Adjusted 4th quarter earnings increased 62% year over year due to sustained balance‑sheet growth, NIM expansion and positive operating leverage.
Announced strategic merger to expand market presence and enhance long‑term growth opportunities.
SAN JOSE, Calif., Jan. 22, 2026 (GLOBE NEWSWIRE) -- Heritage Commerce Corp (Nasdaq: HTBK), (the “Company”), the holding company for Heritage Bank of Commerce (the “Bank”) today announced its financial results for the fourth quarter and year ended December 31, 2025. All data are unaudited.
Fourth Quarter 2025 | Full Year 2025 | ||||
| Reported | Adjusted(1) | Reported | Adjusted(1) | |
Net Income | $15.1 Million | $17.2 Million | $47.8 Million | $56.4 Million | |
Diluted Earnings Per Share ("EPS") | $0.25 | $0.28 | $0.78 | $0.91 | |
Return on Average Assets ("ROAA") | 1.04% | 1.18% | 0.86% | 1.01% | |
Return on Average Tangible Common Equity ("ROATCE")(1) | 11.29% | 12.83% | 9.12% | 10.77% | |
Pre-Provision Net Revenue ("PPNR")(1) | $22.6 Million | $24.6 Million | $69.6 Million | $80.9 Million | |
Fully Tax Equivalent ("FTE") Net Interest Margin(1) | 3.72% | 3.72% | 3.56% | 3.56% | |
Efficiency Ratio | 57.89% | 54.04% | 64.75% | 59.05% | |
CEO COMMENTARY:
“The year 2025, and the fourth quarter in particular, was a consequential time for Heritage, and we are proud of the way our team worked to deliver solid growth and results, driven by steady performance across the business, sustained client momentum and strong credit quality. This quarter reflects strong execution across the organization. We delivered meaningful balance‑sheet growth, expanded operating leverage through disciplined expense management, and increased adjusted full year earnings by 39%. Our focus on consistent performance and prudent growth continues to strengthen our foundation,” said Clay Jones, President and Chief Executive Officer.
“The recently announced merger with Citizens Business Bank represents an exciting next step in Heritage’s journey, building on the strength of our franchise and the consistent performance we delivered throughout 2025. As we work toward the completion of the transaction, we remain fully focused on executing our strategy and continuing to support our clients, colleagues, and communities.”
LINKED-QUARTER BASIS | FULL YEAR 2025 vs. 2024 |
FINANCIAL HIGHLIGHTS / KEY PERFORMANCE METRICS: | |
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(1)This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release. All references to “adjusted” operating metrics exclude the $9.2 million of pre-tax charges primarily related to a legal settlement in the second quarter of 2025 and $2.1 million of pre-tax merger-related costs in the fourth quarter of 2025 as presented in the reconciliation of non-GAAP financial measures at the end of this press release.
About Heritage Commerce Corp
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, 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.
Recent Merger Announcement
On December 17, 2025, CVB Financial Corp. (Nasdaq: CVBF; together with Citizens Business Bank, National Association, “Citizens”) and Heritage Commerce Corp (Nasdaq: HTBK; together with Heritage Bank of Commerce, “Heritage”), jointly announced that they have entered into a definitive merger agreement. Under the terms of the agreement, Heritage will merge with and into Citizens in an all-stock transaction valued at approximately $811 million, or $13.00 per HTBK share, based on CVBF’s closing stock price on December 16, 2025. The value of the transaction is based on a specified closing price and is subject to CVBF stock price fluctuations. Upon completion, the combination is expected to create a top-performing California business bank with approximately $22 billion in assets, more than 75 offices and branches, and a deeply rooted presence in the State’s key economic centers. The proposed merger has been unanimously approved by the respective Boards of Directors of both companies and is expected to close in the second quarter of 2026, subject to customary regulatory approvals, Heritage and Citizens shareholder approvals, and other closing conditions. For more information, please refer to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 17, 2025.
Reclassifications
During the first quarter of 2025, we reclassified Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock dividends from interest income to noninterest income and the related average asset balances were reclassified from interest earning assets to other assets on the “Net Interest Income and Net Interest Margin” tables. The amounts for the prior periods were reclassified to conform to the current presentation. These reclassifications did not affect previously reported net income or shareholders’ equity.
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. These measures include “adjusted” operating metrics that have been adjusted to exclude notable expenses incurred in the second and fourth quarters of 2025 as well as other performance measures and ratios adjusted for notable items. Management believes these non-GAAP financial measures enhance comparability between periods and in some instances are common in the banking industry. 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 press 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 are inherently uncertain in that they reflect plans and expectations for future events. These statements may include, among other things, those relating to the Company’s future financial performance, plans and objectives regarding future events, expectations regarding changes in interest rates and market conditions, projected cash flows of our investment securities portfolio, the performance of our loan portfolio, loan growth, expenses, net interest margin, estimated net interest income resulting from a shift in interest rates, expectation of high credit quality issuers ability to repay, as well as statements relating to the anticipated effects on the Company’s financial condition and results of operations from expected developments or events. Any statements that reflect our belief about, confidence in, or expectations for future events, performance or condition should be considered forward-looking statements. Readers should not construe these statements as assurances of a given level of performance, nor as promises that we will take actions that we currently expect to take. All statements are subject to various risks and uncertainties, many of which are outside our control and some of which may fall outside our ability to predict or anticipate. Accordingly, our actual results may differ materially from our projected results, and we may take actions or experience events that we do not currently expect. Risks and uncertainties that could cause our financial performance to differ materially from our goals, plans, expectations and projections expressed in forward-looking statements include those set forth in our filings with the Securities and Exchange Commission, Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, and include: (i) 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, but not limited to, ransomware, data security breaches, “denial of service” attacks, “hacking” and identity theft) affecting us, our clients, and our third-party vendors and service providers; (ii) 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; (iii) media items and consumer confidence as those factors affect our clients’ confidence in the banking system generally and in our bank specifically; (iv) adequacy of our risk management framework, disclosure controls and procedures and internal control over financial reporting; (v) market, 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; (vi) risks of geographic concentration of our client base, our loans, and the collateral securing our loans, as those clients and assets may be particularly subject to natural disasters and to events and conditions that directly or indirectly affect those regions, including the particular risks of natural disasters (including earthquakes, fires, and flooding) and other events that disproportionately affect that region; (vii) political events that have accompanied or that may in the future accompany or result from recent political changes, particularly including the imposition of tariffs, sociopolitical events and conditions that result from political conflicts and law enforcement activities that may adversely affect our markets or our clients; (viii) our ability to estimate accurately, and to establish adequate reserves against, the risk of loss associated with our loan and lease portfolios and our factoring business; (ix) 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; (x) factors that affect the value and liquidity of our investment portfolios, particularly the values of securities available-for-sale; (xi) 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; (xii) 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; (xiii) 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; (xiv) 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; and (xv) our success in managing the risks involved in the foregoing factors. In addition, statements regarding the timing and impact of the closing of the proposed merger with Citizens are subject to risks and uncertainties. For more information on factors that could cause our expectations regarding the proposed merger with Citizens to differ, potentially materially, please refer to our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 17, 2025.
Member FDIC
For additional information, email:
InvestorRelations@herbank.com
For the Quarter Ended: | Percent Change From: | For the Year Ended: | |||||||||||||||||||||||||||
CONSOLIDATED INCOME STATEMENTS | December 31, | September 30, | December 31, | September 30, | December 31, | December 31, | December 31, | Percent | |||||||||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | Change | |||||||||||||||||||||
Interest income | $ | 67,048 | $ | 65,094 | $ | 64,043 | 3 | % | 5 | % | $ | 256,999 | $ | 240,344 | 7 | % | |||||||||||||
Interest expense | 16,626 | 18,306 | 20,448 | (9) | % | (19) | % | 71,624 | 79,051 | (9) | % | ||||||||||||||||||
Net interest income before provision for credit losses on loans | 50,422 | 46,788 | 43,595 | 8 | % | 16 | % | 185,375 | 161,293 | 15 | % | ||||||||||||||||||
Provision for credit losses on loans | 610 | 416 | 1,331 | 47 | % | (54) | % | 1,816 | 2,139 | (15) | % | ||||||||||||||||||
Net interest income after provision for credit losses on loans | 49,812 | 46,372 | 42,264 | 7 | % | 18 | % | 183,559 | 159,154 | 15 | % | ||||||||||||||||||
Noninterest income: | |||||||||||||||||||||||||||||
Service charges and fees on deposit accounts | 969 | 898 | 885 | 8 | % | 9 | % | 3,688 | 3,561 | 4 | % | ||||||||||||||||||
FHLB and FRB stock dividends | 592 | 587 | 590 | 1 | % | 0 | % | 2,353 | 2,355 | 0 | % | ||||||||||||||||||
Increase in cash surrender value of life insurance | 563 | 564 | 528 | 0 | % | 7 | % | 2,213 | 2,097 | 6 | % | ||||||||||||||||||
Termination fees | 121 | — | 18 | N/A | 572 | % | 435 | 177 | 146 | % | |||||||||||||||||||
Servicing income | 82 | 77 | 77 | 6 | % | 6 | % | 302 | 365 | (17) | % | ||||||||||||||||||
Gain on sales of SBA loans | 30 | — | 125 | N/A | (76) | % | 215 | 473 | (55) | % | |||||||||||||||||||
Gain on proceeds from company-owned life insurance | — | — | — | N/A | N/A | — | 219 | (100) | % | ||||||||||||||||||||
Other | 842 | 1,091 | 552 | (23) | % | 53 | % | 2,883 | 1,856 | 55 | % | ||||||||||||||||||
Total noninterest income | 3,199 | 3,217 | 2,775 | (1) | % | 15 | % | 12,089 | 11,103 | 9 | % | ||||||||||||||||||
Noninterest expense: | |||||||||||||||||||||||||||||
Salaries and employee benefits | 16,787 | 16,948 | 16,976 | (1) | % | (1) | % | 66,537 | 63,952 | 4 | % | ||||||||||||||||||
Occupancy and equipment | 2,357 | 2,528 | 2,495 | (7) | % | (6) | % | 9,944 | 10,226 | -3 | % | ||||||||||||||||||
Professional fees | 1,659 | 1,175 | 1,711 | 41 | % | (3) | % | 6,233 | 5,416 | 15 | % | ||||||||||||||||||
Other | 10,239 | 8,375 | 9,122 | 22 | % | 12 | % | 45,145 | 33,989 | 33 | % | ||||||||||||||||||
Total noninterest expense | 31,042 | 29,026 | 30,304 | 7 | % | 2 | % | 127,859 | 113,583 | 13 | % | ||||||||||||||||||
Income before income taxes | 21,969 | 20,563 | 14,735 | 7 | % | 49 | % | 67,789 | 56,674 | 20 | % | ||||||||||||||||||
Income tax expense | 6,852 | 5,865 | 4,114 | 17 | % | 67 | % | 19,959 | 16,146 | 24 | % | ||||||||||||||||||
Net income | $ | 15,117 | $ | 14,698 | $ | 10,621 | 3 | % | 42 | % | $ | 47,830 | $ | 40,528 | 18 | % | |||||||||||||
PER COMMON SHARE DATA | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||
Basic earnings per share | $ | 0.25 | $ | 0.24 | $ | 0.17 | 4 | % | 47 | % | $ | 0.78 | $ | 0.66 | 18 | % | |||||||||||||
Diluted earnings per share | $ | 0.25 | $ | 0.24 | $ | 0.17 | 4 | % | 47 | % | $ | 0.78 | $ | 0.66 | 18 | % | |||||||||||||
Weighted average shares outstanding - basic | 61,308,370 | 61,333,951 | 61,320,505 | 0 | % | 0 | % | 61,407,520 | 61,270,730 | 0 | % | ||||||||||||||||||
Weighted average shares outstanding - diluted | 61,701,068 | 61,616,785 | 61,679,735 | 0 | % | 0 | % | 61,702,095 | 61,527,372 | 0 | % | ||||||||||||||||||
Common shares outstanding at period-end | 61,368,708 | 61,277,541 | 61,348,095 | 0 | % | 0 | % | 61,368,708 | 61,348,095 | 0 | % | ||||||||||||||||||
Dividend per share | $ | 0.13 | $ | 0.13 | $ | 0.13 | 0 | % | 0 | % | $ | 0.52 | $ | 0.52 | 0 | % | |||||||||||||
Book value per share | $ | 11.55 | $ | 11.42 | $ | 11.24 | 1 | % | 3 | % | $ | 11.55 | $ | 11.24 | 3 | % | |||||||||||||
Tangible book value per share(1) | $ | 8.74 | $ | 8.61 | $ | 8.41 | 2 | % | 4 | % | $ | 8.74 | $ | 8.41 | 4 | % | |||||||||||||
KEY PERFORMANCE METRICS | |||||||||||||||||||||||||||||
(in $000's, unaudited) | |||||||||||||||||||||||||||||
Annualized return on average equity | 8.52 | % | 8.37 | % | 6.16 | % | 2 | % | 38 | % | 6.86 | % | 5.97 | % | 15 | % | |||||||||||||
Annualized return on average tangible common equity(1) | 11.29 | % | 11.14 | % | 8.25 | % | 1 | % | 37 | % | 9.12 | % | 8.05 | % | 13 | % | |||||||||||||
Annualized return on average assets | 1.04 | % | 1.05 | % | 0.75 | % | (1) | % | 39 | % | 0.86 | % | 0.76 | % | 13 | % | |||||||||||||
Annualized return on average tangible assets(1) | 1.07 | % | 1.08 | % | 0.78 | % | (1) | % | 37 | % | 0.88 | % | 0.78 | % | 13 | % | |||||||||||||
Net interest margin (FTE)(1) | 3.72 | % | 3.60 | % | 3.32 | % | 3 | % | 12 | % | 3.56 | % | 3.25 | % | 10 | % | |||||||||||||
Total revenue | $ | 53,621 | $ | 50,005 | $ | 46,370 | 7 | % | 16 | % | $ | 197,464 | $ | 172,396 | 15 | % | |||||||||||||
Pre-provision net revenue | $ | 22,579 | $ | 20,979 | $ | 16,066 | 8 | % | 41 | % | $ | 69,605 | $ | 58,813 | 18 | % | |||||||||||||
Efficiency ratio | 57.89 | % | 58.05 | % | 65.35 | % | 0 | % | (11) | % | 64.75 | % | 65.88 | % | (2) | % | |||||||||||||
AVERAGE BALANCES | |||||||||||||||||||||||||||||
(in $000’s, unaudited) | |||||||||||||||||||||||||||||
Average assets | $ | 5,764,240 | $ | 5,551,457 | $ | 5,607,840 | 4 | % | 3 | % | $ | 5,583,975 | $ | 5,338,705 | 5 | % | |||||||||||||
Average tangible assets(1) | $ | 5,591,718 | $ | 5,378,468 | $ | 5,433,439 | 4 | % | 3 | % | $ | 5,410,766 | $ | 5,163,485 | 5 | % | |||||||||||||
Average earning assets | $ | 5,386,230 | $ | 5,167,710 | $ | 5,235,986 | 4 | % | 3 | % | $ | 5,207,770 | $ | 4,967,582 | 5 | % | |||||||||||||
Average loans held-for-sale | $ | 1,395 | $ | 1,230 | $ | 2,260 | 13 | % | (38) | % | $ | 1,787 | $ | 2,001 | (11) | % | |||||||||||||
Average loans held-for-investment | $ | 3,564,243 | $ | 3,519,775 | $ | 3,388,729 | 1 | % | 5 | % | $ | 3,504,800 | $ | 3,343,661 | 5 | % | |||||||||||||
Average deposits | $ | 4,895,841 | $ | 4,687,294 | $ | 4,771,491 | 4 | % | 3 | % | $ | 4,730,037 | $ | 4,513,774 | 5 | % | |||||||||||||
Average demand deposits - noninterest-bearing | $ | 1,288,941 | $ | 1,187,357 | $ | 1,222,393 | 9 | % | 5 | % | $ | 1,197,836 | $ | 1,174,854 | 2 | % | |||||||||||||
Average interest-bearing deposits | $ | 3,606,900 | $ | 3,499,937 | $ | 3,549,098 | 3 | % | 2 | % | $ | 3,532,201 | $ | 3,338,920 | 6 | % | |||||||||||||
Average interest-bearing liabilities | $ | 3,646,701 | $ | 3,539,706 | $ | 3,588,755 | 3 | % | 2 | % | $ | 3,571,946 | $ | 3,378,516 | 6 | % | |||||||||||||
Average equity | $ | 703,611 | $ | 696,385 | $ | 686,263 | 1 | % | 3 | % | $ | 697,463 | $ | 678,543 | 3 | % | |||||||||||||
Average tangible common equity(1) | $ | 531,089 | $ | 523,396 | $ | 511,862 | 1 | % | 4 | % | $ | 524,254 | $ | 503,323 | 4 | % | |||||||||||||
__________________________________
(1)This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.
For the Quarter Ended: | ||||||||||||||||||||
CONSOLIDATED INCOME STATEMENTS | December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2025 | 2025 | 2024 | |||||||||||||||
Interest income | $ | 67,048 | $ | 65,094 | $ | 63,025 | $ | 61,832 | $ | 64,043 | ||||||||||
Interest expense | 16,626 | 18,306 | 18,220 | 18,472 | 20,448 | |||||||||||||||
Net interest income before provision for credit losses on loans | 50,422 | 46,788 | 44,805 | 43,360 | 43,595 | |||||||||||||||
Provision for credit losses on loans | 610 | 416 | 516 | 274 | 1,331 | |||||||||||||||
Net interest income after provision for credit losses on loans | 49,812 | 46,372 | 44,289 | 43,086 | 42,264 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||
Service charges and fees on deposit accounts | 969 | 898 | 929 | 892 | 885 | |||||||||||||||
FHLB and FRB stock dividends | 592 | 587 | 584 | 590 | 590 | |||||||||||||||
Increase in cash surrender value of life insurance | 563 | 564 | 548 | 538 | 528 | |||||||||||||||
Termination fees | 121 | — | 227 | 87 | 18 | |||||||||||||||
Servicing income | 82 | 77 | 87 | 98 | 77 | |||||||||||||||
Gain on sales of SBA loans | 30 | — | 61 | 82 | 125 | |||||||||||||||
Other | 842 | 1,091 | 541 | 409 | 552 | |||||||||||||||
Total noninterest income | 3,199 | 3,217 | 2,977 | 2,696 | 2,775 | |||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Salaries and employee benefits | 16,787 | 16,948 | 16,227 | 16,575 | 16,976 | |||||||||||||||
Occupancy and equipment | 2,357 | 2,528 | 2,525 | 2,534 | 2,495 | |||||||||||||||
Professional fees | 1,659 | 1,175 | 1,819 | 1,580 | 1,711 | |||||||||||||||
Other | 10,239 | 8,375 | 17,764 | 8,767 | 9,122 | |||||||||||||||
Total noninterest expense | 31,042 | 29,026 | 38,335 | 29,456 | 30,304 | |||||||||||||||
Income before income taxes | 21,969 | 20,563 | 8,931 | 16,326 | 14,735 | |||||||||||||||
Income tax expense | 6,852 | 5,865 | 2,542 | 4,700 | 4,114 | |||||||||||||||
Net income | $ | 15,117 | $ | 14,698 | $ | 6,389 | $ | 11,626 | $ | 10,621 | ||||||||||
PER COMMON SHARE DATA | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Basic earnings per share | $ | 0.25 | $ | 0.24 | $ | 0.10 | $ | 0.19 | $ | 0.17 | ||||||||||
Diluted earnings per share | $ | 0.25 | $ | 0.24 | $ | 0.10 | $ | 0.19 | $ | 0.17 | ||||||||||
Weighted average shares outstanding - basic | 61,308,370 | 61,333,951 | 61,508,180 | 61,479,579 | 61,320,505 | |||||||||||||||
Weighted average shares outstanding - diluted | 61,701,068 | 61,616,785 | 61,624,600 | 61,708,361 | 61,679,735 | |||||||||||||||
Common shares outstanding at period-end | 61,368,708 | 61,277,541 | 61,446,763 | 61,611,121 | 61,348,095 | |||||||||||||||
Dividend per share | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | ||||||||||
Book value per share | $ | 11.55 | $ | 11.42 | $ | 11.31 | $ | 11.30 | $ | 11.24 | ||||||||||
Tangible book value per share(1) | $ | 8.74 | $ | 8.61 | $ | 8.49 | $ | 8.48 | $ | 8.41 | ||||||||||
KEY PERFORMANCE METRICS | ||||||||||||||||||||
(in $000's, unaudited) | ||||||||||||||||||||
Annualized return on average equity | 8.52 | % | 8.37 | % | 3.68 | % | 6.81 | % | 6.16 | % | ||||||||||
Annualized return on average tangible common equity(1) | 11.29 | % | 11.14 | % | 4.89 | % | 9.09 | % | 8.25 | % | ||||||||||
Annualized return on average assets | 1.04 | % | 1.05 | % | 0.47 | % | 0.85 | % | 0.75 | % | ||||||||||
Annualized return on average tangible assets(1) | 1.07 | % | 1.08 | % | 0.48 | % | 0.88 | % | 0.78 | % | ||||||||||
Net interest margin (FTE)(1) | 3.72 | % | 3.60 | % | 3.54 | % | 3.39 | % | 3.32 | % | ||||||||||
Total revenue | $ | 53,621 | $ | 50,005 | $ | 47,782 | $ | 46,056 | $ | 46,370 | ||||||||||
Pre-provision net revenue | $ | 22,579 | $ | 20,979 | $ | 9,447 | $ | 16,600 | $ | 16,066 | ||||||||||
Efficiency ratio | 57.89 | % | 58.05 | % | 80.23 | % | 63.96 | % | 65.35 | % | ||||||||||
AVERAGE BALANCES | ||||||||||||||||||||
(in $000’s, unaudited) | ||||||||||||||||||||
Average assets | $ | 5,764,240 | $ | 5,551,457 | $ | 5,458,420 | $ | 5,559,896 | $ | 5,607,840 | ||||||||||
Average tangible assets(1) | $ | 5,591,718 | $ | 5,378,468 | $ | 5,284,972 | $ | 5,386,001 | $ | 5,433,439 | ||||||||||
Average earning assets | $ | 5,386,230 | $ | 5,167,710 | $ | 5,087,089 | $ | 5,188,317 | $ | 5,235,986 | ||||||||||
Average loans held-for-sale | $ | 1,395 | $ | 1,230 | $ | 2,250 | $ | 2,290 | $ | 2,260 | ||||||||||
Average loans held-for-investment | $ | 3,564,243 | $ | 3,519,775 | $ | 3,504,518 | $ | 3,429,014 | $ | 3,388,729 | ||||||||||
Average deposits | $ | 4,895,841 | $ | 4,687,294 | $ | 4,618,007 | $ | 4,717,517 | $ | 4,771,491 | ||||||||||
Average demand deposits - noninterest-bearing | $ | 1,288,941 | $ | 1,187,357 | $ | 1,146,494 | $ | 1,167,330 | $ | 1,222,393 | ||||||||||
Average interest-bearing deposits | $ | 3,606,900 | $ | 3,499,937 | $ | 3,471,513 | $ | 3,550,187 | $ | 3,549,098 | ||||||||||
Average interest-bearing liabilities | $ | 3,646,701 | $ | 3,539,706 | $ | 3,511,237 | $ | 3,589,872 | $ | 3,588,755 | ||||||||||
Average equity | $ | 703,611 | $ | 696,385 | $ | 697,016 | $ | 692,733 | $ | 686,263 | ||||||||||
Average tangible common equity(1) | $ | 531,089 | $ | 523,396 | $ | 523,568 | $ | 518,838 | $ | 511,862 | ||||||||||
__________________________________
(1)This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.
End of Period: | Percent Change From: | |||||||||||||||||
CONSOLIDATED BALANCE SHEETS | December 31, | September 30, | December 31, | September 30, | December 31, | |||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2024 | 2025 | 2024 | |||||||||||||
ASSETS | ||||||||||||||||||
Cash and due from banks | $ | 21,682 | $ | 42,442 | $ | 29,864 | (49) | % | (27) | % | ||||||||
Other investments and interest-bearing deposits in other financial institutions | 625,346 | 705,300 | 938,259 | (11) | % | (33) | % | |||||||||||
Securities available-for-sale, at fair value | 592,958 | 408,456 | 256,274 | 45 | % | 131 | % | |||||||||||
Securities held-to-maturity, at amortized cost | 529,711 | 544,806 | 590,016 | (3) | % | (10) | % | |||||||||||
Loans - held-for-sale - SBA, including deferred costs | 1,322 | 1,325 | 2,375 | 0 | % | (44) | % | |||||||||||
Loans - held-for-investment: | ||||||||||||||||||
Commercial | 550,362 | 523,110 | 531,350 | 5 | % | 4 | % | |||||||||||
Real estate: | ||||||||||||||||||
CRE - owner occupied | 623,293 | 629,855 | 601,636 | (1) | % | 4 | % | |||||||||||
CRE - non-owner occupied | 1,475,061 | 1,416,987 | 1,341,266 | 4 | % | 10 | % | |||||||||||
Land and construction | 133,558 | 137,170 | 127,848 | (3) | % | 4 | % | |||||||||||
Home equity | 126,085 | 125,742 | 127,963 | 0 | % | (1) | % | |||||||||||
Multifamily | 295,602 | 290,077 | 275,490 | 2 | % | 7 | % | |||||||||||
Residential mortgages | 432,241 | 443,143 | 471,730 | (2) | % | (8) | % | |||||||||||
Consumer and other | 17,366 | 15,938 | 14,837 | 9 | % | 17 | % | |||||||||||
Loans | 3,653,568 | 3,582,022 | 3,492,120 | 2 | % | 5 | % | |||||||||||
Deferred loan fees, net | (508 | ) | (344 | ) | (183 | ) | 48 | % | 178 | % | ||||||||
Total loans - held-for-investment, net of deferred fees | 3,653,060 | 3,581,678 | 3,491,937 | 2 | % | 5 | % | |||||||||||
Allowance for credit losses on loans | (49,999 | ) | (49,427 | ) | (48,953 | ) | 1 | % | 2 | % | ||||||||
Loans, net | 3,603,061 | 3,532,251 | 3,442,984 | 2 | % | 5 | % | |||||||||||
Company-owned life insurance | 83,423 | 82,861 | 81,211 | 1 | % | 3 | % | |||||||||||
Premises and equipment, net | 9,213 | 9,429 | 10,140 | (2) | % | (9) | % | |||||||||||
Goodwill | 167,631 | 167,631 | 167,631 | 0 | % | 0 | % | |||||||||||
Other intangible assets | 4,625 | 5,078 | 6,439 | (9) | % | (28) | % | |||||||||||
Accrued interest receivable and other assets | 125,725 | 124,141 | 119,813 | 1 | % | 5 | % | |||||||||||
Total assets | $ | 5,764,697 | $ | 5,623,720 | $ | 5,645,006 | 3 | % | 2 | % | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||
Liabilities: | ||||||||||||||||||
Deposits: | ||||||||||||||||||
Demand, noninterest-bearing | $ | 1,308,737 | $ | 1,241,603 | $ | 1,214,192 | 5 | % | 8 | % | ||||||||
Demand, interest-bearing | 957,146 | 922,077 | 936,587 | 4 | % | 2 | % | |||||||||||
Savings and money market | 1,380,666 | 1,366,905 | 1,325,923 | 1 | % | 4 | % | |||||||||||
Time deposits - under $250 | 31,500 | 32,462 | 38,988 | (3) | % | (19) | % | |||||||||||
Time deposits - $250 and over | 220,715 | 223,496 | 206,755 | (1) | % | 7 | % | |||||||||||
Insured Cash Sweep ("ICS")/Certificates of Deposit Account Registry Service ("CDARS") - interest-bearing demand, money market and time deposits | 1,004,322 | 990,003 | 1,097,586 | 1 | % | (8) | % | |||||||||||
Total deposits | 4,903,086 | 4,776,546 | 4,820,031 | 3 | % | 2 | % | |||||||||||
Subordinated debt, net of issuance costs | 39,805 | 39,767 | 39,653 | 0 | % | 0 | % | |||||||||||
Accrued interest payable and other liabilities | 113,240 | 107,397 | 95,595 | 5 | % | 18 | % | |||||||||||
Total liabilities | 5,056,131 | 4,923,710 | 4,955,279 | 3 | % | 2 | % | |||||||||||
Shareholders’ Equity: | ||||||||||||||||||
Common stock | 509,611 | 508,664 | 510,070 | 0 | % | 0 | % | |||||||||||
Retained earnings | 203,675 | 196,526 | 187,762 | 4 | % | 8 | % | |||||||||||
Accumulated other comprehensive loss | (4,720 | ) | (5,180 | ) | (8,105 | ) | (9) | % | (42) | % | ||||||||
Total shareholders' equity | 708,566 | 700,010 | 689,727 | 1 | % | 3 | % | |||||||||||
Total liabilities and shareholders’ equity | $ | 5,764,697 | $ | 5,623,720 | $ | 5,645,006 | 3 | % | 2 | % | ||||||||
End of Period: | ||||||||||||||||||||
CONSOLIDATED BALANCE SHEETS | December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2025 | 2025 | 2024 | |||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and due from banks | $ | 21,682 | $ | 42,442 | $ | 55,360 | $ | 44,281 | $ | 29,864 | ||||||||||
Other investments and interest-bearing deposits in other financial institutions | 625,346 | 705,300 | 666,432 | 700,769 | 938,259 | |||||||||||||||
Securities available-for-sale, at fair value | 592,958 | 408,456 | 307,035 | 370,976 | 256,274 | |||||||||||||||
Securities held-to-maturity, at amortized cost | 529,711 | 544,806 | 561,205 | 576,718 | 590,016 | |||||||||||||||
Loans - held-for-sale - SBA, including deferred costs | 1,322 | 1,325 | 1,156 | 1,884 | 2,375 | |||||||||||||||
Loans - held-for-investment: | ||||||||||||||||||||
Commercial | 550,362 | 523,110 | 492,231 | 489,241 | 531,350 | |||||||||||||||
Real estate: | ||||||||||||||||||||
CRE - owner occupied | 623,293 | 629,855 | 627,810 | 616,825 | 601,636 | |||||||||||||||
CRE - non-owner occupied | 1,475,061 | 1,416,987 | 1,390,419 | 1,363,275 | 1,341,266 | |||||||||||||||
Land and construction | 133,558 | 137,170 | 149,460 | 136,106 | 127,848 | |||||||||||||||
Home equity | 126,085 | 125,742 | 120,763 | 119,138 | 127,963 | |||||||||||||||
Multifamily | 295,602 | 290,077 | 285,016 | 284,510 | 275,490 | |||||||||||||||
Residential mortgages | 432,241 | 443,143 | 454,419 | 465,330 | 471,730 | |||||||||||||||
Consumer and other | 17,366 | 15,938 | 14,661 | 12,741 | 14,837 | |||||||||||||||
Loans | 3,653,568 | 3,582,022 | 3,534,779 | 3,487,166 | 3,492,120 | |||||||||||||||
Deferred loan fees, net | (508 | ) | (344 | ) | (446 | ) | (268 | ) | (183 | ) | ||||||||||
Total loans - held-for-investment, net of deferred fees | 3,653,060 | 3,581,678 | 3,534,333 | 3,486,898 | 3,491,937 | |||||||||||||||
Allowance for credit losses on loans | (49,999 | ) | (49,427 | ) | (48,633 | ) | (48,262 | ) | (48,953 | ) | ||||||||||
Loans, net | 3,603,061 | 3,532,251 | 3,485,700 | 3,438,636 | 3,442,984 | |||||||||||||||
Company-owned life insurance | 83,423 | 82,861 | 82,296 | 81,749 | 81,211 | |||||||||||||||
Premises and equipment, net | 9,213 | 9,429 | 9,765 | 9,772 | 10,140 | |||||||||||||||
Goodwill | 167,631 | 167,631 | 167,631 | 167,631 | 167,631 | |||||||||||||||
Other intangible assets | 4,625 | 5,078 | 5,532 | 5,986 | 6,439 | |||||||||||||||
Accrued interest receivable and other assets | 125,725 | 124,141 | 125,125 | 115,853 | 119,813 | |||||||||||||||
Total assets | $ | 5,764,697 | $ | 5,623,720 | $ | 5,467,237 | $ | 5,514,255 | $ | 5,645,006 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Demand, noninterest-bearing | $ | 1,308,737 | $ | 1,241,603 | $ | 1,151,242 | $ | 1,128,593 | $ | 1,214,192 | ||||||||||
Demand, interest-bearing | 957,146 | 922,077 | 955,504 | 949,068 | 936,587 | |||||||||||||||
Savings and money market | 1,380,666 | 1,366,905 | 1,320,142 | 1,353,293 | 1,325,923 | |||||||||||||||
Time deposits - under $250 | 31,500 | 32,462 | 35,356 | 37,592 | 38,988 | |||||||||||||||
Time deposits - $250 and over | 220,715 | 223,496 | 210,818 | 213,357 | 206,755 | |||||||||||||||
ICS/CDARS - interest-bearing demand, money market and time deposits | 1,004,322 | 990,003 | 954,272 | 1,001,365 | 1,097,586 | |||||||||||||||
Total deposits | 4,903,086 | 4,776,546 | 4,627,334 | 4,683,268 | 4,820,031 | |||||||||||||||
Subordinated debt, net of issuance costs | 39,805 | 39,767 | 39,728 | 39,691 | 39,653 | |||||||||||||||
Accrued interest payable and other liabilities | 113,240 | 107,397 | 105,471 | 95,106 | 95,595 | |||||||||||||||
Total liabilities | 5,056,131 | 4,923,710 | 4,772,533 | 4,818,065 | 4,955,279 | |||||||||||||||
Shareholders’ Equity: | ||||||||||||||||||||
Common stock | 509,611 | 508,664 | 509,888 | 511,596 | 510,070 | |||||||||||||||
Retained earnings | 203,675 | 196,526 | 189,794 | 191,401 | 187,762 | |||||||||||||||
Accumulated other comprehensive loss | (4,720 | ) | (5,180 | ) | (4,978 | ) | (6,807 | ) | (8,105 | ) | ||||||||||
Total shareholders' equity | 708,566 | 700,010 | 694,704 | 696,190 | 689,727 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,764,697 | $ | 5,623,720 | $ | 5,467,237 | $ | 5,514,255 | $ | 5,645,006 | ||||||||||
At or For the Quarter Ended: | Percent Change From: | |||||||||||||||||
ASSET QUALITY DATA | December 31, | September 30, | December 31, | September 30, | December 31, | |||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2024 | 2025 | 2024 | |||||||||||||
Nonaccrual loans - held-for-investment: | ||||||||||||||||||
Land and construction loans | $ | 1,663 | $ | 2,346 | $ | 5,874 | (29) | % | (72) | % | ||||||||
Commercial loans | 354 | 467 | — | (24) | % | N/A | ||||||||||||
Commercial real estate ("CRE") | 31 | — | 1,014 | N/A | (97) | % | ||||||||||||
Home equity | — | 655 | 290 | (100) | % | (100) | % | |||||||||||
Total nonaccrual loans - held-for-investment: | 2,048 | 3,468 | 7,178 | (41) | % | (71) | % | |||||||||||
Loans over 90 days past due and still accruing | 735 | 194 | 489 | 279 | % | 50 | % | |||||||||||
Total nonperforming loans | 2,783 | 3,662 | 7,667 | (24) | % | (64) | % | |||||||||||
Foreclosed assets | — | — | — | N/A | N/A | |||||||||||||
Total nonperforming assets | $ | 2,783 | $ | 3,662 | $ | 7,667 | (24) | % | (64) | % | ||||||||
Net charge-offs (recoveries) during the quarter | $ | 38 | $ | (378 | ) | $ | 197 | (110) | % | (81) | % | |||||||
Provision for credit losses on loans during the quarter | $ | 610 | $ | 416 | $ | 1,331 | 47 | % | (54) | % | ||||||||
Allowance for credit losses on loans | $ | 49,999 | $ | 49,427 | $ | 48,953 | 1 | % | 2 | % | ||||||||
Classified assets | $ | 29,223 | $ | 34,633 | $ | 41,661 | (16) | % | (30) | % | ||||||||
Allowance for credit losses on loans to total loans | 1.37 | % | 1.38 | % | 1.40 | % | (1) | % | (2) | % | ||||||||
Allowance for credit losses on loans to total nonperforming loans | 1,796.59 | % | 1,349.73 | % | 638.49 | % | 33 | % | 181 | % | ||||||||
Nonperforming assets to total assets | 0.05 | % | 0.07 | % | 0.14 | % | (29) | % | (64) | % | ||||||||
Nonperforming loans to total loans | 0.08 | % | 0.10 | % | 0.22 | % | (20) | % | (64) | % | ||||||||
Classified assets to total assets | 0.51 | % | 0.62 | % | 0.74 | % | (18) | % | (31) | % | ||||||||
Classified assets to Heritage Commerce Corp | ||||||||||||||||||
Tier 1 capital plus allowance for credit losses on loans | 5 | % | 6 | % | 7 | % | (17) | % | (29) | % | ||||||||
Classified assets to Heritage Bank of Commerce | ||||||||||||||||||
Tier 1 capital plus allowance for credit losses on loans | 5 | % | 6 | % | 7 | % | (17) | % | (29) | % | ||||||||
OTHER PERIOD-END STATISTICS | ||||||||||||||||||
(in $000’s, unaudited) | ||||||||||||||||||
Heritage Commerce Corp: | ||||||||||||||||||
Tangible common equity (1) | $ | 536,310 | $ | 527,301 | $ | 515,657 | 2 | % | 4 | % | ||||||||
Shareholders’ equity / total assets | 12.29 | % | 12.45 | % | 12.22 | % | (1) | % | 1 | % | ||||||||
Tangible common equity / tangible assets (1) | 9.59 | % | 9.67 | % | 9.43 | % | (1) | % | 2 | % | ||||||||
Loan to deposit ratio | 74.51 | % | 74.99 | % | 72.45 | % | (1) | % | 3 | % | ||||||||
Noninterest-bearing deposits / total deposits | 26.69 | % | 25.99 | % | 25.19 | % | 3 | % | 6 | % | ||||||||
Total capital | $ | 629,931 | $ | 620,762 | $ | 610,644 | 1 | % | 3 | % | ||||||||
Tier 1 capital | $ | 539,394 | $ | 530,835 | $ | 524,204 | 2 | % | 3 | % | ||||||||
Total capital ratio | 15.1 | % | 15.4 | % | 15.6 | % | (2) | % | (3) | % | ||||||||
Tier 1 capital ratio | 12.9 | % | 13.2 | % | 13.4 | % | (2) | % | (4) | % | ||||||||
Common Equity Tier 1 capital ratio | 12.9 | % | 13.2 | % | 13.4 | % | (2) | % | (4) | % | ||||||||
Tier 1 leverage ratio | 9.6 | % | 9.9 | % | 9.6 | % | (3) | % | 0 | % | ||||||||
Heritage Bank of Commerce: | ||||||||||||||||||
Tangible common equity / tangible assets (1) | 10.05 | % | 10.13 | % | 9.79 | % | (1) | % | 3 | % | ||||||||
Total capital ratio | 14.8 | % | 15.1 | % | 15.1 | % | (2) | % | (2) | % | ||||||||
Tier 1 capital ratio | 13.6 | % | 13.8 | % | 13.9 | % | (1) | % | (2) | % | ||||||||
Common Equity Tier 1 capital ratio | 13.6 | % | 13.8 | % | 13.9 | % | (1) | % | (2) | % | ||||||||
Tier 1 leverage ratio | 10.1 | % | 10.3 | % | 10.0 | % | (2) | % | 1 | % | ||||||||
__________________________________
(1)This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.
At or For the Quarter Ended: | ||||||||||||||||||||
ASSET QUALITY DATA | December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2025 | 2025 | 2024 | |||||||||||||||
Nonaccrual loans - held-for-investment: | ||||||||||||||||||||
Land and construction loans | $ | 1,663 | $ | 2,346 | $ | 4,198 | $ | 4,793 | $ | 5,874 | ||||||||||
Commercial loans | 354 | 467 | 491 | 324 | 1,014 | |||||||||||||||
CRE | 31 | — | 31 | — | — | |||||||||||||||
Home equity | — | 655 | 728 | 927 | 290 | |||||||||||||||
Residential mortgages | — | — | 607 | — | — | |||||||||||||||
Total nonaccrual loans - held-for-investment: | 2,048 | 3,468 | 6,055 | 6,044 | 7,178 | |||||||||||||||
Loans over 90 days past due and still accruing | 735 | 194 | 123 | 268 | 489 | |||||||||||||||
Total nonperforming loans | 2,783 | 3,662 | 6,178 | 6,312 | 7,667 | |||||||||||||||
Foreclosed assets | — | — | — | — | — | |||||||||||||||
Total nonperforming assets | $ | 2,783 | $ | 3,662 | $ | 6,178 | $ | 6,312 | $ | 7,667 | ||||||||||
Net charge-offs (recoveries) during the quarter | $ | 38 | $ | (378 | ) | $ | 145 | $ | 965 | $ | 197 | |||||||||
Provision for credit losses on loans during the quarter | $ | 610 | $ | 416 | $ | 516 | $ | 274 | $ | 1,331 | ||||||||||
Allowance for credit losses on loans | $ | 49,999 | $ | 49,427 | $ | 48,633 | $ | 48,262 | $ | 48,953 | ||||||||||
Classified assets | $ | 29,223 | $ | 34,633 | $ | 37,525 | $ | 40,034 | $ | 41,661 | ||||||||||
Allowance for credit losses on loans to total loans | 1.37 | % | 1.38 | % | 1.38 | % | 1.38 | % | 1.40 | % | ||||||||||
Allowance for credit losses on loans to total nonperforming loans | 1,796.59 | % | 1,349.73 | % | 787.20 | % | 764.61 | % | 638.49 | % | ||||||||||
Nonperforming assets to total assets | 0.05 | % | 0.07 | % | 0.11 | % | 0.11 | % | 0.14 | % | ||||||||||
Nonperforming loans to total loans | 0.08 | % | 0.10 | % | 0.17 | % | 0.18 | % | 0.22 | % | ||||||||||
Classified assets to total assets | 0.51 | % | 0.62 | % | 0.69 | % | 0.73 | % | 0.74 | % | ||||||||||
Classified assets to Heritage Commerce Corp | ||||||||||||||||||||
Tier 1 capital plus allowance for credit losses on loans | 5 | % | 6 | % | 7 | % | 7 | % | 7 | % | ||||||||||
Classified assets to Heritage Bank of Commerce | ||||||||||||||||||||
Tier 1 capital plus allowance for credit losses on loans | 5 | % | 6 | % | 6 | % | 7 | % | 7 | % | ||||||||||
OTHER PERIOD-END STATISTICS | ||||||||||||||||||||
(in $000’s, unaudited) | ||||||||||||||||||||
Heritage Commerce Corp: | ||||||||||||||||||||
Tangible common equity (1) | $ | 536,310 | $ | 527,301 | $ | 521,541 | $ | 522,573 | $ | 515,657 | ||||||||||
Shareholders’ equity / total assets | 12.29 | % | 12.45 | % | 12.71 | % | 12.63 | % | 12.22 | % | ||||||||||
Tangible common equity / tangible assets (1) | 9.59 | % | 9.67 | % | 9.85 | % | 9.78 | % | 9.43 | % | ||||||||||
Loan to deposit ratio | 74.51 | % | 74.99 | % | 76.38 | % | 74.45 | % | 72.45 | % | ||||||||||
Noninterest-bearing deposits / total deposits | 26.69 | % | 25.99 | % | 24.88 | % | 24.10 | % | 25.19 | % | ||||||||||
Total capital | $ | 629,931 | $ | 620,762 | $ | 613,956 | $ | 615,774 | $ | 610,644 | ||||||||||
Tier 1 capital | $ | 539,394 | $ | 530,835 | $ | 524,826 | $ | 527,666 | $ | 524,204 | ||||||||||
Total capital ratio | 15.1 | % | 15.4 | % | 15.5 | % | 15.9 | % | 15.6 | % | ||||||||||
Tier 1 capital ratio | 12.9 | % | 13.2 | % | 13.3 | % | 13.6 | % | 13.4 | % | ||||||||||
Common Equity Tier 1 capital ratio | 12.9 | % | 13.2 | % | 13.3 | % | 13.6 | % | 13.4 | % | ||||||||||
Tier 1 leverage ratio | 9.6 | % | 9.9 | % | 9.9 | % | 9.8 | % | 9.6 | % | ||||||||||
Heritage Bank of Commerce: | ||||||||||||||||||||
Tangible common equity / tangible assets (1) | 10.05 | % | 10.13 | % | 10.28 | % | 10.15 | % | 9.79 | % | ||||||||||
Total capital ratio | 14.8 | % | 15.1 | % | 15.1 | % | 15.4 | % | 15.1 | % | ||||||||||
Tier 1 capital ratio | 13.6 | % | 13.8 | % | 13.8 | % | 14.1 | % | 13.9 | % | ||||||||||
Common Equity Tier 1 capital ratio | 13.6 | % | 13.8 | % | 13.8 | % | 14.1 | % | 13.9 | % | ||||||||||
Tier 1 leverage ratio | 10.1 | % | 10.3 | % | 10.4 | % | 10.2 | % | 10.0 | % | ||||||||||
__________________________________
(1)This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.
For the Quarter Ended | For the Quarter Ended | |||||||||||||||||||||
December 31, 2025 | September 30, 2025 | |||||||||||||||||||||
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, core bank | $ | 3,073,726 | $ | 42,691 | 5.51 | % | $ | 3,039,478 | $ | 42,655 | 5.57 | % | ||||||||||
Prepayment fees | — | 183 | 0.02 | % | — | 185 | 0.02 | % | ||||||||||||||
Bay View Funding factored receivables | 94,023 | 4,310 | 18.19 | % | 74,353 | 3,654 | 19.50 | % | ||||||||||||||
Purchased residential mortgages | 399,359 | 3,370 | 3.35 | % | 408,810 | 3,472 | 3.37 | % | ||||||||||||||
Loan fair value mark / accretion | (1,470 | ) | 159 | 0.02 | % | (1,636 | ) | 164 | 0.02 | % | ||||||||||||
Loans, gross (1)(2) | 3,565,638 | 50,713 | 5.64 | % | 3,521,005 | 50,130 | 5.65 | % | ||||||||||||||
Securities - taxable | 1,021,124 | 8,400 | 3.26 | % | 842,998 | 6,146 | 2.89 | % | ||||||||||||||
Securities - exempt from Federal tax (3) | 27,735 | 248 | 3.55 | % | 28,683 | 256 | 3.54 | % | ||||||||||||||
Other investments and interest-bearing deposits in other financial institutions | 771,733 | 7,740 | 3.98 | % | 775,024 | 8,615 | 4.41 | % | ||||||||||||||
Total interest earning assets (3) | 5,386,230 | 67,101 | 4.94 | % | 5,167,710 | 65,147 | 5.00 | % | ||||||||||||||
Cash and due from banks | 33,470 | 30,764 | ||||||||||||||||||||
Premises and equipment, net | 9,415 | 9,651 | ||||||||||||||||||||
Goodwill and other intangible assets | 172,522 | 172,989 | ||||||||||||||||||||
Other assets | 162,603 | 170,343 | ||||||||||||||||||||
Total assets | $ | 5,764,240 | $ | 5,551,457 | ||||||||||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Demand, noninterest-bearing | $ | 1,288,941 | $ | 1,187,357 | ||||||||||||||||||
Demand, interest-bearing | 948,217 | 1,347 | 0.56 | % | 932,996 | 1,463 | 0.62 | % | ||||||||||||||
Savings and money market | 1,388,430 | 7,595 | 2.17 | % | 1,340,419 | 8,452 | 2.50 | % | ||||||||||||||
Time deposits - under $100 | 9,743 | 33 | 1.34 | % | 10,620 | 40 | 1.49 | % | ||||||||||||||
Time deposits - $100 and over | 243,693 | 2,015 | 3.28 | % | 233,145 | 1,977 | 3.36 | % | ||||||||||||||
ICS/CDARS - interest-bearing demand, money market and time deposits | 1,016,817 | 5,097 | 1.99 | % | 982,757 | 5,837 | 2.36 | % | ||||||||||||||
Total interest-bearing deposits | 3,606,900 | 16,087 | 1.77 | % | 3,499,937 | 17,769 | 2.01 | % | ||||||||||||||
Total deposits | 4,895,841 | 16,087 | 1.30 | % | 4,687,294 | 17,769 | 1.50 | % | ||||||||||||||
Short-term borrowings | 19 | — | 0.00 | % | 26 | — | 0.00 | % | ||||||||||||||
Subordinated debt, net of issuance costs | 39,782 | 539 | 5.38 | % | 39,743 | 537 | 5.36 | % | ||||||||||||||
Total interest-bearing liabilities | 3,646,701 | 16,626 | 1.81 | % | 3,539,706 | 18,306 | 2.05 | % | ||||||||||||||
Total interest-bearing liabilities and demand, noninterest-bearing / cost of funds | 4,935,642 | 16,626 | 1.34 | % | 4,727,063 | 18,306 | 1.54 | % | ||||||||||||||
Other liabilities | 124,987 | 128,009 | ||||||||||||||||||||
Total liabilities | 5,060,629 | 4,855,072 | ||||||||||||||||||||
Shareholders’ equity | 703,611 | 696,385 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,764,240 | $ | 5,551,457 | ||||||||||||||||||
Net interest income / margin (3) | 50,475 | 3.72 | % | 46,841 | 3.60 | % | ||||||||||||||||
Less tax equivalent adjustment (3) | (53 | ) | (53 | ) | ||||||||||||||||||
Net interest income | $ | 50,422 | 3.71 | % | $ | 46,788 | 3.59 | % | ||||||||||||||
__________________________________
(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 $222,000 for the fourth quarter of 2025, compared to $246,000 for the third quarter of 2025. Prepayment fees totaled $183,000 for the fourth quarter of 2025, compared to $185,000 for the third quarter of 2025.
(3)Reflects the FTE adjustment for Federal tax-exempt income based on a 21% tax rate. This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.
For the Quarter Ended | For the Quarter Ended | |||||||||||||||||||||
December 31, 2025 | December 31, 2024 | |||||||||||||||||||||
NET INTEREST INCOME AND NET INTEREST MARGIN | Interest | Average | Interest | Average | ||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||
(in $000’s, unaudited) | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||
Assets: | ||||||||||||||||||||||
Loans, core bank | $ | 3,073,726 | $ | 42,691 | 5.51 | % | $ | 2,899,347 | $ | 39,852 | 5.47 | % | ||||||||||
Prepayment fees | — | 183 | 0.02 | % | — | 35 | 0.00 | % | ||||||||||||||
Bay View Funding factored receivables | 94,023 | 4,310 | 18.19 | % | 59,153 | 3,084 | 20.74 | % | ||||||||||||||
Purchased residential mortgages | 399,359 | 3,370 | 3.35 | % | 434,846 | 3,732 | 3.41 | % | ||||||||||||||
Loan fair value mark / accretion | (1,470 | ) | 159 | 0.02 | % | (2,357 | ) | 429 | 0.06 | % | ||||||||||||
Loans, gross (1)(2) | 3,565,638 | 50,713 | 5.64 | % | 3,390,989 | 47,132 | 5.53 | % | ||||||||||||||
Securities - taxable | 1,021,124 | 8,400 | 3.26 | % | 800,174 | 4,475 | 2.22 | % | ||||||||||||||
Securities - exempt from Federal tax (3) | 27,735 | 248 | 3.55 | % | 30,570 | 274 | 3.57 | % | ||||||||||||||
Other investments and interest-bearing deposits in other financial institutions | 771,733 | 7,740 | 3.98 | % | 1,014,253 | 12,220 | 4.79 | % | ||||||||||||||
Total interest earning assets (3) | 5,386,230 | 67,101 | 4.94 | % | 5,235,986 | 64,101 | 4.87 | % | ||||||||||||||
Cash and due from banks | 33,470 | 32,569 | ||||||||||||||||||||
Premises and equipment, net | 9,415 | 10,301 | ||||||||||||||||||||
Goodwill and other intangible assets | 172,522 | 174,401 | ||||||||||||||||||||
Other assets | 162,603 | 154,583 | ||||||||||||||||||||
Total assets | $ | 5,764,240 | $ | 5,607,840 | ||||||||||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Demand, noninterest-bearing | $ | 1,288,941 | $ | 1,222,393 | ||||||||||||||||||
Demand, interest-bearing | 948,217 | 1,347 | 0.56 | % | 906,581 | 1,452 | 0.64 | % | ||||||||||||||
Savings and money market | 1,388,430 | 7,595 | 2.17 | % | 1,339,397 | 9,090 | 2.70 | % | ||||||||||||||
Time deposits - under $100 | 9,743 | 33 | 1.34 | % | 11,388 | 49 | 1.71 | % | ||||||||||||||
Time deposits - $100 and over | 243,693 | 2,015 | 3.28 | % | 234,446 | 2,310 | 3.92 | % | ||||||||||||||
ICS/CDARS - interest-bearing demand, money market and time deposits | 1,016,817 | 5,097 | 1.99 | % | 1,057,286 | 7,009 | 2.64 | % | ||||||||||||||
Total interest-bearing deposits | 3,606,900 | 16,087 | 1.77 | % | 3,549,098 | 19,910 | 2.23 | % | ||||||||||||||
Total deposits | 4,895,841 | 16,087 | 1.30 | % | 4,771,491 | 19,910 | 1.66 | % | ||||||||||||||
Short-term borrowings | 19 | — | 0.00 | % | 28 | — | 0.00 | % | ||||||||||||||
Subordinated debt, net of issuance costs | 39,782 | 539 | 5.38 | % | 39,629 | 538 | 5.40 | % | ||||||||||||||
Total interest-bearing liabilities | 3,646,701 | 16,626 | 1.81 | % | 3,588,755 | 20,448 | 2.27 | % | ||||||||||||||
Total interest-bearing liabilities and demand, noninterest-bearing / cost of funds | 4,935,642 | 16,626 | 1.34 | % | 4,811,148 | 20,448 | 1.69 | % | ||||||||||||||
Other liabilities | 124,987 | 110,429 | ||||||||||||||||||||
Total liabilities | 5,060,629 | 4,921,577 | ||||||||||||||||||||
Shareholders’ equity | 703,611 | 686,263 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,764,240 | $ | 5,607,840 | ||||||||||||||||||
Net interest income / margin (3) | 50,475 | 3.72 | % | 43,653 | 3.32 | % | ||||||||||||||||
Less tax equivalent adjustment (3) | (53 | ) | (58 | ) | ||||||||||||||||||
Net interest income | $ | 50,422 | 3.71 | % | $ | 43,595 | 3.31 | % | ||||||||||||||
__________________________________
(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 $222,000 for the fourth quarter of 2025, compared to $167,000 for the fourth quarter of 2024. Prepayment fees totaled $183,000 for the fourth quarter of 2025, compared to $35,000 for the fourth quarter of 2024.
(3)Reflects the FTE adjustment for Federal tax-exempt income based on a 21% tax rate. This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.
For the Year Ended | For the Year Ended | |||||||||||||||||||||
December 31, 2025 | December 31, 2024 | |||||||||||||||||||||
NET INTEREST INCOME AND NET INTEREST MARGIN | Interest | Average | Interest | Average | ||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||
(in $000’s, unaudited) | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||
Assets: | ||||||||||||||||||||||
Loans, core bank | $ | 3,020,109 | $ | 166,842 | 5.52 | % | $ | 2,848,206 | $ | 155,690 | 5.47 | % | ||||||||||
Prepayment fees | — | 1,065 | 0.04 | % | — | 117 | 0.00 | % | ||||||||||||||
Bay View Funding factored receivables | 74,189 | 14,253 | 19.21 | % | 55,717 | 10,980 | 19.71 | % | ||||||||||||||
Purchased residential mortgages | 414,010 | 13,987 | 3.38 | % | 444,476 | 15,038 | 3.38 | % | ||||||||||||||
Loan fair value mark / accretion | (1,721 | ) | 676 | 0.02 | % | (2,737 | ) | 1,158 | 0.04 | % | ||||||||||||
Loans, gross (1)(2) | 3,506,587 | 196,823 | 5.61 | % | 3,345,662 | 182,983 | 5.47 | % | ||||||||||||||
Securities - taxable | 910,926 | 26,451 | 2.90 | % | 905,418 | 20,817 | 2.30 | % | ||||||||||||||
Securities - exempt from Federal tax (3) | 29,280 | 1,051 | 3.59 | % | 31,403 | 1,127 | 3.59 | % | ||||||||||||||
Other investments, interest-bearing deposits in other financial institutions and Federal funds sold | 760,977 | 32,895 | 4.32 | % | 685,099 | 35,654 | 5.20 | % | ||||||||||||||
Total interest earning assets (3) | 5,207,770 | 257,220 | 4.94 | % | 4,967,582 | 240,581 | 4.84 | % | ||||||||||||||
Cash and due from banks | 31,788 | 33,156 | ||||||||||||||||||||
Premises and equipment, net | 9,756 | 10,252 | ||||||||||||||||||||
Goodwill and other intangible assets | 173,209 | 175,220 | ||||||||||||||||||||
Other assets | 161,452 | 152,495 | ||||||||||||||||||||
Total assets | $ | 5,583,975 | $ | 5,338,705 | ||||||||||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Demand, noninterest-bearing | $ | 1,197,836 | $ | 1,174,854 | ||||||||||||||||||
Demand, interest-bearing | 943,845 | 5,732 | 0.61 | % | 916,466 | 6,439 | 0.70 | % | ||||||||||||||
Savings and money market | 1,341,411 | 32,325 | 2.41 | % | 1,175,391 | 32,734 | 2.78 | % | ||||||||||||||
Time deposits - under $100 | 10,795 | 168 | 1.56 | % | 11,112 | 184 | 1.66 | % | ||||||||||||||
Time deposits - $100 and over | 235,744 | 8,116 | 3.44 | % | 228,388 | 8,968 | 3.93 | % | ||||||||||||||
ICS/CDARS - interest-bearing demand, money market and time deposits | 1,000,406 | 23,131 | 2.31 | % | 1,007,563 | 28,574 | 2.84 | % | ||||||||||||||
Total interest-bearing deposits | 3,532,201 | 69,472 | 1.97 | % | 3,338,920 | 76,899 | 2.30 | % | ||||||||||||||
Total deposits | 4,730,037 | 69,472 | 1.47 | % | 4,513,774 | 76,899 | 1.70 | % | ||||||||||||||
Short-term borrowings | 20 | — | 0.00 | % | 24 | — | 0.00 | % | ||||||||||||||
Subordinated debt, net of issuance costs | 39,725 | 2,152 | 5.42 | % | 39,572 | 2,152 | 5.44 | % | ||||||||||||||
Total interest-bearing liabilities | 3,571,946 | 71,624 | 2.01 | % | 3,378,516 | 79,051 | 2.34 | % | ||||||||||||||
Total interest-bearing liabilities and demand, noninterest-bearing / cost of funds | 4,769,782 | 71,624 | 1.50 | % | 4,553,370 | 79,051 | 1.74 | % | ||||||||||||||
Other liabilities | 116,730 | 106,792 | ||||||||||||||||||||
Total liabilities | 4,886,512 | 4,660,162 | ||||||||||||||||||||
Shareholders’ equity | 697,463 | 678,543 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,583,975 | $ | 5,338,705 | ||||||||||||||||||
Net interest income / margin (3) | 185,596 | 3.56 | % | 161,530 | 3.25 | % | ||||||||||||||||
Less tax equivalent adjustment (3) | (221 | ) | (237 | ) | ||||||||||||||||||
Net interest income | $ | 185,375 | 3.56 | % | $ | 161,293 | 3.25 | % | ||||||||||||||
__________________________________
(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 $935,000 for the year ended December 31, 2025, compared to $628,000 for the year ended December 31, 2024. Prepayment fees totaled $1,065,000 for the year ended December 31, 2025, compared to $117,000 for the year ended December 31, 2024.
(3)Reflects the FTE adjustment for Federal tax-exempt income based on a 21% tax rate. This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Management considers adjusted net income and adjusted earnings per share, which exclude the $9.2 million of pre-tax charges primarily related to a legal settlement in the second quarter of 2025 and $2.1 million of pre-tax merger-related costs in the fourth quarter of 2025, for the year ended December 31, 2025, as a useful measurement of the Company’s profitability compared to other periods presented.
During the second quarter of 2025, the Company recorded pre-tax expenses of $9.2 million included in the other noninterest expense on the Company’s consolidated income statement, primarily due to charges related to the settlement of certain litigation matters, including the anticipated settlement of a previously disclosed class action and California Private Attorneys General Act (“PAGA”) lawsuit that alleged the violation of certain California wage-and-hour and related laws and regulations, and charges related to the planned closure of a Bank branch. During the fourth quarter of 2025, the Company recorded pre-tax expenses of $2.1 million included in the other noninterest expense on the Company’s consolidated income statement, primarily due to charges related to investment banker and legal fees resulting from the pending merger with CVBF. Certain merger-related costs are not tax deductible.
The following table summarizes components of net income and diluted earnings per share for the periods indicated:
NET INCOME AND | For the Quarter Ended: | |||||||||||||||||||
DILUTED EARNINGS PER SHARE | December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2025 | 2025 | 2024 | |||||||||||||||
Reported net income (GAAP) | $ | 15,117 | $ | 14,698 | $ | 6,389 | $ | 11,626 | $ | 10,621 | ||||||||||
Add: pre-tax legal settlement, merger and other charges | 2,067 | — | 9,184 | — | — | |||||||||||||||
Less: related income taxes | (15 | ) | — | (2,618 | ) | — | — | |||||||||||||
Adjusted net income (non-GAAP) | $ | 17,169 | $ | 14,698 | $ | 12,955 | $ | 11,626 | $ | 10,621 | ||||||||||
Weighted average shares outstanding - diluted | 61,701,068 | 61,616,785 | 61,624,600 | 61,708,361 | 61,679,735 | |||||||||||||||
Reported diluted earnings per share (GAAP) | $ | 0.25 | $ | 0.24 | $ | 0.10 | $ | 0.19 | $ | 0.17 | ||||||||||
Adjusted diluted earnings per share (non-GAAP) | $ | 0.28 | $ | 0.24 | $ | 0.21 | $ | 0.19 | $ | 0.17 | ||||||||||
NET INCOME AND | For the Year Ended: | |||||||
DILUTED EARNINGS PER SHARE | December 31, | December 31, | ||||||
(in $000’s, except per share amounts, unaudited) | 2025 | 2024 | ||||||
Reported net income (GAAP) | $ | 47,830 | $ | 40,528 | ||||
Add: pre-tax legal settlement, merger and other charges | 11,251 | — | ||||||
Less: related income taxes | (2,633 | ) | — | |||||
Adjusted net income (non-GAAP) | $ | 56,448 | $ | 40,528 | ||||
Weighted average shares outstanding - diluted | 61,702,095 | 61,527,372 | ||||||
Reported diluted earnings per share (GAAP) | $ | 0.78 | $ | 0.66 | ||||
Adjusted diluted earnings per share (non-GAAP) | $ | 0.91 | $ | 0.66 | ||||
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:
End of Period: | ||||||||||||||||||||
TANGIBLE BOOK VALUE PER SHARE | December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2025 | 2025 | 2024 | |||||||||||||||
Capital components: | ||||||||||||||||||||
Total equity (GAAP) | $ | 708,566 | $ | 700,010 | $ | 694,704 | $ | 696,190 | $ | 689,727 | ||||||||||
Less: preferred stock | — | — | — | — | — | |||||||||||||||
Total common equity | 708,566 | 700,010 | 694,704 | 696,190 | 689,727 | |||||||||||||||
Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | ||||||||||
Less: other intangible assets | (4,625 | ) | (5,078 | ) | (5,532 | ) | (5,986 | ) | (6,439 | ) | ||||||||||
Reported tangible common equity (non-GAAP) | 536,310 | 527,301 | 521,541 | 522,573 | 515,657 | |||||||||||||||
Add: pre-tax legal settlement, merger and other charges | 11,251 | 9,184 | 9,184 | — | — | |||||||||||||||
Less: related income taxes | (2,633 | ) | (2,618 | ) | (2,618 | ) | — | — | ||||||||||||
Adjusted tangible common equity (non-GAAP) | $ | 544,928 | $ | 533,867 | $ | 528,107 | $ | 522,573 | $ | 515,657 | ||||||||||
Common shares outstanding at period-end | 61,368,708 | 61,277,541 | 61,446,763 | 61,611,121 | 61,348,095 | |||||||||||||||
Reported tangible book value per share (non-GAAP) | $ | 8.74 | $ | 8.61 | $ | 8.49 | $ | 8.48 | $ | 8.41 | ||||||||||
Adjusted tangible book value per share (non-GAAP) | $ | 8.88 | $ | 8.71 | $ | 8.59 | $ | 8.48 | $ | 8.41 | ||||||||||
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 EQUITY AND AVERAGE ASSETS | For the Quarter Ended: | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2025 | 2025 | 2024 | ||||||||||||||||
Reported net income (GAAP) | $ | 15,117 | $ | 14,698 | $ | 6,389 | $ | 11,626 | $ | 10,621 | |||||||||||
Add: pre-tax legal settlement, merger and other charges | 2,067 | — | 9,184 | — | — | ||||||||||||||||
Less: related income taxes | (15 | ) | — | (2,618 | ) | — | — | ||||||||||||||
Adjusted net income (non-GAAP) | $ | 17,169 | $ | 14,698 | $ | 12,955 | $ | 11,626 | $ | 10,621 | |||||||||||
Average tangible common equity components: | |||||||||||||||||||||
Average equity (GAAP) | $ | 703,611 | $ | 696,385 | $ | 697,016 | $ | 692,733 | $ | 686,263 | |||||||||||
Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
Less: other intangible assets | (4,891 | ) | (5,358 | ) | (5,817 | ) | (6,264 | ) | (6,770 | ) | |||||||||||
Total average tangible common equity (non-GAAP) | $ | 531,089 | $ | 523,396 | $ | 523,568 | $ | 518,838 | $ | 511,862 | |||||||||||
Reported annualized return on average equity (GAAP) | 8.52 | % | 8.37 | % | 3.68 | % | 6.81 | % | 6.16 | % | |||||||||||
Adjusted annualized return on average equity (non-GAAP) | 9.68 | % | 8.37 | % | 7.45 | % | 6.81 | % | 6.16 | % | |||||||||||
Reported annualized return on average tangible common equity (non-GAAP) | 11.29 | % | 11.14 | % | 4.89 | % | 9.09 | % | 8.25 | % | |||||||||||
Adjusted annualized return on average tangible common equity (non-GAAP) | 12.83 | % | 11.14 | % | 9.92 | % | 9.09 | % | 8.25 | % | |||||||||||
Average Assets (GAAP) | $ | 5,764,240 | $ | 5,551,457 | $ | 5,458,420 | $ | 5,559,896 | $ | 5,607,840 | |||||||||||
Reported annualized return on average assets (GAAP) | 1.04 | % | 1.05 | % | 0.47 | % | 0.85 | % | 0.75 | % | |||||||||||
Adjusted annualized return on average assets (non-GAAP) | 1.18 | % | 1.05 | % | 0.95 | % | 0.85 | % | 0.75 | % | |||||||||||
RETURN ON AVERAGE TANGIBLE COMMON | For the Year Ended: | ||||||||
EQUITY AND AVERAGE ASSETS | December 31, | December 31, | |||||||
(in $000’s, unaudited) | 2025 | 2024 | |||||||
Reported net income (GAAP) | $ | 47,830 | $ | 40,528 | |||||
Add: pre-tax legal settlement, merger and other charges | 11,251 | — | |||||||
Less: related income taxes | (2,633 | ) | — | ||||||
Adjusted net income (non-GAAP) | $ | 56,448 | $ | 40,528 | |||||
Average tangible common equity components: | |||||||||
Average equity (GAAP) | $ | 697,463 | $ | 678,543 | |||||
Less: goodwill | (167,631 | ) | (167,631 | ) | |||||
Less: other intangible assets | (5,578 | ) | (7,589 | ) | |||||
Total average tangible common equity (non-GAAP) | $ | 524,254 | $ | 503,323 | |||||
Reported annualized return on average equity (GAAP) | 6.86 | % | 5.97 | % | |||||
Adjusted annualized return on average equity (non-GAAP) | 8.09 | % | 5.97 | % | |||||
Reported annualized return on average tangible common equity (non-GAAP) | 9.12 | % | 8.05 | % | |||||
Adjusted annualized return on average tangible common equity (non-GAAP) | 10.77 | % | 8.05 | % | |||||
Average Assets (GAAP) | $ | 5,583,975 | $ | 5,338,705 | |||||
Reported annualized return on average assets (GAAP) | 0.86 | % | 0.76 | % | |||||
Adjusted annualized return on average assets (non-GAAP) | 1.01 | % | 0.76 | % | |||||
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:
NET INTEREST INCOME | For the Quarter Ended: | ||||||||||||||||||||
AND NET INTEREST MARGIN | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2025 | 2025 | 2024 | ||||||||||||||||
Net interest income before credit losses on loans (GAAP) | $ | 50,422 | $ | 46,788 | $ | 44,805 | $ | 43,360 | $ | 43,595 | |||||||||||
Tax-equivalent adjustment on securities - exempt from Federal tax | 53 | 53 | 57 | 58 | 58 | ||||||||||||||||
Net interest income, FTE (non-GAAP) | $ | 50,475 | $ | 46,841 | $ | 44,862 | $ | 43,418 | $ | 43,653 | |||||||||||
Average balance of total interest earning assets | $ | 5,386,230 | $ | 5,167,710 | $ | 5,087,089 | $ | 5,188,317 | $ | 5,235,986 | |||||||||||
Net interest margin (annualized net interest income divided by the average balance of total interest earnings assets) (GAAP) | 3.71 | % | 3.59 | % | 3.53 | % | 3.39 | % | 3.31 | % | |||||||||||
Net interest margin, FTE (annualized net interest income, FTE, divided by the average balance of total earnings assets) (non-GAAP) | 3.72 | % | 3.60 | % | 3.54 | % | 3.39 | % | 3.32 | % | |||||||||||
NET INTEREST INCOME | For the Year Ended: | ||||||||
AND NET INTEREST MARGIN | December 31, | December 31, | |||||||
(in $000’s, unaudited) | 2025 | 2024 | |||||||
Net interest income before credit losses on loans (GAAP) | $ | 185,375 | $ | 161,293 | |||||
Tax-equivalent adjustment on securities - exempt from Federal tax | 221 | 237 | |||||||
Net interest income, FTE (non-GAAP) | $ | 185,596 | $ | 161,530 | |||||
Average balance of total interest earning assets | $ | 5,207,770 | $ | 4,967,582 | |||||
Net interest margin (annualized net interest income divided by the average balance of total interest earnings assets) (GAAP) | 3.56 | % | 3.25 | % | |||||
Net interest margin, FTE (annualized net interest income, FTE, divided by the average balance of total interest earnings assets) (non-GAAP) | 3.56 | % | 3.25 | % | |||||
Management views its PPNR as a key metric for assessing the Company’s earnings power. The following table summarizes the components of PPNR for the periods indicated:
For the Quarter Ended: | ||||||||||||||||||||
PRE-PROVISION NET REVENUE | December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2025 | 2025 | 2024 | |||||||||||||||
Net interest income before credit losses on loans | $ | 50,422 | $ | 46,788 | $ | 44,805 | $ | 43,360 | $ | 43,595 | ||||||||||
Noninterest income | 3,199 | 3,217 | 2,977 | 2,696 | 2,775 | |||||||||||||||
Total revenue | 53,621 | 50,005 | 47,782 | 46,056 | 46,370 | |||||||||||||||
Less: Noninterest expense | (31,042 | ) | (29,026 | ) | (38,335 | ) | (29,456 | ) | (30,304 | ) | ||||||||||
Reported PPNR | 22,579 | 20,979 | 9,447 | 16,600 | 16,066 | |||||||||||||||
Add: pre-tax legal settlement, merger and other charges | 2,067 | — | 9,184 | — | — | |||||||||||||||
Adjusted PPNR | $ | 24,646 | $ | 20,979 | $ | 18,631 | $ | 16,600 | $ | 16,066 | ||||||||||
For the Year Ended: | ||||||||
PRE-PROVISION NET REVENUE | December 31, | December 31, | ||||||
(in $000’s, unaudited) | 2025 | 2024 | ||||||
Net interest income before credit losses on loans | $ | 185,375 | $ | 161,293 | ||||
Noninterest income | 12,089 | 11,103 | ||||||
Total revenue | 197,464 | 172,396 | ||||||
Less: Noninterest expense | (127,859 | ) | (113,583 | ) | ||||
Reported PPNR | 69,605 | 58,813 | ||||||
Add: pre-tax legal settlement, merger and other charges | 11,251 | — | ||||||
Adjusted PPNR | $ | 80,856 | $ | 58,813 | ||||
The efficiency ratio, which is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income), 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:
NONINTEREST EXPENSE AND | For the Quarter Ended: | ||||||||||||||||||||
EFFICIENCY RATIO | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2025 | 2025 | 2024 | ||||||||||||||||
Reported noninterest expense (GAAP) | $ | 31,042 | $ | 29,026 | $ | 38,335 | $ | 29,456 | $ | 30,304 | |||||||||||
Add: pre-tax legal settlement, merger and other charges | (2,067 | ) | — | (9,184 | ) | — | — | ||||||||||||||
Adjusted noninterest expense (non-GAAP) | $ | 28,975 | $ | 29,026 | $ | 29,151 | $ | 29,456 | $ | 30,304 | |||||||||||
Net interest income before credit losses on loans | $ | 50,422 | $ | 46,788 | $ | 44,805 | $ | 43,360 | $ | 43,595 | |||||||||||
Noninterest income | 3,199 | 3,217 | 2,977 | 2,696 | 2,775 | ||||||||||||||||
Total revenue | $ | 53,621 | $ | 50,005 | $ | 47,782 | $ | 46,056 | $ | 46,370 | |||||||||||
Reported efficiency ratio (noninterest expense divided by total revenue) (GAAP) | 57.89 | % | 58.05 | % | 80.23 | % | 63.96 | % | 65.35 | % | |||||||||||
Adjusted efficiency ratio (adjusted noninterest expense divided by total revenue) (non-GAAP) | 54.04 | % | 58.05 | % | 61.01 | % | 63.96 | % | 65.35 | % | |||||||||||
NONINTEREST EXPENSE AND | For the Year Ended: | ||||||||
EFFICIENCY RATIO | December 31, | December 31, | |||||||
(in $000’s, unaudited) | 2025 | 2024 | |||||||
Reported noninterest expense (GAAP) | $ | 127,859 | $ | 113,583 | |||||
Add: pre-tax legal settlement, merger and other charges | (11,251 | ) | — | ||||||
Adjusted noninterest expense (non-GAAP) | $ | 116,608 | $ | 113,583 | |||||
Net interest income before credit losses on loans | $ | 185,375 | $ | 161,293 | |||||
Noninterest income | 12,089 | 11,103 | |||||||
Total revenue | $ | 197,464 | $ | 172,396 | |||||
Reported efficiency ratio (noninterest expense divided by total revenue) (GAAP) | 64.75 | % | 65.88 | % | |||||
Adjusted efficiency ratio (adjusted noninterest expense divided by total revenue) (non-GAAP) | 59.05 | % | 65.88 | % | |||||
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 | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2025 | 2025 | 2024 | ||||||||||||||||
Heritage Commerce Corp: | |||||||||||||||||||||
Capital components: | |||||||||||||||||||||
Total equity (GAAP) | $ | 708,566 | $ | 700,010 | $ | 694,704 | $ | 696,190 | $ | 689,727 | |||||||||||
Less: preferred stock | — | — | — | — | — | ||||||||||||||||
Total common equity | 708,566 | 700,010 | 694,704 | 696,190 | 689,727 | ||||||||||||||||
Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
Less: other intangible assets | (4,625 | ) | (5,078 | ) | (5,532 | ) | (5,986 | ) | (6,439 | ) | |||||||||||
Total tangible common equity (non-GAAP) | $ | 536,310 | $ | 527,301 | $ | 521,541 | $ | 522,573 | $ | 515,657 | |||||||||||
Asset components: | |||||||||||||||||||||
Total assets (GAAP) | $ | 5,764,697 | $ | 5,623,720 | $ | 5,467,237 | $ | 5,514,255 | $ | 5,645,006 | |||||||||||
Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
Less: other intangible assets | (4,625 | ) | (5,078 | ) | (5,532 | ) | (5,986 | ) | (6,439 | ) | |||||||||||
Total tangible / assets (non-GAAP) | $ | 5,592,441 | $ | 5,451,011 | $ | 5,294,074 | $ | 5,340,638 | $ | 5,470,936 | |||||||||||
Tangible common equity / tangible assets (non-GAAP) | 9.59 | % | 9.67 | % | 9.85 | % | 9.78 | % | 9.43 | % | |||||||||||
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 | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(in $000’s, unaudited) | 2025 | 2025 | 2025 | 2025 | 2024 | ||||||||||||||||
Heritage Bank of Commerce: | |||||||||||||||||||||
Capital components: | |||||||||||||||||||||
Total equity (GAAP) | $ | 733,802 | $ | 724,780 | $ | 717,103 | $ | 715,605 | $ | 709,379 | |||||||||||
Less: preferred stock | — | — | — | — | — | ||||||||||||||||
Total common equity | 733,802 | 724,780 | 717,103 | 715,605 | 709,379 | ||||||||||||||||
Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
Less: other intangible assets | (4,625 | ) | (5,078 | ) | (5,532 | ) | (5,986 | ) | (6,439 | ) | |||||||||||
Total tangible common equity (non-GAAP) | $ | 561,546 | $ | 552,071 | $ | 543,940 | $ | 541,988 | $ | 535,309 | |||||||||||
Asset components: | |||||||||||||||||||||
Total assets (GAAP) | $ | 5,760,786 | $ | 5,620,681 | $ | 5,464,618 | $ | 5,512,160 | $ | 5,641,646 | |||||||||||
Less: goodwill | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | (167,631 | ) | |||||||||||
Less: other intangible assets | (4,625 | ) | (5,078 | ) | (5,532 | ) | (5,986 | ) | (6,439 | ) | |||||||||||
Total tangible assets (non-GAAP) | $ | 5,588,530 | $ | 5,447,972 | $ | 5,291,455 | $ | 5,338,543 | $ | 5,467,576 | |||||||||||
Tangible common equity / tangible assets (non-GAAP) | 10.05 | % | 10.13 | % | 10.28 | % | 10.15 | % | 9.79 | % | |||||||||||