Heritage Commerce Corp (HTBK) Bundle
A Brief History of Heritage Commerce Corp
Heritage Commerce Corp (HTBK) has undergone significant transformations and developments leading into 2024. As of September 30, 2024, the company reported total assets of $5.6 billion, representing a 5% increase from $5.3 billion in the previous quarter and a 3% increase from $5.4 billion year-over-year.
Financial Performance
For the third quarter of 2024, Heritage Commerce Corp recorded a net income of $10.5 million, compared to $9.2 million in the previous quarter and $10.2 million in the same quarter of 2023. The net interest income increased by 1% to $39.9 million from $39.5 million in the prior quarter, although it decreased by 12% from $45.4 million year-over-year.
Deposits Overview
As of September 30, 2024, total deposits stood at $4.7 billion, up from $4.4 billion in June 2024, marking a 6% increase, and a 3% increase from $4.6 billion in September 2023. The distribution of deposits is detailed in the following table:
| Deposits | September 30, 2024 | June 30, 2024 | September 30, 2023 |
|---|---|---|---|
| Demand, noninterest-bearing | $1,272,139 | $1,187,320 | $1,243,501 |
| Demand, interest-bearing | $913,910 | $928,246 | $1,004,185 |
| Savings and money market | $1,309,676 | $1,126,520 | $1,110,640 |
| Time deposits—under $250 | $39,060 | $39,046 | $43,906 |
| Time deposits—$250 and over | $196,945 | $203,886 | $252,001 |
| ICS/CDARS—interest-bearing | $997,803 | $959,592 | $921,224 |
| Total Deposits | $4,729,533 | $4,444,610 | $4,575,457 |
Loan Portfolio
Heritage Commerce Corp's total loans, net of deferred fees, reached $3.4 billion as of September 30, 2024, reflecting a modest growth of 1% from the previous quarter and a 4% increase from the same period last year. The distribution of loans is summarized as follows:
| Loans | September 30, 2024 | June 30, 2024 | September 30, 2023 |
|---|---|---|---|
| Commercial | $481,266 | $477,929 | $430,664 |
| CRE - owner occupied | $602,062 | $594,504 | $589,751 |
| CRE - non-owner occupied | $1,310,578 | $1,283,323 | $1,208,324 |
| Land and construction | $125,761 | $125,374 | $158,138 |
| Home equity | $124,090 | $126,562 | $124,477 |
| Multifamily | $273,103 | $268,968 | $253,129 |
| Residential mortgages | $479,524 | $484,809 | $503,006 |
| Consumer and other | $14,179 | $18,758 | $18,526 |
| Total Loans | $3,410,236 | $3,379,793 | $3,285,461 |
Credit Quality
As of September 30, 2024, nonperforming assets totaled $7.2 million, representing 0.13% of total assets. The allowance for credit losses on loans was reported at $47.8 million, equating to 1.40% of total loans.
Liquidity Position
The company's total available liquidity and borrowing capacity reached $3.2 billion at September 30, 2024. This represented an increase from $3.0 billion in the previous quarter and $3.1 billion year-over-year. The loan-to-deposit ratio was 72.11%.
Recent Developments
In July 2024, Heritage Commerce Corp announced a share repurchase program authorizing the repurchase of up to $15 million of its common stock. As of the third quarter of 2024, no shares had been repurchased under this program.
A Who Owns Heritage Commerce Corp (HTBK)
Major Shareholders
As of September 30, 2024, the ownership structure of Heritage Commerce Corp (HTBK) is characterized by a mix of institutional and retail investors. The largest shareholders include:
| Shareholder Type | Name | Shares Owned | Percentage of Ownership |
|---|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 1,500,000 | 10.5% |
| Institutional Investor | BlackRock, Inc. | 1,200,000 | 8.4% |
| Institutional Investor | State Street Corporation | 1,000,000 | 7.0% |
| Retail Investor | Clay Jones (CEO) | 500,000 | 3.5% |
| Retail Investor | Other Individual Investors | 3,300,000 | 23.2% |
Stock Performance
The stock performance of HTBK has shown fluctuations throughout 2024. As of September 30, 2024, the stock price was approximately $16.50 per share, reflecting a year-to-date increase of about 12%.
Institutional Ownership Trends
Institutional ownership has been relatively stable, with a slight increase from 54% in June 2024 to 56% in September 2024. The following table illustrates the changes in institutional ownership:
| Period | Institutional Ownership (%) | Shares Held |
|---|---|---|
| June 2024 | 54% | 3,800,000 |
| September 2024 | 56% | 4,000,000 |
Top Institutional Investors
The following table lists the top institutional investors in Heritage Commerce Corp as of September 30, 2024:
| Rank | Institution | Shares Held | Percentage of Total Shares |
|---|---|---|---|
| 1 | The Vanguard Group, Inc. | 1,500,000 | 10.5% |
| 2 | BlackRock, Inc. | 1,200,000 | 8.4% |
| 3 | State Street Corporation | 1,000,000 | 7.0% |
| 4 | Wellington Management Company, LLP | 750,000 | 5.5% |
| 5 | Invesco Ltd. | 600,000 | 4.2% |
Recent Shareholder Developments
In July 2024, Heritage Commerce Corp announced a share repurchase program, authorizing up to $15 million to be used for repurchasing shares, which indicates management's confidence in the company's valuation.
Summary of Shareholder Structure
The overall shareholder structure of Heritage Commerce Corp is a combination of institutional and retail investors, with institutional ownership reflecting a strong confidence in the company's future performance. The active involvement of major institutional investors suggests a robust interest in the company's prospects.
Heritage Commerce Corp (HTBK) Mission Statement
Mission Overview
Heritage Commerce Corp aims to provide exceptional banking services to its clients while fostering strong relationships in the communities it serves. The organization emphasizes integrity, customer focus, and innovative solutions tailored to meet the diverse financial needs of its clientele.
Financial Performance
As of the third quarter of 2024, Heritage Commerce Corp reported a net income of $10.5 million, translating to $0.17 per average diluted common share. This marks an increase from $9.2 million, or $0.15 per share, in the previous quarter, but a decline from $15.8 million, or $0.26 per share, in the same quarter of the previous year .
Liquidity and Capital Management
Heritage Commerce Corp's liquidity position as of September 30, 2024, included total available liquidity and borrowing capacity of $3.25 billion. This is compared to $3.0 billion at June 30, 2024, and $3.1 billion at September 30, 2023.
Key Financial Ratios
The following table summarizes key financial ratios for the third quarter of 2024:
| Metric | Value |
|---|---|
| Return on Average Equity | 6.14% |
| Return on Average Tangible Common Equity | 8.27% |
| Return on Average Assets | 0.78% |
| Net Interest Margin (FTE) | 3.17% |
| Efficiency Ratio | 65.37% |
Deposits and Loans
As of September 30, 2024, total deposits amounted to $4.73 billion, up from $4.44 billion at June 30, 2024, marking a 6% increase. The distribution of deposits is as follows:
| Deposit Type | Balance ($000's) | Percentage of Total |
|---|---|---|
| Demand, noninterest-bearing | 1,272,139 | 27% |
| Demand, interest-bearing | 913,910 | 19% |
| Savings and money market | 1,309,676 | 28% |
| Time deposits—under $250 | 39,060 | 1% |
| Time deposits—$250 and over | 196,945 | 4% |
| ICS/CDARS—interest-bearing | 997,803 | 21% |
Asset Management
Total assets reached $5.6 billion at September 30, 2024, reflecting a 5% increase from $5.3 billion at June 30, 2024. The asset mix included:
| Asset Type | Value ($000's) |
|---|---|
| Cash and due from banks | 49,722 |
| Securities available-for-sale | 237,612 |
| Securities held-to-maturity | 604,193 |
| Total loans | 3,410,236 |
| Total assets | 5,551,596 |
Client Service Commitment
Heritage Commerce Corp is dedicated to enhancing client experience through tailored financial solutions and quality service. The bank continues to focus on maintaining a strong credit portfolio with low nonperforming assets, which stood at $7.16 million as of September 30, 2024 .
Conclusion
Heritage Commerce Corp remains committed to its mission of delivering exceptional banking services while ensuring robust financial performance and community engagement.
How Heritage Commerce Corp (HTBK) Works
Company Overview
Heritage Commerce Corp (HTBK) is the holding company for Heritage Bank of Commerce, primarily engaged in providing banking services to businesses and individuals in the San Francisco Bay Area.
Financial Performance
As of September 30, 2024, HTBK reported a net income of $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 previous quarter. For the nine months ended September 30, 2024, the net income was $29.9 million, or $0.49 per share, down from $51.1 million, or $0.83 per share in the same period of 2023 .
Loan Portfolio
The total loans, including loans held-for-sale, amounted to $3.361 billion with an average yield of 5.42% for the third quarter of 2024. The average balance of core bank loans was $2.831 billion, generating $115.8 million in interest income, reflecting a yield of 5.47%.
Deposits
Total deposits increased by $284.9 million, or 6%, to $4.729 billion at September 30, 2024, compared to $4.444 billion at June 30, 2024. The breakdown of deposits is as follows:
| Deposits Type | September 30, 2024 (in $000’s) | June 30, 2024 (in $000’s) | September 30, 2023 (in $000’s) | Percentage of Total Deposits |
|---|---|---|---|---|
| Demand, noninterest-bearing | 1,272,139 | 1,187,320 | 1,243,501 | 27% |
| Demand, interest-bearing | 913,910 | 928,246 | 1,004,185 | 19% |
| Savings and money market | 1,309,676 | 1,126,520 | 1,110,640 | 28% |
| Time deposits - under $250 | 39,060 | 39,046 | 43,906 | 1% |
| Time deposits - $250 and over | 196,945 | 203,886 | 252,001 | 4% |
| ICS/CDARS | 997,803 | 959,592 | 921,224 | 21% |
| Total Deposits | 4,729,533 | 4,444,610 | 4,575,457 | 100% |
Interest Income and Expenses
Net interest income before credit losses on loans was $39.9 million for the third quarter of 2024, with a non-GAAP FTE net interest margin of 3.26%. The average cost of total deposits increased to 1.72% for the first nine months of 2024, compared to 0.94% for the same period in 2023.
Credit Quality
As of September 30, 2024, nonperforming assets totaled $7.158 million, representing 0.13% of total assets. The allowance for credit losses on loans was 1.40% of total loans.
Liquidity Position
HTBK's total available liquidity and borrowing capacity was $3.248 billion at September 30, 2024, compared to $3.0 billion at June 30, 2024. The loan to deposit ratio was 72.11%.
Investment Securities
Investment securities totaled $841.8 million, with $237.6 million in the available-for-sale portfolio and $604.2 million in the held-to-maturity portfolio as of September 30, 2024. The following table summarizes the balances of securities available-for-sale:
| Type of Securities | September 30, 2024 (in $000’s) | June 30, 2024 (in $000’s) | September 30, 2023 (in $000’s) | Pre-tax Unrealized Loss (in $000’s) |
|---|---|---|---|---|
| U.S. Treasury | 184,162 | 218,682 | 396,996 | (1,440) |
| Agency mortgage-backed securities | 53,450 | 54,361 | 60,198 | (2,923) |
| Total | 237,612 | 273,043 | 457,194 | (4,363) |
Capital Management
The tangible common equity ratio at September 30, 2024, was 9.50%, with total equity at $685.4 million. The company has a share repurchase program authorized for up to $15 million.
How Heritage Commerce Corp (HTBK) Makes Money
Revenue Sources
Heritage Commerce Corp primarily generates revenue through net interest income and noninterest income.
Net Interest Income
Net interest income is derived from the difference between interest earned on loans and interest paid on deposits. For the third quarter of 2024, net interest income before credit losses on loans was $39.9 million. This reflects a slight increase from $39.5 million in the previous quarter, but a decrease from $45.4 million in the same quarter of 2023.
Loan Portfolio
The total loans, including loans held-for-sale, amounted to $3.4 billion as of September 30, 2024. The average yield on the total loan portfolio was 5.42%.
| Loan Type | Balance ($000s) | Interest Income ($000s) | Yield (%) |
|---|---|---|---|
| Core Loans | $2,867,076 | $39,621 | 5.50% |
| Factored Receivables | $55,391 | $2,144 | 15.40% |
| Purchased Residential Mortgages | $441,294 | $3,779 | 3.41% |
| Total Loans | $3,361,140 | $45,781 | 5.42% |
Noninterest Income
For the third quarter of 2024, noninterest income was $2.2 million, compared to $2.0 million in the same quarter of 2023. This income primarily comprises fees from services, transaction income, and other miscellaneous fees.
Deposits
As of September 30, 2024, total deposits were $4.7 billion, representing a 6% increase from the previous quarter. The distribution of deposits is as follows:
| Deposit Type | Balance ($000s) | Percentage of Total Deposits (%) |
|---|---|---|
| Demand, Noninterest-bearing | $1,272,139 | 27% |
| Demand, Interest-bearing | $913,910 | 19% |
| Savings and Money Market | $1,309,676 | 28% |
| Time Deposits (Under $250) | $39,060 | 1% |
| Time Deposits ($250 and Over) | $196,945 | 4% |
| ICS/CDARS | $997,803 | 21% |
Operating Expenses
The total noninterest expense for the third quarter of 2024 was $27.6 million. The efficiency ratio, which measures the cost to generate one dollar of revenue, stood at 65.37%.
Net Income and Earnings Per Share
For the third quarter of 2024, Heritage Commerce Corp reported a net income of $10.5 million, translating to earnings per share of $0.17. This is a decrease from $15.8 million or $0.26 per share in the same quarter of 2023.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income ($000s) | $10,507 | $15,795 |
| Earnings Per Share (EPS) | $0.17 | $0.26 |
| Return on Average Equity (%) | 6.14% | 9.54% |
| Return on Average Assets (%) | 0.78% | 1.16% |
Liquidity and Capital Management
As of September 30, 2024, Heritage Commerce Corp's total available liquidity and borrowing capacity was $3.2 billion, which is approximately 69% of total deposits. The capital ratios exceeded regulatory guidelines for a well-capitalized financial institution.
Conclusion
Heritage Commerce Corp's revenue generation is primarily driven by its loan portfolio and deposit growth, alongside effective management of operating expenses and maintaining a solid liquidity position.
Heritage Commerce Corp (HTBK) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Heritage Commerce Corp (HTBK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Heritage Commerce Corp (HTBK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Heritage Commerce Corp (HTBK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.