UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 27, 1999
Heritage Commerce Corp
(Exact name of registrant as specified in its charter)
CA 00-23877 77-0469558
(State of other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
150 Almaden Blvd., San Jose, CA 95113
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 947-6900
None
Former name or former address, if changed since last report.)
Item 5. Other Events.
Heritage Commerce Corp reports Financial
Results for the year ended December 31, 1998
and Announces a 3 for 2 Stock Split
Heritage Commerce Corp (the "Company") (Nasdaq: HTBK)
today reported consolidated earnings of $2,150,000, or $0.55
per diluted share ($0.37 on a split adjusted basis), for the
year ended December 31, 1998. This compares to $1,565,000,
or $0.45 per diluted share ($0.30 on a split adjusted basis)
in the prior year period. Annualized year to date return on
average assets and return on average equity were 0.65% and
8.25% respectively for the year ended December 31, 1998
compared with returns of 0.74% and 7.38% respectively for
the year ended December 31, 1997.
For the year, earnings show an increase of $585,000 or
37% over those of the prior year. For the year, net interest
income grew by $6,906,000 or 57%; noninterest income grew by
$1,113,000 or 189% and noninterest expense grew by
$6,438,000 or 70% compared to December 31, 1997. The
Company's net interest margin was 6.33% for the year ended
December 31, 1998 compared with 6.23% for the year ended
December 31, 1997. This increase in net interest margin can
be attributed to decreases in the rates paid on interest
bearing deposits and to an improved mix of interest earning
assets.
Total assets as of December 31, 1998 were
$404,931,000, an increase of $137,356,000, or 51%, from
December 31, 1997. At December 31, 1998, total loans were
$252,765,000 in addition to credit card receivables held for
sale of $16,620,000, and deposits were $350,047,000 in
addition to deposits held for sale of $18,911,000. During
the year ended December 31, 1998 loans and deposits grew by
$123,995,000, or 96%, and $107,069,000, or 44%,
respectively, over the year ended December 31, 1997.
The Company's allowance for loan losses was
$3,825,000, or 1.51%, of total loans as of December 31,
1998. This compares with an allowance for loan losses of
$2,285,000, or 1.77%, of total loans as of December 31,
1997. The Company's nonperforming assets increased to
$1,288,000 as of December 31, 1998 from zero at December 31,
1997.
The Company's capital at December 31, 1998 stood at
$30,697,000 compared with $22,336,000 as of December 31,
1997, a 37% increase. During 1998, the Company completed an
offering of 387,096 common shares (580,644 on a split
adjusted basis) at $15.50 per share ($10.33 per share on a
split adjusted basis), netting $5,846,000 of new capital.
Book value per share totaled $8.29 ($5.53 on a split
adjusted basis) as of December 31, 1998. The Company's
leverage capital ratio stood at 9.0% at December 31, 1998.
This compares with a leverage ratio of 10.3% as of December
31, 1997.
Heritage Commerce Corp has also announced that the
Company's Board of Directors has declared a 3 for 2 stock
split on Heritage Commerce Corp Common Stock, payable to
shareholders of record as of February 5, 1999. The shares of
Common Stock payable as a result of the stock split will be
disbursed to shareholders on or about February 19, 1999. "We
are pleased to punctuate a successful 1998 with the
declaration of a 3 for 2 stock split to our shareholders,"
stated John Rossell, President & Chief Executive Officer.
"Their support and confidence since Heritage opened for
business in June of 1994 have been essential to our ongoing
success."
During 1998, the Company's common stock was approved
for listing on the Nasdaq National Market under the symbol
"HTBK."
Heritage Commerce Corp, a bank holding company
established February 17, 1998, is the parent company of two
financial institutions: Heritage Bank of Commerce, a
commercial bank located in San Jose, and Heritage Bank East
Bay, located in the city of Fremont, with an office in San
Ramon. For further information about the Company's financial
performance, contact John Rossell, Chief Executive Officer,
at (408) 947-6900, or visit the Company's web site at
www.heritage-bank.com.
Forward Looking Statement Disclaimer
This release may contain forward-looking statements
that are subject to risks and uncertainties. Such risks and
uncertainties may include but are not necessarily limited to
fluctuations in interest rates, inflation, government
regulations and general economic conditions, and competition
within the business areas in which the Company is conducting
its operations, including the real estate market in
California and other factors beyond the Company's control.
Such risks and uncertainties could cause results for
subsequent interim periods or for the entire year to differ
materially from those indicated. For a discussion of factors
which could cause results to differ, please see the
Company's reports on Forms 10-K and 10-Q as filed with the
Securities and Exchange Commission and the Company's press
releases. Readers should not place undue reliance on the
forward-looking statements, which reflect management's view
only as of the date hereof. The Company undertakes no
obligation to publicly revise these forward-looking
statements to reflect subsequent events or circumstances.
<TABLE>
<CAPTION>
Heritage Commerce Corp
(unaudited)
Three Months Ended Year Ended
December 31 December 31
(in thousands, except per share amounts) 1998 1997 1998 1997 Percent Change
<S> <C> <C> <C> <C> <C>
Statement of Income Data
Net Interest Income 5,485 3,631 18,953 12,047 57%
Provision for Loan Losses 516 455 1,576 1,060 49%
Noninterest Income 921 176 1,703 590 189%
Noninterest expense 4,978 2,700 15,606 9,168 70%
Net Income 592 424 2,150 1,565 37%
Per Share Data
Earnings Per Share
Basic 0.16 0.13 0.62 0.48 29%
Diluted 0.14 0.12 0.55 0.45 23%
Book Value Per Common Share 8.29 6.78 8.29 6.78 22%
Weighted average shares used in computing:
Basic earnings per share 3,701,237 3,291,689 3,495,011 3,291,689
Diluted earnings per share 4,144,157 3,683,855 3,899,270 3,481,236
Proforma per share data (reflecting 3 for 2 stock split)
Earnings Per Share
Basic 0.11 0.09 0.41 0.32 29%
Diluted 0.10 0.08 0.37 0.30 23%
Book Value Per Common Share 5.53 4.52 5.53 4.52 22%
Weighted average shares used in computing:
Basic earnings per share 5,551,856 4,937,533 5,242,516 4,937,533
Diluted earnings per share 6,216,235 5,531,092 5,843,726 5,221,854
Balance Sheet Data
Total Assets 404,931 267,575 51%
Securities, Available-For-Sale 50,249 61,166 -18%
Securities, Held-To-Maturity 26,544 26,531 0%
Loans held for sale 16,620 - N/A
Loans 252,765 128,770 96%
Allowance For Loan Losses 3,825 2,285 67%
Total Deposits 350,047 242,978 44%
Total Shareholders' Equity 30,697 22,336 37%
Unrealized Holding Gain on Securities, Net 658 418 57%
Nonperforming Loans 1,288 N/A N/A
Other Real Estate Owned N/A N/A N/A
Selected Financial Ratios
Net Interest Margin 6.33% 6.23%
Return on Average Assets 0.65% 0.74%
Return on Average Equity 8.25% 7.38%
Allowance for Loan Losses to Nonperforming Loans 297.04% N/A
Allowance for Loan Losses to Total Loans 1.51% 1.77%
Leverage Ratio 9.00% 10.30%
</TABLE>
SIGNATURES
Under the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Date: January 27, 1998 HERITAGE COMMERCE CORP
By: /s/ Lawrence D. McGovern
Lawrence D. McGovern
Chief Financial Officer
(Principal Financial and
Accounting Officer)
