HERITAGE COMMERCE CORP REPORTS FINANCIAL RESULTS
FOR THE SECOND QUARTER OF 1999
Heritage Commerce Corp (the "Company") (Nasdaq: HTBK) today reported
consolidated earnings of $674,000, or $0.11 per diluted share, for the second
quarter of 1999. This compares to $530,000 or $0.09 per diluted share in the
prior year period. Year-to-date return on average assets and return on
average equity were 0.72% and 8.41%, respectively, compared with returns of
0.69% and 8.65%, respectively, for the same period of 1998.
For the quarter, earnings show an increase of $144,000, or 27%, over
those of the prior year. For the quarter, net interest income grew by
$532,000, or 12%, compared to the second quarter of 1998; noninterest income
grew by $444,000, or 183%, due primarily to gains on sale of securities; and
noninterest expense grew by $701,000, or 20%, compared to the second quarter
of 1998, reflecting start-up expenses associated with the Company's
expansion in Fremont and Morgan Hill, California. The Company's net interest
margin was 6.01% for the year ended June 30, 1999, compared with 6.36% for
the year ended June 30, 1998. This decrease in net interest margin can be
primarily attributed to lower rates earned on interest earning assets.
Total assets as of June 30, 1999 were $403,215,000, an increase of
$53,541,000, or 15%, from June 30, 1998. Total deposits as of June 30, 1999
were $364,592,000, an increase of $40,941,000, or 13%, since June 30, 1998.
Deposit growth for the quarter, as compared to the same quarter of 1998, was
net of approximately $50 million of bankruptcy deposits, which were sold by
Heritage Bank of Commerce in the fourth quarter of 1988.
Total portfolio loans as of June 30, 1999 were $245,336,000, an
increase of $92,598,000, or 61%, since June 30, 1998. The Company's
allowance for loan losses was $4,337,000, or 1.77%, of total loans as of June
30, 1999. This compares with an allowance for loan losses of $3,825,000,
or 1.62 %, of total loans at December 31, 1998 and $2,884,000, or 1.89%, of
total loans as of June 30, 1998. The Company's non-performing assets (NPA's)
increased from zero at June 30, 1998 to $1,776,000 as of June 30, 1999. NPA's
were $1,288,000 as of 1998 year-end.
The Company's shareholders' equity at June 30, 1999 stood at
$31,473,000, compared with $30,697,000 as of December 31, 1998, a 2.53%
increase. Book value per share totaled $5.63 as of June 30, 1999 (book value
per share data has been adjusted for a 3 for 2 stock split declared by the
Company to shareholders of record as of February 5, 1999 and paid on February
19, 1999). The Company's leverage capital ratio stood at 7.90% at June 30,
1999. This compares with a leverage ratio of 9.0% at December 31, 1998 and
7.4 % as of June 30, 1998.
The Company began a public stock offering on June 1, 1999. The
Company intends to sell up to 700,000 new shares at a price of $15.00 per
share on a best efforts basis.
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 headquartered in the city of San Jose with a
branch in Morgan Hill (which, pending regulatory approval, will become a de
novo bank); and Heritage Bank East Bay, a commercial bank headquartered in
the city of Fremont, with a branch in San Ramon.
The Company's common stock is listed on the Nasdaq National Market
under the symbol "HTBK".
Readers should carefully review the risk factors described in other
documents the Company files from time to time with the Securities and
Exchange Commission, including the Annual Report on Form 10-K for the year
ended December 31, 1998 and the Quarterly Reports on Form 10-Q filed by the
Company in fiscal 1999.
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.
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Heritage Commerce Corp
(unaudited)
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At and For the At and for the
Three Months Six Months
(in thousands, except June 30 June 30 Percent June 30 June 30 Percent
per share amounts) 1999 1998 Change 1999 1998 Change
Statement of Income Data
Net Interest Income $ 4,914 $ 4,382 12% $ 9,908 $ 8,160 21%
Provision for Loan Losses 484 350 38% 1,127 510 121%
Noninterest Income 687 243 183% 1,911 374 411%
Noninterest Expense 4,163 3,462 20% 8,750 6,480 35%
Net Income $ 674 $ 530 27% $ 1,301 $ 983 32%
Per Share Data
Earnings Per Share
Basic $ 0.12 $ 0.11 9.1% $ 0.23 $ 0.19 21%
Diluted $ 0.11 $ 0.09 22% $ 0.20 $ 0.16 25%
Book Value Per Common Share $ 5.63 $ 4.74 19% $ 5.63 $ 4.74 19%
Weighted average shares used in computing:
Basic earnings per share 5,582,308 4,943,844 13% 5,569,613 5,242,516 6%
Diluted earnings per share 6,364,109 5,680,169 12% 6,387,357 5,971,369 7%
Balance Sheet Data
Total Assets $ 403,215 $ 349,674 15%
Securities, Available-For-Sale 31,782 75,857 -58%
Securities, Held-To-Maturity 13,856 28,182 -51%
Loans Held-For-Sale 11,675 17,534 -33%
Loans 245,336 152,738 61%
Allowance For Loan Losses 4,337 2,884 50%
Total Deposits 364,592 323,651 13%
Total Shareholders' Equity 31,473 23,448 34%
Unrealized Holding Gain (loss) on Securities, Net $ (92) $ 546 -117%
Nonperforming Loans $ 1,776 ---
Other Real Estate Owned --- ---
Selected Financial Ratios
Net Interest Margin 6.01% 6.36%
Return on Average Assets 0.72% 0.69%
Return on Average Equity 8.41% 8.65%
Allowance for Loan Losses to Nonperforming Loans 244% N/A
Allowance for Loan Losses to Total Loans 1.77% 1.89%
Leverage Ratio 7.90% 7.40%
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