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) 10/25/99
Heritage Commerce Corp
(Exact name of registrant as specified in its charter)
CA 00-23877 77-0469558
(State of other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
(IRS Employer
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.)
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HERITAGE COMMERCE CORP REPORTS FINANCIAL RESULTS
FOR THE THIRD QUARTER OF 1999
Heritage Commerce Corp (the "Company") (Nasdaq: HTBK) today reported
consolidated earnings of $753,000, or $0.11 per diluted share, for the third
quarter of 1999. This compares to $574,000 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 8.06%, respectively, compared with returns of
0.67% and 8.46%, respectively, for the same period of 1998.
For the quarter, earnings show an increase of $179,000, or 31%, over
those of the third quarter of the prior year. For the quarter, net interest
income grew by $111,000, or 2%, compared to the third quarter of 1998;
noninterest income grew by $1,206,000, or 202%, primarily due to the sale of
the Company's internet credit card portfolio; and noninterest expense grew by
$1,355,000, or 33%, compared to the third quarter of 1998. The Company's net
interest margin was 5.89% for the year ended September 30, 1999, compared
with 6.34% for the year ended September 30, 1998.
Total assets as of September 30, 1999 were $468,574,000, an increase of
$69,495,000, or 17%, from September 30, 1998. Total deposits as of September
30, 1999 were $416,650,000, an increase of $52,781,000, or 15%, since
September 30, 1998. Deposit growth for the quarter, as compared to the same
quarter of 1998, was net of approximately $40 million of bankruptcy deposits,
which were sold by Heritage Bank of Commerce in the fourth quarter of 1998.
Total portfolio loans as of September 30, 1999 were $245,411,000, an
increase of $41,635,000, or 20%, since September 30, 1998. The Company's
allowance for loan losses was $4,569,000, or 1.86%, of total loans as of
September 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 $3,402,000, or
1.67%, of total loans as of September 30, 1998. The Company's non-performing
assets (NPA's) increased from zero at September 30, 1998 to $1,187,000 as of
September 30, 1999. NPA's were $1,288,000 as of 1998 year-end.
The Company completed a public stock offering on August 16, 1999. The
Company sold 758,138 new shares at a price of $15.00 per share.
The Company's shareholders' equity at September 30, 1999 stood at
$43,630,000, compared with $30,697,000 as of December 31, 1998, a 42%
increase. Book value per share totaled $6.83 as of September 30, 1999,
compared to $5.51 as of September 30, 1998 (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 10.7% at September 30, 1999.
This compares with a leverage ratio of 9.0% at December 31, 1998 and 8.3% as
of September 30, 1998.
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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<TABLE>
<CAPTION>
Heritage Commerce Corp
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
(in thousands At and For the Three Months Ended At and For the Nine Months Ended
except per share amounts) Sept 30 Sept 30 Percent Sept 30 Sept 30 Percent
1999 1998 Change 1999 1998 Change
Statement of Income Data
Net Interest Income $ 5,230 $ 5,119 2% $ 15,137 $ 13,279 14%
Provision for Loan Losses 356 550 -35% 1,483 1,060 40%
Noninterest Income 1,802 596 202% 3,713 970 283%
Noninterest Expense 5,503 4,148 33% 14,252 10,628 34%
Net Income 753 574 31% 2,055 1,557 32%
Per Share Data
Earnings Per Share
Basic 0.12 0.10 20% 0.35 0.30 17%
Diluted 0.11 0.09 22% 0.31 0.27 15%
Book Value Per Common Share 6.83 5.51 24% 6.83 5.51 24%
Weighted average shares
used in computing:
Basic 6,272,202 5,530,522 13% 5,803,809 5,139,054 13%
Diluted 6,963,513 6,174,418 13% 6,565,892 5,674,950 16%
Balance Sheet Data
Total Assets 468,574 399,079 17%
Securities, Available-For-Sale 24,650 68,031 -64%
Securities, Held-To-Maturity 13,845 27,717 -50%
Loans Held-For-Sale 17,372 18,222 -5%
Loans 245,411 203,776 20%
Allowance For Loan Losses 4,569 3,402 34%
Total Deposits 416,650 363,869 15%
Total Shareholders' Equity 43,630 30,513 43%
Unrealized Holding Gain (loss)
on Securities, Net (52) 1,142 -105%
Nonperforming Loans 1,187 ---
Other Real Estate Owned --- ---
Selected Financial Ratios
Net Interest Margin 5.89% 6.34%
Return on Average Assets 0.72% 0.67%
Return on Average Equity 8.06% 8.46%
Allowance for Loan Losses
to Nonperforming Loans 385% --
Allowance for Loan Losses
to Total Loans 1.86% 1.67%
Leverage Ratio 10.71% 8.31%
</TABLE>
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Signatures
Under the requirement of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: October 25, 1999 Heritage Commerce Corp
By: /S/ Lawrence D. McGovern
Lawrence D. McGovern
Chief Financial Officer
(Principal Financial and Accounting Officer)
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