Heritage Commerce Corp Reports Second Quarter and First Six Months of 2025 Financial Results
SAN JOSE, Calif., July 24, 2025 (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 second quarter and six months ended June 30, 2025. All data are unaudited.
REPORTED SECOND QUARTER 2025 HIGHLIGHTS:
Net Income
Earnings Per Share
Pre-Provision Net Revenue ("PPNR")(1)
Fully Tax Equivalent ("FTE") Net Interest Margin(1)
Efficiency Ratio(1)
Tangible Book Value Per Share(1)
$6.4 million
$0.10
$9.4 million
3.54
%
80.23
%
$8.49
ADJUSTED SECOND QUARTER 2025 HIGHLIGHTS:(1)
Net Income
Earnings Per Share
PPNR(1)
FTE Net Interest Margin(1)
Efficiency Ratio(1)
Tangible Book Value Per Share(1)
$13.0 million
$0.21
$18.6 million
3.54
%
61.01
%
$8.59
CEO COMMENTARY:"We executed well in the second quarter, generating a higher level of net income and earnings per share, excluding significant charges primarily related to a legal settlement," said Clay Jones, President and Chief Executive Officer. "We had positive trends in loan growth, an expansion in our net interest margin, and stable asset quality, while deposits declined due to seasonal outflows that we typically see in the second quarter. Our loan growth was well diversified across our portfolios. We continue to successfully add new clients by offering a superior banking experience and generate loan growth while maintaining our disciplined underwriting and pricing criteria."
"We have a strong balance sheet with a high level of capital and liquidity and healthy asset quality, which provides a strong foundation to weather periods of economic volatility. We are well positioned to navigate the current environment and expect to see positive trends in loan growth, the net interest margin, and expense management," said Mr. Jones.
LINKED-QUARTER BASIS
YEAR-OVER-YEAR
FINANCIAL HIGHLIGHTS:
• Total revenue of $47.8 million, an increase of 4%, or $1.7 million • Noninterest expense of $38.3 million includes an accrual of $9.2 million for pre-tax charges primarily related to a legal settlement• Reported net income of $6.4 million and earnings per share of $0.10, down 45% and 47%, from $11.6 million and $0.19, respectively• Adjusted net income(1) of $13.0 million and adjusted earnings per share(1) of $0.21, both metrics up 11% from $11.6 million and $0.19, respectively
• Total revenue of $47.8 million, an increase of 15%, or $6.1 million• Noninterest expense of $38.3 million includes an accrual of $9.2 million for pre-tax charges primarily related to a legal settlement• Reported net income of $6.4 million and earnings per share of $0.10, down 31% and 33%, from $9.2 million and $0.15, respectively• Adjusted net income(1) of $13.0 million and adjusted earnings per share(1) of $0.21, both metrics up 40% from $9.2 million and $0.15, respectively
FINANCIAL CONDITION:
• Loans held-for-investment ("HFI") of $3.5 billion, up $47.4 million or 1%• Total deposits of $4.6 billion, down $55.9 million, or 1%• Loan to deposit ratio of 76.38%, up from 74.45%• Total shareholders' equity of $694.7 million, down $1.5 million
• Increase in loans HFI of $154.5 million, or 5%• Increase in total deposits of $182.7 million, or 4% • Loan to deposit ratio of 76.38%, up from 76.04%• Increase in total shareholders' equity of $15.5 million
CREDIT QUALITY:
• Nonperforming assets ("NPAs") to total assets of 0.11% for both quarters• NPAs to total assets of 0.11% for both quarters
• Classified assets to total assets of 0.69%, compared to 0.73%• Classified assets to total assets of 0.69%, compared to 0.64%
KEY PERFORMANCE METRICS:
• FTE net interest margin(1) of 3.54%, an increase from 3.39%• Common equity tier 1 capital ratio of 13.3%, compared to 13.6%• Total capital ratio of 15.5%, compared to 15.9%• Tangible common equity ratio(1) of 9.85%, an increase of 1% from 9.78%
• FTE net interest margin(1) of 3.54%, an increase from 3.26%• Common equity tier 1 capital ratio of 13.3%, compared to 13.4%• Total capital ratio of 15.5%, compared to 15.6%• Tangible common equity ratio(1) of 9.85%, a decrease of 1% from 9.91%
(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 charges primarily related to a legal settlement in the second quarter and first six months of 2025 as presented in the reconciliation of non-GAAP financial measures at the end of this press release.
Results of Operations:
Reported net income was $6.4 million, or $0.10 per average diluted common share, for the second quarter of 2025. Adjusted net income(2) was $13.0 million, or $0.21 per average diluted common share, for the second quarter of 2025, compared to $11.6 million, or $0.19 per average diluted common share, for the first quarter of 2025, and $9.2 million, or $0.15 per average diluted common share, for the second quarter of 2024. The annualized return on average assets was 0.47% and annualized return on average equity was 3.68% for the second quarter of 2025, compared to 0.85% and 6.81%, respectively, for the first quarter of 2025, and 0.71% and 5.50%, respectively, for the second quarter of 2024. The adjusted annualized return on average assets(2) was 0.95% and adjusted annualized return on average tangible common equity(2) was 9.92% for the second quarter of 2025, compared to 0.85% and 9.09%, respectively, for the first quarter ended of 2025, and 0.71% and 7.43%, respectively, for the second quarter of 2024.
Reported net income was $18.0 million, or $0.29 per average diluted common share, for the first six months of 2025. Adjusted net income(2) was $24.6 million, or $0.40 per average diluted common share, for the first six months of 2025, compared to $19.4 million, or $0.32 per average diluted common share, for the first six months of 2024. The annualized return on average assets was 0.66% and annualized return on average equity was 5.23% for the six months ended June 30, 2025, compared to 0.75% and 5.79%, respectively, for the six months ended June 30, 2024. The adjusted annualized return on average assets(2) was 0.90% and annualized return on average tangible common equity(2) was 9.51% for the six months ended June 30, 2025, compared to 0.75% and 7.84%, respectively, for the six months ended June 30, 2024.
Total revenue, which is defined as net interest income before provision for credit losses on loans plus noninterest income, increased $1.7 million, or 4%, to $47.8 million for the second quarter of 2025, compared to $46.1 million for the first quarter of 2025, and increased $6.1 million, or 15%, from $41.7 million for the second quarter of 2024. Total revenue increased $9.9 million, or 12%, to $93.8 million for the first six months of 2025, compared to $83.9 million for the first six months of 2024.
For the second quarter and first six months of 2025, the Company's reported PPNR(2), which is defined as total revenue less adjusted noninterest expense(2) was $9.4 million and $26.0 million, respectively. The adjusted PPNR(2) was $18.6 million for the second quarter of 2025, compared to $16.6 million for the first quarter of 2025, and $13.5 million for the second quarter of 2024. For the six months of 2025, the Company's adjusted PPNR(2) was $35.2 million, compared to $28.1 million for the six months of 2024.
Net interest income totaled $44.8 million for the second quarter of 2025, an increase of $1.4 million, or 3%, compared to $43.4 million for the first quarter of 2025. The FTE net interest margin(2) was 3.54% for the second quarter of 2025, an increase over 3.39% for the first quarter of 2025 primarily due to an increase in the average yields and average balances of loans and securities, partially offset by a decrease in the average balances of deposits resulting in a lower average balance of overnight funds.
Net interest income increased $5.9 million, or 15%, to $44.8 million, compared to $38.9 million for the second quarter of 2024. The FTE net interest margin(2) increased from 3.23% for the second quarter of 2024 primarily due to lower rates paid on customer deposits, an increase in the average yields and average balances of loans and securities, and an increase in the average balance of deposits resulting in a higher average balance of overnight funds, partially offset by a lower average yield on overnight funds.
For the first six months of 2025, net interest income increased $9.8 million, or 12% to $88.2 million, compared to $78.4 million for the first six months of 2024. The FTE net interest margin(2) increased 20 basis points to 3.47% for the first six months of 2025, from 3.27% for the first six months of 2024, primarily due to an increase in the average balances of average interest earning assets, and an increase in the average yields on loans and securities, partially offset by higher rates paid on client deposits and a lower yield on overnight funds.
We recorded a provision for credit losses on loans of $516,000 for the second quarter of 2025, compared to $274,000 for the first quarter of 2025, and $471,000 for the second quarter of 2024. There was a provision for credit losses on loans of $790,000 for the six months ended June 30, 2025, compared to $655,000 for the six months ended June 30, 2024. The increase in the provision for credit losses on loans for the second quarter and first six months of 2025 was primarily due to loan growth.
Total noninterest income increased to $3.0 million for the second quarter of 2025, compared to $2.7 million for the first quarter of 2025, and $2.9 million for the second quarter of 2024, primarily due to higher termination and facility fees. The increase in noninterest income in the second quarter of 2025 was partially offset by a $219,000 gain on proceeds from company-owned life insurance in the second quarter of 2024.
Total noninterest income increased 3% to $5.7 million for the first six months of 2025, compared to $5.5 million for the first six months of 2024, primarily due to higher termination and facility fees, partially offset by a $219,000 gain on proceeds from company-owned life insurance in the first six months of 2024.
(2)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
Reported noninterest expense for the second quarter of 2025 and first six months of 2025 totaled $38.3 million and $67.8 million, respectively. During the second quarter of 2025, the Company recorded expenses of $9.2 million, primarily due to pre-tax 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. Adjusted noninterest expense(3) was $29.1 million, compared to $29.5 million for the first quarter of 2025, and $28.2 million for the second quarter of 2024. Adjusted noninterest expense(3) for the first six months of 2025 was $58.6 million, compared to $55.7 million for the first six months of 2024.
Income tax expense decreased to $2.5 million for the second quarter of 2025, compared to $4.7 million for the first quarter of 2025, and $3.8 million for the second quarter of 2024, primarily due to lower pre-tax income. The effective tax rate for the second quarter of 2025 was 28.5%, compared to 28.8% for the first quarter of 2025, and 29.4% for the second quarter of 2024.
Income tax expense for the six months ended June 30, 2025 was $7.2 million, compared to $8.1 million for the six months ended June 30, 2024. The effective tax rate for six months ended June 30, 2025 was 28.7%, compared to 29.4% for the six months ended June 30, 2024.
The reported efficiency ratio(3) for the second quarter and first six month of 2025 was 80.23% and 72.24%, respectively. The adjusted efficiency ratio(3) improved to 61.01% for the second quarter of 2025, compared to 63.96% for the first quarter of 2025, as a result of higher total revenue. The adjusted efficiency ratio(3) improved from 67.55% for the second quarter of 2024, primarily due to higher total revenue, partially offset by higher noninterest expense. The adjusted efficiency ratio(3) improved to 62.45% for the first six months of 2025 from 66.44% for the first six months of 2024, primarily due to higher total revenue, partially offset by higher noninterest expense.
Full time equivalent employees were 350 at both June 30, 2025 and March 31, 2025, and 353 at June 30, 2024.
Financial Condition and Capital Management:
Total assets remained relatively flat at $5.5 billion at both June 30, 2025 and March 31, 2025. Total assets increased 4% from $5.3 billion at June 30, 2024, primarily due to an increase in deposits resulting in an increase in overnight funds, and an increase in loans.
Investment securities available-for-sale (at fair value) decreased to $307.0 million at June 30, 2025, compared to $371.0 million at March 31, 2025, primarily due to maturities and paydowns, partially offset by purchases. Investment securities available-for-sale totaled $273.0 million at June 30, 2024. The pre-tax unrealized loss on the securities available-for-sale portfolio was $448,000, or $396,000 net of taxes, which equaled less than 1% of total shareholders' equity at June 30, 2025.
During the first six months of 2025, the Company purchased $87.2 million of agency mortgage-backed securities, $79.8 million of collateralized mortgage obligations, and $44.8 million of U.S. Treasury securities, for total purchases of $211.8 million in the available-for-sale portfolio. Securities purchased had a book yield of 4.82% and an average life of 4.55 years.
Investment securities held-to-maturity (at amortized cost, net of allowance for credit losses of ($16,000), totaled $561.2 million at June 30, 2025, compared to $576.7 million at March 31, 2025, and $621.2 million at June 30, 2024. The fair value of the securities held-to-maturity portfolio was $486.5 million at June 30, 2025. The pre-tax unrecognized loss on the securities held-to-maturity portfolio was $74.7 million, or $52.7 million net of taxes, which equaled 7.6% of total shareholders' equity at June 30, 2025.
The unrealized and unrecognized losses in both the available-for-sale and held-to-maturity portfolios were due to higher interest rates at June 30, 2025 compared to when the securities were purchased. The issuers are of high credit quality and all principal amounts are expected to be repaid when the securities mature. The fair value is expected to recover as the securities approach their maturity date and/or market rates decline.
Loans HFI, net of deferred costs and fees, increased $47.4 million, or 1% to $3.5 billion at June 30, 2025, compared to $3.5 billion at March 31, 2025, and increased $154.5 million, or 5%, from $3.4 billion at June 30, 2024. Loans HFI, excluding residential mortgages, increased $58.3 million, or 2% to $3.1 billion at June 30, 2025, compared to $3.0 billion at March 31, 2025, and increased $184.9 million, or 6%, from $2.9 billion at June 30, 2024.
Commercial and industrial line utilization was 32% at June 30, 2025, compared to 31% at both March 31, 2025, and June 30, 2024. Commercial real estate ("CRE") loans totaled $2.0 billion at June 30, 2025, of which 31% were owner occupied and 31% were investor CRE loans. Owner occupied CRE loans totaled 31% at March 31, 2025 and 32% at June 30, 2024. Approximately 24% of the Company's loan portfolio consisted of floating interest rate loans at both June 30, 2025 and March 31, 2025, compared to 27% at June 30, 2024.
At June 30, 2025, paydowns and maturities of investment securities and fixed interest rate loans maturing within one year totaled $311.0 million.
(3)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
Total deposits decreased $55.9 million, or 1%, to $4.6 billion at June 30, 2025, compared to $4.7 billion at March 31, 2025, primarily due to season outflows. Total deposits increased $182.7 million, or 4% from $4.4 billion at June 30, 2024.
The following table shows the Company's deposit types as a percentage of total deposits at the dates indicated:
June 30,
March 31,
June 30,
DEPOSITS TYPE % TO TOTAL DEPOSITS
2025
2025
2024
Demand, noninterest-bearing
25
%
24
%
27
%
Demand, interest-bearing
21
%
20
%
21
%
Savings and money market
28
%
29
%
25
%
Time deposits — under $250
1
%
1
%
1
%
Time deposits — $250 and over
4
%
5
%
4
%
Insured Cash Sweep ("ICS")/Certificate of Deposit Registry
Service ("CDARS") - interest-bearing demand, money
market and time deposits
21
%
21
%
22
%
Total deposits
100
%
100
%
100
%
The loan to deposit ratio was 76.38% at June 30, 2025, compared to 74.45% at March 31, 2025, and 76.04% at June 30, 2024.
The Company's total available liquidity and borrowing capacity was $3.1 billion at June 30, 2025, compared to $3.2 billion at March 31, 2025, and $3.0 billion at June 30, 2024.
Total shareholders' equity was $694.7 million at June 30, 2025, compared to $696.2 million at March 31, 2025, and $679.2 million at June 30, 2024. The change in shareholders' equity at June 30, 2025 is primarily a function of net income and the decrease in the total accumulated other comprehensive loss, partially offset by dividends to stockholders.
Total accumulated other comprehensive loss of $5.0 million at June 30, 2025 was comprised of $2.5 million in actuarial losses associated with split dollar insurance contracts, $2.2 million in actuarial losses associated with the supplemental executive retirement plan, unrealized losses on securities available-for-sale of $396,000, and a $42,000 unrealized gain on interest-only strip from SBA loans.
The Company's consolidated capital ratios exceeded regulatory guidelines and the Bank's capital ratios exceeded regulatory guidelines under the prompt corrective action ("PCA") regulatory guidelines for a well-capitalized financial institution, and the Basel III minimum regulatory requirements at June 30, 2025.
Reported tangible book value per share(4) was $8.49 at June 30, 2025. Adjusted tangible book value per share(4) was $8.59 at June 30, 2025, compared to $8.48 at March 31, 2025, and $8.22 at June 30, 2024.
The Company is authorized to repurchase up to $15.0 million of the Company's shares of its issued and outstanding common stock under its share repurchase program authorized by the Board of Directors in July 2024. During the second quarter of 2025, the Company repurchased 207,989 shares of its common stock with a weighted average price of $9.19 for a total of $1.9 million. The remaining capacity under this share repurchase program was $13.1 million at June 30, 2025. In July 2025, the Company's Board of Directors extended the program for one year, expiring on July 31, 2026.
Credit Quality:The provision for credit losses on loans totaled $516,000 for the second quarter of 2025, compared to a $274,000 provision for credit losses on loans for the first quarter of 2025 and a provision for credit losses on loans of $471,000 for the second quarter of 2024. Net charge-offs totaled $145,000 for the second quarter of 2025, compared to $965,000 for the first quarter of 2025, and $405,000 for the second quarter of 2024.
The provision for credit losses on loans totaled $790,000 for the first six months of 2025, compared to a $655,000 provision for credit losses on loans for the first six months of 2024. Net charge-offs totaled $1.1 million for the first six months of 2025, compared to $659,000 for the first six months of 2024.
The allowance for credit losses on loans ("ACLL") at June 30, 2025 was $48.6 million, or 1.38% of total loans, representing 787% of total nonperforming loans. The ACLL at March 31, 2025 was $48.3 million, or 1.38% of total loans, representing 765% of total nonperforming loans. The ACLL at June 30, 2024 was $48.0 million, or 1.42% of total loans, representing 795% of total nonperforming loans. The reduction to the allowance for credit on losses on loans reflects our credit assessment and economic factors.
NPAs were $6.2 million at June 30, 2025, compared to $6.3 million at March 31, 2025, and $6.0 million at June 30, 2024. There were no foreclosed assets on the balance sheet at June 30, 2025, March 31, 2025, or June 30, 2024. There were no Shared National Credits ("SNCs") or material purchased participations included in NPAs or total loans at June 30, 2025, March 31, 2025, or June 30, 2024.
Classified assets totaled $37.5 million, or 0.69% of total assets, at June 30, 2025, compared to $40.0 million, or 0.73% of total assets, at March 31, 2025, and $33.6 million, or 0.64% of total assets, at June 30, 2024.
(4)This is a non-GAAP financial measure as defined and discussed under "Non-GAAP Financial Measures" in this press release.
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, Gilroy, 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.
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 quarter 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) the effects of recent wildfires affecting Southern California, which have affected certain clients and certain loans secured by mortgages in Los Angeles County, and which are affecting or may, in the future, affect other clients in those and other markets throughout California; (vi) 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; (vii) 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; (viii) political events that have accompanied or that may in the future accompany or result from recent political changes, particularly including sociopolitical events and conditions that result from political conflicts and law enforcement activities that may adversely affect our markets or our clients; (ix) 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; (x) 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; (xi) factors that affect the value and liquidity of our investment portfolios, particularly the values of securities available-for-sale; (xii) 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; (xiii) 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; (xiv) 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; (xv) 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 (xvi) our success in managing the risks involved in the foregoing factors.
Member FDIC
For additional information,
For the Quarter Ended:
Percent Change From:
For the Six Months Ended:
CONSOLIDATED INCOME STATEMENTS
June 30,
March 31,
June 30,
March 31,
June 30,
June 30,
June 30,
Percent
(in $000's, unaudited)
2025
2025
2024
2025
2024
2025
2024
Change
Interest income
$
63,025
$
61,832
$
58,489
2
%
8
%
$
124,857
$
115,450
8
%
Interest expense
18,220
18,472
19,622
(1
)
%
(7
)
%
36,692
37,080
(1
)
%
Net interest income before provision
for credit losses on loans
44,805
43,360
38,867
3
%
15
%
88,165
78,370
12
%
Provision for credit losses on loans
516
274
471
88
%
10
%
790
655
21
%
Net interest income after provision
for credit losses on loans
44,289
43,086
38,396
3
%
15
%
87,375
77,715
12
%
Noninterest income:
Service charges and fees on deposit
accounts
929
892
891
4
%
4
%
1,821
1,768
3
%
FHLB and FRB stock dividends
584
590
588
(1
)
%
(1
)
%
1,174
1,178
Increase in cash surrender value of
life insurance
548
538
521
2
%
5
%
1,086
1,039
5
%
Termination fees
227
87
100
161
%
127
%
314
113
178
%
Gain on sales of SBA loans
87
98
76
(11
)
%
14
%
185
254
(27
)
%
Servicing income
61
82
90
(26
)
%
(32
)
%
143
180
(21
)
%
Gain on proceeds from company-owned
life insurance
—
—
219
N/A
(100
)
%
—
219
(100
)
%
Other
541
409
379
32
%
43
%
950
750
27
%
Total noninterest income
2,977
2,696
2,864
10
%
4
%
5,673
5,501
3
%
Noninterest expense:
Salaries and employee benefits
16,227
16,575
15,794
(2
)
%
3
%
32,802
31,303
5
%
Occupancy and equipment
2,525
2,534
2,689
0
%
(6
)
%
5,059
5,132
(1
)
%
Professional fees
1,819
1,580
1,072
15
%
70
%
3,399
2,399
42
%
Other
17,764
8,767
8,633
103
%
106
%
26,531
16,890
57
%
Total noninterest expense
38,335
29,456
28,188
30
%
36
%
67,791
55,724
22
%
Income before income taxes
8,931
16,326
13,072
(45
)
%
(32
)
%
25,257
27,492
(8
)
%
Income tax expense
2,542
4,700
3,838
(46
)
%
(34
)
%
7,242
8,092
(11
)
%
Net income
$
6,389
$
11,626
$
9,234
(45
)
%
(31
)
%
$
18,015
$
19,400
(7
)
%
PER COMMON SHARE DATA
(unaudited)
Basic earnings per share
$
0.10
$
0.19
$
0.15
(47
)
%
(33
)
%
$
0.29
$
0.32
(9
)
%
Diluted earnings per share
$
0.10
$
0.19
$
0.15
(47
)
%
(33
)
%
$
0.29
$
0.32
(9
)
%
Weighted average shares outstanding - basic
61,508,180
61,479,579
61,279,914
0
%
0
%
61,493,880
61,233,269
0
%
Weighted average shares outstanding - diluted
61,624,600
61,708,361
61,438,088
0
%
0
%
61,664,942
61,446,484
0
%
Common shares outstanding at period-end
61,446,763
61,611,121
61,292,094
0
%
0
%
61,446,763
61,292,094
0
%
Dividend per share
$
0.13
$
0.13
$
0.13
0
%
0
%
$
0.26
$
0.26
0
%
Book value per share
$
11.31
$
11.30
$
11.08
0
%
2
%
$
11.31
$
11.08
2
%
Tangible book value per share(1)
$
8.49
$
8.48
$
8.22
0
%
3
%
$
8.49
$
8.22
3
%
KEY PERFORMANCE METRICS
(in $000's, unaudited)
Annualized return on average equity
3.68
%
6.81
%
5.50
%
(46
)
%
(33
)
%
5.23
%
5.79
%
(10
)
%
Annualized return on average tangible
common equity(1)
4.89
%
9.09
%
7.43
%
(46
)
%
(34
)
%
6.97
%
7.84
%
(11
)
%
Annualized return on average assets
0.47
%
0.85
%
0.71
%
(45
)
%
(34
)
%
0.66
%
0.75
%
(12
)
%
Annualized return on average tangible assets(1)
0.48
%
0.88
%
0.74
%
(45
)
%
(35
)
%
0.68
%
0.78
%
(13
)
%
Net interest margin (FTE)(1)
3.54
%
3.39
%
3.23
%
4
%
10
%
3.47
%
3.27
%
6
%
Total revenue
$
47,782
$
46,056
$
41,731
4
%
15
%
93,838
83,871
12
%
Pre-provision net revenue(1)
$
9,447
$
16,600
$
13,543
(43
)
%
(30
)
%
26,047
28,147
(7
)
%
Efficiency ratio(1)
80.23
%
63.96
%
67.55
%
25
%
19
%
72.24
%
66.44
%
9
%
AVERAGE BALANCES
(in $000's, unaudited)
Average assets
$
5,458,420
$
5,559,896
$
5,213,171
(2
)
%
5
%
$
5,508,878
$
5,195,903
6
%
Average tangible assets(1)
$
5,284,972
$
5,386,001
$
5,037,673
(2
)
%
5
%
$
5,335,207
$
5,020,134
6
%
Average earning assets
$
5,087,089
$
5,188,317
$
4,840,670
(2
)
%
5
%
$
5,137,424
$
4,825,587
6
%
Average loans held-for-sale
$
2,250
$
2,290
$
1,503
(2
)
%
50
%
$
2,270
$
2,126
7
%
Average loans held-for-investment
$
3,504,518
$
3,429,014
$
3,328,358
2
%
5
%
$
3,466,975
$
3,312,799
5
%
Average deposits
$
4,618,007
$
4,717,517
$
4,394,545
(2
)
%
5
%
$
4,667,487
$
4,377,347
7
%
Average demand deposits - noninterest-bearing
$
1,146,494
$
1,167,330
$
1,127,145
(2
)
%
2
%
$
1,156,854
$
1,152,111
0
%
Average interest-bearing deposits
$
3,471,513
$
3,550,187
$
3,267,400
(2
)
%
6
%
$
3,510,633
$
3,225,236
9
%
Average interest-bearing liabilities
$
3,511,237
$
3,589,872
$
3,306,972
(2
)
%
6
%
$
3,550,338
$
3,264,788
9
%
Average equity
$
697,016
$
692,733
$
675,108
1
%
3
%
$
694,886
$
673,700
3
%
Average tangible common equity(1)
$
523,568
$
518,838
$
499,610
1
%
5
%
$
521,215
$
497,931
5
%
(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
June 30,
March 31,
December 31,
September 30,
June 30,
(in $000's, unaudited)
2025
2025
2024
2024
2024
Interest income
$
63,025
$
61,832
$
64,043
$
60,852
$
58,489
Interest expense
18,220
18,472
20,448
21,523
19,622
Net interest income before provision
for credit losses on loans
44,805
43,360
43,595
39,329
38,867
Provision for credit losses on loans
516
274
1,331
153
471
Net interest income after provision
for credit losses on loans
44,289
43,086
42,264
39,176
38,396
Noninterest income:
Service charges and fees on deposit
accounts
929
892
885
908
891
FHLB and FRB stock dividends
584
590
590
586
588
Increase in cash surrender value of
life insurance
548
538
528
530
521
Termination fees
227
87
18
46
100
Gain on sales of SBA loans
87
98
125
94
76
Servicing income
61
82
77
108
90
Gain on proceeds from company-owned
life insurance
—
—
—
—
219
Other
541
409
552
554
379
Total noninterest income
2,977
2,696
2,775
2,826
2,864
Noninterest expense:
Salaries and employee benefits
16,227
16,575
16,976
15,673
15,794
Occupancy and equipment
2,525
2,534
2,495
2,599
2,689
Professional fees
1,819
1,580
1,711
1,306
1,072
Other
17,764
8,767
9,122
7,977
8,633
Total noninterest expense
38,335
29,456
30,304
27,555
28,188
Income before income taxes
8,931
16,326
14,735
14,447
13,072
Income tax expense
2,542
4,700
4,114
3,940
3,838
Net income
$
6,389
$
11,626
$
10,621
$
10,507
$
9,234
PER COMMON SHARE DATA
(unaudited)
Basic earnings per share
$
0.10
$
0.19
$
0.17
$
0.17
$
0.15
Diluted earnings per share
$
0.10
$
0.19
$
0.17
$
0.17
$
0.15
Weighted average shares outstanding - basic
61,508,180
61,479,579
61,320,505
61,295,877
61,279,914
Weighted average shares outstanding - diluted
61,624,600
61,708,361
61,679,735
61,546,157
61,438,088
Common shares outstanding at period-end
61,446,763
61,611,121
61,348,095
61,297,344
61,292,094
Dividend per share
$
0.13
$
0.13
$
0.13
$
0.13
$
0.13
Book value per share
$
11.31
$
11.30
$
11.24
$
11.18
$
11.08
Tangible book value per share(1)
$
8.49
$
8.48
$
8.41
$
8.33
$
8.22
KEY PERFORMANCE METRICS
(in $000's, unaudited)
Annualized return on average equity
3.68
%
6.81
%
6.16
%
6.14
%
5.50
%
Annualized return on average tangible
common equity(1)
4.89
%
9.09
%
8.25
%
8.27
%
7.43
%
Annualized return on average assets
0.47
%
0.85
%
0.75
%
0.78
%
0.71
%
Annualized return on average tangible assets(1)
0.48
%
0.88
%
0.78
%
0.81
%
0.74
%
Net interest margin (FTE)(1)
3.54
%
3.39
%
3.32
%
3.15
%
3.23
%
Total revenue
$
47,782
$
46,056
$
46,370
$
42,155
$
41,731
Pre-provision net revenue(1)
$
9,447
$
16,600
$
16,066
$
14,600
$
13,543
Efficiency ratio(1)
80.23
%
63.96
%
65.35
%
65.37
%
67.55
%
AVERAGE BALANCES
(in $000's, unaudited)
Average assets
$
5,458,420
$
5,559,896
$
5,607,840
$
5,352,067
$
5,213,171
Average tangible assets(1)
$
5,284,972
$
5,386,001
$
5,433,439
$
5,177,114
$
5,037,673
Average earning assets
$
5,087,089
$
5,188,317
$
5,235,986
$
4,980,082
$
4,840,670
Average loans held-for-sale
$
2,250
$
2,290
$
2,260
$
1,493
$
1,503
Average loans held-for-investment
$
3,504,518
$
3,429,014
$
3,388,729
$
3,359,647
$
3,328,358
Average deposits
$
4,618,007
$
4,717,517
$
4,771,491
$
4,525,946
$
4,394,545
Average demand deposits - noninterest-bearing
$
1,146,494
$
1,167,330
$
1,222,393
$
1,172,304
$
1,127,145
Average interest-bearing deposits
$
3,471,513
$
3,550,187
$
3,549,098
$
3,353,642
$
3,267,400
Average interest-bearing liabilities
$
3,511,237
$
3,589,872
$
3,588,755
$
3,393,264
$
3,306,972
Average equity
$
697,016
$
692,733
$
686,263
$
680,404
$
675,108
Average tangible common equity(1)
$
523,568
$
518,838
$
511,862
$
505,451
$
499,610
(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
June 30,
March 31,
June 30,
March 31,
June 30,
(in $000's, unaudited)
2025
2025
2024
2025
2024
ASSETS
Cash and due from banks
$
55,360
$
44,281
$
37,497
25
%
48
%
Other investments and interest-bearing deposits
in other financial institutions
666,432
700,769
610,763
(5
)
%
9
%
Securities available-for-sale, at fair value
307,035
370,976
273,043
(17
)
%
12
%
Securities held-to-maturity, at amortized cost
561,205
576,718
621,178
(3
)
%
(10
)
%
Loans - held-for-sale - SBA, including deferred costs
1,156
1,884
1,899
(39
)
%
(39
)
%
Loans - held-for-investment:
Commercial
492,231
489,241
477,929
1
%
3
%
Real estate:
CRE - owner occupied
627,810
616,825
594,504
2
%
6
%
CRE - non-owner occupied
1,390,419
1,363,275
1,283,323
2
%
8
%
Land and construction
149,460
136,106
125,374
10
%
19
%
Home equity
120,763
119,138
126,562
1
%
(5
)
%
Multifamily
285,016
284,510
268,968
0
%
6
%
Residential mortgages
454,419
465,330
484,809
(2
)
%
(6
)
%
Consumer and other
14,661
12,741
18,758
15
%
(22
)
%
Loans
3,534,779
3,487,166
3,380,227
1
%
5
%
Deferred loan fees, net
(446
)
(268
)
(434
)
66
%
3
%
Total loans - held-for-investment, net of deferred fees
3,534,333
3,486,898
3,379,793
1
%
5
%
Allowance for credit losses on loans
(48,633
)
(48,262
)
(47,954
)
1
%
1
%
Loans, net
3,485,700
3,438,636
3,331,839
1
%
5
%
Company-owned life insurance
82,296
81,749
80,153
