Heritage Commerce (HTBK) 10-Q 2014 Q1 Quarterly report

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Exhibit 12.1

CALCULATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES

	Three Months Ended March 31,				Year Ended December 31,
	2014		2013		2013		2012		2011		2010
	(Dollars in thousands)
Earnings:
Income (loss) before income taxes	$	4,627	$	3,035	$	16,494	$	14,203	$	10,537	$	(61,623	)
Fixed Charges:
Interest on deposits	$	521	$	625	$	2,369	$	2,800	$	3,942	$	8,086
Interest on notes payable to subsidiary grantor trusts, repurchase agreements, and other borrowings		—		89		231		1,387		1,933		2,426
Rent expense interest factor(1)		216		249		906		912		922		909
Total fixed charges:
Including interest on deposits	$	737	$	963	$	3,506	$	5,099	$	6,797	$	11,421
Excluding interest on deposits	$	216	$	338	$	1,137	$	2,299	$	2,855	$	3,335
Ratio of earnings (loss) to fixed charges:
Excluding interest on deposits		22.45		9.98		15.50		7.18		4.69		(17.48	)
Including interest on deposits		7.28		4.15		5.70		3.79		2.55		(4.40	)

(1)

This amount is the portion of rent expense (generally one-third) deemed representative of the interest factor.

        For purposes of calculating the ratios of earnings to fixed charges and preferred stock dividends, earnings consist of income (loss) before income taxes and fixed charges. Fixed charges consist of interest on subordinated debt, repurchase agreements and other borrowings, the proportion deemed representative of the interest factor within rent expense. These ratios are presented both including and excluding interest on deposits.

CALCULATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS

	Three Months Ended March 31,				Year Ended December 31,
	2014		2013		2013		2012		2011		2010
	(Dollars in thousands)
Earnings:
Income (loss) before income taxes	$	4,627	$	3,035	$	16,494	$	14,203	$	10,537	$	(61,623	)
​	​	​	​	​	​	​	​	​	​	​	​	​	��
Fixed Charges:
Interest on deposits	$	521		625	$	2,369	$	2,800	$	3,942	$	8,086
Interest on notes payable to subsidiary grantor trusts, repurchase agreements, and other borrowings		—		89		231		1,387		1,933		2,426
Preferred stock dividends(1)		224		—		336		373		1,939		2,027
Rent expense interest factor(2)		216		249		906		912		922		909
Total fixed charges:
Including interest on deposits	$	961	$	963	$	3,842	$	5,472	$	8,736	$	13,448
Excluding interest on deposits	$	440	$	338	$	1,473	$	2,672	$	4,794	$	5,362
Ratio of earnings (loss) to fixed charges and preferred stock dividends:
Excluding interest on deposits		11.52		9.98		12.20		6.32		3.20		(10.49	)
Including interest on deposits		5.82		4.15		5.29		3.60		2.21		(3.58	)

(1)

The balance for the three months ended March 31, 2014 and the year ended December 31, 2013 reflect amounts paid to holders of Series C Preferred Stock. Under the terms of the Series C Preferred Stock, dividends are paid only when they are declared by the Board of Directors and also paid to holders of common stock. The Series C Preferred Stock receives dividends on an as converted basis. The Series C Preferred Stock does not have a coupon rate of dividends and is non-cumulative. The balances for the years ended December 31, 2010 through 2012 reflect dividends paid to the US. Treasury Department on the Series A Preferred Stock. The Company repurchased the $40 million of Series A Preferred Stock issued to the U.S. Treasury Department under the TARP Capital Purchase Program during the first quarter of 2012.

(2)

This amount is the portion of rent expense (generally one-third) deemed representative of the interest factor.

        For purposes of calculating the ratios of earnings to fixed charges and preferred stock dividends, earnings consist of income (loss) before income taxes and fixed charges. Fixed charges consist of interest on subordinated debt, repurchase agreements and other borrowings, the proportion deemed representative of the interest factor within rent expense, and preferred stock dividends. These ratios are presented both including and excluding interest on deposits.

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Exhibit 12.1

CALCULATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
CALCULATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS