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) | July 23, 2001 | |
Heritage Commerce Corp
| CA | 00-23877 | 77-0469558 | ||
| (State of other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
| 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
| Item 5. Other Events. | ||||||||
| SIGNATURES | ||||||||
Item 5. Other Events.
Heritage Commerce Corp Reports Financial
Results for the Second Quarter of 2001
Heritage Commerce Corp (the “Company”) (NASDAQ:HTBK) today reported consolidated operating results for the second quarter of 2001. Consolidated net income, was $1,890,000, or $0.17 per diluted share, up 27% from $1,489,000 or $0.13 per diluted share for the second quarter of 2000. Annualized return on average assets and return on average equity for the quarter ended June 30, 2001 were 0.95% and 11.90%, respectively, compared with returns of 0.84% and 10.38%, respectively, for the same period in 2000.
For the second quarter of 2001, as compared with the same period in 2000, net interest income increased from $10,380,000 to $10,620,000, an increase of $240,000, or 2%. The increase is attributable to the growth in earning assets, primarily loans, offset by a decline in interest rates earned. The Company’s net interest margin was 5.52% for the six months ended June 30, 2001, compared with 5.91% for the six months ended June 30, 2000, reflective of the overall decline in the interest rate environment.
The Company’s operating results are heavily dependent upon market rates of interest. During the first six months of 2001, the Federal Reserve Bank Board of Governors reduced short-term interest rates by 275 basis points. This decrease in short term interest rates immediately affected the rate collected on the majority of the Company’s loans, which reprice in response to the changes in the prime rate. While the decrease in interest rates also affects the cost of interest bearing deposits, which represent one of the Company’s primary funding sources, they tend to reprice more slowly than floating rate loans. The reduction in market rates of interest which took place during the first six months of 2001, as well as any further reductions that may take place in the future, will have a negative effect on the Company’s net interest margin and net interest income.
Noninterest income was $1,647,000 for the second quarter ended June 30, 2001, compared with $614,000 for the same period in the previous year. The increase was primarily due to the increases in gains on sale of securities and SBA loans recognized in the second quarter of 2001 compared to the same period in 2000.
Noninterest expense for the quarter ended June 30, 2001 increased by $444,000, or 5%, as compared to the same period in the previous year. The increase was primarily in support of the overall growth of the Company.
At June 30, 2001, the Company’s total assets were $867,631,000, an increase of $53,336,000, or 7%, from $814,295,000 at June 30, 2000. Total deposits were $770,168,000 at June 30, 2001, up 4% from $737,116,000 at June 30, 2000.
Total loans were $605,132,000 at June 30, 2001, up 16% from $521,538,000 at June 30, 2000. The Company’s allowance for loan losses was $10,347,000, or 1.71% of total loans, as of June 30, 2001, as compared to $7,738,000, or 1.48% of total loans, at June 30, 2000. The Company had $66,000 in nonperforming assets (NPA’s) as of June 30, 2001, as compared to $1,092,000 as of June 30, 2000.
Shareholders’ equity as of June 30, 2001 was $70,967,000, compared with $60,276,000 as of June 30, 2000. Book value per share was $6.39 as of June 30, 2001, compared to $5.71 as of June 30, 2000. The Company’s leverage capital ratio was 9.78% at June 30, 2001, compared to 9.06% at June 30, 2000.
All of the Company’s operations and virtually all of its customers are located in California. The availability of a sufficient supply of electrical power in California has been called into question by recent events, including the bankruptcy of one of the state’s major utilities. While neither the Company nor any of its customers have been materially adversely affected by the electrical power crisis to date, power supply issues could have an affect on future operations of the Company or its customers, including borrowers.
Heritage Commerce Corp, a bank holding company, is the parent company of four financial institutions:Heritage Bank of Commerce, a commercial bank headquartered in the city of San Jose, with Loan Production offices in San Jose, Pittsburg, Santa Cruz, Elk Grove, Watsonville and Chico;Heritage Bank East Bay, a commercial bank headquartered in the city of Fremont, with an office in Danville;Heritage Bank South Valley, a commercial bank headquartered in the city of Morgan Hill, with an office in Gilroy; andBank of Los Altos, with two branches in Los Altos and an office in Mountain View.
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 theAnnual Reporton Form 10-K for the year ended December 31, 2000 and theQuarterly Reportson Form 10-Q filed by the Company in fiscal 2001.
For further information about the Company’s financial performance, contact Brad L. Smith, Chief Executive Officer, 408-947-6900 or visit the Company’s web site at www.heritagecommercecorp.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.
END
Heritage Commerce Corp
(unaudited)
| At and For the Three Months Ended | At and For the Six Months Ended | |||||||||||||||||||||||||
| June 30, | June 30, | Percent | June 30, | June 30, | Percent | |||||||||||||||||||||
| (In thousands, except per share amounts) | 2001 | 2000 | Change | 2001 | 2000 | Change | ||||||||||||||||||||
| Income Statement Data | ||||||||||||||||||||||||||
| Net Interest Income | $ | 10,620 | $ | 10,380 | 2 | % | $ | 21,700 | $ | 19,498 | 11 | % | ||||||||||||||
| Provision for Loan Losses | 528 | 534 | -1 | % | 1,055 | 1,214 | -13 | % | ||||||||||||||||||
| Noninterest Income | 1,647 | 614 | 168 | % | 2,868 | 1,350 | 112 | % | ||||||||||||||||||
| Noninterest Expense | 8,669 | 8,225 | 5 | % | 16,936 | 15,015 | 13 | % | ||||||||||||||||||
| Income Tax Provision | 1,180 | 746 | 58 | % | 2,506 | 1,613 | 55 | % | ||||||||||||||||||
| Net Income | $ | 1,890 | $ | 1,489 | 27 | % | $ | 4,071 | $ | 3,006 | 35 | % | ||||||||||||||
| Per Share Data | ||||||||||||||||||||||||||
| Earnings Per Share | ||||||||||||||||||||||||||
| Basic | $ | 0.17 | $ | 0.14 | 21 | % | $ | 0.37 | $ | 0.29 | 28 | % | ||||||||||||||
| Diluted | $ | 0.17 | $ | 0.13 | 31 | % | $ | 0.36 | $ | 0.27 | 33 | % | ||||||||||||||
| Book Value Per Common Share | $ | 6.39 | $ | 5.71 | 12 | % | $ | 6.39 | $ | 5.71 | 12 | % | ||||||||||||||
| Weighted average shares outstanding used in computing: | ||||||||||||||||||||||||||
| Basic earnings per share | 11,096,230 | 10,472,289 | 6 | % | 11,053,894 | 10,429,176 | 6 | % | ||||||||||||||||||
| Diluted earnings per share | 11,400,038 | 11,276,634 | 1 | % | 11,370,308 | 11,227,776 | 1 | % | ||||||||||||||||||
| Shares outstanding at period end | 11,104,574 | 10,563,818 | 5 | % | 11,104,574 | 10,563,818 | 5 | % | ||||||||||||||||||
| Balance Sheet Data | ||||||||||||||||||||||||||
| Total Assets | $ | 867,631 | $ | 814,295 | 7 | % | ||||||||||||||||||||
| Securities, Available-For-Sale | 62,072 | 79,429 | -23 | % | ||||||||||||||||||||||
| Securities, Held-To-Maturity | 18,999 | 21,394 | -11 | % | ||||||||||||||||||||||
| Loans Held-For-Sale | 40,680 | 27,620 | 47 | % | ||||||||||||||||||||||
| Loans | 605,132 | 521,538 | 16 | % | ||||||||||||||||||||||
| Allowance For Loan Losses | 10,347 | 7,738 | 34 | % | ||||||||||||||||||||||
| Total Deposits | 770,168 | 737,116 | 4 | % | ||||||||||||||||||||||
| Total Shareholders’ Equity | 70,967 | 60,276 | 18 | % | ||||||||||||||||||||||
| Unrealized Gain (loss) on Securities, Net | 656 | (1,306 | ) | 150 | % | |||||||||||||||||||||
| Nonperforming Loans | 66 | 1,092 | -94 | % | ||||||||||||||||||||||
| Selected Financial Ratios | ||||||||||||||||||||||||||
| Net Interest Margin | 5.52 | % | 5.91 | % | ||||||||||||||||||||||
| Annualized Return on Average Assets | 0.95 | % | 0.84 | % | ||||||||||||||||||||||
| Annualized Return on Average Equity | 11.90 | % | 10.38 | % | ||||||||||||||||||||||
| Allowance for Loan Losses to Nonperforming Loans | 15661 | % | 709 | % | ||||||||||||||||||||||
| Allowance for Loan Losses to Total Loans | 1.71 | % | 1.48 | % | ||||||||||||||||||||||
| Leverage Ratio | 9.78 | % | 9.06 | % | ||||||||||||||||||||||
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: July 23, 2001 | HERITAGE COMMERCE CORP | |
| By: | /s/ Lawrence D. McGovern | |
| Lawrence D. McGovern | ||
| Chief Financial Officer / Executive Vice President | ||
