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) January 26, 2000
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.)
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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Item 5. Other Events.
Heritage Commerce Corp reports Fifth
Consecutive Year of Record Earnings and a
10% Stock Dividend to its Shareholders
The Directors of Heritage Commerce Corp (the "Company") (Nasdaq: HTBK),
at its Board Meeting of January 20, 2000, declared a 10% stock dividend
payable to Heritage Commerce Corp shareholders of record as of February 7,
2000. The payable date of the dividend has been set for February 21, 2000.
Having just completed its fifth full calendar year of operations, the
Company today reported consolidated net income of $3,026,000 for the year
ended December 31, 1999, up 41% from the $2,150,000 reported for the prior
year. Net income per diluted share was $.45 for the year ended December 31,
1999, up 22% from the $.37 reported for the prior year. For fiscal year 1999,
return on average assets and return on average equity were 0.75% and 8.26%
compared with returns of 0.65% and 8.22% for fiscal year 1998.
"We are pleased to punctuate a very successful 1999 with the payment
of a 10% stock dividend to our shareholders," stated John Rossell, President
& Chief Executive Officer. "Their support and confidence have been essential
to our success."
For the fourth quarter of 1999, net income was $971,000, up 64% from
the $592,000 reported for the same period the prior year. Net income per
diluted share was $.14 for the quarter ended December 31, 1999, up 40% from
the $.10 reported for same quarter of the prior year. The Company, as a
policyholder in The Canada Life Assurance Company, received a one-time
pre-tax gain of $530,000 in the fourth quarter as a result of the
demutualization of that company.
Total assets as of December 31, 1999 were $476,664,000, up $71,733,000,
or 18%, from December 31, 1998. Total deposits as of December 31, 1999 were
$418,540,000, an increase of $49,582,000, or 13%, from December 31, 1998.
Total portfolio loans as of December 31, 1999 were $271,855,000, up
$35,548,000, or 15%, from December 31, 1998. The Company's allowance for
loan losses was $5,003,000 as of December 31, 1999, up $1,178,000 from
$3,825,000 as of December 31, 1998. The ratio of the allowance to portfolio
loans was 1.84% and 1.62% at year-end 1999 and 1998. Although the Company's
Non-Performing Assets (NPA's) increased $108,000 from $1,288,000 as of
December 31, 1998 to $1,396,000 as of December 31, 1999, NPA's as a
percentage of total portfolio loans decreased from 0.55% to 0.51% over the
same period.
The Company's shareholders' equity at December 31, 1999 was $44,531,000,
compared with $30,697,000 as of December 31, 1998, a 45% increase which
reflects current year earnings and the mid-1999 $11.2 million common stock
offering. Book value per share, as adjusted for a 3 for 2 stock split, was
$6.97 as of December 31, 1999, compared to $5.53 as of December 31, 1998.
The Company's leverage capital ratio increased to 9.38% at December 31, 1999,
from 7.48% at December 31, 1998.
Heritage Commerce Corp, a bank holding company established February 17,
1998, is the parent company of three commercial banks: Heritage Bank of
Commerce, headquartered in San Jose; Heritage Bank East Bay, headquartered
in Fremont, with an office in San Ramon; and Heritage Bank South Valley,
headquartered in the City of Morgan Hill. Plans are currently underway for
the relocation of Heritage Bank East Bay's San Ramon Office to the town of
Danville during the first quarter of 2000.
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 during fiscal year 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 statement to reflect
subsequent events or circumstances.
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Condensed Financial Statements
(unaudited)
At and For the Three Months Ended At and For the Twelve Months Ended
(Dollars in thousands, Dec. 31 Dec. 31 Percent Dec. 31 Dec. 31 Percent
except per Share amounts) 1999 1998 Change 1999 1998 Change
Statement of Income Data
Net Interest Income 5,639 5,463 3% 20,777 18,742 11%
Provision for Loan Losses 428 516 -17% 1,911 1,576 21%
Noninterest Income 1,270 944 35% 4,983 1,914 160%
Noninterest Expense 5,021 4,978 1% 19,274 15,606 24%
Net Income 971 592 64% 3,026 2,150 41%
Per Share Data
Earnings Per Share
Basic 0.15 0.11 36% 0.51 0.41 24%
Diluted 0.14 0.10 40% 0.45 0.37 22%
Book Value Per Common Share 6.97 5.53 26% 6.97 5.53 26%
Weighted average shares
used in computing:
Basic 6,389,926 5,551,856 15% 5,950,339 5,242,516 14%
Diluted 7,115,830 6,216,485 14% 6,706,726 5,844,038 15%
Balance Sheet Data
Total Assets 476,664 404,931 18%
Securities, Available-For-Sale 17,430 50,249 -65%
Securities, Held-To-Maturity 13,834 26,544 -48%
Loans Held-For-Sale 22,243 33,079 -33%
Loans 271,855 236,307 15%
Allowance For Loan Losses 5,003 3,825 31%
Total Deposits 418,540 368,958 13%
Total Shareholders' Equity 44,531 30,697 45%
Unrealized Holding Gain (loss) on Securities, Net (137) 658 -121%
Nonperforming Loans 1,396 1,288 8%
Other Real Estate Owned --- --- ---
Selected Financial Ratios
Net Interest Margin 5.64% 6.23%
Return on Average Assets 0.75% 0.65%
Return on Average Equity 8.26% 8.22%
Allowance for Loan Losses to Nonperforming Loans 358% 297%
Allowance for Loan Losses to Total Loans 1.84% 1.62%
Leverage Ratio 9.38% 7.48%
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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: January 26, 2000 HERITAGE COMMERCE CORP
By: /s/ Lawrence D. McGovern
Lawrence D. McGovern
Chief Financial Officer / Executive Vice President
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