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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) October 24, 2000
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Heritage Commerce Corp
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(Exact name of registrant as specified in its charter)
CA 00-23877 77-0469558
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(State of other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
150 Almaden Blvd., San Jose, CA 95113
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 947-6900
None
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(Former name or former address, if changed since last report.)
Item 5. Other Events.
HERITAGE COMMERCE CORP REPORTS FINANCIAL RESULTS
FOR THE THIRD QUARTER OF 2000
Heritage Commerce Corp (the "Company") (Nasdaq: HTBK) today reported
consolidated earnings of $1,411,000 for the third quarter of 2000, up 87%, or
$658,000 from $753,000 for the third quarter of 1999. Earnings per diluted share
for the third quarter of 2000 were $0.19, up 90%, or $.09, from $0.10 per
diluted share for the prior year period. Annualized year-to-date return on
average assets and return on average equity were 0.82% and 9.32%, respectively,
compared with returns of 0.72% and 8.06%, respectively, for the same period in
1999.
Effective October 1, 2000, the Company completed the pending merger with Western
Holdings Bancorp. Under the terms of the merger agreement, Western Holdings
Bancorp shareholders received 1.2264 shares of Heritage Commerce Corp common
stock for each share of Western Holdings Bancorp common stock. The merger will
be accounted for as a pooling of interests. Bank of Los Altos now operates as a
wholly owned subsidiary of Heritage Commerce Corp. The financial information
herein represents only the activities of Heritage Commerce Corp as of and for
the period ended September 30, 2000 and does not include any financial
information of the Bank of Los Altos or Western Holdings Bancorp. Pro forma
information for Western Holdings Bancorp and Heritage Commerce Corp as of June
30, 2000 was filed with the Securities and Exchange Commission on October 16,
2000 on Form 8-K.
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For the third quarter of 2000, as compared with the same period of the previous
year, net interest income grew by $2,744,000, or 52%. The increase was primarily
due to an increase in the volume of the Company's interest earning assets,
specifically loans.
Noninterest income was $544,000 for the third quarter of 2000, compared with
$1,802,000 for the same period of the previous year. Noninterest income for the
third quarter of 1999 included $1,180,000 in revenue from the origination of
credit cards for an unaffiliated financial institution. The credit card
origination agreement terminated in 1999 and was not renewed.
Noninterest expenses, primarily salaries and benefits, increased by $319,000, or
6%, as a result of an increase in the number of employees to support the growth
of the Company. The Company's net interest margin was 5.90% for the quarter
ended September 30, 2000, compared with 5.89% for the quarter ended September
30, 1999.
Total assets as of September 30, 2000 were $607,848,000, an increase of
$139,274,000, or 30%, from September 30, 1999 and an increase of $131,184,000,
or 28%, from total assets of $476,664,000 at December 31, 1999. Total deposits
as of September 30, 2000 were $535,534,000, an increase of $118,884,000, or 29%,
from September 30, 1999 and an increase of $116,994,000, or 28%, from total
deposits of $418,540,000 at December 31, 1999.
Total portfolio loans as of September 30, 2000 were $383,603,000, an increase of
$138,192,000, or 56%, when compared to September 30, 1999. Total portfolio loans
as of December 31, 1999 were $271,855,000. The Company's allowance for loan
losses was $6,500,000, or 1.69%, of total loans as of September 30, 2000. This
compares to an allowance for loan losses of $4,569,000, or 1.86%, and
$5,003,000, or 1.84%, of total loans at September 30, 1999 and December 31,
1999, respectively. The Company had no non-performing assets (NPA's) as of
September 30, 2000. NPA's were $1,396,000 as of December 31, 1999, and
$1,187,000 as of September 30, 1999.
Shareholders' equity as of September 30, 2000 was $49,536,000, compared with
$43,630,000 as of September 30, 1999. Book value per share was $6.70 as of
September 30, 2000, compared to $6.21 as of September 30, 1999. The Company's
leverage capital ratio was 10.68% at September 30, 2000, compared to 10.71% at
September 30, 1999.
Heritage Commerce Corp, a bank holding company established February 17, 1998, is
the parent company of four financial institutions, Heritage Bank of Commerce, a
commercial bank headquartered in the city of San Jose, with a Loan Production
office in Santa Cruz; 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; and effective October
1, 2000, Bank of Los Altos, with two locations in Los Altos and an office in Mt.
View.
The Company's common stock is listed on the Nasdaq National Market under the
symbol "HTBK".
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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, 1999
and the Quarterly Reports on Form 10-Q filed by the Company in fiscal 2000.
For further information about the Company's financial performance, contact Brad
L. Smith, 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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HERITAGE COMMERCE CORP CONDENSED FINANCIAL STATEMENTS
(unaudited)
At and For the Three Months Ended At and For the Nine Months Ended
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September 30, September 30, Percent September 30, September 30, Percent
(In thousands, except per share 2000 1999 Change 2000 1999 Change
amounts) ------------- ------------- ------- ------------- ------------- -------
Income Statement Data
Net Interest Income $ 7,974 $ 5,230 52% $ 21,735 $ 15,137 44%
Provision for Loan Losses 500 356 40% 1,484 1,483 0%
Noninterest Income 544 1,802 (70)% 1,418 3,713 (62)%
Noninterest Expense 5,822 5,503 6% 16,586 14,252 16%
Net Income $ 1,411 $ 753 87% $ 3,258 $ 2,055 59%
Per Share Data
Earnings Per Share
Basic $ 0.19 $ 0.11 73% $ 0.46 $ 0.32 44%
Diluted 0.19 0.10 90% 0.44 0.28 57%
Book Value Per Common Share 6.70 6.21 8% 6.70 6.21 8%
Weighted average shares outstanding
used in computing:
Basic 7,292,275 6,899,421 6% 7,138,237 6,384,190 12%
Diluted 7,548,528 7,659,864 (1)% 7,469,405 7,222,481 3%
Balance Sheet Data
Total Assets $607,848 $468,574 30%
Securities, Available-For-Sale 38,377 24,650 56%
Securities, Held-To-Maturity 11,921 13,845 (14)%
Loans Held-For-Sale 30,653 17,373 76%
Loans 383,603 245,411 56%
Allowance For Loan Losses 6,500 4,569 42%
Total Deposits 535,534 416,650 29%
Total Shareholders' Equity 49,536 43,630 14%
Unrealized Gain (loss) on Securities, Net 73 (52) (240)%
Nonperforming Loans - 1,187
Selected Financial Ratios
Net Interest Margin 5.90% 5.89%
Annualized Return on Average Assets 0.82% 0.72%
Annualized Return on Average Equity 9.32% 8.06%
Allowance for Loan Losses to Nonperforming Loans - 385%
Allowance for Loan Losses to Total Loans 1.69% 1.86%
Leverage Ratio 10.68% 10.71%
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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: October 24, 2000 HERITAGE COMMERCE CORP
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By: /s/ Lawrence D. McGovern
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Lawrence D. McGovern
Chief Financial Officer / Executive
Vice President