Heritage Commerce Corp Reports Fourth Quarter and Full Year 2025 Financial Results

Adjusted 4^th quarter earnings increased 62% year over year due to sustained balance‑sheet growth, NIM expansion and positive operating leverage.

Announced strategic merger to expand market presence and enhance long‑term growth opportunities.

SAN JOSE, Calif., Jan. 22, 2026 (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 fourth quarter and year ended December 31, 2025. All data are unaudited.

	Fourth Quarter 2025			Full Year 2025
FOURTH QUARTER AND FULL YEAR 2025 HIGHLIGHTS:	Reported	Adjusted(1)		Reported	Adjusted(1)
Net Income	$15.1 Million	$17.2 Million		$47.8 Million	$56.4 Million
Diluted Earnings Per Share ("EPS")	$0.25	$0.28		$0.78	$0.91
Return on Average Assets ("ROAA")	1.04%	1.18%		0.86%	1.01%
Return on Average Tangible Common Equity ("ROATCE")(1)	11.29%	12.83%		9.12%	10.77%
Pre-Provision Net Revenue ("PPNR")(1)	$22.6 Million	$24.6 Million		$69.6 Million	$80.9 Million
Fully Tax Equivalent ("FTE") Net Interest Margin(1)	3.72%	3.72%		3.56%	3.56%
Efficiency Ratio	57.89%	54.04%		64.75%	59.05%

CEO COMMENTARY:

“The year 2025, and the fourth quarter in particular, was a consequential time for Heritage, and we are proud of the way our team worked to deliver solid growth and results, driven by steady performance across the business, sustained client momentum and strong credit quality. This quarter reflects strong execution across the organization. We delivered meaningful balance‑sheet growth, expanded operating leverage through disciplined expense management, and increased adjusted full year earnings by 39%. Our focus on consistent performance and prudent growth continues to strengthen our foundation,” said Clay Jones, President and Chief Executive Officer.

“The recently announced merger with Citizens Business Bank represents an exciting next step in Heritage’s journey, building on the strength of our franchise and the consistent performance we delivered throughout 2025. As we work toward the completion of the transaction, we remain fully focused on executing our strategy and continuing to support our clients, colleagues, and communities.”

LINKED-QUARTER BASIS	FULL YEAR 2025 vs. 2024
FINANCIAL HIGHLIGHTS / KEY PERFORMANCE METRICS:
Total revenue of $53.6 million, an increase of 7%, or $3.6 million FTE net interest margin(1) of 3.72%, an increase of 12 basis points from 3.60% Reported net income of $15.1 million and reported EPS of $0.25, up 3% and 4%, from $14.7 million and $0.24, respectively Adjusted net income(1) of $17.2 million and adjusted EPS(1) of $0.28, both up 17% from $14.7 million and $0.24, respectively Loans held-for-investment (“HFI”) of $3.7 billion, up $71.4 million, or 2% Total deposits of $4.9 billion, up $126.5 million, or 3% Nonperforming assets (“NPAs”) to total assets of 0.05%, compared to 0.07% Adjusted efficiency ratio(1) of 54.04%, a decrease of 7% from efficiency ratio of 58.05% Adjusted ROAA(1) of 1.18%, an increase of 12% over ROAA of 1.05% Adjusted ROATCE(1) of 12.83%, an increase of 15% over ROATCE(1) of 11.14%	Total revenue of $197.5 million, an increase of 15%, or $25.1 million FTE net interest margin(1) of 3.56%, an increase of 31 basis points from 3.25% Reported net income of $47.8 million and reported EPS of $0.78, both up 18%, from $40.5 million and $0.66, respectively Adjusted net income(1) of $56.4 million and adjusted EPS(1) of $0.91, up 39% and 38%, from $40.5 million and $0.66, respectively Loans HFI of $3.7 billion, up $161.1 million, or 5% Total deposits of $4.9 billion, up $83.1 million, or 2%  NPAs to total assets of 0.05%, compared to 0.14% Adjusted efficiency ratio(1) of 59.05%, a decrease of 10% from efficiency ratio of 65.88% Adjusted ROAA(1) of 1.01%, an increase of 33% over ROAA of 0.76% Adjusted ROATCE(1) of 10.77%, an increase of 34% over ROATCE(1) of 8.05%

⁽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 pre-tax charges primarily related to a legal settlement in the second quarter of 2025 and $2.1 million of pre-tax merger-related costs in the fourth quarter of 2025 as presented in the reconciliation of non-GAAP financial measures at the end of this press release.

About Heritage Commerce Corp

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, 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.

Recent Merger Announcement

On December 17, 2025, CVB Financial Corp. (Nasdaq: CVBF; together with Citizens Business Bank, National Association, “Citizens”) and Heritage Commerce Corp (Nasdaq: HTBK; together with Heritage Bank of Commerce, “Heritage”), jointly announced that they have entered into a definitive merger agreement. Under the terms of the agreement, Heritage will merge with and into Citizens in an all-stock transaction valued at approximately $811 million, or $13.00 per HTBK share, based on CVBF’s closing stock price on December 16, 2025. The value of the transaction is based on a specified closing price and is subject to CVBF stock price fluctuations. Upon completion, the combination is expected to create a top-performing California business bank with approximately $22 billion in assets, more than 75 offices and branches, and a deeply rooted presence in the State’s key economic centers. The proposed merger has been unanimously approved by the respective Boards of Directors of both companies and is expected to close in the second quarter of 2026, subject to customary regulatory approvals, Heritage and Citizens shareholder approvals, and other closing conditions. For more information, please refer to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 17, 2025.

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 and fourth quarters of 2025 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) 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; (vi) 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; (vii) political events that have accompanied or that may in the future accompany or result from recent political changes, particularly including the imposition of tariffs, sociopolitical events and conditions that result from political conflicts and law enforcement activities that may adversely affect our markets or our clients; (viii) 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; (ix) 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; (x) factors that affect the value and liquidity of our investment portfolios, particularly the values of securities available-for-sale; (xi) 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; (xii) 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; (xiii) 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; (xiv) 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 (xv) our success in managing the risks involved in the foregoing factors. In addition, statements regarding the timing and impact of the closing of the proposed merger with Citizens are subject to risks and uncertainties. For more information on factors that could cause our expectations regarding the proposed merger with Citizens to differ, potentially materially, please refer to our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 17, 2025.

Member FDIC

For additional information, email:
InvestorRelations@herbank.com

		For the Quarter Ended:												Percent Change From:						For the Year Ended:
CONSOLIDATED INCOME STATEMENTS		December 31,				September 30,				December 31,				September 30,			December 31,			December 31,				December 31,				Percent
(in $000’s, unaudited)		2025				2025				2024				2025			2024			2025				2024				Change
Interest income		$	67,048			$	65,094			$	64,043			3	%		5	%		$	256,999			$	240,344			7	%
Interest expense			16,626				18,306				20,448			(9)	%		(19)	%			71,624				79,051			(9)	%
Net interest income before provision for credit losses on loans			50,422				46,788				43,595			8	%		16	%			185,375				161,293			15	%
Provision for credit losses on loans			610				416				1,331			47	%		(54)	%			1,816				2,139			(15)	%
Net interest income after provision for credit losses on loans			49,812				46,372				42,264			7	%		18	%			183,559				159,154			15	%
Noninterest income:
Service charges and fees on deposit accounts			969				898				885			8	%		9	%			3,688				3,561			4	%
FHLB and FRB stock dividends			592				587				590			1	%		0	%			2,353				2,355			0	%
Increase in cash surrender value of life insurance			563				564				528			0	%		7	%			2,213				2,097			6	%
Termination fees			121				—				18			N/A			572	%			435				177			146	%
Servicing income			82				77				77			6	%		6	%			302				365			(17)	%
Gain on sales of SBA loans			30				—				125			N/A			(76)	%			215				473			(55)	%
Gain on proceeds from company-owned life insurance			—				—				—			N/A			N/A				—				219			(100)	%
Other			842				1,091				552			(23)	%		53	%			2,883				1,856			55	%
Total noninterest income			3,199				3,217				2,775			(1)	%		15	%			12,089				11,103			9	%
Noninterest expense:
Salaries and employee benefits			16,787				16,948				16,976			(1)	%		(1)	%			66,537				63,952			4	%
Occupancy and equipment			2,357				2,528				2,495			(7)	%		(6)	%			9,944				10,226			-3	%
Professional fees			1,659				1,175				1,711			41	%		(3)	%			6,233				5,416			15	%
Other			10,239				8,375				9,122			22	%		12	%			45,145				33,989			33	%
Total noninterest expense			31,042				29,026				30,304			7	%		2	%			127,859				113,583			13	%
Income before income taxes			21,969				20,563				14,735			7	%		49	%			67,789				56,674			20	%
Income tax expense			6,852				5,865				4,114			17	%		67	%			19,959				16,146			24	%
Net income		$	15,117			$	14,698			$	10,621			3	%		42	%		$	47,830			$	40,528			18	%
PER COMMON SHARE DATA
(unaudited)
Basic earnings per share		$	0.25			$	0.24			$	0.17			4	%		47	%		$	0.78			$	0.66			18	%
Diluted earnings per share		$	0.25			$	0.24			$	0.17			4	%		47	%		$	0.78			$	0.66			18	%
Weighted average shares outstanding - basic			61,308,370				61,333,951				61,320,505			0	%		0	%			61,407,520				61,270,730			0	%
Weighted average shares outstanding - diluted			61,701,068				61,616,785				61,679,735			0	%		0	%			61,702,095				61,527,372			0	%
Common shares outstanding at period-end			61,368,708				61,277,541				61,348,095			0	%		0	%			61,368,708				61,348,095			0	%
Dividend per share		$	0.13			$	0.13			$	0.13			0	%		0	%		$	0.52			$	0.52			0	%
Book value per share		$	11.55			$	11.42			$	11.24			1	%		3	%		$	11.55			$	11.24			3	%
Tangible book value per share(1)		$	8.74			$	8.61			$	8.41			2	%		4	%		$	8.74			$	8.41			4	%
KEY PERFORMANCE METRICS
(in $000's, unaudited)
Annualized return on average equity			8.52	%			8.37	%			6.16	%		2	%		38	%			6.86	%			5.97	%		15	%
Annualized return on average tangible common equity(1)			11.29	%			11.14	%			8.25	%		1	%		37	%			9.12	%			8.05	%		13	%
Annualized return on average assets			1.04	%			1.05	%			0.75	%		(1)	%		39	%			0.86	%			0.76	%		13	%
Annualized return on average tangible assets(1)			1.07	%			1.08	%			0.78	%		(1)	%		37	%			0.88	%			0.78	%		13	%
Net interest margin (FTE)(1)			3.72	%			3.60	%			3.32	%		3	%		12	%			3.56	%			3.25	%		10	%
Total revenue		$	53,621			$	50,005			$	46,370			7	%		16	%		$	197,464			$	172,396			15	%
Pre-provision net revenue		$	22,579			$	20,979			$	16,066			8	%		41	%		$	69,605			$	58,813			18	%
Efficiency ratio			57.89	%			58.05	%			65.35	%		0	%		(11)	%			64.75	%			65.88	%		(2)	%
AVERAGE BALANCES
(in $000’s, unaudited)
Average assets		$	5,764,240			$	5,551,457			$	5,607,840			4	%		3	%		$	5,583,975			$	5,338,705			5	%
Average tangible assets(1)		$	5,591,718			$	5,378,468			$	5,433,439			4	%		3	%		$	5,410,766			$	5,163,485			5	%
Average earning assets		$	5,386,230			$	5,167,710			$	5,235,986			4	%		3	%		$	5,207,770			$	4,967,582			5	%
Average loans held-for-sale		$	1,395			$	1,230			$	2,260			13	%		(38)	%		$	1,787			$	2,001			(11)	%
Average loans held-for-investment		$	3,564,243			$	3,519,775			$	3,388,729			1	%		5	%		$	3,504,800			$	3,343,661			5	%
Average deposits		$	4,895,841			$	4,687,294			$	4,771,491			4	%		3	%		$	4,730,037			$	4,513,774			5	%
Average demand deposits - noninterest-bearing		$	1,288,941			$	1,187,357			$	1,222,393			9	%		5	%		$	1,197,836			$	1,174,854			2	%
Average interest-bearing deposits		$	3,606,900			$	3,499,937			$	3,549,098			3	%		2	%		$	3,532,201			$	3,338,920			6	%
Average interest-bearing liabilities		$	3,646,701			$	3,539,706			$	3,588,755			3	%		2	%		$	3,571,946			$	3,378,516			6	%
Average equity		$	703,611			$	696,385			$	686,263			1	%		3	%		$	697,463			$	678,543			3	%
Average tangible common equity(1)		$	531,089			$	523,396			$	511,862			1	%		4	%		$	524,254			$	503,323			4	%

__________________________________
⁽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		December 31,				September 30,				June 30,				March 31,				December 31,
(in $000’s, unaudited)		2025				2025				2025				2025				2024
Interest income		$	67,048			$	65,094			$	63,025			$	61,832			$	64,043
Interest expense			16,626				18,306				18,220				18,472				20,448
Net interest income before provision for credit losses on loans			50,422				46,788				44,805				43,360				43,595
Provision for credit losses on loans			610				416				516				274				1,331
Net interest income after provision for credit losses on loans			49,812				46,372				44,289				43,086				42,264
Noninterest income:
Service charges and fees on deposit accounts			969				898				929				892				885
FHLB and FRB stock dividends			592				587				584				590				590
Increase in cash surrender value of life insurance			563				564				548				538				528
Termination fees			121				—				227				87				18
Servicing income			82				77				87				98				77
Gain on sales of SBA loans			30				—				61				82				125
Other			842				1,091				541				409				552
Total noninterest income			3,199				3,217				2,977				2,696				2,775
Noninterest expense:
Salaries and employee benefits			16,787				16,948				16,227				16,575				16,976
Occupancy and equipment			2,357				2,528				2,525				2,534				2,495
Professional fees			1,659				1,175				1,819				1,580				1,711
Other			10,239				8,375				17,764				8,767				9,122
Total noninterest expense			31,042				29,026				38,335				29,456				30,304
Income before income taxes			21,969				20,563				8,931				16,326				14,735
Income tax expense			6,852				5,865				2,542				4,700				4,114
Net income		$	15,117			$	14,698			$	6,389			$	11,626			$	10,621
PER COMMON SHARE DATA
(unaudited)
Basic earnings per share		$	0.25			$	0.24			$	0.10			$	0.19			$	0.17
Diluted earnings per share		$	0.25			$	0.24			$	0.10			$	0.19			$	0.17
Weighted average shares outstanding - basic			61,308,370				61,333,951				61,508,180				61,479,579				61,320,505
Weighted average shares outstanding - diluted			61,701,068				61,616,785				61,624,600				61,708,361				61,679,735
Common shares outstanding at period-end			61,368,708				61,277,541				61,446,763				61,611,121				61,348,095
Dividend per share		$	0.13			$	0.13			$	0.13			$	0.13			$	0.13
Book value per share		$	11.55			$	11.42			$	11.31			$	11.30			$	11.24
Tangible book value per share(1)		$	8.74			$	8.61			$	8.49			$	8.48			$	8.41
KEY PERFORMANCE METRICS
(in $000's, unaudited)
Annualized return on average equity			8.52	%			8.37	%			3.68	%			6.81	%			6.16	%
Annualized return on average tangible common equity(1)			11.29	%			11.14	%			4.89	%			9.09	%			8.25	%
Annualized return on average assets			1.04	%			1.05	%			0.47	%			0.85	%			0.75	%
Annualized return on average tangible assets(1)			1.07	%			1.08	%			0.48	%			0.88	%			0.78	%
Net interest margin (FTE)(1)			3.72	%			3.60	%			3.54	%			3.39	%			3.32	%
Total revenue		$	53,621			$	50,005			$	47,782			$	46,056			$	46,370
Pre-provision net revenue		$	22,579			$	20,979			$	9,447			$	16,600			$	16,066
Efficiency ratio			57.89	%			58.05	%			80.23	%			63.96	%			65.35	%
AVERAGE BALANCES
(in $000’s, unaudited)
Average assets		$	5,764,240			$	5,551,457			$	5,458,420			$	5,559,896			$	5,607,840
Average tangible assets(1)		$	5,591,718			$	5,378,468			$	5,284,972			$	5,386,001			$	5,433,439
Average earning assets		$	5,386,230			$	5,167,710			$	5,087,089			$	5,188,317			$	5,235,986
Average loans held-for-sale		$	1,395			$	1,230			$	2,250			$	2,290			$	2,260
Average loans held-for-investment		$	3,564,243			$	3,519,775			$	3,504,518			$	3,429,014			$	3,388,729
Average deposits		$	4,895,841			$	4,687,294			$	4,618,007			$	4,717,517			$	4,771,491
Average demand deposits - noninterest-bearing		$	1,288,941			$	1,187,357			$	1,146,494			$	1,167,330			$	1,222,393
Average interest-bearing deposits		$	3,606,900			$	3,499,937			$	3,471,513			$	3,550,187			$	3,549,098
Average interest-bearing liabilities		$	3,646,701			$	3,539,706			$	3,511,237			$	3,589,872			$	3,588,755
Average equity		$	703,611			$	696,385			$	697,016			$	692,733			$	686,263
Average tangible common equity(1)		$	531,089			$	523,396			$	523,568			$	518,838			$	511,862

__________________________________
⁽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		December 31,				September 30,				December 31,				September 30,			December 31,
(in $000’s, unaudited)		2025				2025				2024				2025			2024
ASSETS
Cash and due from banks		$	21,682			$	42,442			$	29,864			(49)	%		(27)	%
Other investments and interest-bearing deposits in other financial institutions			625,346				705,300				938,259			(11)	%		(33)	%
Securities available-for-sale, at fair value			592,958				408,456				256,274			45	%		131	%
Securities held-to-maturity, at amortized cost			529,711				544,806				590,016			(3)	%		(10)	%
Loans - held-for-sale - SBA, including deferred costs			1,322				1,325				2,375			0	%		(44)	%
Loans - held-for-investment:
Commercial			550,362				523,110				531,350			5	%		4	%
Real estate:
CRE - owner occupied			623,293				629,855				601,636			(1)	%		4	%
CRE - non-owner occupied			1,475,061				1,416,987				1,341,266			4	%		10	%
Land and construction			133,558				137,170				127,848			(3)	%		4	%
Home equity			126,085				125,742				127,963			0	%		(1)	%
Multifamily			295,602				290,077				275,490			2	%		7	%
Residential mortgages			432,241				443,143				471,730			(2)	%		(8)	%
Consumer and other			17,366				15,938				14,837			9	%		17	%
Loans			3,653,568				3,582,022				3,492,120			2	%		5	%
Deferred loan fees, net			(508	)			(344	)			(183	)		48	%		178	%
Total loans - held-for-investment, net of deferred fees			3,653,060				3,581,678				3,491,937			2	%		5	%
Allowance for credit losses on loans			(49,999	)			(49,427	)			(48,953	)		1	%		2	%
Loans, net			3,603,061				3,532,251				3,442,984			2	%		5	%
Company-owned life insurance			83,423				82,861				81,211			1	%		3	%
Premises and equipment, net			9,213				9,429				10,140			(2)	%		(9)	%
Goodwill			167,631				167,631				167,631			0	%		0	%
Other intangible assets			4,625				5,078				6,439			(9)	%		(28)	%
Accrued interest receivable and other assets			125,725				124,141				119,813			1	%		5	%
Total assets		$	5,764,697			$	5,623,720			$	5,645,006			3	%		2	%
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand, noninterest-bearing		$	1,308,737			$	1,241,603			$	1,214,192			5	%		8	%
Demand, interest-bearing			957,146				922,077				936,587			4	%		2	%
Savings and money market			1,380,666				1,366,905				1,325,923			1	%		4	%
Time deposits - under $250			31,500				32,462				38,988			(3)	%		(19)	%
Time deposits - $250 and over			220,715				223,496				206,755			(1)	%		7	%
Insured Cash Sweep ("ICS")/Certificates of Deposit Account Registry Service ("CDARS") - interest-bearing demand, money market and time deposits			1,004,322				990,003				1,097,586			1	%		(8)	%
Total deposits			4,903,086				4,776,546				4,820,031			3	%		2	%
Subordinated debt, net of issuance costs			39,805				39,767				39,653			0	%		0	%
Accrued interest payable and other liabilities			113,240				107,397				95,595			5	%		18	%
Total liabilities			5,056,131				4,923,710				4,955,279			3	%		2	%
Shareholders’ Equity:
Common stock			509,611				508,664				510,070			0	%		0	%
Retained earnings			203,675				196,526				187,762			4	%		8	%
Accumulated other comprehensive loss			(4,720	)			(5,180	)			(8,105	)		(9)	%		(42)	%
Total shareholders' equity			708,566				700,010				689,727			1	%		3	%
Total liabilities and shareholders’ equity		$	5,764,697			$	5,623,720			$	5,645,006			3	%		2	%

		End of Period:
CONSOLIDATED BALANCE SHEETS		December 31,				September 30,				June 30,				March 31,				December 31,
(in $000’s, unaudited)		2025				2025				2025				2025				2024
ASSETS
Cash and due from banks		$	21,682			$	42,442			$	55,360			$	44,281			$	29,864
Other investments and interest-bearing deposits in other financial institutions			625,346				705,300				666,432				700,769				938,259
Securities available-for-sale, at fair value			592,958				408,456				307,035				370,976				256,274
Securities held-to-maturity, at amortized cost			529,711				544,806				561,205				576,718				590,016
Loans - held-for-sale - SBA, including deferred costs			1,322				1,325				1,156				1,884				2,375
Loans - held-for-investment:
Commercial			550,362				523,110				492,231				489,241				531,350
Real estate:
CRE - owner occupied			623,293				629,855				627,810				616,825				601,636
CRE - non-owner occupied			1,475,061				1,416,987				1,390,419				1,363,275				1,341,266
Land and construction			133,558				137,170				149,460				136,106				127,848
Home equity			126,085				125,742				120,763				119,138				127,963
Multifamily			295,602				290,077				285,016				284,510				275,490
Residential mortgages			432,241				443,143				454,419				465,330				471,730
Consumer and other			17,366				15,938				14,661				12,741				14,837
Loans			3,653,568				3,582,022				3,534,779				3,487,166				3,492,120
Deferred loan fees, net			(508	)			(344	)			(446	)			(268	)			(183	)
Total loans - held-for-investment, net of deferred fees			3,653,060				3,581,678				3,534,333				3,486,898				3,491,937
Allowance for credit losses on loans			(49,999	)			(49,427	)			(48,633	)			(48,262	)			(48,953	)
Loans, net			3,603,061				3,532,251				3,485,700				3,438,636				3,442,984
Company-owned life insurance			83,423				82,861				82,296				81,749				81,211
Premises and equipment, net			9,213				9,429				9,765				9,772				10,140
Goodwill			167,631				167,631				167,631				167,631				167,631
Other intangible assets			4,625				5,078				5,532				5,986				6,439
Accrued interest receivable and other assets			125,725				124,141				125,125				115,853				119,813
Total assets		$	5,764,697			$	5,623,720			$	5,467,237			$	5,514,255			$	5,645,006
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand, noninterest-bearing		$	1,308,737			$	1,241,603			$	1,151,242			$	1,128,593			$	1,214,192
Demand, interest-bearing			957,146				922,077				955,504				949,068				936,587
Savings and money market			1,380,666				1,366,905				1,320,142				1,353,293				1,325,923
Time deposits - under $250			31,500				32,462				35,356				37,592				38,988
Time deposits - $250 and over			220,715				223,496				210,818				213,357				206,755
ICS/CDARS -  interest-bearing demand, money market and time deposits			1,004,322				990,003				954,272				1,001,365				1,097,586
Total deposits			4,903,086				4,776,546				4,627,334				4,683,268				4,820,031
Subordinated debt, net of issuance costs			39,805				39,767				39,728				39,691				39,653
Accrued interest payable and other liabilities			113,240				107,397				105,471				95,106				95,595
Total liabilities			5,056,131				4,923,710				4,772,533				4,818,065				4,955,279
Shareholders’ Equity:
Common stock			509,611				508,664				509,888				511,596				510,070
Retained earnings			203,675				196,526				189,794				191,401				187,762
Accumulated other comprehensive loss			(4,720	)			(5,180	)			(4,978	)			(6,807	)			(8,105	)
Total shareholders' equity			708,566				700,010				694,704				696,190				689,727
Total liabilities and shareholders’ equity		$	5,764,697			$	5,623,720			$	5,467,237			$	5,514,255			$	5,645,006

		At or For the Quarter Ended:												Percent Change From:
ASSET QUALITY DATA		December 31,				September 30,				December 31,				September 30,			December 31,
(in $000’s, unaudited)		2025				2025				2024				2025			2024
Nonaccrual loans - held-for-investment:
Land and construction loans		$	1,663			$	2,346			$	5,874			(29)	%		(72)	%
Commercial loans			354				467				—			(24)	%		N/A
Commercial real estate ("CRE")			31				—				1,014			N/A			(97)	%
Home equity			—				655				290			(100)	%		(100)	%
Total nonaccrual loans - held-for-investment:			2,048				3,468				7,178			(41)	%		(71)	%
Loans over 90 days past due and still accruing			735				194				489			279	%		50	%
Total nonperforming loans			2,783				3,662				7,667			(24)	%		(64)	%
Foreclosed assets			—				—				—			N/A			N/A
Total nonperforming assets		$	2,783			$	3,662			$	7,667			(24)	%		(64)	%
Net charge-offs (recoveries) during the quarter		$	38			$	(378	)		$	197			(110)	%		(81)	%
Provision for credit losses on loans during the quarter		$	610			$	416			$	1,331			47	%		(54)	%
Allowance for credit losses on loans		$	49,999			$	49,427			$	48,953			1	%		2	%
Classified assets		$	29,223			$	34,633			$	41,661			(16)	%		(30)	%
Allowance for credit losses on loans to total loans			1.37	%			1.38	%			1.40	%		(1)	%		(2)	%
Allowance for credit losses on loans to total nonperforming loans			1,796.59	%			1,349.73	%			638.49	%		33	%		181	%
Nonperforming assets to total assets			0.05	%			0.07	%			0.14	%		(29)	%		(64)	%
Nonperforming loans to total loans			0.08	%			0.10	%			0.22	%		(20)	%		(64)	%
Classified assets to total assets			0.51	%			0.62	%			0.74	%		(18)	%		(31)	%
Classified assets to Heritage Commerce Corp
Tier 1 capital plus allowance for credit losses on loans			5	%			6	%			7	%		(17)	%		(29)	%
Classified assets to Heritage Bank of Commerce
Tier 1 capital plus allowance for credit losses on loans			5	%			6	%			7	%		(17)	%		(29)	%
OTHER PERIOD-END STATISTICS
(in $000’s, unaudited)
Heritage Commerce Corp:
Tangible common equity (1)		$	536,310			$	527,301			$	515,657			2	%		4	%
Shareholders’ equity / total assets			12.29	%			12.45	%			12.22	%		(1)	%		1	%
Tangible common equity / tangible assets (1)			9.59	%			9.67	%			9.43	%		(1)	%		2	%
Loan to deposit ratio			74.51	%			74.99	%			72.45	%		(1)	%		3	%
Noninterest-bearing deposits / total deposits			26.69	%			25.99	%			25.19	%		3	%		6	%
Total capital		$	629,931			$	620,762			$	610,644			1	%		3	%
Tier 1 capital		$	539,394			$	530,835			$	524,204			2	%		3	%
Total capital ratio			15.1	%			15.4	%			15.6	%		(2)	%		(3)	%
Tier 1 capital ratio			12.9	%			13.2	%			13.4	%		(2)	%		(4)	%
Common Equity Tier 1 capital ratio			12.9	%			13.2	%			13.4	%		(2)	%		(4)	%
Tier 1 leverage ratio			9.6	%			9.9	%			9.6	%		(3)	%		0	%
Heritage Bank of Commerce:
Tangible common equity / tangible assets (1)			10.05	%			10.13	%			9.79	%		(1)	%		3	%
Total capital ratio			14.8	%			15.1	%			15.1	%		(2)	%		(2)	%
Tier 1 capital ratio			13.6	%			13.8	%			13.9	%		(1)	%		(2)	%
Common Equity Tier 1 capital ratio			13.6	%			13.8	%			13.9	%		(1)	%		(2)	%
Tier 1 leverage ratio			10.1	%			10.3	%			10.0	%		(2)	%		1	%

__________________________________
⁽¹⁾This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.

		At or For the Quarter Ended:
ASSET QUALITY DATA		December 31,				September 30,				June 30,				March 31,				December 31,
(in $000’s, unaudited)		2025				2025				2025				2025				2024
Nonaccrual loans - held-for-investment:
Land and construction loans		$	1,663			$	2,346			$	4,198			$	4,793			$	5,874
Commercial loans			354				467				491				324				1,014
CRE			31				—				31				—				—
Home equity			—				655				728				927				290
Residential mortgages			—				—				607				—				—
Total nonaccrual loans - held-for-investment:			2,048				3,468				6,055				6,044				7,178
Loans over 90 days past due and still accruing			735				194				123				268				489
Total nonperforming loans			2,783				3,662				6,178				6,312				7,667
Foreclosed assets			—				—				—				—				—
Total nonperforming assets		$	2,783			$	3,662			$	6,178			$	6,312			$	7,667
Net charge-offs (recoveries) during the quarter		$	38			$	(378	)		$	145			$	965			$	197
Provision for credit losses on loans during the quarter		$	610			$	416			$	516			$	274			$	1,331
Allowance for credit losses on loans		$	49,999			$	49,427			$	48,633			$	48,262			$	48,953
Classified assets		$	29,223			$	34,633			$	37,525			$	40,034			$	41,661
Allowance for credit losses on loans to total loans			1.37	%			1.38	%			1.38	%			1.38	%			1.40	%
Allowance for credit losses on loans to total nonperforming loans			1,796.59	%			1,349.73	%			787.20	%			764.61	%			638.49	%
Nonperforming assets to total assets			0.05	%			0.07	%			0.11	%			0.11	%			0.14	%
Nonperforming loans to total loans			0.08	%			0.10	%			0.17	%			0.18	%			0.22	%
Classified assets to total assets			0.51	%			0.62	%			0.69	%			0.73	%			0.74	%
Classified assets to Heritage Commerce Corp
Tier 1 capital plus allowance for credit losses on loans			5	%			6	%			7	%			7	%			7	%
Classified assets to Heritage Bank of Commerce
Tier 1 capital plus allowance for credit losses on loans			5	%			6	%			6	%			7	%			7	%
OTHER PERIOD-END STATISTICS
(in $000’s, unaudited)
Heritage Commerce Corp:
Tangible common equity (1)		$	536,310			$	527,301			$	521,541			$	522,573			$	515,657
Shareholders’ equity / total assets			12.29	%			12.45	%			12.71	%			12.63	%			12.22	%
Tangible common equity / tangible assets (1)			9.59	%			9.67	%			9.85	%			9.78	%			9.43	%
Loan to deposit ratio			74.51	%			74.99	%			76.38	%			74.45	%			72.45	%
Noninterest-bearing deposits / total deposits			26.69	%			25.99	%			24.88	%			24.10	%			25.19	%
Total capital		$	629,931			$	620,762			$	613,956			$	615,774			$	610,644
Tier 1 capital		$	539,394			$	530,835			$	524,826			$	527,666			$	524,204
Total capital ratio			15.1	%			15.4	%			15.5	%			15.9	%			15.6	%
Tier 1 capital ratio			12.9	%			13.2	%			13.3	%			13.6	%			13.4	%
Common Equity Tier 1 capital ratio			12.9	%			13.2	%			13.3	%			13.6	%			13.4	%
Tier 1 leverage ratio			9.6	%			9.9	%			9.9	%			9.8	%			9.6	%
Heritage Bank of Commerce:
Tangible common equity / tangible assets (1)			10.05	%			10.13	%			10.28	%			10.15	%			9.79	%
Total capital ratio			14.8	%			15.1	%			15.1	%			15.4	%			15.1	%
Tier 1 capital ratio			13.6	%			13.8	%			13.8	%			14.1	%			13.9	%
Common Equity Tier 1 capital ratio			13.6	%			13.8	%			13.8	%			14.1	%			13.9	%
Tier 1 leverage ratio			10.1	%			10.3	%			10.4	%			10.2	%			10.0	%

__________________________________
⁽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											For the Quarter Ended
		December 31, 2025											September 30, 2025
						Interest				Average							Interest				Average
NET INTEREST INCOME AND NET INTEREST MARGIN		Average				Income/				Yield/			Average				Income/				Yield/
(in $000’s, unaudited)		Balance				Expense				Rate			Balance				Expense				Rate
Assets:
Loans, core bank		$	3,073,726			$	42,691			5.51	%		$	3,039,478			$	42,655			5.57	%
Prepayment fees			—				183			0.02	%			—				185			0.02	%
Bay View Funding factored receivables			94,023				4,310			18.19	%			74,353				3,654			19.50	%
Purchased residential mortgages			399,359				3,370			3.35	%			408,810				3,472			3.37	%
Loan fair value mark / accretion			(1,470	)			159			0.02	%			(1,636	)			164			0.02	%
Loans, gross (1)(2)			3,565,638				50,713			5.64	%			3,521,005				50,130			5.65	%
Securities - taxable			1,021,124				8,400			3.26	%			842,998				6,146			2.89	%
Securities - exempt from Federal tax (3)			27,735				248			3.55	%			28,683				256			3.54	%
Other investments and interest-bearing deposits in other financial institutions			771,733				7,740			3.98	%			775,024				8,615			4.41	%
Total interest earning assets (3)			5,386,230				67,101			4.94	%			5,167,710				65,147			5.00	%
Cash and due from banks			33,470											30,764
Premises and equipment, net			9,415											9,651
Goodwill and other intangible assets			172,522											172,989
Other assets			162,603											170,343
Total assets		$	5,764,240										$	5,551,457
Liabilities and shareholders’ equity:
Deposits:
Demand, noninterest-bearing		$	1,288,941										$	1,187,357
Demand, interest-bearing			948,217				1,347			0.56	%			932,996				1,463			0.62	%
Savings and money market			1,388,430				7,595			2.17	%			1,340,419				8,452			2.50	%
Time deposits - under $100			9,743				33			1.34	%			10,620				40			1.49	%
Time deposits - $100 and over			243,693				2,015			3.28	%			233,145				1,977			3.36	%
ICS/CDARS - interest-bearing demand, money market and time deposits			1,016,817				5,097			1.99	%			982,757				5,837			2.36	%
Total interest-bearing deposits			3,606,900				16,087			1.77	%			3,499,937				17,769			2.01	%
Total deposits			4,895,841				16,087			1.30	%			4,687,294				17,769			1.50	%
Short-term borrowings			19				—			0.00	%			26				—			0.00	%
Subordinated debt, net of issuance costs			39,782				539			5.38	%			39,743				537			5.36	%
Total interest-bearing liabilities			3,646,701				16,626			1.81	%			3,539,706				18,306			2.05	%
Total interest-bearing liabilities and demand, noninterest-bearing / cost of funds			4,935,642				16,626			1.34	%			4,727,063				18,306			1.54	%
Other liabilities			124,987											128,009
Total liabilities			5,060,629											4,855,072
Shareholders’ equity			703,611											696,385
Total liabilities and shareholders’ equity		$	5,764,240										$	5,551,457
Net interest income / margin (3)							50,475			3.72	%							46,841			3.60	%
Less tax equivalent adjustment (3)							(53	)										(53	)
Net interest income						$	50,422			3.71	%						$	46,788			3.59	%

__________________________________
⁽¹⁾Includes loans held-for-sale.  Nonaccrual loans are included in average balances.
⁽²⁾Yield amounts earned on loans include fees and costs. The accretion of net deferred loan fees into loan interest income was $222,000 for the fourth quarter of 2025, compared to $246,000 for the third quarter of 2025.  Prepayment fees totaled $183,000 for the fourth quarter of 2025, compared to $185,000 for the third quarter of 2025.
⁽³⁾Reflects the FTE adjustment for Federal tax-exempt income based on a 21% tax rate. This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.

		For the Quarter Ended											For the Quarter Ended
		December 31, 2025											December 31, 2024
NET INTEREST INCOME AND NET INTEREST MARGIN						Interest				Average							Interest				Average
		Average				Income/				Yield/			Average				Income/				Yield/
(in $000’s, unaudited)		Balance				Expense				Rate			Balance				Expense				Rate
Assets:
Loans, core bank		$	3,073,726			$	42,691			5.51	%		$	2,899,347			$	39,852			5.47	%
Prepayment fees			—				183			0.02	%			—				35			0.00	%
Bay View Funding factored receivables			94,023				4,310			18.19	%			59,153				3,084			20.74	%
Purchased residential mortgages			399,359				3,370			3.35	%			434,846				3,732			3.41	%
Loan fair value mark / accretion			(1,470	)			159			0.02	%			(2,357	)			429			0.06	%
Loans, gross (1)(2)			3,565,638				50,713			5.64	%			3,390,989				47,132			5.53	%
Securities - taxable			1,021,124				8,400			3.26	%			800,174				4,475			2.22	%
Securities - exempt from Federal tax (3)			27,735				248			3.55	%			30,570				274			3.57	%
Other investments and interest-bearing deposits in other financial institutions			771,733				7,740			3.98	%			1,014,253				12,220			4.79	%
Total interest earning assets (3)			5,386,230				67,101			4.94	%			5,235,986				64,101			4.87	%
Cash and due from banks			33,470											32,569
Premises and equipment, net			9,415											10,301
Goodwill and other intangible assets			172,522											174,401
Other assets			162,603											154,583
Total assets		$	5,764,240										$	5,607,840
Liabilities and shareholders’ equity:
Deposits:
Demand, noninterest-bearing		$	1,288,941										$	1,222,393
Demand, interest-bearing			948,217				1,347			0.56	%			906,581				1,452			0.64	%
Savings and money market			1,388,430				7,595			2.17	%			1,339,397				9,090			2.70	%
Time deposits - under $100			9,743				33			1.34	%			11,388				49			1.71	%
Time deposits - $100 and over			243,693				2,015			3.28	%			234,446				2,310			3.92	%
ICS/CDARS - interest-bearing demand, money market and time deposits			1,016,817				5,097			1.99	%			1,057,286				7,009			2.64	%
Total interest-bearing deposits			3,606,900				16,087			1.77	%			3,549,098				19,910			2.23	%
Total deposits			4,895,841				16,087			1.30	%			4,771,491				19,910			1.66	%
Short-term borrowings			19				—			0.00	%			28				—			0.00	%
Subordinated debt, net of issuance costs			39,782				539			5.38	%			39,629				538			5.40	%
Total interest-bearing liabilities			3,646,701				16,626			1.81	%			3,588,755				20,448			2.27	%
Total interest-bearing liabilities and demand, noninterest-bearing / cost of funds			4,935,642				16,626			1.34	%			4,811,148				20,448			1.69	%
Other liabilities			124,987											110,429
Total liabilities			5,060,629											4,921,577
Shareholders’ equity			703,611											686,263
Total liabilities and shareholders’ equity		$	5,764,240										$	5,607,840
Net interest income / margin (3)							50,475			3.72	%							43,653			3.32	%
Less tax equivalent adjustment (3)							(53	)										(58	)
Net interest income						$	50,422			3.71	%						$	43,595			3.31	%

__________________________________
⁽¹⁾Includes loans held-for-sale.  Nonaccrual loans are included in average balances.
⁽²⁾Yield amounts earned on loans include fees and costs. The accretion of net deferred loan fees into loan interest income was $222,000 for the fourth quarter of 2025, compared to $167,000 for the fourth quarter of 2024.  Prepayment fees totaled $183,000 for the fourth quarter of 2025, compared to $35,000 for the fourth quarter of 2024.
⁽³⁾Reflects the FTE adjustment for Federal tax-exempt income based on a 21% tax rate. This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.

		For the Year Ended											For the Year Ended
		December 31, 2025											December 31, 2024
NET INTEREST INCOME AND NET INTEREST MARGIN						Interest				Average							Interest				Average
		Average				Income/				Yield/			Average				Income/				Yield/
(in $000’s, unaudited)		Balance				Expense				Rate			Balance				Expense				Rate
Assets:
Loans, core bank		$	3,020,109			$	166,842			5.52	%		$	2,848,206			$	155,690			5.47	%
Prepayment fees			—				1,065			0.04	%			—				117			0.00	%
Bay View Funding factored receivables			74,189				14,253			19.21	%			55,717				10,980			19.71	%
Purchased residential mortgages			414,010				13,987			3.38	%			444,476				15,038			3.38	%
Loan fair value mark / accretion			(1,721	)			676			0.02	%			(2,737	)			1,158			0.04	%
Loans, gross (1)(2)			3,506,587				196,823			5.61	%			3,345,662				182,983			5.47	%
Securities - taxable			910,926				26,451			2.90	%			905,418				20,817			2.30	%
Securities - exempt from Federal tax (3)			29,280				1,051			3.59	%			31,403				1,127			3.59	%
Other investments, interest-bearing deposits in other financial institutions and Federal funds sold			760,977				32,895			4.32	%			685,099				35,654			5.20	%
Total interest earning assets (3)			5,207,770				257,220			4.94	%			4,967,582				240,581			4.84	%
Cash and due from banks			31,788											33,156
Premises and equipment, net			9,756											10,252
Goodwill and other intangible assets			173,209											175,220
Other assets			161,452											152,495
Total assets		$	5,583,975										$	5,338,705
Liabilities and shareholders’ equity:
Deposits:
Demand, noninterest-bearing		$	1,197,836										$	1,174,854
Demand, interest-bearing			943,845				5,732			0.61	%			916,466				6,439			0.70	%
Savings and money market			1,341,411				32,325			2.41	%			1,175,391				32,734			2.78	%
Time deposits - under $100			10,795				168			1.56	%			11,112				184			1.66	%
Time deposits - $100 and over			235,744				8,116			3.44	%			228,388				8,968			3.93	%
ICS/CDARS - interest-bearing demand, money market and time deposits			1,000,406				23,131			2.31	%			1,007,563				28,574			2.84	%
Total interest-bearing deposits			3,532,201				69,472			1.97	%			3,338,920				76,899			2.30	%
Total deposits			4,730,037				69,472			1.47	%			4,513,774				76,899			1.70	%
Short-term borrowings			20				—			0.00	%			24				—			0.00	%
Subordinated debt, net of issuance costs			39,725				2,152			5.42	%			39,572				2,152			5.44	%
Total interest-bearing liabilities			3,571,946				71,624			2.01	%			3,378,516				79,051			2.34	%
Total interest-bearing liabilities and demand, noninterest-bearing / cost of funds			4,769,782				71,624			1.50	%			4,553,370				79,051			1.74	%
Other liabilities			116,730											106,792
Total liabilities			4,886,512											4,660,162
Shareholders’ equity			697,463											678,543
Total liabilities and shareholders’ equity		$	5,583,975										$	5,338,705
Net interest income / margin (3)							185,596			3.56	%							161,530			3.25	%
Less tax equivalent adjustment (3)							(221	)										(237	)
Net interest income						$	185,375			3.56	%						$	161,293			3.25	%

__________________________________
⁽¹⁾Includes loans held-for-sale.  Nonaccrual loans are included in average balances.
⁽²⁾Yield amounts earned on loans include fees and costs. The accretion of net deferred loan fees into loan interest income was $935,000 for the year ended December 31, 2025, compared to $628,000 for the year ended December 31, 2024.  Prepayment fees totaled $1,065,000 for the year ended December 31, 2025, compared to $117,000 for the year ended December 31, 2024.
⁽³⁾Reflects the FTE adjustment for Federal tax-exempt income based on a 21% tax rate. This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Management considers adjusted net income and adjusted earnings per share, which exclude the $9.2 million of pre-tax charges primarily related to a legal settlement in the second quarter of 2025 and $2.1 million of pre-tax merger-related costs in the fourth quarter of 2025, for the year ended December 31, 2025, as a useful measurement of the Company’s profitability compared to other periods presented.

During the second quarter of 2025, the Company recorded pre-tax expenses of $9.2 million included in the other noninterest expense on the Company’s consolidated income statement, primarily due to 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. During the fourth quarter of 2025, the Company recorded pre-tax expenses of $2.1 million included in the other noninterest expense on the Company’s consolidated income statement, primarily due to charges related to investment banker and legal fees resulting from the pending merger with CVBF. Certain merger-related costs are not tax deductible.

The following table summarizes components of net income and diluted earnings per share for the periods indicated:

NET INCOME AND		For the Quarter Ended:
DILUTED EARNINGS PER SHARE		December 31,				September 30,				June 30,				March 31,				December 31,
(in $000’s, unaudited)		2025				2025				2025				2025				2024
Reported net income (GAAP)		$	15,117			$	14,698			$	6,389			$	11,626			$	10,621
Add: pre-tax legal settlement, merger and other charges			2,067				—				9,184				—				—
Less: related income taxes			(15	)			—				(2,618	)			—				—
Adjusted net income (non-GAAP)		$	17,169			$	14,698			$	12,955			$	11,626			$	10,621
Weighted average shares outstanding - diluted			61,701,068				61,616,785				61,624,600				61,708,361				61,679,735
Reported diluted earnings per share (GAAP)		$	0.25			$	0.24			$	0.10			$	0.19			$	0.17
Adjusted diluted earnings per share (non-GAAP)		$	0.28			$	0.24			$	0.21			$	0.19			$	0.17

NET INCOME AND		For the Year Ended:
DILUTED EARNINGS PER SHARE		December 31,				December 31,
(in $000’s, except per share amounts, unaudited)		2025				2024
Reported net income (GAAP)		$	47,830			$	40,528
Add: pre-tax legal settlement, merger and other charges			11,251				—
Less: related income taxes			(2,633	)			—
Adjusted net income (non-GAAP)		$	56,448			$	40,528
Weighted average shares outstanding - diluted			61,702,095				61,527,372
Reported diluted earnings per share (GAAP)		$	0.78			$	0.66
Adjusted diluted earnings per share (non-GAAP)		$	0.91			$	0.66

Management considers tangible book value per share as a useful measurement of the Company’s equity. The Company references the return on average tangible common equity and the return on average tangible assets as measurements of profitability.

The following table summarizes components of the tangible book value per share at the dates indicated:

		End of Period:
TANGIBLE BOOK VALUE PER SHARE		December 31,				September 30,				June 30,				March 31,				December 31,
(in $000’s, unaudited)		2025				2025				2025				2025				2024
Capital components:
Total equity (GAAP)		$	708,566			$	700,010			$	694,704			$	696,190			$	689,727
Less: preferred stock			—				—				—				—				—
Total common equity			708,566				700,010				694,704				696,190				689,727
Less: goodwill			(167,631	)			(167,631	)			(167,631	)			(167,631	)			(167,631	)
Less: other intangible assets			(4,625	)			(5,078	)			(5,532	)			(5,986	)			(6,439	)
Reported tangible common equity (non-GAAP)			536,310				527,301				521,541				522,573				515,657
Add: pre-tax legal settlement, merger and other charges			11,251				9,184				9,184				—				—
Less: related income taxes			(2,633	)			(2,618	)			(2,618	)			—				—
Adjusted tangible common equity (non-GAAP)		$	544,928			$	533,867			$	528,107			$	522,573			$	515,657
Common shares outstanding at period-end			61,368,708				61,277,541				61,446,763				61,611,121				61,348,095
Reported tangible book value per share (non-GAAP)		$	8.74			$	8.61			$	8.49			$	8.48			$	8.41
Adjusted tangible book value per share (non-GAAP)		$	8.88			$	8.71			$	8.59			$	8.48			$	8.41

The following tables summarize components of the annualized return on average tangible common equity and the annualized return on average tangible assets for the periods indicated:

RETURN ON AVERAGE TANGIBLE COMMON EQUITY AND AVERAGE ASSETS		For the Quarter Ended:
		December 31,				September 30,				June 30,				March 31,				December 31,
(in $000’s, unaudited)		2025				2025				2025				2025				2024
Reported net income (GAAP)		$	15,117			$	14,698			$	6,389			$	11,626			$	10,621
Add: pre-tax legal settlement, merger and other charges			2,067				—				9,184				—				—
Less: related income taxes			(15	)			—				(2,618	)			—				—
Adjusted net income (non-GAAP)		$	17,169			$	14,698			$	12,955			$	11,626			$	10,621
Average tangible common equity components:
Average equity (GAAP)		$	703,611			$	696,385			$	697,016			$	692,733			$	686,263
Less: goodwill			(167,631	)			(167,631	)			(167,631	)			(167,631	)			(167,631	)
Less: other intangible assets			(4,891	)			(5,358	)			(5,817	)			(6,264	)			(6,770	)
Total average tangible common equity (non-GAAP)		$	531,089			$	523,396			$	523,568			$	518,838			$	511,862
Reported annualized return on average equity (GAAP)			8.52		%		8.37		%		3.68		%		6.81		%		6.16		%
Adjusted annualized return on average equity (non-GAAP)			9.68		%		8.37		%		7.45		%		6.81		%		6.16		%
Reported annualized return on average tangible common equity (non-GAAP)			11.29		%		11.14		%		4.89		%		9.09		%		8.25		%
Adjusted annualized return on average tangible common equity (non-GAAP)			12.83		%		11.14		%		9.92		%		9.09		%		8.25		%
Average Assets (GAAP)		$	5,764,240			$	5,551,457			$	5,458,420			$	5,559,896			$	5,607,840
Reported annualized return on average assets (GAAP)			1.04		%		1.05		%		0.47		%		0.85		%		0.75		%
Adjusted annualized return on average assets (non-GAAP)			1.18		%		1.05		%		0.95		%		0.85		%		0.75		%

RETURN ON AVERAGE TANGIBLE COMMON		For the Year Ended:
EQUITY AND AVERAGE ASSETS		December 31,				December 31,
(in $000’s, unaudited)		2025				2024
Reported net income (GAAP)		$	47,830			$	40,528
Add: pre-tax legal settlement, merger and other charges			11,251				—
Less: related income taxes			(2,633	)			—
Adjusted net income (non-GAAP)		$	56,448			$	40,528
Average tangible common equity components:
Average equity (GAAP)		$	697,463			$	678,543
Less: goodwill			(167,631	)			(167,631	)
Less: other intangible assets			(5,578	)			(7,589	)
Total average tangible common equity (non-GAAP)		$	524,254			$	503,323
Reported annualized return on average equity (GAAP)			6.86		%		5.97		%
Adjusted annualized return on average equity (non-GAAP)			8.09		%		5.97		%
Reported annualized return on average tangible common equity (non-GAAP)			9.12		%		8.05		%
Adjusted annualized return on average tangible common equity (non-GAAP)			10.77		%		8.05		%
Average Assets (GAAP)		$	5,583,975			$	5,338,705
Reported annualized return on average assets (GAAP)			0.86		%		0.76		%
Adjusted annualized return on average assets (non-GAAP)			1.01		%		0.76		%

Management reviews yields on certain asset categories and the net interest margin of the Company on an FTE basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. The following tables summarize components of FTE net interest income of the Company for the periods indicated:

NET INTEREST INCOME		For the Quarter Ended:
AND NET INTEREST MARGIN		December 31,				September 30,				June 30,				March 31,				December 31,
(in $000’s, unaudited)		2025				2025				2025				2025				2024
Net interest income before credit losses on loans (GAAP)		$	50,422			$	46,788			$	44,805			$	43,360			$	43,595
Tax-equivalent adjustment on securities - exempt from Federal tax			53				53				57				58				58
Net interest income, FTE (non-GAAP)		$	50,475			$	46,841			$	44,862			$	43,418			$	43,653
Average balance of total interest earning assets		$	5,386,230			$	5,167,710			$	5,087,089			$	5,188,317			$	5,235,986
Net interest margin (annualized net interest income divided by the average balance of total interest earnings assets) (GAAP)			3.71		%		3.59		%		3.53		%		3.39		%		3.31		%
Net interest margin, FTE (annualized net interest income, FTE, divided by the average balance of total earnings assets) (non-GAAP)			3.72		%		3.60		%		3.54		%		3.39		%		3.32		%

NET INTEREST INCOME		For the Year Ended:
AND NET INTEREST MARGIN		December 31,				December 31,
(in $000’s, unaudited)		2025				2024
Net interest income before credit losses on loans (GAAP)		$	185,375			$	161,293
Tax-equivalent adjustment on securities - exempt from Federal tax			221				237
Net interest income, FTE (non-GAAP)		$	185,596			$	161,530
Average balance of total interest earning assets		$	5,207,770			$	4,967,582
Net interest margin (annualized net interest income divided by the average balance of total interest earnings assets) (GAAP)			3.56		%		3.25		%
Net interest margin, FTE (annualized net interest income, FTE, divided by the average balance of total interest earnings assets) (non-GAAP)			3.56		%		3.25		%

Management views its PPNR as a key metric for assessing the Company’s earnings power. The following table summarizes the components of PPNR for the periods indicated:

		For the Quarter Ended:
PRE-PROVISION NET REVENUE		December 31,				September 30,				June 30,				March 31,				December 31,
(in $000’s, unaudited)		2025				2025				2025				2025				2024
Net interest income before credit losses on loans		$	50,422			$	46,788			$	44,805			$	43,360			$	43,595
Noninterest income			3,199				3,217				2,977				2,696				2,775
Total revenue			53,621				50,005				47,782				46,056				46,370
Less: Noninterest expense			(31,042	)			(29,026	)			(38,335	)			(29,456	)			(30,304	)
Reported PPNR			22,579				20,979				9,447				16,600				16,066
Add: pre-tax legal settlement, merger and other charges			2,067				—				9,184				—				—
Adjusted PPNR		$	24,646			$	20,979			$	18,631			$	16,600			$	16,066

		For the Year Ended:
PRE-PROVISION NET REVENUE		December 31,				December 31,
(in $000’s, unaudited)		2025				2024
Net interest income before credit losses on loans		$	185,375			$	161,293
Noninterest income			12,089				11,103
Total revenue			197,464				172,396
Less: Noninterest expense			(127,859	)			(113,583	)
Reported PPNR			69,605				58,813
Add: pre-tax legal settlement, merger and other charges			11,251				—
Adjusted PPNR		$	80,856			$	58,813

The efficiency ratio, which is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income), measures how much it costs to produce one dollar of revenue. The following tables summarize components of the efficiency ratio of the Company for the periods indicated:

NONINTEREST EXPENSE AND		For the Quarter Ended:
EFFICIENCY RATIO		December 31,				September 30,				June 30,				March 31,				December 31,
(in $000’s, unaudited)		2025				2025				2025				2025				2024
Reported noninterest expense (GAAP)		$	31,042			$	29,026			$	38,335			$	29,456			$	30,304
Add: pre-tax legal settlement, merger and other charges			(2,067	)			—				(9,184	)			—				—
Adjusted noninterest expense (non-GAAP)		$	28,975			$	29,026			$	29,151			$	29,456			$	30,304
Net interest income before credit losses on loans		$	50,422			$	46,788			$	44,805			$	43,360			$	43,595
Noninterest income			3,199				3,217				2,977				2,696				2,775
Total revenue		$	53,621			$	50,005			$	47,782			$	46,056			$	46,370
Reported efficiency ratio (noninterest expense divided by total revenue) (GAAP)			57.89		%		58.05		%		80.23		%		63.96		%		65.35		%
Adjusted efficiency ratio (adjusted noninterest expense divided by total revenue) (non-GAAP)			54.04		%		58.05		%		61.01		%		63.96		%		65.35		%

NONINTEREST EXPENSE AND		For the Year Ended:
EFFICIENCY RATIO		December 31,				December 31,
(in $000’s, unaudited)		2025				2024
Reported noninterest expense (GAAP)		$	127,859			$	113,583
Add: pre-tax legal settlement, merger and other charges			(11,251	)			—
Adjusted noninterest expense (non-GAAP)		$	116,608			$	113,583
Net interest income before credit losses on loans		$	185,375			$	161,293
Noninterest income			12,089				11,103
Total revenue		$	197,464			$	172,396
Reported efficiency ratio (noninterest expense divided by total revenue) (GAAP)			64.75		%		65.88		%
Adjusted efficiency ratio (adjusted noninterest expense divided by total revenue) (non-GAAP)			59.05		%		65.88		%

Management considers the tangible common equity ratio as a useful measurement of the Company’s and the Bank’s equity. The following table summarizes components of the tangible common equity to tangible assets ratio of the Company at the dates indicated:

TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS		December 31,				September 30,				June 30,				March 31,				December 31,
(in $000’s, unaudited)		2025				2025				2025				2025				2024
Heritage Commerce Corp:
Capital components:
Total equity (GAAP)		$	708,566			$	700,010			$	694,704			$	696,190			$	689,727
Less: preferred stock			—				—				—				—				—
Total common equity			708,566				700,010				694,704				696,190				689,727
Less: goodwill			(167,631	)			(167,631	)			(167,631	)			(167,631	)			(167,631	)
Less: other intangible assets			(4,625	)			(5,078	)			(5,532	)			(5,986	)			(6,439	)
Total tangible common equity (non-GAAP)		$	536,310			$	527,301			$	521,541			$	522,573			$	515,657
Asset components:
Total assets (GAAP)		$	5,764,697			$	5,623,720			$	5,467,237			$	5,514,255			$	5,645,006
Less: goodwill			(167,631	)			(167,631	)			(167,631	)			(167,631	)			(167,631	)
Less: other intangible assets			(4,625	)			(5,078	)			(5,532	)			(5,986	)			(6,439	)
Total tangible / assets (non-GAAP)		$	5,592,441			$	5,451,011			$	5,294,074			$	5,340,638			$	5,470,936
Tangible common equity / tangible assets (non-GAAP)			9.59		%		9.67		%		9.85		%		9.78		%		9.43		%

The following table summarizes components of the tangible common equity to tangible assets ratio of the Bank at the dates indicated:

TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS		December 31,				September 30,				June 30,				March 31,				December 31,
(in $000’s, unaudited)		2025				2025				2025				2025				2024
Heritage Bank of Commerce:
Capital components:
Total equity (GAAP)		$	733,802			$	724,780			$	717,103			$	715,605			$	709,379
Less: preferred stock			—				—				—				—				—
Total common equity			733,802				724,780				717,103				715,605				709,379
Less: goodwill			(167,631	)			(167,631	)			(167,631	)			(167,631	)			(167,631	)
Less: other intangible assets			(4,625	)			(5,078	)			(5,532	)			(5,986	)			(6,439	)
Total tangible common equity (non-GAAP)		$	561,546			$	552,071			$	543,940			$	541,988			$	535,309
Asset components:
Total assets (GAAP)		$	5,760,786			$	5,620,681			$	5,464,618			$	5,512,160			$	5,641,646
Less: goodwill			(167,631	)			(167,631	)			(167,631	)			(167,631	)			(167,631	)
Less: other intangible assets			(4,625	)			(5,078	)			(5,532	)			(5,986	)			(6,439	)
Total tangible assets (non-GAAP)		$	5,588,530			$	5,447,972			$	5,291,455			$	5,338,543			$	5,467,576
Tangible common equity / tangible assets (non-GAAP)			10.05		%		10.13		%		10.28		%		10.15		%		9.79		%

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.