Heritage Commerce Corp (HTBK) Reports Q3 2023 Earnings of $15.8 Million

• Heritage Commerce Corp (NASDAQ:HTBK) reported a net income of $15.8 million for Q3 2023, a decrease from Q3 2022's $18.1 million.

• The company's net income for the first nine months of 2023 increased by 12% to $51.1 million, compared to $45.8 million for the same period in 2022.

• HTBK's total assets decreased by 1% to $5.403 billion at the end of September 2023, compared to $5.431 billion at the end of September 2022.

• The company's liquidity position remains strong, with total available lines of credit amounting to $3,189,112.

Heritage Commerce Corp (NASDAQ:HTBK) announced its third-quarter 2023 earnings on October 27, 2023. The company reported a net income of $15.8 million, or $0.26 per average diluted common share, a decrease from the $18.1 million, or $0.30 per average diluted common share, reported for the third quarter of 2022. However, for the first nine months of 2023, the company's net income increased by 12% to $51.1 million, or $0.83 per average diluted common share, compared to $45.8 million, or $0.75 per average diluted common share, for the same period in 2022.

Financial Performance and Challenges

Despite the decrease in net income for Q3 2023, HTBK's President and CEO, Clay Jones, stated that the company delivered strong operating results for the quarter, leading to record earnings for the first nine months of 2023. He attributed the decrease in Q3 profits to the expected increased cost of deposits. However, the year-to-date net income increased by 12% compared to the first nine months of 2022, fueled by steady growth in deposits, moderate loan demand, and higher net interest income.

Financial Condition and Liquidity Position

HTBK's total assets decreased by 1% to $5.403 billion at the end of September 2023, compared to $5.431 billion at the end of September 2022. However, the company's liquidity position remains strong, with total available lines of credit amounting to $3,189,112. This includes excess funds at the Federal Reserve Bank, FRB discount window collateralized line of credit, Federal Home Loan Bank collateralized borrowing capacity, unpledged investment securities, off-balance sheet deposits, federal funds purchase arrangements, and holding company line of credit.

Operating Results and Balance Sheet Review

HTBK's return on average tangible assets for the quarter ended September 30, 2023, was 1.20%, while the return on average tangible common equity was 13.06%. The company's total loans, including loans held-for-sale, amounted to $3,257,480, with an average yield of 5.46% for the quarter ended September 30, 2023.

Capital Management and Credit Quality

HTBK continues to maintain a strong balance sheet and a solid allowance for credit losses on loans, reflecting prudent credit risk management. The company's strong liquidity position is enhanced by a well-diversified deposit profile and access to ample alternative funding sources, positioning it well to navigate challenging economic headwinds and continue to grow the franchise.

Explore the complete 8-K earnings release (here) from Heritage Commerce Corp for further details.

This article first appeared on GuruFocus.