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Dec 31, 2023
Heritage Commerce Q4 2023 Earnings Report
Net income was $13.3 million, or $0.22 per average diluted common share.
Key Takeaways
Heritage Commerce Corp reported a net income of $13.3 million for Q4 2023, with diluted earnings per share of $0.22. The company's loan growth resulted in an increase of 2% year-over-year and from the prior quarter, while client deposits remained stable.
Net income for Q4 2023 was $13.3 million, or $0.22 per diluted share, compared to $20.8 million, or $0.34 per diluted share, for Q4 2022.
Loan growth increased 2% year-over-year and from the prior quarter.
Total deposits were relatively flat at $4.38 billion at December 31, 2023, compared to $4.39 billion at December 31, 2022.
Total liquidity and borrowing capacity was $2.87 billion at December 31, 2023.
Heritage Commerce
Heritage Commerce
Forward Guidance
Company anticipates stabilization in their cost of funds following the recent Fed guidance on expected rate reductions in 2024.
Positive Outlook
- Anticipate stabilization in our cost of funds following the recent Fed guidance on expected rate reductions in 2024.
- Focus remains on orderly organic growth.
- Avoiding borrowed funds and brokered deposits.
- Local community retail and commercial deposit relationships serve as a stable and lower-cost funding source, reflecting our disciplined management approach.
- Have a strong balance sheet, evidenced by robust capital, ample liquidity, and a diversified loan portfolio.
Challenges Ahead
- The pre-tax unrealized loss on the securities available-for-sale portfolio was ($9.9) million, or ($7.1) million net of taxes, which was 1.1% of total shareholders’ equity at December 31, 2023
- The pre-tax unrecognized loss on the securities held-to-maturity portfolio was ($86.5) million, or ($60.9) million net of taxes, which was 9.0% of total shareholders’ equity at December 31, 2023
- Total noninterest income decreased (30%) to $1.9 million for the fourth quarter of 2023, compared to $2.8 million for the fourth quarter of 2022
- Net interest income decreased (18%) to $42.3 million for the fourth quarter of 2023, compared to $51.7 million for the fourth quarter of 2022.
- Total deposits decreased ($197.0) million, or (4%) from $4.58 billion at September 30, 2023, as a result of deposit outflows from clients operating expenses, tax payments, one-time capital events, profit distributions, and to a lesser extent clients moving deposits to outside investment alternatives.