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Heritage Commerce Corp Reports Third Quarter and First Nine Months of 2025 Financial Results

News Provided by GlobeNewswire2025-10-23

Core Business Momentum and Operating Leverage Drive Double-Digit EPS Growth in Third Quarter

SAN JOSE, Calif., Oct. 23, 2025 (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 third quarter and first nine months of 2025. All data are unaudited.

REPORTED THIRD QUARTER 2025 HIGHLIGHTS:

Net Income	Diluted Earnings Per Share ( "EPS ")		Pre-Provision Net Revenue ( "PPNR ")	Fully Tax Equivalent ( "FTE ") Net Interest Margin⁽¹⁾		Efficiency Ratio		Return on Average Tangible Common Equity⁽¹⁾
$14.7 Million	$	0.24	$21.0 Million	3.60	%	58.05	%	11.14	%

CEO COMMENTARY:

“We executed well in the third quarter, generating double digit EPS growth and positive operating leverage,” said Clay Jones, President and Chief Executive Officer. “We had positive trends in loan and deposit growth, an expansion in our net interest margin, disciplined expense management, and an improvement in our asset quality. Loan and deposit growth was 1% and 3%, respectively, over the linked quarter, and we continue to add clients in key markets across our footprint, while maintaining our underwriting and pricing.”

“Our financial foundation is solid — marked by high capital reserves, strong liquidity, and sound asset quality. These fundamentals position us to continue to execute on our strategy, which is focused on increasing market share, growing our client franchise, and generating profitable growth, as we continue to support our community, colleagues, and shareholders. We are strengthening our platform to perform and position ourselves to deliver sustained, high-quality financial results for our shareholders.” said Mr. Jones.


LINKED-QUARTER BASIS	YEAR-OVER-YEAR

FINANCIAL HIGHLIGHTS:
Total revenue of $50.0 million, an increase of 5%, or $2.2 million Cost of funds decreased to 1.54% from 1.57% Reported net income of $14.7 million and reported EPS of $0.24, up 130% and 140%, from $6.4 million and $0.10, respectively Adjusted net income⁽¹⁾of $14.7 million and adjusted EPS⁽¹⁾of $0.24, up 13% and 14%, from $13.0 million and $0.21, respectively	Total revenue of $50.0 million, an increase of 19%, or $7.9 million Cost of funds decreased to 1.54% from 1.88% PPNR of $21.0 million, an increase of 44% from $14.6 million Net income of $14.7 million and EPS of $0.24, up 40% and 41%, respectively
BALANCE SHEET HIGHLIGHTS:
Loans held-for-investment (“HFI”) of $3.6 billion, up $47.3 million, or 1% Total deposits of $4.8 billion, up $149.2 million, or 3% Loan to deposit ratio of 74.99%, a decrease of 2% from 76.38% Total shareholders’ equity of $700.0 million, up $5.3 million	Increase in loans HFI of $171.4 million, or 5% Increase in total deposits of $47.0 million, or 1% Loan to deposit ratio of 74.99%, an increase of 4% from 72.11% Total shareholders’ equity of $700.0 million, up $14.7 million
ASSET QUALITY:
Nonperforming assets (“NPAs”) to total assets of 0.07%, compared to 0.11% Classified assets to total assets of 0.62%, compared to 0.69%	NPAs to total assets of 0.07%, compared to 0.13% Classified assets to total assets of 0.62%, compared to 0.59%
KEY PERFORMANCE METRICS:
FTE net interest margin⁽¹⁾of 3.60%, an increase of 6 basis points from 3.54% Efficiency ratio of 58.05%, a decrease of 5% from adjusted efficiency ratio⁽¹⁾of 61.01% Return on average assets of 1.05%, an increase of 11% over adjusted return on average assets⁽¹⁾ Return on average tangible common equity⁽¹⁾of 11.14%, an increase of 12% over adjusted return on average tangible common equity⁽¹⁾	FTE net interest margin⁽¹⁾of 3.60%, an increase of 45 basis points from 3.15% Efficiency ratio of 58.05%, a decrease of 11% from 65.37% Return on average assets of 1.05%, an increase of 35% Return on average tangible common equity⁽¹⁾of 11.14%, an increase of 35%
CAPITAL MANAGEMENT:
Common stock net repurchases of $2.2 million, compared to $1.9 million Total capital ratio of 15.4%, compared to 15.5% Common equity tier 1 capital ratio of 13.2%, compared to 13.3% Tangible common equity ratio⁽¹⁾of 9.67%, compared to 9.85%	Last twelve months ( "LTM ") common dividend of $31.9 million and dividend payout ratio of 74% LTM common stock net repurchases of $4.0 million Total capital ratio of 15.4%, compared to 15.6% Common equity tier 1 capital ratio of 13.2%, compared to 13.4% Tangible common equity ratio⁽¹⁾of 9.67%, compared to 9.50%

⁽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 and first nine months of 2025 as presented in the reconciliation of non-GAAP financial measures at the end of this press release.

Results of Operations:

Net income was $14.7 million, or $0.24 per average diluted common share, for the third quarter of 2025, compared to $6.4 million, or $0.10 for the second quarter of 2025, and $10.5 million, or $0.17 per average diluted common share for the third quarter of 2024. Adjusted net income⁽²⁾ was $13.0 million, or $0.21 per average diluted common share, for the second quarter of 2025. The annualized return on average assets was 1.05%, the annualized return on average equity was 8.37%, and the annualized return on average tangible common equity⁽²⁾ was 11.14% for the third quarter of 2025, compared to 0.47%, 3.68%, and 4.89%, respectively, for the second quarter of 2025, and 0.78%, 6.14%, and 8.27%, respectively, for the third quarter of 2024. The adjusted annualized return on average assets⁽²⁾was 0.95%, the adjusted annualized return on average equity⁽²⁾ was 7.45%, and the adjusted annualized return on average tangible common equity⁽²⁾ was 9.92%, for the second quarter of 2025.

Net income was $32.7 million, or $0.53 per average diluted common share, for the first nine months of 2025. Adjusted net income⁽²⁾was $39.3 million, or $0.64 per average diluted common share, for the first nine months of 2025, compared to $29.9 million, or $0.49 per average diluted common share, for the first nine months of 2024. EPS increased 8% and adjusted EPS⁽²⁾ increased 31% for the first nine months of 2025, compared to the first nine months of 2024. The annualized return on average assets was 0.79%, the annualized return on average equity was 6.29%, and the annualized return on average tangible common equity⁽²⁾ was 8.38% for the nine months ended September 30, 2025, compared to 0.76%, 5.91%, and 7.98%, respectively, for the nine months ended September 30, 2024. The adjusted annualized return on average assets⁽²⁾ was 0.95%, the adjusted annualized return on average equity⁽²⁾was 7.55%, and the adjusted annualized return on average tangible common equity⁽²⁾ was 10.06%, for the nine months ended September 30, 2025.

Total revenue, which is defined as net interest income before provision for credit losses on loans plus noninterest income, increased $2.2 million, or 5%, to $50.0 million for the third quarter of 2025, compared to $47.8 million for the second quarter of 2025, and increased $7.9 million, or 19%, from $42.2 million for the third quarter of 2024. Total revenue increased $17.8 million, or 14%, to $143.8 million for the first nine months of 2025, compared to $126.0 million for the first nine months of 2024.

Net interest income totaled $46.8 million for the third quarter of 2025, representing an increase of $2.0 million, or 4%, compared to $44.8 million for the second quarter of 2025. The FTE net interest margin⁽²⁾ was 3.60% for the third quarter of 2025, compared to 3.54% for the second quarter of 2025. The increase in the net interest margin is primarily attributable to higher average balances of loans and overnight funds, a higher average yield on securities, and a decrease in the average cost of deposits. The cost of deposits was down 4 basis points, driven by proactive management of exception based deposit pricing and favorable noninterest-bearing deposit mix shift. These factors were partially offset by a decrease in the average balances of securities due to maturities and paydowns.

Net interest income increased $7.5 million, or 19%, to $46.8 million, compared to $39.3 million for the third quarter of 2024. The FTE net interest margin⁽²⁾ increased from 3.15% for the third quarter of 2024 primarily due to lower rates paid on customer deposits, an increase in the average yields on loans and securities, a higher average balance of loans, and an increase in the average balance of deposits resulting in a higher average balance of overnight funds, partially offset by a lower average yield on overnight funds.

For the first nine months of 2025, net interest income increased $17.3 million, or 15% to $135.0 million, compared to $117.7 million for the first nine months of 2024. The FTE net interest margin⁽²⁾ increased 28 basis points to 3.51% for the first nine months of 2025, from 3.23% for the first nine months of 2024, primarily due to decrease in rates paid on client deposits, an increase in the average balances of average interest earning assets, and an increase in the average yields on loans and securities, partially offset by a lower yield on overnight funds.

Total noninterest income increased 8% to $3.2 million for the third quarter of 2025, compared to $3.0 million for the second quarter of 2025, and increased 14% from $2.8 million for the third quarter of 2024. Total noninterest income increased 7% to $8.9 million for the first nine months of 2025, compared to $8.3 million for the first nine months of 2024. The increase in noninterest income for the third quarter and first nine months of 2025 was primarily driven by a $386,000 recovery on an acquired loan that had been previously charged off and by higher facility fees. For the first nine months of 2025, the increase was partially offset by a $219,000 gain on proceeds from company-owned life insurance recorded in the same period of 2024.

⁽²⁾This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.

Noninterest expense for the third quarter of 2025 totaled $29.0 million, compared to $38.3 million⁽³⁾ for the second quarter of 2025, and $27.6 million for the third quarter of 2024. Adjusted noninterest expense⁽⁴⁾ was $29.1 million for the second quarter of 2025. Noninterest expense totaled $96.8 million⁽³⁾ for the first nine months of 2025, compared to $83.3 million for the first nine months of 2024. Adjusted noninterest expense⁽⁴⁾ for the first nine months of 2025 increased to $87.6 million, compared to $83.3 million for the first nine months of 2024. The increase in adjusted noninterest expense⁽⁴⁾ for the third quarter and first nine months of 2025 compared to the respective periods in 2024 was primarily due to higher salaries and employee benefits as a result of annual salary increases. The first nine months of 2025 was also impacted by higher professional fees and information technology related expenses as the Company invested in enhancing its infrastructure.

For the third quarter the Company’s PPNR, which is defined as total revenue less adjusted noninterest expense was $21.0 million, compared to $9.4 million for the second quarter of 2025, and $14.6 million for the third quarter of 2024. For the third quarter the Company’s adjusted PPNR⁽⁴⁾increased 13% to $21.0 million from $18.6 million for the second quarter of 2025, and increased 44% from $14.6 million for the third quarter of 2024. For the first nine months of 2025, the Company’s PPNR was $47.0 million, compared to $42.7 million for the first nine months of 2024. For the first nine months of 2025, the Company’s adjusted PPNR⁽⁴⁾ increased 31% to $56.2 million from $42.7 million for the first nine months of 2024.

The provision for credit losses on loans totaled $416,000 for the third quarter of 2025, compared to a $516,000 provision for credit losses on loans for the second quarter of 2025 and a provision for credit losses on loans of $153,000 for the third quarter of 2024. Net recoveries totaled $378,000 for the third quarter of 2025, compared to net charge-offs of $145,000 for the second quarter of 2025, and net charge-offs of $288,000 for the third quarter of 2024.

The provision for credit losses on loans totaled $1.2 million for the first nine months of 2025, compared to a $808,000 provision for credit losses on loans for the first nine months of 2024. Net charge-offs totaled $732,000 for the first nine months of 2025, compared to $947,000 for the first nine months of 2024.

Income tax expense increased to $5.9 million for the third quarter of 2025, compared to $2.5 million for the second quarter of 2025, and $3.9 million for the third quarter of 2024, primarily due to higher pre-tax income. The effective tax rate for the third quarter of 2025 was 28.5% for both the third and second quarters of 2025, and 27.3% for the third quarter of 2024.

Income tax expense for the nine months ended September 30, 2025 was $13.1 million, compared to $12.0 million for the nine months ended September 30, 2024. The effective tax rate for nine months ended September 30, 2025 was 28.6%, compared to 28.7% for the nine months ended September 30, 2024.

The efficiency ratio was 58.05% for the third quarter of 2025, compared to 80.23% for the second quarter of 2025, and 65.37% for the third quarter of 2024. The adjusted efficiency ratio⁽⁴⁾ improved to 58.05% for the third quarter of 2025, from 61.01% for the second quarter of 2025, and 65.37% for the third quarter of 2024, primarily due to higher total revenue. The reported efficiency ratio was 67.31% for the first nine months of 2025. The adjusted efficiency ratio⁽⁴⁾ improved to 60.92% for the first nine months of 2025 from 66.08% for the first nine months of 2024, primarily due to higher total revenue, partially offset by higher noninterest expense.

Full time equivalent employees were 350 at both September 30, 2025 and June 30, 2025, and 353 at September 30, 2024.

⁽³⁾During the second quarter of 2025, the Company recorded expenses of $9.2 million, primarily due to pre-tax 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.

⁽⁴⁾This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.

Balance Sheet, Liquidity and Capital Management:

Total assets increased 3% to $5.6 billion at September 30, 2025, compared to $5.5 billion at June 30, 2025, primarily due to an increase in deposits resulting in an increase in overnight funds, purchases of investment securities, and an increase in loans. Total assets were relatively flat from $5.6 billion at September 30, 2024.

Investment securities available-for-sale (at fair value) increased to $408.5 million at September 30, 2025, compared to $307.0 million at June 30, 2025, primarily due to purchases, partially offset by maturities and paydowns. At September 30, 2024, these securities totaled $237.6 million. The pre-tax unrealized loss on the securities available-for-sale portfolio was $652,000, or $540,000 net of taxes, which equaled less than 1% of total shareholders’ equity at September 30, 2025.

During the first nine months of 2025, the Company purchased $174.2 million of agency mortgage-backed securities, $129.8 million of collateralized mortgage obligations, and $44.8 million of U.S. Treasury securities, for total purchases of $348.8 million in the available-for-sale portfolio. Securities purchased had a book yield of 4.92% and an average life of 5.42 years.

Investment securities held-to-maturity (at amortized cost, net of an $11,000 allowance for credit losses), totaled $544.8 million at September 30, 2025, compared to $561.2 million at June 30, 2025, and $604.2 million at September 30, 2024. The fair value of the securities held-to-maturity portfolio was $476.8 million at September 30, 2025. The pre-tax unrecognized loss on the securities held-to-maturity portfolio was $68.0 million, or $47.9 million net of taxes, which equaled 7% of total shareholders’ equity at September 30, 2025.

The unrealized and unrecognized losses in both the available-for-sale and held-to-maturity portfolios resulted from higher interest rates at September 30, 2025, compared to when the securities were purchased. The issuers are of high credit quality, and all principal amounts are expected to be repaid at maturity. Fair values are expected to recover as the securities approach maturity and/or if market rates decline.

Loans HFI, net of deferred costs and fees, increased $47.3 million, or 1% to $3.6 billion at September 30, 2025, compared to $3.5 billion at June 30, 2025, and increased $171.4 million, or 5%, from $3.4 billion at September 30, 2024. Loans HFI, excluding residential mortgages, increased $58.6 million, or 2% to $3.14 billion at September 30, 2025, compared to $3.08 billion at June 30 2025, and increased $207.8 million, or 7%, from $2.93 billion at September 30, 2024.

Commercial and industrial line utilization was 35% at September 30, 2025, compared to 32% at June 30, 2025, and 31% at September 30, 2024. Commercial real estate (“CRE”) loans totaled $2.0 billion at September 30, 2025, of which 31% were owner occupied and 69% were investor CRE loans. Owner occupied CRE loans also totaled 31% at both June 30, 2025 and September 30, 2024. Approximately 23% of the Company’s loan portfolio consisted of floating interest rate loans at September 30, 2025, compared to 24% at June 30, 2025, and 25% at September 30, 2024.

At September 30, 2025, paydowns and maturities of investment securities and fixed interest rate loans maturing within one year totaled $343.8 million.

Total deposits increased $149.2 million, or 3%, to $4.8 billion at September 30, 2025, compared to $4.6 billion at June 30, 2025, and increased $47.0 million, or 1% from $4.7 billion at September 30, 2024.

The following table shows the Company’s deposit types as a percentage of total deposits at the dates indicated:

	September 30,		June 30,		September 30,
DEPOSITS TYPE % TO TOTAL DEPOSITS	2025		2025		2024
Demand, noninterest-bearing	26	%	25	%	27	%
Demand, interest-bearing	19	%	21	%	19	%
Savings and money market	28	%	28	%	28	%
Time deposits — under $250	1	%	1	%	1	%
Time deposits — $250 and over	5	%	4	%	4	%
Insured Cash Sweep ( "ICS ")/Certificate of Deposit Registry
Service ( "CDARS ") - interest-bearing demand, money
market and time deposits	21	%	21	%	21	%
Total deposits	100	%	100	%	100	%

The loan to deposit ratio was 74.99% at September 30, 2025, compared to 76.38% at June 30, 2025, and 72.11% at September 30, 2024.

The Company’s total available liquidity and borrowing capacity was $3.3 billion at September 30, 2025, compared to $3.1 billion at June 30, 2025, and $3.2 billion at September 30, 2024.

Total shareholders’ equity was $700.0 million at September 30, 2025, compared to $694.7 million at June 30, 2025, and $685.4 million at September 30, 2024.

Total accumulated other comprehensive loss of $5.2 million at September 30, 2025 was comprised of $2.5 million in actuarial losses associated with split dollar insurance contracts, $2.1 million in actuarial losses associated with the supplemental executive retirement plan, unrealized losses on securities available-for-sale of $540,000, and a $40,000 unrealized gain on interest-only strip from SBA loans.

Capital at September 30, 2025 was above well capitalized regulatory thresholds.

The reported tangible book value per share⁽⁵⁾ was $8.61 at September 30, 2025, compared to $8.49 at June 30, 2025, and $8.33 at September 30, 2024. The adjusted tangible book value per share⁽⁵⁾ was $8.71, compared to $8.59 at June 30, 2025, and $8.33 at September 30, 2024.

Asset Quality:

The allowance for credit losses on loans (“ACLL”) at September 30, 2025 was $49.4 million, or 1.38% of total loans. The ACLL at June 30, 2025 was $48.6 million, or 1.38% of total loans. The ACLL at September 30, 2024 was $47.8 million, or 1.40% of total loans. The increase in the ACLL year-over-year is due to loan growth.

NPAs were $3.7 million at September 30, 2025, compared to $6.2 million at June 30, 2025, and $7.2 million at September 30, 2024. There were no Shared National Credits (“SNCs”) in NPAs or total loans at September 30, 2025, June 30, 2025, or September 30, 2024.

Classified assets totaled $34.6 million, or 0.62% of total assets, at September 30, 2025, compared to $37.5 million, or 0.69% of total assets, at June 30, 2025, and $32.6 million, or 0.59% of total assets, at September 30, 2024.

Announcing An Increase to the Company 's Share Repurchase Program:

Today, the Board of Directors (the "Board ") of the Company approved an increase in the maximum total value of shares authorized for repurchase under the Company’s share repurchase program, initially approved by the Board in July 2024 (the “Repurchase Program”), doubling the authorization from $15 million to $30 million. The term of the Repurchase Program was also extended by the Board to October 31, 2026. During the second and third quarters of 2025, the Company repurchased 439,187 shares of its common stock with a weighted average price of $9.22 per share for a total of $4.0 million. The remaining capacity under the Program after giving effect to the amendment as described above is $26 million at September 30, 2025.

⁽⁵⁾This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release.

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.

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 quarter 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.

Member FDIC

For additional information, email:
InvestorRelations@herbank.com

	For the Quarter Ended:									Percent Change From:				For the Nine Months Ended:
CONSOLIDATED INCOME STATEMENTS	September 30,			June 30,			September 30,			June 30,		September 30,		September 30,			September 30,			Percent
(in $000’s, unaudited)	2025			2025			2024			2025		2024		2025			2024			Change
Interest income	$	65,094		$	63,025		$	60,852		3	%	7	%	$	189,951		$	176,301		8	%
Interest expense		18,306			18,220			21,523		0	%	(15)	%		54,998			58,603		(6)	%
Net interest income before provision
for credit losses on loans		46,788			44,805			39,329		4	%	19	%		134,953			117,698		15	%
Provision for credit losses on loans		416			516			153		(19)	%	172	%		1,206			808		49	%
Net interest income after provision
for credit losses on loans		46,372			44,289			39,176		5	%	18	%		133,747			116,890		14	%
Noninterest income:
Service charges and fees on deposit
accounts		898			929			908		(3)	%	(1)	%		2,719			2,676		2	%
FHLB and FRB stock dividends		587			584			586		1	%	0	%		1,761			1,765		0	%
Increase in cash surrender value of
life insurance		564			548			530		3	%	6	%		1,650			1,569		5	%
Servicing income		77			61			108		26	%	(29)	%		220			348		-37	%
Gain on sales of SBA loans		—			87			94		(100)	%	(100)	%		185			288		-36	%
Termination fees		—			227			46		(100)	%	(100)	%		314			159		97	%
Gain on proceeds from company-owned
life insurance		—			—			—		N/A		N/A			—			219		-100	%
Other		1,091			541			554		102	%	97	%		2,041			1,304		57	%
Total noninterest income		3,217			2,977			2,826		8	%	14	%		8,890			8,328		7	%
Noninterest expense:
Salaries and employee benefits		16,948			16,227			15,673		4	%	8	%		49,750			46,976		6	%
Occupancy and equipment		2,528			2,525			2,599		0	%	(3)	%		7,587			7,731		-2	%
Professional fees		1,175			1,819			1,306		(35)	%	(10)	%		4,574			3,705		23	%
Other		8,375			17,764			7,977		(53)	%	5	%		34,906			24,867		40	%
Total noninterest expense		29,026			38,335			27,555		(24)	%	5	%		96,817			83,279		16	%
Income before income taxes		20,563			8,931			14,447		130	%	42	%		45,820			41,939		9	%
Income tax expense		5,865			2,542			3,940		131	%	49	%		13,107			12,032		9	%
Net income	$	14,698		$	6,389		$	10,507		130	%	40	%	$	32,713		$	29,907		9	%

PER COMMON SHARE DATA
(unaudited)
Basic earnings per share	$	0.24		$	0.10		$	0.17		140	%	41	%	$	0.53		$	0.49		8	%
Diluted earnings per share	$	0.24		$	0.10		$	0.17		140	%	41	%	$	0.53		$	0.49		8	%
Weighted average shares outstanding - basic		61,333,951			61,508,180			61,295,877		0	%	0	%		61,440,570			61,254,138		0	%
Weighted average shares outstanding - diluted		61,616,785			61,624,600			61,546,157		0	%	0	%		61,687,616			61,497,927		0	%
Common shares outstanding at period-end		61,277,541			61,446,763			61,297,344		0	%	0	%		61,277,541			61,297,344		0	%
Dividend per share	$	0.13		$	0.13		$	0.13		0	%	0	%	$	0.39		$	0.39		0	%
Book value per share	$	11.42		$	11.31		$	11.18		1	%	2	%	$	11.42		$	11.18		2	%
Tangible book value per share⁽¹⁾	$	8.61		$	8.49		$	8.33		1	%	3	%	$	8.61		$	8.33		3	%

KEY PERFORMANCE METRICS
(in $000 's, unaudited)
Annualized return on average equity		8.37	%		3.68	%		6.14	%	127	%	36	%		6.29	%		5.91	%	6	%
Annualized return on average tangible
common equity⁽¹⁾		11.14	%		4.89	%		8.27	%	128	%	35	%		8.38	%		7.98	%	5	%
Annualized return on average assets		1.05	%		0.47	%		0.78	%	123	%	35	%		0.79	%		0.76	%	4	%
Annualized return on average tangible assets⁽¹⁾		1.08	%		0.48	%		0.81	%	125	%	33	%		0.82	%		0.79	%	4	%
Net interest margin (FTE)⁽¹⁾		3.60	%		3.54	%		3.15	%	2	%	14	%		3.51	%		3.23	%	9	%
Total revenue	$	50,005		$	47,782		$	42,155		5	%	19	%	$	143,843		$	126,026		14	%
Pre-provision net revenue	$	20,979		$	9,447		$	14,600		122	%	44	%	$	47,026		$	42,747		10	%
Efficiency ratio		58.05	%		80.23	%		65.37	%	(28)	%	(11)	%		67.31	%		66.08	%	2	%

AVERAGE BALANCES
(in $000’s, unaudited)
Average assets	$	5,551,457		$	5,458,420		$	5,352,067		2	%	4	%	$	5,523,227		$	5,248,338		5	%
Average tangible assets⁽¹⁾	$	5,378,468		$	5,284,972		$	5,177,114		2	%	4	%	$	5,349,786		$	5,072,843		5	%
Average earning assets	$	5,167,710		$	5,087,089		$	5,011,865		2	%	3	%	$	5,147,630		$	4,909,240		5	%
Average loans held-for-sale	$	1,230		$	2,250		$	1,493		(45)	%	(18)	%	$	1,919		$	1,913		0	%
Average loans held-for-investment	$	3,519,775		$	3,504,518		$	3,359,647		0	%	5	%	$	3,484,769		$	3,328,529		5	%
Average deposits	$	4,687,294		$	4,618,007		$	4,525,946		2	%	4	%	$	4,674,162		$	4,427,242		6	%
Average demand deposits - noninterest-bearing	$	1,187,357		$	1,146,494		$	1,172,304		4	%	1	%	$	1,167,134		$	1,158,891		1	%
Average interest-bearing deposits	$	3,499,937		$	3,471,513		$	3,353,642		1	%	4	%	$	3,507,028		$	3,268,351		7	%
Average interest-bearing liabilities	$	3,539,706		$	3,511,237		$	3,393,264		1	%	4	%	$	3,546,754		$	3,307,926		7	%
Average equity	$	696,385		$	697,016		$	680,404		0	%	2	%	$	695,391		$	675,951		3	%
Average tangible common equity⁽¹⁾	$	523,396		$	523,568		$	505,451		0	%	4	%	$	521,950		$	500,456		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	September 30,			June 30,			March 31,			December 31,			September 30,
(in $000’s, unaudited)	2025			2025			2025			2024			2024
Interest income	$	65,094		$	63,025		$	61,832		$	64,043		$	60,852
Interest expense		18,306			18,220			18,472			20,448			21,523
Net interest income before provision
for credit losses on loans		46,788			44,805			43,360			43,595			39,329
Provision for credit losses on loans		416			516			274			1,331			153
Net interest income after provision
for credit losses on loans		46,372			44,289			43,086			42,264			39,176
Noninterest income:
Service charges and fees on deposit
accounts		898			929			892			885			908
FHLB and FRB stock dividends		587			584			590			590			586
Increase in cash surrender value of
life insurance		564			548			538			528			530
Servicing income		77			87			98			125			94
Gain on sales of SBA loans		—			61			82			77			108
Termination fees		—			227			87			18			46
Other		1,091			541			409			552			554
Total noninterest income		3,217			2,977			2,696			2,775			2,826
Noninterest expense:
Salaries and employee benefits		16,948			16,227			16,575			16,976			15,673
Occupancy and equipment		2,528			2,525			2,534			2,495			2,599
Professional fees		1,175			1,819			1,580			1,711			1,306
Other		8,375			17,764			8,767			9,122			7,977
Total noninterest expense		29,026			38,335			29,456			30,304			27,555
Income before income taxes		20,563			8,931			16,326			14,735			14,447
Income tax expense		5,865			2,542			4,700			4,114			3,940
Net income	$	14,698		$	6,389		$	11,626		$	10,621		$	10,507

PER COMMON SHARE DATA
(unaudited)
Basic earnings per share	$	0.24		$	0.10		$	0.19		$	0.17		$	0.17
Diluted earnings per share	$	0.24		$	0.10		$	0.19		$	0.17		$	0.17
Weighted average shares outstanding - basic		61,333,951			61,508,180			61,479,579			61,320,505			61,295,877
Weighted average shares outstanding - diluted		61,616,785			61,624,600			61,708,361			61,679,735			61,546,157
Common shares outstanding at period-end		61,277,541			61,446,763			61,611,121			61,348,095			61,297,344
Dividend per share	$	0.13		$	0.13		$	0.13		$	0.13		$	0.13
Book value per share	$	11.42		$	11.31		$	11.30		$	11.24		$	11.18
Tangible book value per share⁽¹⁾	$	8.61		$	8.49		$	8.48		$	8.41		$	8.33

KEY PERFORMANCE METRICS
(in $000 's, unaudited)
Annualized return on average equity		8.37	%		3.68	%		6.81	%		6.16	%		6.14	%
Annualized return on average tangible
common equity⁽¹⁾		11.14	%		4.89	%		9.09	%		8.25	%		8.27	%
Annualized return on average assets		1.05	%		0.47	%		0.85	%		0.75	%		0.78	%
Annualized return on average tangible assets⁽¹⁾		1.08	%		0.48	%		0.88	%		0.78	%		0.81	%
Net interest margin (FTE)⁽¹⁾		3.60	%		3.54	%		3.39	%		3.32	%		3.15	%
Total revenue	$	50,005		$	47,782		$	46,056		$	46,370		$	42,155
Pre-provision net revenue	$	20,979		$	9,447		$	16,600		$	16,066		$	14,600
Efficiency ratio		58.05	%		80.23	%		63.96	%		65.35	%		65.37	%

AVERAGE BALANCES
(in $000’s, unaudited)
Average assets	$	5,551,457		$	5,458,420		$	5,559,896		$	5,607,840		$	5,352,067
Average tangible assets⁽¹⁾	$	5,378,468		$	5,284,972		$	5,386,001		$	5,433,439		$	5,177,114
Average earning assets	$	5,167,710		$	5,087,089		$	5,188,317		$	5,235,986		$	4,980,082
Average loans held-for-sale	$	1,230		$	2,250		$	2,290		$	2,260		$	1,493
Average loans held-for-investment	$	3,519,775		$	3,504,518		$	3,429,014		$	3,388,729		$	3,359,647
Average deposits	$	4,687,294		$	4,618,007		$	4,717,517		$	4,771,491		$	4,525,946
Average demand deposits - noninterest-bearing	$	1,187,357		$	1,146,494		$	1,167,330		$	1,222,393		$	1,172,304
Average interest-bearing deposits	$	3,499,937		$	3,471,513		$	3,550,187		$	3,549,098		$	3,353,642
Average interest-bearing liabilities	$	3,539,706		$	3,511,237		$	3,589,872		$	3,588,755		$	3,393,264
Average equity	$	696,385		$	697,016		$	692,733		$	686,263		$	680,404
Average tangible common equity⁽¹⁾	$	523,396		$	523,568		$	518,838		$	511,862		$	505,451

⁽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	September 30,			June 30,			September 30,			June 30,			September 30,
(in $000’s, unaudited)	2025			2025			2024			2025			2024
ASSETS
Cash and due from banks	$	42,442		$	55,360		$	49,722		(23	)	%	(15	)	%
Other investments and interest-bearing deposits
in other financial institutions		705,300			666,432			906,588		6		%	(22	)	%
Securities available-for-sale, at fair value		408,456			307,035			237,612		33		%	72		%
Securities held-to-maturity, at amortized cost		544,806			561,205			604,193		(3	)	%	(10	)	%
Loans - held-for-sale - SBA, including deferred costs		1,325			1,156			1,649		15		%	(20	)	%
Loans - held-for-investment:
Commercial		523,110			492,231			481,266		6		%	9		%
Real estate:
CRE - owner occupied		629,855			627,810			602,062		0		%	5		%
CRE - non-owner occupied		1,416,987			1,390,419			1,310,578		2		%	8		%
Land and construction		137,170			149,460			125,761		(8	)	%	9		%
Home equity		125,742			120,763			124,090		4		%	1		%
Multifamily		290,077			285,016			273,103		2		%	6		%
Residential mortgages		443,143			454,419			479,524		(2	)	%	(8	)	%
Consumer and other		15,938			14,661			14,179		9		%	12		%
Loans		3,582,022			3,534,779			3,410,563		1		%	5		%
Deferred loan fees, net		(344	)		(446	)		(327	)	(23	)	%	5		%
Total loans - held-for-investment, net of deferred fees		3,581,678			3,534,333			3,410,236		1		%	5		%
Allowance for credit losses on loans		(49,427	)		(48,633	)		(47,819	)	2		%	3		%
Loans, net		3,532,251			3,485,700			3,362,417		1		%	5		%
Company-owned life insurance		82,861			82,296			80,682		1		%	3		%
Premises and equipment, net		9,429			9,765			10,398		(3	)	%	(9	)	%
Goodwill		167,631			167,631			167,631		0		%	0		%
Other intangible assets		5,078			5,532			6,966		(8	)	%	(27	)	%
Accrued interest receivable and other assets		124,141			125,125			123,738		(1)		%	0		%
Total assets	$	5,623,720		$	5,467,237		$	5,551,596		3		%	1		%

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand, noninterest-bearing	$	1,241,603		$	1,151,242		$	1,272,139		8		%	(2	)	%
Demand, interest-bearing		922,077			955,504			913,910		(3	)	%	1		%
Savings and money market		1,366,905			1,320,142			1,309,676		4		%	4		%
Time deposits - under $250		32,462			35,356			39,060		(8	)	%	(17	)	%
Time deposits - $250 and over		223,496			210,818			196,945		6		%	13		%
ICS/CDARS - interest-bearing demand, money market
and time deposits		990,003			954,272			997,803		4		%	(1	)	%
Total deposits		4,776,546			4,627,334			4,729,533		3		%	1		%
Subordinated debt, net of issuance costs		39,767			39,728			39,615		0		%	0		%
Accrued interest payable and other liabilities		107,397			105,471			97,096		2		%	11		%
Total liabilities		4,923,710			4,772,533			4,866,244		3		%	1		%

Shareholders’ Equity:
Common stock		508,664			509,888			509,134		0		%	0		%
Retained earnings		196,526			189,794			185,110		4		%	6		%
Accumulated other comprehensive loss		(5,180	)		(4,978	)		(8,892	)	4		%	(42	)	%
Total shareholders ' equity		700,010			694,704			685,352		1		%	2		%
Total liabilities and shareholders’ equity	$	5,623,720		$	5,467,237		$	5,551,596		3		%	1		%

	End of Period:
CONSOLIDATED BALANCE SHEETS	September 30,			June 30,			March 31,			December 31,			September 30,
(in $000’s, unaudited)	2025			2025			2025			2024			2024
ASSETS
Cash and due from banks	$	42,442		$	55,360		$	44,281		$	29,864		$	49,722
Other investments and interest-bearing deposits
in other financial institutions		705,300			666,432			700,769			938,259			906,588
Securities available-for-sale, at fair value		408,456			307,035			370,976			256,274			237,612
Securities held-to-maturity, at amortized cost		544,806			561,205			576,718			590,016			604,193
Loans - held-for-sale - SBA, including deferred costs		1,325			1,156			1,884			2,375			1,649
Loans - held-for-investment:
Commercial		523,110			492,231			489,241			531,350			481,266
Real estate:
CRE - owner occupied		629,855			627,810			616,825			601,636			602,062
CRE - non-owner occupied		1,416,987			1,390,419			1,363,275			1,341,266			1,310,578
Land and construction		137,170			149,460			136,106			127,848			125,761
Home equity		125,742			120,763			119,138			127,963			124,090
Multifamily		290,077			285,016			284,510			275,490			273,103
Residential mortgages		443,143			454,419			465,330			471,730			479,524
Consumer and other		15,938			14,661			12,741			14,837			14,179
Loans		3,582,022			3,534,779			3,487,166			3,492,120			3,410,563
Deferred loan fees, net		(344	)		(446	)		(268	)		(183	)		(327	)
Total loans - held-for-investment, net of deferred fees		3,581,678			3,534,333			3,486,898			3,491,937			3,410,236
Allowance for credit losses on loans		(49,427	)		(48,633	)		(48,262	)		(48,953	)		(47,819	)
Loans, net		3,532,251			3,485,700			3,438,636			3,442,984			3,362,417
Company-owned life insurance		82,861			82,296			81,749			81,211			80,682
Premises and equipment, net		9,429			9,765			9,772			10,140			10,398
Goodwill		167,631			167,631			167,631			167,631			167,631
Other intangible assets		5,078			5,532			5,986			6,439			6,966
Accrued interest receivable and other assets		124,141			125,125			115,853			119,813			123,738
Total assets	$	5,623,720		$	5,467,237		$	5,514,255		$	5,645,006		$	5,551,596

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand, noninterest-bearing	$	1,241,603		$	1,151,242		$	1,128,593		$	1,214,192		$	1,272,139
Demand, interest-bearing		922,077			955,504			949,068			936,587			913,910
Savings and money market		1,366,905			1,320,142			1,353,293			1,325,923			1,309,676
Time deposits - under $250		32,462			35,356			37,592			38,988			39,060
Time deposits - $250 and over		223,496			210,818			213,357			206,755			196,945
ICS/CDARS - interest-bearing demand, money market
and time deposits		990,003			954,272			1,001,365			1,097,586			997,803
Total deposits		4,776,546			4,627,334			4,683,268			4,820,031			4,729,533
Subordinated debt, net of issuance costs		39,767			39,728			39,691			39,653			39,615
Accrued interest payable and other liabilities		107,397			105,471			95,106			95,595			97,096
Total liabilities		4,923,710			4,772,533			4,818,065			4,955,279			4,866,244

Shareholders’ Equity:
Common stock		508,664			509,888			511,596			510,070			509,134
Retained earnings		196,526			189,794			191,401			187,762			185,110
Accumulated other comprehensive loss		(5,180	)		(4,978	)		(6,807	)		(8,105	)		(8,892	)
Total shareholders ' equity		700,010			694,704			696,190			689,727			685,352
Total liabilities and shareholders’ equity		5,623,720		$	5,467,237		$	5,514,255		$	5,645,006		$	5,551,596

	At or For the Quarter Ended:										Percent Change From:
ASSET QUALITY DATA	September 30,				June 30,			September 30,			June 30,		September 30,
(in $000’s, unaudited)	2025				2025			2024			2025		2024
Nonaccrual loans - held-for-investment:
Land and construction loans	$	2,346			$	4,198		$	5,862		(44)	%	(60)	%
Home equity		655				728			84		(10)	%	680	%
Residential mortgages		—				607			—		(100)	%	N/A
Commercial loans		467				491			752		(5)	%	(38)	%
CRE loans		—				31			—		(100)	%	N/A
Total nonaccrual loans - held-for-investment:		3,468				6,055			6,698		(43)	%	(48)	%
Loans over 90 days past due
and still accruing		194				123			460		58	%	(58)	%
Total nonperforming loans		3,662				6,178			7,158		(41)	%	(49)	%
Foreclosed assets		—				—			—		N/A		N/A
Total nonperforming assets	$	3,662			$	6,178		$	7,158		(41)	%	(49)	%
Net (recoveries) charge-offs during the quarter	$	(378	)		$	145		$	288		(361)	%	(231)	%
Provision for credit losses on loans during the quarter	$	416			$	516		$	153		(19)	%	172	%
Allowance for credit losses on loans	$	49,427			$	48,633		$	47,819		2	%	3	%
Classified assets	$	34,633			$	37,525		$	32,609		(8)	%	6	%
Allowance for credit losses on loans to total loans		1.38		%		1.38	%		1.40	%	0	%	(1)	%
Allowance for credit losses on loans to total nonperforming loans		1,349.73		%		787.20	%		668.05	%	71	%	102	%
Nonperforming assets to total assets		0.07		%		0.11	%		0.13	%	(36)	%	(46)	%
Nonperforming loans to total loans		0.10		%		0.17	%		0.21	%	(41)	%	(52)	%
Classified assets to total assets		0.62		%		0.69	%		0.59	%	(10)	%	5	%
Classified assets to Heritage Commerce Corp
Tier 1 capital plus allowance for credit losses on loans		6		%		7	%		6	%	(14)	%	0	%
Classified assets to Heritage Bank of Commerce
Tier 1 capital plus allowance for credit losses on loans		6		%		6	%		6	%	0	%	0	%

OTHER PERIOD-END STATISTICS
(in $000’s, unaudited)
Heritage Commerce Corp:
Tangible common equity⁽¹⁾	$	527,301			$	521,541		$	510,755		1	%	3	%
Shareholders’ equity / total assets		12.45		%		12.71	%		12.35	%	(2)	%	1	%
Tangible common equity / tangible assets⁽¹⁾		9.67		%		9.85	%		9.50	%	(2)	%	2	%
Loan to deposit ratio		74.99		%		76.38	%		72.11	%	(2)	%	4	%
Noninterest-bearing deposits / total deposits		25.99		%		24.88	%		26.90	%	4	%	(3)	%
Total capital ratio		15.4		%		15.5	%		15.6	%	(1)	%	(1)	%
Tier 1 capital ratio		13.2		%		13.3	%		13.4	%	(1)	%	(1)	%
Common Equity Tier 1 capital ratio		13.2		%		13.3	%		13.4	%	(1)	%	(1)	%
Tier 1 leverage ratio		9.9		%		9.9	%		10.0	%	0	%	(1)	%
Heritage Bank of Commerce:
Tangible common equity / tangible assets⁽¹⁾		10.13		%		10.28	%		9.86	%	(1)	%	3	%
Total capital ratio		15.1		%		15.1	%		15.1	%	0	%	0	%
Tier 1 capital ratio		13.8		%		13.8	%		13.9	%	0	%	(1)	%
Common Equity Tier 1 capital ratio		13.8		%		13.8	%		13.9	%	0	%	(1)	%
Tier 1 leverage ratio		10.3		%		10.4	%		10.4	%	(1)	%	(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	September 30,				June 30,			March 31,			December 31,			September 30,
(in $000’s, unaudited)	2025				2025			2025			2024			2024
Nonaccrual loans - held-for-investment:
Land and construction loans	$	2,346			$	4,198		$	4,793		$	5,874		$	5,862
Home equity		655				728			927			290			84
Residential mortgages		—				607			—			—			—
Commercial loans		467				491			324			1,014			752
CRE loans		—				31			—			—			—
Total nonaccrual loans - held-for-investment:		3,468				6,055			6,044			7,178			6,698
Loans over 90 days past due
and still accruing		194				123			268			489			460
Total nonperforming loans		3,662				6,178			6,312			7,667			7,158
Foreclosed assets		—				—			—			—			—
Total nonperforming assets	$	3,662			$	6,178		$	6,312		$	7,667		$	7,158
Net (recoveries) charge-offs during the quarter	$	(378	)		$	145		$	965		$	197		$	288
Provision for credit losses on loans during the quarter	$	416			$	516		$	274		$	1,331		$	153
Allowance for credit losses on loans	$	49,427			$	48,633		$	48,262		$	48,953		$	47,819
Classified assets	$	34,633			$	37,525		$	40,034		$	41,661		$	32,609
Allowance for credit losses on loans to total loans		1.38		%		1.38	%		1.38	%		1.40	%		1.40	%
Allowance for credit losses on loans to total nonperforming loans		1,349.73		%		787.20	%		764.61	%		638.49	%		668.05	%
Nonperforming assets to total assets		0.07		%		0.11	%		0.11	%		0.14	%		0.13	%
Nonperforming loans to total loans		0.10		%		0.17	%		0.18	%		0.22	%		0.21	%
Classified assets to total assets		0.62		%		0.69	%		0.73	%		0.74	%		0.59	%
Classified assets to Heritage Commerce Corp
Tier 1 capital plus allowance for credit losses on loans		6		%		7	%		7	%		7	%		6	%
Classified assets to Heritage Bank of Commerce
Tier 1 capital plus allowance for credit losses on loans		6		%		6	%		7	%		7	%		6	%

OTHER PERIOD-END STATISTICS
(in $000’s, unaudited)
Heritage Commerce Corp:
Tangible common equity⁽¹⁾	$	527,301			$	521,541		$	522,573		$	515,657		$	510,755
Shareholders’ equity / total assets		12.45		%		12.71	%		12.63	%		12.22	%		12.35	%
Tangible common equity / tangible assets⁽¹⁾		9.67		%		9.85	%		9.78	%		9.43	%		9.50	%
Loan to deposit ratio		74.99		%		76.38	%		74.45	%		72.45	%		72.11	%
Noninterest-bearing deposits / total deposits		25.99		%		24.88	%		24.10	%		25.19	%		26.90	%
Total capital ratio		15.4		%		15.5	%		15.9	%		15.6	%		15.6	%
Tier 1 capital ratio		13.2		%		13.3	%		13.6	%		13.4	%		13.4	%
Common Equity Tier 1 capital ratio		13.2		%		13.3	%		13.6	%		13.4	%		13.4	%
Tier 1 leverage ratio		9.9		%		9.9	%		9.8	%		9.6	%		10.0	%
Heritage Bank of Commerce:
Tangible common equity / tangible assets⁽¹⁾		10.13		%		10.28	%		10.15	%		9.79	%		9.86	%
Total capital ratio		15.1		%		15.1	%		15.4	%		15.1	%		15.1	%
Tier 1 capital ratio		13.8		%		13.8	%		14.1	%		13.9	%		13.9	%
Common Equity Tier 1 capital ratio		13.8		%		13.8	%		14.1	%		13.9	%		13.9	%
Tier 1 leverage ratio		10.3		%		10.4	%		10.2	%		10.0	%		10.4	%

⁽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								For the Quarter Ended
	September 30, 2025								June 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	$	3,039,478		$	42,655		5.57	%	$	3,020,534		$	41,738		5.54	%
Prepayment fees		—			185		0.02	%		—			473		0.06	%
Bay View Funding factored receivables		74,353			3,654		19.50	%		67,756			3,347		19.81	%
Purchased residential mortgages		408,810			3,472		3.37	%		420,280			3,548		3.39	%
Loan fair value mark / accretion		(1,636	)		164		0.02	%		(1,802	)		172		0.02	%
Loans, gross⁽¹⁾⁽²⁾		3,521,005			50,130		5.65	%		3,506,768			49,278		5.64	%
Securities - taxable		842,998			6,146		2.89	%		902,642			6,346		2.82	%
Securities - exempt from Federal tax⁽³⁾		28,683			256		3.54	%		30,259			272		3.61	%
Other investments and interest-bearing deposits
in other financial institutions		775,024			8,615		4.41	%		647,420			7,186		4.45	%
Total interest earning assets⁽³⁾		5,167,710			65,147		5.00	%		5,087,089			63,082		4.97	%
Cash and due from banks		30,764								31,044
Premises and equipment, net		9,651								9,958
Goodwill and other intangible assets		172,989								173,448
Other assets		170,343								156,881
Total assets	$	5,551,457							$	5,458,420

Liabilities and shareholders’ equity:
Deposits:
Demand, noninterest-bearing	$	1,187,357							$	1,146,494

Demand, interest-bearing		932,996			1,463		0.62	%		949,867			1,484		0.63	%
Savings and money market		1,340,419			8,452		2.50	%		1,313,054			8,205		2.51	%
Time deposits - under $100		10,620			40		1.49	%		11,456			49		1.72	%
Time deposits - $100 and over		233,145			1,977		3.36	%		231,644			1,995		3.45	%
ICS/CDARS - interest-bearing demand, money market
and time deposits		982,757			5,837		2.36	%		965,492			5,949		2.47	%
Total interest-bearing deposits		3,499,937			17,769		2.01	%		3,471,513			17,682		2.04	%
Total deposits		4,687,294			17,769		1.50	%		4,618,007			17,682		1.54	%

Short-term borrowings		26			—		0.00	%		19			—		0.00	%
Subordinated debt, net of issuance costs		39,743			537		5.36	%		39,705			538		5.43	%
Total interest-bearing liabilities		3,539,706			18,306		2.05	%		3,511,237			18,220		2.08	%
Total interest-bearing liabilities and demand,
noninterest-bearing / cost of funds		4,727,063			18,306		1.54	%		4,657,731			18,220		1.57	%
Other liabilities		128,009								103,673
Total liabilities		4,855,072								4,761,404
Shareholders’ equity		696,385								697,016
Total liabilities and shareholders’ equity	$	5,551,457							$	5,458,420

Net interest income / margin⁽³⁾					46,841		3.60	%					44,862		3.54	%
Less tax equivalent adjustment⁽³⁾					(53	)							(57	)
Net interest income				$	46,788		3.59	%				$	44,805		3.53	%

⁽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 $246,000 for the third quarter of 2025, compared to $253,000 for the second quarter of 2025. Prepayment fees totaled $185,000 for the third quarter of 2025, compared to $473,000 for the second 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 FinancialMeasures”in this press release.


	For the Quarter Ended								For the Quarter Ended
	September 30, 2025								September 30, 2024
				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	$	3,039,478		$	42,655		5.57	%	$	2,867,076		$	39,621		5.50	%
Prepayment fees		—			185		0.02	%		—			4		0.00	%
Bay View Funding factored receivables		74,353			3,654		19.50	%		55,391			2,144		15.40	%
Purchased residential mortgages		408,810			3,472		3.37	%		441,294			3,779		3.41	%
Loan fair value mark / accretion		(1,636	)		164		0.02	%		(2,621	)		233		0.03	%
Loans, gross⁽¹⁾⁽²⁾		3,521,005			50,130		5.65	%		3,361,140			45,781		5.42	%
Securities - taxable		842,998			6,146		2.89	%		838,375			4,676		2.22	%
Securities - exempt from Federal tax⁽³⁾		28,683			256		3.54	%		31,311			282		3.58	%
Other investments and interest-bearing deposits
in other financial institutions		775,024			8,615		4.41	%		749,256			10,172		5.40	%
Total interest earning assets⁽³⁾		5,167,710			65,147		5.00	%		4,980,082			60,911		4.87	%
Cash and due from banks		30,764								33,425
Premises and equipment, net		9,651								10,471
Goodwill and other intangible assets		172,989								174,953
Other assets		170,343								153,136
Total assets	$	5,551,457							$	5,352,067

Liabilities and shareholders’ equity:
Deposits:
Demand, noninterest-bearing	$	1,187,357							$	1,172,304

Demand, interest-bearing		932,996			1,463		0.62	%		907,346			1,714		0.75	%
Savings and money market		1,340,419			8,452		2.50	%		1,188,057			9,128		3.06	%
Time deposits - under $100		10,620			40		1.49	%		11,133			47		1.68	%
Time deposits - $100 and over		233,145			1,977		3.36	%		229,565			2,349		4.07	%
ICS/CDARS - interest-bearing demand, money market
and time deposits		982,757			5,837		2.36	%		1,017,541			7,747		3.03	%
Total interest-bearing deposits		3,499,937			17,769		2.01	%		3,353,642			20,985		2.49	%
Total deposits		4,687,294			17,769		1.50	%		4,525,946			20,985		1.84	%

Short-term borrowings		26			—		0.00	%		32			—		0.00	%
Subordinated debt, net of issuance costs		39,743			537		5.36	%		39,590			538		5.41	%
Total interest-bearing liabilities		3,539,706			18,306		2.05	%		3,393,264			21,523		2.52	%
Total interest-bearing liabilities and demand,
noninterest-bearing / cost of funds		4,727,063			18,306		1.54	%		4,565,568			21,523		1.88	%
Other liabilities		128,009								106,095
Total liabilities		4,855,072								4,671,663
Shareholders’ equity		696,385								680,404
Total liabilities and shareholders’ equity	$	5,551,457							$	5,352,067

Net interest income / margin⁽³⁾					46,841		3.60	%					39,388		3.15	%
Less tax equivalent adjustment⁽³⁾					(53	)							(59	)
Net interest income				$	46,788		3.59	%				$	39,329		3.14	%

⁽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 $246,000 for the third quarter of 2025, compared to $184,000 for the third quarter of 2024. Prepayment fees totaled $185,000 for the third quarter of 2025, compared to $4,000 for the third 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 FinancialMeasures”in this press release.


	For the Nine Months Ended								For the Nine Months Ended
	September 30, 2025								September 30, 2024
				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	$	3,002,040		$	124,151		5.53	%	$	2,831,035		$	115,838		5.47	%
Prepayment fees		—			882		0.04	%		—			82		0.00	%
Bay View Funding factored receivables		67,505			9,943		19.69	%		54,563			7,896		19.33	%
Purchased residential mortgages		418,948			10,617		3.39	%		447,709			11,306		3.37	%
Loan fair value mark / accretion		(1,805	)		517		0.02	%		(2,865	)		729		0.03	%
Loans, gross⁽¹⁾⁽²⁾		3,486,688			146,110		5.60	%		3,330,442			135,851		5.45	%
Securities - taxable		873,789			18,051		2.76	%		940,755			16,342		2.32	%
Securities - exempt from Federal tax⁽³⁾		29,801			803		3.60	%		31,683			853		3.60	%
Other investments, interest-bearing deposits in other
financial institutions and Federal funds sold		757,352			25,155		4.44	%		574,581			23,434		5.45	%
Total interest earning assets⁽³⁾		5,147,630			190,119		4.94	%		4,877,461			176,480		4.85	%
Cash and due from banks		31,222								33,353
Premises and equipment, net		9,870								10,235
Goodwill and other intangible assets		173,441								175,495
Other assets		161,064								151,794
Total assets	$	5,523,227							$	5,248,338

Liabilities and shareholders’ equity:
Deposits:
Demand, noninterest-bearing	$	1,167,134							$	1,158,891

Demand, interest-bearing		942,371			4,385		0.62	%		919,786			4,987		0.72	%
Savings and money market		1,325,567			24,730		2.49	%		1,120,324			23,644		2.82	%
Time deposits - under $100		11,150			135		1.62	%		11,020			135		1.64	%
Time deposits - $100 and over		233,065			6,101		3.50	%		226,353			6,658		3.93	%
ICS/CDARS - interest-bearing demand, money market
and time deposits		994,875			18,034		2.42	%		990,868			21,565		2.91	%
Total interest-bearing deposits		3,507,028			53,385		2.04	%		3,268,351			56,989		2.33	%
Total deposits		4,674,162			53,385		1.53	%		4,427,242			56,989		1.72	%

Short-term borrowings		21			—		0.00	%		22			—		0.00	%
Subordinated debt, net of issuance costs		39,705			1,613		5.43	%		39,553			1,614		5.45	%
Total interest-bearing liabilities		3,546,754			54,998		2.07	%		3,307,926			58,603		2.37	%
Total interest-bearing liabilities and demand,
noninterest-bearing / cost of funds		4,713,888			54,998		1.56	%		4,466,817			58,603		1.75	%
Other liabilities		113,948								105,570
Total liabilities		4,827,836								4,572,387
Shareholders’ equity		695,391								675,951
Total liabilities and shareholders’ equity	$	5,523,227							$	5,248,338

Net interest income / margin⁽³⁾					135,121		3.51	%					117,877		3.23	%
Less tax equivalent adjustment⁽³⁾					(168	)							(179	)
Net interest income				$	134,953		3.51	%				$	117,698		3.22	%

⁽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 $713,000 for the first nine months of 2025, compared to $461,000 for the first nine months of 2024. Prepayment fees totaled $882,000 for the first nine months of 2025, compared to $82,000 for the first nine months 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 FinancialMeasures”in this press release.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Management considers adjusted net income and adjusted earnings per share, which excludes the $9.2 million of charges primarily related to a legal settlement in the second quarter of 2025 and first nine months of 2025 as a useful measurement of the Company’s profitability compared to other periods presented.

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	September 30,		June 30,			March 31,		December 31,		September 30,
(in $000’s, unaudited)	2025		2025			2025		2024		2024
Reported net income (GAAP)	$	14,698	$	6,389		$	11,626	$	10,621	$	10,507
Add: pre-tax legal settlement and other charges		—		9,184			—		—		—
Less: related income taxes		—		(2,618	)		—		—		—
Adjusted net income (non-GAAP)	$	14,698	$	12,955		$	11,626	$	10,621	$	10,507

Weighted average shares outstanding - diluted		61,616,785		61,624,600			61,708,361		61,679,735		61,546,157

Reported diluted earnings per share (GAAP)	$	0.24	$	0.10		$	0.19	$	0.17	$	0.17

Adjusted diluted earnings per share (non-GAAP)	$	0.24	$	0.21		$	0.19	$	0.17	$	0.17

NET INCOME AND	For the Nine Months Ended:
DILUTED EARNINGS PER SHARE	September 30,			September 30,
(in $000’s, except per share amounts, unaudited)	2025			2024
Reported net income (GAAP)	$	32,713		$	29,907
Add: pre-tax legal settlement and other charges		9,184			—
Less: related income taxes		(2,618	)		—
Adjusted net income (non-GAAP)	$	39,279		$	29,907

Weighted average shares outstanding - diluted		61,687,616			61,497,927

Reported diluted earnings per share (GAAP)	$	0.53		$	0.49

Adjusted diluted earnings per share (non-GAAP)	$	0.64		$	0.49

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:

TANGIBLE BOOK VALUE PER SHARE	September 30,			June 30,			March 31,			December 31,			September 30,
(in $000’s, unaudited)	2025			2025			2025			2024			2024
Capital components:
Total equity (GAAP)	$	700,010		$	694,704		$	696,190		$	689,727		$	685,352
Less: preferred stock		—			—			—			—			—
Total common equity		700,010			694,704			696,190			689,727			685,352
Less: goodwill		(167,631	)		(167,631	)		(167,631	)		(167,631	)		(167,631	)
Less: other intangible assets		(5,078	)		(5,532	)		(5,986	)		(6,439	)		(6,966	)
Reported tangible common equity (non-GAAP)		527,301			521,541			522,573			515,657			510,755
Add: pre-tax legal settlement and other charges		9,184			9,184			—			—			—
Less: related income taxes		(2,618	)		(2,618	)		—			—			—
Adjusted tangible common equity (non-GAAP)	$	533,867		$	528,107		$	522,573		$	515,657		$	510,755

Common shares outstanding at period-end		61,277,541			61,446,763			61,611,121			61,348,095			61,297,344
Reported tangible book value per share (non-GAAP)	$	8.61		$	8.49		$	8.48		$	8.41		$	8.33
Adjusted tangible book value per share (non-GAAP)	$	8.71		$	8.59		$	8.48		$	8.41		$	8.33

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	For the Quarter Ended:
EQUITY AND AVERAGE ASSETS	September 30,				June 30,				March 31,				December 31,				September 30,
(in $000’s, unaudited)	2025				2025				2025				2024				2024
Reported net income (GAAP)	$	14,698			$	6,389			$	11,626			$	10,621			$	10,507
Add: pre-tax legal settlement and other charges		—				9,184				—				—				—
Less: related income taxes		—				(2,618	)			—				—				—
Adjusted net income (non-GAAP)	$	14,698			$	12,955			$	11,626			$	10,621			$	10,507

Average tangible common equity components:
Average equity (GAAP)	$	696,385			$	697,016			$	692,733			$	686,263			$	680,404
Less: goodwill		(167,631	)			(167,631	)			(167,631	)			(167,631	)			(167,631	)
Less: other intangible assets		(5,358	)			(5,817	)			(6,264	)			(6,770	)			(7,322	)
Total average tangible common equity (non-GAAP)	$	523,396			$	523,568			$	518,838			$	511,862			$	505,451

Reported annualized return on average equity (GAAP)		8.37		%		3.68		%		6.81		%		6.16		%		6.14		%
Adjusted annualized return on average equity (non-GAAP)		8.37		%		7.45		%		6.81		%		6.16		%		6.14		%

Reported annualized return on average
tangible common equity (non-GAAP)		11.14		%		4.89		%		9.09		%		8.25		%		8.27		%
Adjusted annualized return on average
tangible common equity (non-GAAP)		11.14		%		9.92		%		9.09		%		8.25		%		8.27		%

Average Assets (GAAP)	$	5,551,457			$	5,458,420			$	5,559,896			$	5,607,840			$	5,352,067

Reported annualized return on average assets (GAAP)		1.05		%		0.47		%		0.85		%		0.75		%		0.78		%
Adjusted annualized return on average assets (non-GAAP)		1.05		%		0.95		%		0.85		%		0.75		%		0.78		%

RETURN ON AVERAGE TANGIBLE COMMON	For the Nine Months Ended:
EQUITY AND AVERAGE ASSETS	September 30,				September 30,
(in $000’s, unaudited)	2025				2024
Reported net income (GAAP)	$	32,713			$	29,907
Add: pre-tax legal settlement and other charges		9,184				—
Less: related income taxes		(2,618	)			—
Adjusted net income (non-GAAP)	$	39,279			$	29,907

Average tangible common equity components:
Average equity (GAAP)	$	695,391			$	675,951
Less: goodwill		(167,631	)			(167,631	)
Less: other intangible assets		(5,810	)			(7,864	)
Total average tangible common equity (non-GAAP)	$	521,950			$	500,456

Reported annualized return on average equity (GAAP)		6.29		%		5.91		%
Adjusted annualized return on average equity (non-GAAP)		7.55		%		5.91		%

Reported annualized return on average
tangible common equity (non-GAAP)		8.38		%		7.98		%
Adjusted annualized return on average
tangible common equity (non-GAAP)		10.06		%		7.98		%

Average Assets (GAAP)	$	5,523,227			$	5,248,338

Reported annualized return on average assets (GAAP)		0.79		%		0.76		%
Adjusted annualized return on average assets (non-GAAP)		0.95		%		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	September 30,			June 30,			March 31,			December 31,			September 30,
(in $000’s, unaudited)	2025			2025			2025			2024			2024
Net interest income before
credit losses on loans (GAAP)	$	46,788		$	44,805		$	43,360		$	43,595		$	39,329
Tax-equivalent adjustment on securities -
exempt from Federal tax		53			57			58			58			59
Net interest income, FTE (non-GAAP)	$	46,841		$	44,862		$	43,418		$	43,653		$	39,388

Average balance of total interest earning assets	$	5,167,710		$	5,087,089		$	5,188,317		$	5,235,986		$	4,980,082

Net interest margin (annualized net interest income divided by the
average balance of total interest earnings assets) (GAAP)		3.59	%		3.53	%		3.39	%		3.31	%		3.14	%

Net interest margin, FTE (annualized net interest income, FTE,
divided by the average balance of total
earnings assets) (non-GAAP)		3.60	%		3.54	%		3.39	%		3.32	%		3.15	%

NET INTEREST INCOME	For the Nine Months Ended:
AND NET INTEREST MARGIN	September 30,			September 30,
(in $000’s, unaudited)	2025			2024
Net interest income before
credit losses on loans (GAAP)	$	134,953		$	117,698
Tax-equivalent adjustment on securities - exempt from Federal tax		168			179
Net interest income, FTE (non-GAAP)	$	135,121		$	117,877

Average balance of total interest earning assets	$	5,147,630		$	4,909,240

Net interest margin (annualized net interest income divided by the
average balance of total interest earnings assets) (GAAP)		3.51	%		3.22	%

Net interest margin, FTE (annualized net interest income, FTE, divided by the
average balance of total interest earnings assets) (non-GAAP)		3.51	%		3.23	%

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	September 30,				June 30,			March 31,		December 31,				September 30,
(in $000’s, unaudited)	2025				2025		2025			2024			2024
Net interest income before credit losses on loans	$	46,788		$	44,805		$	43,360		$	43,595		$	39,329
Noninterest income		3,217			2,977			2,696			2,775			2,826
Total revenue		50,005			47,782			46,056			46,370			42,155
Less: Noninterest expense		(29,026	)		(38,335	)		(29,456	)		(30,304	)		(27,555	)
Reported PPNR (GAAP)		20,979			9,447			16,600			16,066			14,600
Add: pre-tax legal settlement and other charges		—			9,184			—			—			—
Adjusted PPNR (non-GAAP)	$	20,979		$	18,631		$	16,600		$	16,066		$	14,600

	For the Nine Months Ended:
PRE-PROVISION NET REVENUE	September 30,				September 30,
(in $000’s, unaudited)	2025				2024
Net interest income before credit losses on loans	$	134,953		$	117,698
Noninterest income		8,890			8,328
Total revenue		143,843			126,026
Less: Noninterest expense		(96,817	)		(83,279	)
Reported PPNR (GAAP)		47,026			42,747
Add: pre-tax legal settlement and other charges		9,184			—
Adjusted PPNR (non-GAAP)	$	56,210		$	42,747

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	September 30,			June 30,				March 31,			December 31,			September 30,
(in $000’s, unaudited)	2025			2025				2025			2024			2024
Reported noninterest expense (GAAP)	$	29,026		$	38,335			$	29,456		$	30,304		$	27,555
Less: pre-tax legal settlement and other charges		—			(9,184	)			—			—			—
Adjusted noninterest expense (non-GAAP)	$	29,026		$	29,151			$	29,456		$	30,304		$	27,555

Net interest income before credit losses on loans	$	46,788		$	44,805			$	43,360		$	43,595		$	39,329
Noninterest income		3,217			2,977				2,696			2,775			2,826
Total revenue	$	50,005		$	47,782			$	46,056		$	46,370		$	42,155

Reported efficiency ratio (noninterest expense divided
by total revenue) (GAAP)		58.05	%		80.23		%		63.96	%		65.35	%		65.37	%

Adjusted efficiency ratio (adjusted noninterest expense
divided by total revenue) (non-GAAP)		58.05	%		61.01		%		63.96	%		65.35	%		65.37	%

NONINTEREST EXPENSE AND	For the Nine Months Ended:
EFFICIENCY RATIO	September 30,				September 30,
(in $000’s, unaudited)	2025				2024
Reported noninterest expense (GAAP)	$	96,817			$	83,279
Less: pre-tax legal settlement and other charges		(9,184	)			—
Adjusted noninterest expense (non-GAAP)	$	87,633			$	83,279

Net interest income before credit losses on loans	$	134,953			$	117,698
Noninterest income		8,890				8,328
Total revenue	$	143,843			$	126,026

Reported efficiency ratio (noninterest expense divided
by total revenue) (GAAP)		67.31		%		66.08	%

Adjusted efficiency ratio (adjusted noninterest expense
divided by total revenue) (non-GAAP)		60.92		%		66.08	%

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		September 30,				June 30,				March 31,				December 31,				September 30,
(in $000’s, unaudited)		2025				2025				2025				2024				2024
Heritage Commerce Corp:
Capital components:
Total equity (GAAP)		$	700,010			$	694,704			$	696,190			$	689,727			$	685,352
Less: preferred stock			—				—				—				—				—
Total common equity			700,010				694,704				696,190				689,727				685,352
Less: goodwill			(167,631	)			(167,631	)			(167,631	)			(167,631	)			(167,631	)
Less: other intangible assets			(5,078	)			(5,532	)			(5,986	)			(6,439	)			(6,966	)
	Total tangible common equity (non-GAAP)	$	527,301			$	521,541			$	522,573			$	515,657			$	510,755

Asset components:
Total assets (GAAP)		$	5,623,720			$	5,467,237			$	5,514,255			$	5,645,006			$	5,551,596
Less: goodwill			(167,631	)			(167,631	)			(167,631	)			(167,631	)			(167,631	)
Less: other intangible assets			(5,078	)			(5,532	)			(5,986	)			(6,439	)			(6,966	)
Total tangible assets (non-GAAP)		$	5,451,011			$	5,294,074			$	5,340,638			$	5,470,936			$	5,376,999

Tangible common equity / tangible assets (non-GAAP)			9.67		%		9.85		%		9.78		%		9.43		%		9.50		%

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		September 30,				June 30,				March 31,				December 31,				September 30,
(in $000’s, unaudited)		2025				2025				2025				2024				2024
Heritage Bank of Commerce:
Capital components:
Total Equity (GAAP)		$	724,780			$	717,103			$	715,605			$	709,379			$	704,585
Less: Preferred Stock			—				—				—				—				—
Total Common Equity			724,780				717,103				715,605				709,379				704,585
Less: Goodwill			(167,631	)			(167,631	)			(167,631	)			(167,631	)			(167,631	)
Less: Other Intangible Assets			(5,078	)			(5,532	)			(5,986	)			(6,439	)			(6,966	)
	Total Tangible Common Equity (non-GAAP)	$	552,071			$	543,940			$	541,988			$	535,309			$	529,988

Asset components:
Total Assets (GAAP)		$	5,620,681			$	5,464,618			$	5,512,160			$	5,641,646			$	5,548,576
Less: Goodwill			(167,631	)			(167,631	)			(167,631	)			(167,631	)			(167,631	)
Less: Other Intangible Assets			(5,078	)			(5,532	)			(5,986	)			(6,439	)			(6,966	)
Total Tangible Assets (non-GAAP)		$	5,447,972			$	5,291,455			$	5,338,543			$	5,467,576			$	5,373,979

Tangible common equity / tangible assets (non-GAAP)			10.13		%		10.28		%		10.15		%		9.79		%		9.86		%

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