Heritage Commerce Corp reported its financial results for the second quarter and first half of 2025, revealing a net income of $6.4 million, or $0.10 per diluted share, down from $9.2 million, or $0.15 per diluted share, in the same period last year. For the six months ended June 30, 2025, net income totaled $18.0 million, or $0.29 per diluted share, compared to $19.4 million, or $0.32 per diluted share, for the first half of 2024. The decline in profitability was attributed to a significant legal settlement charge of $9.2 million recorded in the second quarter, which impacted the overall earnings.
Total revenue for the second quarter increased by 15% to $47.8 million, driven by a 15% rise in net interest income, which reached $44.8 million, compared to $38.9 million in the prior year. The net interest margin improved to 3.54%, up from 3.23%, primarily due to lower rates on customer deposits and increased yields on loans and securities. The company’s total assets decreased to $5.5 billion as of June 30, 2025, down from $5.6 billion at the end of 2024, largely due to a decline in deposits.
Heritage Commerce Corp's loan portfolio showed growth, with loans held-for-investment increasing by 5% to $3.5 billion compared to the previous year. The company reported a provision for credit losses of $516,000 for the second quarter, reflecting ongoing loan growth. The allowance for credit losses on loans stood at $48.6 million, or 1.38% of total loans, indicating a stable asset quality despite the economic environment. The company also noted a slight increase in classified assets, totaling $37.5 million, or 0.69% of total assets.
In terms of strategic developments, the company repurchased 207,989 shares of its common stock during the second quarter under its $15 million share repurchase program, which has been extended through July 2026. The company’s capital ratios remained strong, exceeding regulatory requirements, with a total capital ratio of 15.5% and a Tier 1 capital ratio of 13.3% as of June 30, 2025. Looking ahead, Heritage Commerce Corp expressed optimism about continued loan growth and improving net interest margins, while maintaining a disciplined approach to underwriting and risk management.
About HERITAGE COMMERCE CORP
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