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Heritage Commerce Corp Reports Second Quarter and First Six Months of 2025 Financial Results

1. HTBK reported Q2 2025 net income down 45% to $6.4 million. 2. Adjusted EPS increased 11% to $0.21, driven by strong loan growth. 3. Total deposits declined 1% due to seasonal outflows; loans increased 1%. 4. Net interest margin steady at 3.54%; adjusted efficiency improved to 61.01%. 5. Legal settlement charges impacted net income but revealed strong loan quality.

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Why Bullish?

Strong loan growth and improved efficiency metrics suggest positive operational performance, though legal settlements had a negative effect on reported earnings.

How important is it?

The article discusses key financial metrics and operational strength of HTBK, which directly impacts investor sentiment and market positioning.

Why Short Term?

The immediate market reaction may be favorable due to the adjusted earnings metrics and loan growth, though underlying legal issues present potential long-term risks.

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SAN JOSE, Calif., July 24, 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 second quarter and six months ended June 30, 2025. All data are unaudited. REPORTED SECOND QUARTER 2025 HIGHLIGHTS:       Net IncomeEarnings Per SharePre-Provision Net Revenue ("PPNR")(1)Fully Tax Equivalent ("FTE") Net Interest Margin(1)Efficiency Ratio(1)Tangible Book Value Per Share(1)      $6.4 million$0.10 $9.4 million3.54%80.23%$8.49        ADJUSTED SECOND QUARTER 2025 HIGHLIGHTS:(1)            Net IncomeEarnings Per SharePPNR(1)FTE Net Interest Margin(1)Efficiency Ratio(1)Tangible Book Value Per Share(1)            $13.0 million$0.21 $18.6 million3.54%61.01%$8.59        CEO COMMENTARY:“We executed well in the second quarter, generating a higher level of net income and earnings per share, excluding significant charges primarily related to a legal settlement,” said Clay Jones, President and Chief Executive Officer. “We had positive trends in loan growth, an expansion in our net interest margin, and stable asset quality, while deposits declined due to seasonal outflows that we typically see in the second quarter. Our loan growth was well diversified across our portfolios. We continue to successfully add new clients by offering a superior banking experience and generate loan growth while maintaining our disciplined underwriting and pricing criteria.” “We have a strong balance sheet with a high level of capital and liquidity and healthy asset quality, which provides a strong foundation to weather periods of economic volatility. We are well positioned to navigate the current environment and expect to see positive trends in loan growth, the net interest margin, and expense management,” said Mr. Jones.   LINKED-QUARTER BASISYEAR-OVER-YEAR FINANCIAL HIGHLIGHTS:  • Total revenue of $47.8 million, an increase of 4%, or $1.7 million • Noninterest expense of $38.3 million includes an accrual of $9.2 million for pre-tax charges primarily related to a legal settlement• Reported net income of $6.4 million and earnings per share of $0.10, down 45% and 47%, from $11.6 million and $0.19, respectively• Adjusted net income(1) of $13.0 million and adjusted earnings per share(1) of $0.21, both metrics up 11% from $11.6 million and $0.19, respectively • Total revenue of $47.8 million, an increase of 15%, or $6.1 million• Noninterest expense of $38.3 million includes an accrual of $9.2 million for pre-tax charges primarily related to a legal settlement• Reported net income of $6.4 million and earnings per share of $0.10, down 31% and 33%, from $9.2 million and $0.15, respectively• Adjusted net income(1) of $13.0 million and adjusted earnings per share(1) of $0.21, both metrics up 40% from $9.2 million and $0.15, respectively FINANCIAL CONDITION:  • Loans held-for-investment (“HFI”) of $3.5 billion, up $47.4 million or 1%• Total deposits of $4.6 billion, down $55.9 million, or 1%• Loan to deposit ratio of 76.38%, up from 74.45%• Total shareholders’ equity of $694.7 million, down $1.5 million • Increase in loans HFI of $154.5 million, or 5%• Increase in total deposits of $182.7 million, or 4%        • Loan to deposit ratio of 76.38%, up from 76.04%• Increase in total shareholders’ equity of $15.5 million CREDIT QUALITY:  • Nonperforming assets (“NPAs”) to total assets of 0.11% for both quarters• NPAs to total assets of 0.11% for both quarters • Classified assets to total assets of 0.69%, compared to 0.73%• Classified assets to total assets of 0.69%, compared to 0.64% KEY PERFORMANCE METRICS:  • FTE net interest margin(1) of 3.54%, an increase from 3.39%• Common equity tier 1 capital ratio of 13.3%, compared to 13.6%• Total capital ratio of 15.5%, compared to 15.9%• Tangible common equity ratio(1) of 9.85%, an increase of 1% from 9.78% • FTE net interest margin(1) of 3.54%, an increase from 3.26%• Common equity tier 1 capital ratio of 13.3%, compared to 13.4%• Total capital ratio of 15.5%, compared to 15.6%• Tangible common equity ratio(1) of 9.85%, a decrease of 1% from 9.91% (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 charges primarily related to a legal settlement in the second quarter and first six months of 2025 as presented in the reconciliation of non-GAAP financial measures at the end of this press release. Results of Operations: Reported net income was $6.4 million, or $0.10 per average diluted common share, for the second quarter of 2025. Adjusted net income(2) was $13.0 million, or $0.21 per average diluted common share, for the second quarter of 2025, compared to $11.6 million, or $0.19 per average diluted common share, for the first quarter of 2025, and $9.2 million, or $0.15 per average diluted common share, for the second quarter of 2024. The annualized return on average assets was 0.47% and annualized return on average equity was 3.68% for the second quarter of 2025, compared to 0.85% and 6.81%, respectively, for the first quarter of 2025, and 0.71% and 5.50%, respectively, for the second quarter of 2024. The adjusted annualized return on average assets(2) was 0.95% and adjusted annualized return on average tangible common equity(2) was 9.92% for the second quarter of 2025, compared to 0.85% and 9.09%, respectively, for the first quarter ended of 2025, and 0.71% and 7.43%, respectively, for the second quarter of 2024. Reported net income was $18.0 million, or $0.29 per average diluted common share, for the first six months of 2025. Adjusted net income(2) was $24.6 million, or $0.40 per average diluted common share, for the first six months of 2025, compared to $19.4 million, or $0.32 per average diluted common share, for the first six months of 2024. The annualized return on average assets was 0.66% and annualized return on average equity was 5.23% for the six months ended June 30, 2025, compared to 0.75% and 5.79%, respectively, for the six months ended June 30, 2024. The adjusted annualized return on average assets(2) was 0.90% and annualized return on average tangible common equity(2) was 9.51% for the six months ended June 30, 2025, compared to 0.75% and 7.84%, respectively, for the six months ended June 30, 2024. Total revenue, which is defined as net interest income before provision for credit losses on loans plus noninterest income, increased $1.7 million, or 4%, to $47.8 million for the second quarter of 2025, compared to $46.1 million for the first quarter of 2025, and increased $6.1 million, or 15%, from $41.7 million for the second quarter of 2024. Total revenue increased $9.9 million, or 12%, to $93.8 million for the first six months of 2025, compared to $83.9 million for the first six months of 2024. For the second quarter and first six months of 2025, the Company’s reported PPNR(2), which is defined as total revenue less adjusted noninterest expense(2) was $9.4 million and $26.0 million, respectively. The adjusted PPNR(2) was $18.6 million for the second quarter of 2025, compared to $16.6 million for the first quarter of 2025, and $13.5 million for the second quarter of 2024. For the six months of 2025, the Company’s adjusted PPNR(2) was $35.2 million, compared to $28.1 million for the six months of 2024. Net interest income totaled $44.8 million for the second quarter of 2025, an increase of $1.4 million, or 3%, compared to $43.4 million for the first quarter of 2025. The FTE net interest margin(2) was 3.54% for the second quarter of 2025, an increase over 3.39% for the first quarter of 2025 primarily due to an increase in the average yields and average balances of loans and securities, partially offset by a decrease in the average balances of deposits resulting in a lower average balance of overnight funds. Net interest income increased $5.9 million, or 15%, to $44.8 million, compared to $38.9 million for the second quarter of 2024. The FTE net interest margin(2) increased from 3.23% for the second quarter of 2024 primarily due to lower rates paid on customer deposits, an increase in the average yields and average balances of loans and securities, 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 six months of 2025, net interest income increased $9.8 million, or 12% to $88.2 million, compared to $78.4 million for the first six months of 2024. The FTE net interest margin(2) increased 20 basis points to 3.47% for the first six months of 2025, from 3.27% for the first six months of 2024, primarily due to 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 higher rates paid on client deposits and a lower yield on overnight funds. We recorded a provision for credit losses on loans of $516,000 for the second quarter of 2025, compared to $274,000 for the first quarter of 2025, and $471,000 for the second quarter of 2024. There was a provision for credit losses on loans of $790,000 for the six months ended June 30, 2025, compared to $655,000 for the six months ended June 30, 2024. The increase in the provision for credit losses on loans for the second quarter and first six months of 2025 was primarily due to loan growth. Total noninterest income increased to $3.0 million for the second quarter of 2025, compared to $2.7 million for the first quarter of 2025, and $2.9 million for the second quarter of 2024, primarily due to higher termination and facility fees. The increase in noninterest income in the second quarter of 2025 was partially offset by a $219,000 gain on proceeds from company-owned life insurance in the second quarter of 2024. Total noninterest income increased 3% to $5.7 million for the first six months of 2025, compared to $5.5 million for the first six months of 2024, primarily due to higher termination and facility fees, partially offset by a $219,000 gain on proceeds from company-owned life insurance in the first six months of 2024. (2)This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release. Reported noninterest expense for the second quarter of 2025 and first six months of 2025 totaled $38.3 million and $67.8 million, respectively. 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. Adjusted noninterest expense(3) was $29.1 million, compared to $29.5 million for the first quarter of 2025, and $28.2 million for the second quarter of 2024. Adjusted noninterest expense(3) for the first six months of 2025 was $58.6 million, compared to $55.7 million for the first six months of 2024. Income tax expense decreased to $2.5 million for the second quarter of 2025, compared to $4.7 million for the first quarter of 2025, and $3.8 million for the second quarter of 2024, primarily due to lower pre-tax income. The effective tax rate for the second quarter of 2025 was 28.5%, compared to 28.8% for the first quarter of 2025, and 29.4% for the second quarter of 2024. Income tax expense for the six months ended June 30, 2025 was $7.2 million, compared to $8.1 million for the six months ended June 30, 2024. The effective tax rate for six months ended June 30, 2025 was 28.7%, compared to 29.4% for the six months ended June 30, 2024. The reported efficiency ratio(3) for the second quarter and first six month of 2025 was 80.23% and 72.24%, respectively. The adjusted efficiency ratio(3) improved to 61.01% for the second quarter of 2025, compared to 63.96% for the first quarter of 2025, as a result of higher total revenue. The adjusted efficiency ratio(3) improved from 67.55% for the second quarter of 2024, primarily due to higher total revenue, partially offset by higher noninterest expense. The adjusted efficiency ratio(3) improved to 62.45% for the first six months of 2025 from 66.44% for the first six months of 2024, primarily due to higher total revenue, partially offset by higher noninterest expense. Full time equivalent employees were 350 at both June 30, 2025 and March 31, 2025, and 353 at June 30, 2024. Financial Condition and Capital Management: Total assets remained relatively flat at $5.5 billion at both June 30, 2025 and March 31, 2025. Total assets increased 4% from $5.3 billion at June 30, 2024, primarily due to an increase in deposits resulting in an increase in overnight funds, and an increase in loans.   Investment securities available-for-sale (at fair value) decreased to $307.0 million at June 30, 2025, compared to $371.0 million at March 31, 2025, primarily due to maturities and paydowns, partially offset by purchases. Investment securities available-for-sale totaled $273.0 million at June 30, 2024. The pre-tax unrealized loss on the securities available-for-sale portfolio was $448,000, or $396,000 net of taxes, which equaled less than 1% of total shareholders’ equity at June 30, 2025. During the first six months of 2025, the Company purchased $87.2 million of agency mortgage-backed securities, $79.8 million of collateralized mortgage obligations, and $44.8 million of U.S. Treasury securities, for total purchases of $211.8 million in the available-for-sale portfolio. Securities purchased had a book yield of 4.82% and an average life of 4.55 years. Investment securities held-to-maturity (at amortized cost, net of allowance for credit losses of ($16,000), totaled $561.2 million at June 30, 2025, compared to $576.7 million at March 31, 2025, and $621.2 million at June 30, 2024. The fair value of the securities held-to-maturity portfolio was $486.5 million at June 30, 2025. The pre-tax unrecognized loss on the securities held-to-maturity portfolio was $74.7 million, or $52.7 million net of taxes, which equaled 7.6% of total shareholders’ equity at June 30, 2025. The unrealized and unrecognized losses in both the available-for-sale and held-to-maturity portfolios were due to higher interest rates at June 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 when the securities mature. The fair value is expected to recover as the securities approach their maturity date and/or market rates decline. Loans HFI, net of deferred costs and fees, increased $47.4 million, or 1% to $3.5 billion at June 30, 2025, compared to $3.5 billion at March 31, 2025, and increased $154.5 million, or 5%, from $3.4 billion at June 30, 2024. Loans HFI, excluding residential mortgages, increased $58.3 million, or 2% to $3.1 billion at June 30, 2025, compared to $3.0 billion at March 31, 2025, and increased $184.9 million, or 6%, from $2.9 billion at June 30, 2024. Commercial and industrial line utilization was 32% at June 30, 2025, compared to 31% at both March 31, 2025, and June 30, 2024. Commercial real estate (“CRE”) loans totaled $2.0 billion at June 30, 2025, of which 31% were owner occupied and 31% were investor CRE loans. Owner occupied CRE loans totaled 31% at March 31, 2025 and 32% at June 30, 2024. Approximately 24% of the Company’s loan portfolio consisted of floating interest rate loans at both June 30, 2025 and March 31, 2025, compared to 27% at June 30, 2024. At June 30, 2025, paydowns and maturities of investment securities and fixed interest rate loans maturing within one year totaled $311.0 million. (3)This is a non-GAAP financial measure as defined and discussed under “Non-GAAP Financial Measures” in this press release. Total deposits decreased $55.9 million, or 1%, to $4.6 billion at June 30, 2025, compared to $4.7 billion at March 31, 2025, primarily due to season outflows. Total deposits increased $182.7 million, or 4% from $4.4 billion at June 30, 2024. The following table shows the Company’s deposit types as a percentage of total deposits at the dates indicated:             June 30,   March 31,  June 30,  DEPOSITS TYPE % TO TOTAL DEPOSITS    2025      2025      2024 Demand, noninterest-bearing 25%   24%   27%  Demand, interest-bearing 21%   20%   21%  Savings and money market 28%   29%   25%  Time deposits — under $250 1%   1%   1%  Time deposits — $250 and over 4%   5%   4%  Insured Cash Sweep ("ICS")/Certificate of Deposit Registry         Service ("CDARS") - interest-bearing demand, money         market and time deposits 21%   21%   22%  Total deposits 100%   100%   100%   The loan to deposit ratio was 76.38% at June 30, 2025, compared to 74.45% at March 31, 2025, and 76.04% at June 30, 2024. The Company’s total available liquidity and borrowing capacity was $3.1 billion at June 30, 2025, compared to $3.2 billion at March 31, 2025, and $3.0 billion at June 30, 2024. Total shareholders’ equity was $694.7 million at June 30, 2025, compared to $696.2 million at March 31, 2025, and $679.2 million at June 30, 2024. The change in shareholders’ equity at June 30, 2025 is primarily a function of net income and the decrease in the total accumulated other comprehensive loss, partially offset by dividends to stockholders. Total accumulated other comprehensive loss of $5.0 million at June 30, 2025 was comprised of $2.5 million in actuarial losses associated with split dollar insurance contracts, $2.2 million in actuarial losses associated with the supplemental executive retirement plan, unrealized losses on securities available-for-sale of $396,000, and a $42,000 unrealized gain on interest-only strip from SBA loans. The Company’s consolidated capital ratios exceeded regulatory guidelines and the Bank’s capital ratios exceeded regulatory guidelines under the prompt corrective action (“PCA”) regulatory guidelines for a well-capitalized financial institution, and the Basel III minimum regulatory requirements at June 30, 2025. Reported tangible book value per share(4) was $8.49 at June 30, 2025. Adjusted tangible book value per share(4) was $8.59 at June 30, 2025, compared to $8.48 at March 31, 2025, and $8.22 at June 30, 2024. The Company is authorized to repurchase up to $15.0 million of the Company’s shares of its issued and outstanding common stock under its share repurchase program authorized by the Board of Directors in July 2024. During the second quarter of 2025, the Company repurchased 207,989 shares of its common stock with a weighted average price of $9.19 for a total of $1.9 million. The remaining capacity under this share repurchase program was $13.1 million at June 30, 2025. In July 2025, the Company’s Board of Directors extended the program for one year, expiring on July 31, 2026. Credit Quality:The provision for credit losses on loans totaled $516,000 for the second quarter of 2025, compared to a $274,000 provision for credit losses on loans for the first quarter of 2025 and a provision for credit losses on loans of $471,000 for the second quarter of 2024. Net charge-offs totaled $145,000 for the second quarter of 2025, compared to $965,000 for the first quarter of 2025, and $405,000 for the second quarter of 2024.  The provision for credit losses on loans totaled $790,000 for the first six months of 2025, compared to a $655,000 provision for credit losses on loans for the first six months of 2024. Net charge-offs totaled $1.1 million for the first six months of 2025, compared to $659,000 for the first six months of 2024.  The allowance for credit losses on loans (“ACLL”) at June 30, 2025 was $48.6 million, or 1.38% of total loans, representing 787% of total nonperforming loans. The ACLL at March 31, 2025 was $48.3 million, or 1.38% of total loans, representing 765% of total nonperforming loans. The ACLL at June 30, 2024 was $48.0 million, or 1.42% of total loans, representing 795% of total nonperforming loans. The reduction to the allowance for credit on losses on loans reflects our credit assessment and economic factors. NPAs were $6.2 million at June 30, 2025, compared to $6.3 million at March 31, 2025, and $6.0 million at June 30, 2024. There were no foreclosed assets on the balance sheet at June 30, 2025, March 31, 2025, or June 30, 2024. There were no Shared National Credits (“SNCs”) or material purchased participations included in NPAs or total loans at June 30, 2025, March 31, 2025, or June 30, 2024. Classified assets totaled $37.5 million, or 0.69% of total assets, at June 30, 2025, compared to $40.0 million, or 0.73% of total assets, at March 31, 2025, and $33.6 million, or 0.64% of total assets, at June 30, 2024. (4)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, Gilroy, 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 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) the effects of recent wildfires affecting Southern California, which have affected certain clients and certain loans secured by mortgages in Los Angeles County, and which are affecting or may, in the future, affect other clients in those and other markets throughout California; (vi) 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; (vii) 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; (viii) political events that have accompanied or that may in the future accompany or result from recent political changes, particularly including sociopolitical events and conditions that result from political conflicts and law enforcement activities that may adversely affect our markets or our clients; (ix) 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; (x) 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; (xi) factors that affect the value and liquidity of our investment portfolios, particularly the values of securities available-for-sale; (xii) 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; (xiii) 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; (xiv) 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; (xv) 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 (xvi) 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 Six Months Ended:CONSOLIDATED INCOME STATEMENTS    June 30,     March 31,     June 30,     March 31,     June 30,      June 30,     June 30,     Percent (in $000’s, unaudited) 2025 2025 2024 2025  2024   2025 2024 Change Interest income $63,025 $61,832 $58,489 2 %  8 % $124,857 $115,450 8 %Interest expense  18,220  18,472  19,622 (1)%  (7)%  36,692  37,080 (1)%Net interest income before provision                       for credit losses on loans  44,805  43,360  38,867 3 %  15 %  88,165  78,370 12 %Provision for credit losses on loans  516  274  471 88 %  10 %  790  655 21 %Net interest income after provision                       for credit losses on loans  44,289  43,086  38,396 3 %  15 %  87,375  77,715 12 %Noninterest income:                            Service charges and fees on deposit                       accounts  929  892  891 4 %  4 %  1,821  1,768 3 %FHLB and FRB stock dividends  584  590  588 (1)%  (1)%  1,174  1,178   Increase in cash surrender value of                       life insurance  548  538  521 2 %  5 %  1,086  1,039 5 %Termination fees  227  87  100 161 %  127 %  314  113 178 %Gain on sales of SBA loans  87  98  76 (11)%  14 %  185  254 (27)%Servicing income  61  82  90 (26)%  (32)%  143  180 (21)%Gain on proceeds from company-owned                       life insurance  —  —  219 N/A (100)%  —  219 (100)%Other  541  409  379 32 %  43 %  950  750 27 %Total noninterest income  2,977  2,696  2,864 10 %  4 %  5,673  5,501 3 %Noninterest expense:                            Salaries and employee benefits  16,227  16,575  15,794 (2)%  3 %  32,802  31,303 5 %Occupancy and equipment  2,525  2,534  2,689 0 %  (6)%  5,059  5,132 (1)%Professional fees  1,819  1,580  1,072 15 %  70 %  3,399  2,399 42 %Other  17,764  8,767  8,633 103 %  106 %  26,531  16,890 57 %Total noninterest expense  38,335  29,456  28,188 30 %  36 %  67,791  55,724 22 %Income before income taxes  8,931  16,326  13,072 (45)%  (32)%  25,257  27,492 (8)%Income tax expense  2,542  4,700  3,838 (46)%  (34)%  7,242  8,092 (11)% Net income $ 6,389 $ 11,626 $ 9,234 (45)%  (31)% $ 18,015 $ 19,400 (7)%                        PER COMMON SHARE DATA                       (unaudited)                          Basic earnings per share $0.10 $0.19 $0.15 (47)%  (33)% $0.29 $0.32 (9)%Diluted earnings per share $0.10 $0.19 $0.15 (47)%  (33)% $0.29 $0.32 (9)%Weighted average shares outstanding - basic  61,508,180  61,479,579  61,279,914 0 %  0 %  61,493,880  61,233,269 0 %Weighted average shares outstanding - diluted  61,624,600  61,708,361  61,438,088 0 %  0 %  61,664,942  61,446,484 0 %Common shares outstanding at period-end  61,446,763  61,611,121  61,292,094 0 %  0 %  61,446,763  61,292,094 0 %Dividend per share $0.13 $0.13 $0.13 0 %  0 % $0.26 $0.26 0 %Book value per share $11.31 $11.30 $11.08 0 %  2 % $11.31 $11.08 2 %Tangible book value per share(1) $8.49 $8.48 $8.22 0 %  3 % $8.49 $8.22 3 %                        KEY PERFORMANCE METRICS                               (in $000's, unaudited)                               Annualized return on average equity  3.68%   6.81%   5.50%  (46)%  (33)%  5.23%   5.79%  (10)%Annualized return on average tangible                       common equity(1)  4.89%   9.09%   7.43%  (46)%  (34)%  6.97%   7.84%  (11)%Annualized return on average assets  0.47%   0.85%   0.71%  (45)%  (34)%  0.66%   0.75%  (12)%Annualized return on average tangible assets(1)  0.48%   0.88%   0.74%  (45)%  (35)%  0.68%   0.78%  (13)%Net interest margin (FTE)(1)  3.54%   3.39%   3.23%  4 %  10 %  3.47%   3.27%  6 %Total revenue $47,782 $46,056 $41,731 4 %  15 %  93,838  83,871 12 %Pre-provision net revenue(1) $9,447 $16,600 $13,543 (43)%  (30)%  26,047  28,147 (7)%Efficiency ratio(1)  80.23%   63.96%   67.55%  25 %  19 %  72.24%   66.44%  9 %                        AVERAGE BALANCES                              (in $000’s, unaudited)                               Average assets $5,458,420 $5,559,896 $5,213,171 (2)%  5 % $5,508,878 $5,195,903 6 %Average tangible assets(1) $5,284,972 $5,386,001 $5,037,673 (2)%  5 % $5,335,207 $5,020,134 6 %Average earning assets $5,087,089 $5,188,317 $4,840,670 (2)%  5 % $5,137,424 $4,825,587 6 %Average loans held-for-sale $2,250 $2,290 $1,503 (2)%  50 % $2,270 $2,126 7 %Average loans held-for-investment $3,504,518 $3,429,014 $3,328,358 2 %  5 % $3,466,975 $3,312,799 5 %Average deposits $4,618,007 $4,717,517 $4,394,545 (2)%  5 % $4,667,487 $4,377,347 7 %Average demand deposits - noninterest-bearing $1,146,494 $1,167,330 $1,127,145 (2)%  2 % $1,156,854 $1,152,111 0 %Average interest-bearing deposits $3,471,513 $3,550,187 $3,267,400 (2)%  6 % $3,510,633 $3,225,236 9 %Average interest-bearing liabilities $3,511,237 $3,589,872 $3,306,972 (2)%  6 % $3,550,338 $3,264,788 9 %Average equity $697,016 $692,733 $675,108 1 %  3 % $694,886 $673,700 3 %Average tangible common equity(1) $523,568 $518,838 $499,610 1 %  5 % $521,215 $497,931 5 %                                                 (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    June 30,     March 31,     December 31,     September 30,    June 30,  (in $000’s, unaudited) 2025 2025 2024 2024 2024 Interest income $63,025 $61,832 $64,043 $60,852 $58,489 Interest expense  18,220  18,472  20,448  21,523  19,622 Net interest income before provision                for credit losses on loans  44,805  43,360  43,595  39,329  38,867 Provision for credit losses on loans  516  274  1,331  153  471 Net interest income after provision                for credit losses on loans  44,289  43,086  42,264  39,176  38,396 Noninterest income:                 Service charges and fees on deposit                accounts  929  892  885  908  891 FHLB and FRB stock dividends  584  590  590  586  588 Increase in cash surrender value of                life insurance  548  538  528  530  521 Termination fees  227  87  18  46  100 Gain on sales of SBA loans  87  98  125  94  76 Servicing income  61  82  77  108  90 Gain on proceeds from company-owned                life insurance  —  —  —  —  219 Other  541  409  552  554  379 Total noninterest income  2,977  2,696  2,775  2,826  2,864 Noninterest expense:                     Salaries and employee benefits  16,227  16,575  16,976  15,673  15,794 Occupancy and equipment  2,525  2,534  2,495  2,599  2,689 Professional fees  1,819  1,580  1,711  1,306  1,072 Other  17,764  8,767  9,122  7,977  8,633 Total noninterest expense  38,335  29,456  30,304  27,555  28,188 Income before income taxes  8,931  16,326  14,735  14,447  13,072 Income tax expense  2,542  4,700  4,114  3,940  3,838  Net income $ 6,389 $ 11,626 $ 10,621 $ 10,507 $ 9,234                  PER COMMON SHARE DATA                (unaudited)                    Basic earnings per share $0.10 $0.19 $0.17 $0.17 $0.15 Diluted earnings per share $0.10 $0.19 $0.17 $0.17 $0.15 Weighted average shares outstanding - basic  61,508,180  61,479,579  61,320,505  61,295,877  61,279,914 Weighted average shares outstanding - diluted  61,624,600  61,708,361  61,679,735  61,546,157  61,438,088 Common shares outstanding at period-end  61,446,763  61,611,121  61,348,095  61,297,344  61,292,094 Dividend per share $0.13 $0.13 $0.13 $0.13 $0.13 Book value per share $11.31 $11.30 $11.24 $11.18 $11.08 Tangible book value per share(1) $8.49 $8.48 $8.41 $8.33 $8.22                  KEY PERFORMANCE METRICS                     (in $000's, unaudited)                     Annualized return on average equity  3.68%   6.81%   6.16%   6.14%   5.50%  Annualized return on average tangible                common equity(1)  4.89%   9.09%   8.25%   8.27%   7.43%  Annualized return on average assets  0.47%   0.85%   0.75%   0.78%   0.71%  Annualized return on average tangible assets(1)  0.48%   0.88%   0.78%   0.81%   0.74%  Net interest margin (FTE)(1)  3.54%   3.39%   3.32%   3.15%   3.23%  Total revenue $47,782 $46,056 $46,370 $42,155 $41,731 Pre-provision net revenue(1) $9,447 $16,600 $16,066 $14,600 $13,543 Efficiency ratio(1)  80.23%   63.96%   65.35%   65.37%   67.55%                   AVERAGE BALANCES                     (in $000’s, unaudited)                     Average assets $5,458,420 $5,559,896 $5,607,840 $5,352,067 $5,213,171 Average tangible assets(1) $5,284,972 $5,386,001 $5,433,439 $5,177,114 $5,037,673 Average earning assets $5,087,089 $5,188,317 $5,235,986 $4,980,082 $4,840,670 Average loans held-for-sale $2,250 $2,290 $2,260 $1,493 $1,503 Average loans held-for-investment $3,504,518 $3,429,014 $3,388,729 $3,359,647 $3,328,358 Average deposits $4,618,007 $4,717,517 $4,771,491 $4,525,946 $4,394,545 Average demand deposits - noninterest-bearing $1,146,494 $1,167,330 $1,222,393 $1,172,304 $1,127,145 Average interest-bearing deposits $3,471,513 $3,550,187 $3,549,098 $3,353,642 $3,267,400 Average interest-bearing liabilities $3,511,237 $3,589,872 $3,588,755 $3,393,264 $3,306,972 Average equity $697,016 $692,733 $686,263 $680,404 $675,108 Average tangible common equity(1) $523,568 $518,838 $511,862 $505,451 $499,610                                                     (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    June 30,     March 31,     June 30,     March 31,     June 30,  (in $000’s, unaudited) 2025  2025  2024  2025  2024  ASSETS                   Cash and due from banks $55,360  $44,281  $37,497  25 %  48 %Other investments and interest-bearing deposits              in other financial institutions  666,432   700,769   610,763  (5)%  9 %Securities available-for-sale, at fair value  307,035   370,976   273,043  (17)%  12 %Securities held-to-maturity, at amortized cost  561,205   576,718   621,178  (3)%  (10)%Loans - held-for-sale - SBA, including deferred costs  1,156   1,884   1,899  (39)%  (39)%Loans - held-for-investment:               Commercial  492,231   489,241   477,929  1 %  3 %Real estate:               CRE - owner occupied  627,810   616,825   594,504  2 %  6 %CRE - non-owner occupied  1,390,419   1,363,275   1,283,323  2 %  8 %Land and construction  149,460   136,106   125,374  10 %  19 %Home equity  120,763   119,138   126,562  1 %  (5)%Multifamily  285,016   284,510   268,968  0 %  6 %Residential mortgages  454,419   465,330   484,809  (2)%  (6)%Consumer and other  14,661   12,741   18,758  15 %  (22)%Loans  3,534,779   3,487,166   3,380,227  1 %  5 %Deferred loan fees, net  (446)  (268)  (434) 66 %  3 %Total loans - held-for-investment, net of deferred fees  3,534,333   3,486,898   3,379,793  1 %  5 %Allowance for credit losses on loans  (48,633)  (48,262)  (47,954) 1 %  1 %Loans, net  3,485,700   3,438,636   3,331,839  1 %  5 %Company-owned life insurance  82,296   81,749   80,153  1 %  3 %Premises and equipment, net  9,765   9,772   10,310  0 %  (5)%Goodwill  167,631   167,631   167,631  0 %  0 %Other intangible assets  5,532   5,986   7,521  (8)%  (26)%Accrued interest receivable and other assets  125,125   115,853   121,190  8 %  3 %Total assets $ 5,467,237  $ 5,514,255  $ 5,263,024  (1)%  4 %               LIABILITIES AND SHAREHOLDERS’ EQUITY                Liabilities:                Deposits:               Demand, noninterest-bearing $1,151,242  $1,128,593  $1,187,320  2 %  (3)%Demand, interest-bearing  955,504   949,068   928,246  1 %  3 %Savings and money market  1,320,142   1,353,293   1,126,520  (2)%  17 %Time deposits - under $250  35,356   37,592   39,046  (6)%  (9)%Time deposits - $250 and over  210,818   213,357   203,886  (1)%  3 %ICS/CDARS - interest-bearing demand, money market              and time deposits  954,272   1,001,365   959,592  (5)%  (1)%Total deposits  4,627,334   4,683,268   4,444,610  (1)%  4 %Subordinated debt, net of issuance costs  39,728   39,691   39,577  0 %  0 %Accrued interest payable and other liabilities  105,471   95,106   99,638  11 %  6 %Total liabilities  4,772,533   4,818,065   4,583,825  (1)%  4 %               Shareholders’ Equity:                   Common stock  509,888   511,596   508,343  0 %  0 %Retained earnings  189,794   191,401   182,571  (1)%  4 %Accumulated other comprehensive loss  (4,978)  (6,807)  (11,715) (27)%  (58)%Total shareholders' equity  694,704   696,190   679,199  0 %  2 % Total liabilities and shareholders’ equity $ 5,467,237  $ 5,514,255  $ 5,263,024  (1)%  4 %                                  End of Period:CONSOLIDATED BALANCE SHEETS    June 30,     March 31,     December 31,     September 30,    June 30, (in $000’s, unaudited) 2025  2025  2024  2024  2024 ASSETS                    Cash and due from banks $55,360  $44,281  $29,864  $49,722  $37,497 Other investments and interest-bearing deposits               in other financial institutions  666,432   700,769   938,259   906,588   610,763 Securities available-for-sale, at fair value  307,035   370,976   256,274   237,612   273,043 Securities held-to-maturity, at amortized cost  561,205   576,718   590,016   604,193   621,178 Loans - held-for-sale - SBA, including deferred costs  1,156   1,884   2,375   1,649   1,899 Loans - held-for-investment:               Commercial  492,231   489,241   531,350   481,266   477,929 Real estate:               CRE - owner occupied  627,810   616,825   601,636   602,062   594,504 CRE - non-owner occupied  1,390,419   1,363,275   1,341,266   1,310,578   1,283,323 Land and construction  149,460   136,106   127,848   125,761   125,374 Home equity  120,763   119,138   127,963   124,090   126,562 Multifamily  285,016   284,510   275,490   273,103   268,968 Residential mortgages  454,419   465,330   471,730   479,524   484,809 Consumer and other  14,661   12,741   14,837   14,179   18,758 Loans  3,534,779   3,487,166   3,492,120   3,410,563   3,380,227 Deferred loan fees, net  (446)  (268)  (183)  (327)  (434)Total loans - held-for-investment, net of deferred fees  3,534,333   3,486,898   3,491,937   3,410,236   3,379,793 Allowance for credit losses on loans  (48,633)  (48,262)  (48,953)  (47,819)  (47,954)Loans, net  3,485,700   3,438,636   3,442,984   3,362,417   3,331,839 Company-owned life insurance  82,296   81,749   81,211   80,682   80,153 Premises and equipment, net  9,765   9,772   10,140   10,398   10,310 Goodwill  167,631   167,631   167,631   167,631   167,631 Other intangible assets  5,532   5,986   6,439   6,966   7,521 Accrued interest receivable and other assets  125,125   115,853   119,813   123,738   121,190 Total assets $ 5,467,237  $ 5,514,255  $ 5,645,006  $ 5,551,596  $ 5,263,024                 LIABILITIES AND SHAREHOLDERS’ EQUITY               Liabilities:                  Deposits:                  Demand, noninterest-bearing $1,151,242  $1,128,593  $1,214,192  $1,272,139  $1,187,320 Demand, interest-bearing  955,504   949,068   936,587   913,910   928,246 Savings and money market  1,320,142   1,353,293   1,325,923   1,309,676   1,126,520 Time deposits - under $250  35,356   37,592   38,988   39,060   39,046 Time deposits - $250 and over  210,818   213,357   206,755   196,945   203,886 ICS/CDARS - interest-bearing demand, money market               and time deposits  954,272   1,001,365   1,097,586   997,803   959,592 Total deposits  4,627,334   4,683,268   4,820,031   4,729,533   4,444,610 Subordinated debt, net of issuance costs  39,728   39,691   39,653   39,615   39,577 Accrued interest payable and other liabilities  105,471   95,106   95,595   97,096   99,638 Total liabilities  4,772,533   4,818,065   4,955,279   4,866,244   4,583,825                 Shareholders’ Equity:                    Common stock  509,888   511,596   510,070   509,134   508,343 Retained earnings  189,794   191,401   187,762   185,110   182,571 Accumulated other comprehensive loss  (4,978)  (6,807)  (8,105)  (8,892)  (11,715)Total shareholders' equity  694,704   696,190   689,727   685,352   679,199  Total liabilities and shareholders’ equity $ 5,467,237  $ 5,514,255  $ 5,645,006  $ 5,551,596  $ 5,263,024                                   At or For the Quarter Ended: Percent Change From: CREDIT QUALITY DATA    June 30,     March 31,     June 30,     March 31,     June 30,  (in $000’s, unaudited) 2025 2025 2024 2025  2024  Nonaccrual loans - held-for-investment:              Land and construction loans $4,198 $4,793 $4,774 (12)%  (12)%Home equity and other loans  728  927  108 (21)%  574 %Residential mortgages  607  —  — N/A N/A Commercial loans  491  324  900 52 %  (45)%CRE loans  31  —  — N/A N/A Total nonaccrual loans - held-for-investment:  6,055  6,044  5,782 0 %  5 %Loans over 90 days past due              and still accruing  123  268  248 (54)%  (50)%Total nonperforming loans  6,178  6,312  6,030 (2)%  2 %Foreclosed assets  —  —  — N/A N/A Total nonperforming assets $6,178 $6,312 $6,030 (2)%  2 %Net charge-offs during the quarter $145 $965 $405 (85)%  (64)%Provision for credit losses on loans during the quarter $516 $274 $471 88 %  10 %Allowance for credit losses on loans $48,633 $48,262 $47,954 1 %  1 %Classified assets $37,525 $40,034 $33,605 (6)%  12 %Allowance for credit losses on loans to total loans  1.38%   1.38%   1.42%  0 %  (3)%Allowance for credit losses on loans to total nonperforming loans  787.20%   764.61%   795.26%  3 %  (1)%Nonperforming assets to total assets  0.11%   0.11%   0.11%  0 %  0 %Nonperforming loans to total loans  0.17%   0.18%   0.18%  (6)%  (6)%Classified assets to Heritage Commerce Corp              Tier 1 capital plus allowance for credit losses on loans  7%   7%   6%  0 %  17 %Classified assets to Heritage Bank of Commerce              Tier 1 capital plus allowance for credit losses on loans  6%   7%   6%  (14)%  0 %               OTHER PERIOD-END STATISTICS                   (in $000’s, unaudited)                   Heritage Commerce Corp:                   Tangible common equity (1) $521,541 $522,573 $504,047 0 %  3 %Shareholders’ equity / total assets  12.71%   12.63%   12.91%  1 %  (2)%Tangible common equity / tangible assets (1)  9.85%   9.78%   9.91%  1 %  (1)%Loan to deposit ratio  76.38%   74.45%   76.04%  3 %  0 %Noninterest-bearing deposits / total deposits  24.88%   24.10%   26.71%  3 %  (7)%Total capital ratio  15.5%   15.9%   15.6%  (3)%  (1)%Tier 1 capital ratio  13.3%   13.6%   13.4%  (2)%  (1)%Common Equity Tier 1 capital ratio  13.3%   13.6%   13.4%  (2)%  (1)%Tier 1 leverage ratio  9.9%   9.8%   10.2%  1 %  (3)%Heritage Bank of Commerce:              Tangible common equity / tangible assets (1)  10.28%   10.15%   10.28%  1 %  0 %Total capital ratio  15.1%   15.4%   15.1%  (2)%  0 %Tier 1 capital ratio  13.8%   14.1%   13.9%  (2)%  (1)%Common Equity Tier 1 capital ratio  13.8%   14.1%   13.9%  (2)%  (1)%Tier 1 leverage ratio  10.4%   10.2%   10.6%  2 %  (2)%                (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: CREDIT QUALITY DATA    June 30,     March 31,     December 31,     September 30,    June 30,  (in $000’s, unaudited) 2025 2025 2024 2024 2024 Nonaccrual loans - held-for-investment:                Land and construction loans $4,198 $4,793 $5,874 $5,862 $4,774 Home equity and other loans  728  927  290  84  108 Residential mortgages  607  —  —  —  — Commercial loans  491  324  1,014  752  900 CRE loans  31  —  —  —  — Total nonaccrual loans - held-for-investment:  6,055  6,044  7,178  6,698  5,782 Loans over 90 days past due                and still accruing  123  268  489  460  248 Total nonperforming loans  6,178  6,312  7,667  7,158  6,030 Foreclosed assets  —  —  —  —  — Total nonperforming assets $6,178 $6,312 $7,667 $7,158 $6,030 Net charge-offs during the quarter $145 $965 $197 $288 $405 Provision for credit losses on loans during the quarter $516 $274 $1,331 $153 $471 Allowance for credit losses on loans $48,633 $48,262 $48,953 $47,819 $47,954 Classified assets $37,525 $40,034 $41,661 $32,609 $33,605 Allowance for credit losses on loans to total loans  1.38%   1.38%   1.40%   1.40%   1.42%  Allowance for credit losses on loans to total nonperforming loans  787.20%   764.61%   638.49%   668.05%   795.26%  Nonperforming assets to total assets  0.11%   0.11%   0.14%   0.13%   0.11%  Nonperforming loans to total loans  0.17%   0.18%   0.22%   0.21%   0.18%  Classified assets to Heritage Commerce Corp                Tier 1 capital plus allowance for credit losses on loans  7%   7%   7%   6%   6%  Classified assets to Heritage Bank of Commerce                Tier 1 capital plus allowance for credit losses on loans  6%   7%   7%   6%   6%                   OTHER PERIOD-END STATISTICS                     (in $000’s, unaudited)                     Heritage Commerce Corp:                     Tangible common equity (1) $521,541 $522,573 $515,657 $510,755 $504,047 Shareholders’ equity / total assets  12.71%   12.63%   12.22%   12.35%   12.91%  Tangible common equity / tangible assets (1)  9.85%   9.78%   9.43%   9.50%   9.91%  Loan to deposit ratio  76.38%   74.45%   72.45%   72.11%   76.04%  Noninterest-bearing deposits / total deposits  24.88%   24.10%   25.19%   26.90%   26.71%  Total capital ratio  15.5%   15.9%   15.6%   15.6%   15.6%  Tier 1 capital ratio  13.3%   13.6%   13.4%   13.4%   13.4%  Common Equity Tier 1 capital ratio  13.3%   13.6%   13.4%   13.4%   13.4%  Tier 1 leverage ratio  9.9%   9.8%   9.6%   10.0%   10.2%  Heritage Bank of Commerce:                Tangible common equity / tangible assets (1)  10.28%   10.15%   9.79%   9.86%   10.28%  Total capital ratio  15.1%   15.4%   15.1%   15.1%   15.1%  Tier 1 capital ratio  13.8%   14.1%   13.9%   13.9%   13.9%  Common Equity Tier 1 capital ratio  13.8%   14.1%   13.9%   13.9%   13.9%  Tier 1 leverage ratio  10.4%   10.2%   10.0%   10.4%   10.6%   (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   June 30, 2025 March 31, 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 $3,020,534   41,738  5.54%  $2,945,072  $39,758  5.47%  Prepayment fees  —   473  0.06%   —   224  0.03%  Bay View Funding factored receivables  67,756   3,347  19.81%   60,250   2,942  19.80%  Purchased residential mortgages  420,280   3,548  3.39%   427,963   3,597  3.41%  Loan fair value mark / accretion  (1,802)  172  0.02%   (1,981)  181  0.02%  Loans, gross (1)(2)  3,506,768   49,278  5.64%   3,431,304   46,702  5.52%  Securities - taxable  902,642   6,346  2.82%   876,092   5,559  2.57%  Securities - exempt from Federal tax (3)  30,259   272  3.61%   30,480   275  3.66%  Other investments and interest-bearing deposits                 in other financial institutions  647,420   7,186  4.45%   850,441   9,354  4.46%  Total interest earning assets (3)  5,087,089   63,082  4.97%   5,188,317   61,890  4.84%  Cash and due from banks  31,044         31,869        Premises and equipment, net  9,958         10,007        Goodwill and other intangible assets  173,448         173,895        Other assets  156,881         155,808        Total assets $5,458,420        $5,559,896                          Liabilities and shareholders’ equity:                   Deposits:                   Demand, noninterest-bearing $1,146,494        $1,167,330                          Demand, interest-bearing  949,867   1,484  0.63%   944,375   1,438  0.62%  Savings and money market  1,313,054   8,205  2.51%   1,323,038   8,073  2.47%  Time deposits - under $100  11,456   49  1.72%   11,383   47  1.67%  Time deposits - $100 and over  231,644   1,995  3.45%   234,421   2,129  3.68%  ICS/CDARS - interest-bearing demand, money market                 and time deposits  965,492   5,949  2.47%   1,036,970   6,248  2.44%  Total interest-bearing deposits  3,471,513   17,682  2.04%   3,550,187   17,935  2.05%  Total deposits  4,618,007   17,682  1.54%   4,717,517   17,935  1.54%                    Short-term borrowings  19   —  0.00%   18   —  0.00%  Subordinated debt, net of issuance costs  39,705   538  5.43%   39,667   537  5.49%  Total interest-bearing liabilities  3,511,237   18,220  2.08%   3,589,872   18,472  2.09%  Total interest-bearing liabilities and demand,                 noninterest-bearing / cost of funds  4,657,731   18,220  1.57%   4,757,202   18,472  1.57%  Other liabilities  103,673         109,961        Total liabilities  4,761,404         4,867,163        Shareholders’ equity  697,016         692,733        Total liabilities and shareholders’ equity $5,458,420        $5,559,896                          Net interest income / margin (3)      44,862  3.54%       43,418  3.39%  Less tax equivalent adjustment (3)      (57)         (58)    Net interest income     $44,805  3.53%      $43,360  3.39%                     (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 $253,000 for the second quarter of 2025, compared to $214,000 for the first quarter of 2025.  Prepayment fees totaled $473,000 for the second quarter of 2025, compared to $224,000 for the first 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   June 30, 2025 June 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 $3,020,534  $41,738  5.54%  $2,830,260  $38,496  5.47%  Prepayment fees  —   473  0.06%   —   54  0.01%  Bay View Funding factored receivables  67,756   3,347  19.81%   54,777   2,914  21.40%  Purchased residential mortgages  420,280   3,548  3.39%   447,687   3,739  3.36%  Loan fair value mark / accretion  (1,802)  172  0.02%   (2,863)  267  0.04%  Loans, gross (1)(2)  3,506,768   49,278  5.64%   3,329,861   45,470  5.49%  Securities - taxable  902,642   6,346  2.82%   942,532   5,483  2.34%  Securities - exempt from Federal tax (3)  30,259   272  3.61%   31,803   285  3.60%  Other investments and interest-bearing deposits                  in other financial institutions  647,420   7,186  4.45%   536,474   7,311  5.48%  Total interest earning assets (3)  5,087,089   63,082  4.97%   4,840,670   58,549  4.86%  Cash and due from banks  31,044         33,419        Premises and equipment, net  9,958         10,216        Goodwill and other intangible assets  173,448         175,498        Other assets  156,881         153,368        Total assets $5,458,420        $5,213,171                          Liabilities and shareholders’ equity:                   Deposits:                   Demand, noninterest-bearing $1,146,494        $1,127,145                          Demand, interest-bearing  949,867   1,484  0.63%   932,100   1,719  0.74%  Savings and money market  1,313,054   8,205  2.51%   1,104,589   7,867  2.86%  Time deposits - under $100  11,456   49  1.72%   10,980   46  1.68%  Time deposits - $100 and over  231,644   1,995  3.45%   228,248   2,245  3.96%  ICS/CDARS - interest-bearing demand, money market                 and time deposits  965,492   5,949  2.47%   991,483   7,207  2.92%  Total interest-bearing deposits  3,471,513   17,682  2.04%   3,267,400   19,084  2.35%  Total deposits  4,618,007   17,682  1.54%   4,394,545   19,084  1.75%                    Short-term borrowings  19   —  0.00%   19   —  0.00%  Subordinated debt, net of issuance costs  39,705   538  5.43%   39,553   538  5.47%  Total interest-bearing liabilities  3,511,237   18,220  2.08%   3,306,972   19,622  2.39%  Total interest-bearing liabilities and demand,                 noninterest-bearing / cost of funds  4,657,731   18,220  1.57%   4,434,117   19,622  1.78%  Other liabilities  103,673         103,946        Total liabilities  4,761,404         4,538,063        Shareholders’ equity  697,016         675,108        Total liabilities and shareholders’ equity $5,458,420        $5,213,171                          Net interest income / margin (3)      44,862  3.54%       38,927  3.23%  Less tax equivalent adjustment (3)      (57)         (60)    Net interest income     $44,805  3.53%      $38,867  3.23%   (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 $253,000 for the second quarter of 2025, compared to $117,000 for the second quarter of 2024. Prepayment fees totaled $473,000 for the second quarter of 2025, compared to $54,000 for the second 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 Six Months Ended For the Six Months Ended   June 30, 2025 June 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 $2,983,011  $81,496  5.51%  $2,812,805  $76,217  5.45%  Prepayment fees  —   697  0.05%   —   78  0.01%  Bay View Funding factored receivables  64,024   6,289  19.81%   54,144   5,752  21.36%  Purchased residential mortgages  424,101   7,145  3.40%   450,964   7,527  3.36%  Loan fair value mark / accretion  (1,891)  353  0.02%   (2,988)  496  0.04%  Loans, gross (1)(2)  3,469,245   95,980  5.58%   3,314,925   90,070  5.46%  Securities - taxable  889,440   11,905  2.70%   992,508   11,666  2.36%  Securities - exempt from Federal tax (3)  30,369   547  3.63%   31,871   571  3.60%  Other investments, interest-bearing deposits in other                 financial institutions and Federal funds sold  748,370   16,540  4.46%   486,283   13,263  5.48%  Total interest earning assets (3)  5,137,424   124,972  4.91%   4,825,587   115,570  4.82%  Cash and due from banks  31,454         33,316        Premises and equipment, net  9,982         10,115        Goodwill and other intangible assets  173,671         175,769        Other assets  156,347         151,116        Total assets $5,508,878        $5,195,903                          Liabilities and shareholders’ equity:                     Deposits:                     Demand, noninterest-bearing $1,156,854        $1,152,111                          Demand, interest-bearing  947,137   2,922  0.62%   926,074   3,273  0.71%  Savings and money market  1,318,018   16,278  2.49%   1,086,085   14,516  2.69%  Time deposits - under $100  11,420   96  1.70%   10,962   88  1.61%  Time deposits - $100 and over  233,025   4,124  3.57%   224,730   4,309  3.86%  ICS/CDARS - interest-bearing demand, money market                 and time deposits  1,001,033   12,197  2.46%   977,385   13,818  2.84%  Total interest-bearing deposits  3,510,633   35,617  2.05%   3,225,236   36,004  2.24%  Total deposits  4,667,487   35,617  1.54%   4,377,347   36,004  1.65%                    Short-term borrowings  19   —  0.00%   17   —  0.00%  Subordinated debt, net of issuance costs  39,686   1,075  5.46%   39,535   1,076  5.47%  Total interest-bearing liabilities  3,550,338   36,692  2.08%   3,264,788   37,080  2.28%  Total interest-bearing liabilities and demand,                 noninterest-bearing / cost of funds  4,707,192   36,692  1.57%   4,416,899   37,080  1.69%  Other liabilities  106,800        105,304       Total liabilities  4,813,992         4,522,203        Shareholders’ equity  694,886         673,700        Total liabilities and shareholders’ equity $5,508,878        $5,195,903                            Net interest income / margin (3)      88,280  3.47%       78,490  3.27%  Less tax equivalent adjustment (3)      (115)        (120)   Net interest income     $88,165  3.46%      $78,370  3.27%   (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 $467,000 for the first six months of 2025, compared to $277,000 for the six months of 2024. Prepayment fees totaled $697,000 for the first six months of 2025, compared to $78,000 for the first six 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 Financial    Measures” in this press release. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Management considers net income and earnings per share adjusted to exclude the $9.2 million of charges primarily related to a legal settlement in the second quarter and first six months of 2025 as a useful measurement of the Company’s profitability compared to prior periods. 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 June 30,  March 31,  December 31, September 30, June 30, (in $000’s, except per share amounts, unaudited)    2025  2025     2024 2024 2024Reported net income (GAAP) $6,389  $11,626 $10,621 $10,507 $9,234Add: pre-tax legal settlement and other charges  9,184   —  —  —  —Less: related income taxes  (2,618)  —  —  —  —Adjusted net income (non-GAAP) $12,955  $11,626 $10,621 $10,507 $9,234                Weighted average shares outstanding - diluted  61,624,600   61,708,361  61,679,735  61,546,157  61,438,088                Reported diluted earnings per share $0.10  $0.19 $0.17 $0.17 $0.15                Adjusted diluted earnings per share $0.21  $0.19 $0.17 $0.17 $0.15        NET INCOME AND For the Six Months Ended: DILUTED EARNINGS PER SHARE June 30,  June 30, (in $000’s, except per share amounts, unaudited)    2025  2024Reported net income (GAAP) $18,015  $19,400Add: pre-tax legal settlement and other charges  9,184   —Less: related income taxes  (2,618)  —Adjusted net income (non-GAAP) $24,581  $19,400       Weighted average shares outstanding - diluted  61,664,942   61,446,484       Reported diluted earnings per share $0.29  $0.32       Adjusted diluted earnings per share $0.40  $0.32 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 June 30,  March  31,  December 31, September 30, June 30,  (in $000’s, unaudited)    2025  2025  2025  2024     2024  Capital components:                Total equity (GAAP) $694,704  $696,190  $689,727  $685,352  $679,199  Less: preferred stock  —   —   —   —   —  Total common equity  694,704   696,190   689,727   685,352   679,199  Less: goodwill  (167,631)  (167,631)  (167,631)  (167,631)  (167,631) Less: other intangible assets  (5,532)  (5,986)  (6,439)  (6,966)  (7,521) Reported tangible common equity (non-GAAP)  521,541   522,573   515,657   510,755   504,047  Add: pre-tax legal settlement and other charges  9,184   —   —   —   —  Less: related income taxes  (2,618)  —   —   —   —  Adjusted tangible common equity (non-GAAP) $528,107  $522,573  $515,657  $510,755  $504,047                   Common shares outstanding at period-end  61,446,763   61,611,121   61,348,095   61,297,344   61,292,094                   Reported tangible book value per share (non-GAAP) $8.49  $8.48  $8.41  $8.33  $8.22                   Adjusted tangible book value per share (non-GAAP) $8.59  $8.48  $8.41  $8.33  $8.22   The following tables summarize components of the annualized return on average equity, annualized return on average tangible common equity and the annualized return on average assets for the periods indicated:                  RETURN ON AVERAGE TANGIBLE COMMON  For the Quarter Ended:  EQUITY AND AVERAGE ASSETS June 30,  March 31,  December 31, September 30, June 30,  (in $000’s, unaudited)    2025  2025      2024  2024  2024     Reported net income (GAAP) $6,389  $11,626  $10,621  $10,507  $9,234  Add: pre-tax legal settlement and other charges  9,184   —   —   —   —  Less: related income taxes  (2,618)  —   —   —   —  Adjusted net income (non-GAAP) $12,955  $11,626  $10,621  $10,507  $9,234                   Average tangible common equity components:                Average equity (GAAP) $697,016  $692,733  $686,263  $680,404  $675,108  Less: goodwill  (167,631)  (167,631)  (167,631)  (167,631)  (167,631) Less: other intangible assets  (5,817)  (6,264)  (6,770)  (7,322)  (7,867) Total average tangible common equity (non-GAAP) $523,568  $518,838  $511,862  $505,451  $499,610                   Annualized return on average equity (GAAP)   3.68 %   6.81 %  6.16 %  6.14 %  5.50 %                 Reported annualized return on average                tangible common equity (non-GAAP)  4.89 %   9.09 %   8.25 %   8.27 %   7.43 %                        Adjusted annualized return on average                tangible common equity (non-GAAP)  9.92 %   9.09 %   8.25 %   8.27 %   7.43 %                   Average assets (GAAP) $5,458,420  $5,559,896  $5,607,840  $5,352,067  $5,213,171                   Reported annualized return on average assets (GAAP)  0.47 %   0.85 %   0.75 %   0.78 %   0.71 %                   Adjusted annualized return on average assets (non-GAAP)  0.95 %   0.85 %   0.75 %   0.78 %   0.71 %           RETURN ON AVERAGE TANGIBLE COMMON  For the Six Months Ended:  EQUITY AND AVERAGE ASSETS June 30,  June 30,  (in $000’s, unaudited)    2025  2024     Reported net income (GAAP) $18,015  $19,400  Add: pre-tax legal settlement and other charges  9,184   —  Less: related income taxes  (2,618)  —  Adjusted net income (non-GAAP) $24,581  $19,400          Average tangible common equity components:       Average equity (GAAP) $694,886  $673,700  Less: goodwill  (167,631)  (167,631) Less: other intangible assets  (6,040)  (8,138) Total average tangible common equity (non-GAAP) $521,215  $497,931          Annualized return on average equity (GAAP)   5.23 %   5.79 %        Reported annualized return on average       tangible common equity (non-GAAP)  6.97 %   7.84 %            Adjusted annualized return on average       tangible common equity (non-GAAP)  9.51 %   7.84 %          Average assets (GAAP) $5,508,878  $5,195,903          Reported annualized return on average assets (GAAP)  0.66 %   0.75 %          Adjusted annualized return on average assets (non-GAAP)  0.90 %   0.75 %   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:                    For the Quarter Ended: NET INTEREST INCOME AND NET INTEREST MARGIN June 30,  March 31,  December 31,  September 30,  June 30,  (in $000’s, unaudited)    2025 2025 2024 2024 2024 Net interest income before                credit losses on loans (GAAP) $44,805 $43,360 $43,595 $39,329 $38,867 Tax-equivalent adjustment on securities -                exempt from Federal tax  57  58  58  59  60 Net interest income, FTE (non-GAAP) $44,862 $43,418 $43,653 $39,388 $38,927                  Average balance of total interest earning assets $5,087,089 $5,188,317 $5,235,986 $4,980,082 $4,840,670                  Net interest margin (annualized net interest income divided by the                average balance of total interest earnings assets) (GAAP)  3.53%   3.39%   3.31%   3.14%   3.23%                   Net interest margin, FTE (annualized net interest income, FTE,                divided by the average balance of total                earnings assets) (non-GAAP)  3.54%   3.39%   3.32%   3.15%   3.23%             For the Six Months Ended: NET INTEREST INCOME AND NET INTEREST MARGIN June 30,  June 30,  (in $000’s, unaudited)    2025 2024 Net interest income before       credit losses on loans (GAAP) $88,165 $78,370 Tax-equivalent adjustment on securities - exempt from Federal tax  115  120 Net interest income, FTE (non-GAAP) $88,280 $78,490         Average balance of total interest earning assets $5,137,424 $4,825,587         Net interest margin (annualized net interest income divided by the       average balance of total interest earnings assets) (GAAP)  3.46%   3.27%          Net interest margin, FTE (annualized net interest income, FTE, divided by the       average balance of total interest earnings assets) (non-GAAP)  3.47%   3.27%   Management views its non-GAAP 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 June 30,  March 31,  December 31, September 30, June 30, (in $000’s, unaudited)    2025  2025  2024  2025  2024 Net interest income before credit losses on loans $44,805  $43,360  $43,595  $39,329  $38,867 Noninterest income  2,977   2,696   2,775   2,826   2,864 Total revenue  47,782   46,056   46,370  $42,155  $41,731 Less: Noninterest expense  (38,335)  (29,456)  (30,304)  (27,555)  (28,188)Reported PPNR (non-GAAP)  9,447   16,600   16,066  $14,600  $13,543 Add: pre-tax legal settlement and other charges  9,184   —   —   —   — Adjusted PPNR (non-GAAP) $18,631  $16,600  $16,066  $14,600  $13,543           For the Six Months Ended:PRE-PROVISION NET REVENUE June 30,  June 30, (in $000’s, unaudited)    2025  2024 Net interest income before credit losses on loans $88,165  $78,370 Noninterest income  5,673   5,501 Total revenue  93,838   83,871 Less: Noninterest expense  (67,791)  (55,724)Reported PPNR (non-GAAP)  26,047   28,147 Add: pre-tax legal settlement and other charges  9,184   — Adjusted PPNR (non-GAAP) $35,231  $28,147  The efficiency ratio is a non-GAAP financial measure, which is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income), and measures how much it costs to produce one dollar of revenue. The following tables summarize components of noninterest expense and the efficiency ratio of the Company for the periods indicated:                    For the Quarter Ended:  NONINTEREST EXPENSE AND EFFICIENCY RATIO June 30,  March 31,  December 31, September 30, June 30,  (in $000’s, unaudited)    2025  2025 2024 2024 2024 Reported noninterest expense (GAAP) $38,335  $29,456 $30,304 $27,555 $28,188 Less: pre-tax legal settlement and other charges  (9,184)  —  —  —  — Adjusted noninterest expense (non-GAAP) $29,151  $29,456 $30,304 $27,555 $28,188                  Net interest income before credit losses on loans $44,805  $43,360 $43,595 $39,329 $38,867 Noninterest income  2,977   2,696  2,775  2,826  2,864 Total revenue $47,782  $46,056 $46,370 $42,155 $41,731                  Reported efficiency ratio (noninterest expense divided                by total revenue) (non-GAAP)  80.23 %   63.96%   65.35%   65.37%   67.55%                   Adjusted efficiency ratio (adjusted noninterest expense                divided by total revenue) (non-GAAP)  61.01 %   63.96%   65.35%   65.37%   67.55%             For the Six Months Ended: NONINTEREST EXPENSE AND EFFICIENCY RATIO June 30,  June 30,  (in $000’s, unaudited)    2025  2024 Reported noninterest expense (GAAP) $67,791  $55,724 Less: pre-tax legal settlement and other charges  (9,184)  — Adjusted noninterest expense (non-GAAP) $58,607  $55,724         Net interest income before credit losses on loans $88,165  $79,548 Noninterest income  5,673   4,323 Total revenue $93,838  $83,871         Reported efficiency ratio (noninterest expense divided       by total revenue) (non-GAAP)  72.24 %   66.44%          Adjusted efficiency ratio (adjusted noninterest expense       divided by total revenue) (non-GAAP)  62.46 %   66.44%   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 June 30,  March 31,  December 31,     September 30,    June 30,  (in $000’s, unaudited)    2025  2025     2024     2024     2024  Capital components:                Total equity (GAAP) $694,704  $696,190  $689,727  $685,352  $679,199  Less: preferred stock  —   —   —   —   —  Total common equity  694,704   696,190   689,727   685,352   679,199  Less: goodwill  (167,631)  (167,631)  (167,631)  (167,631)  (167,631) Less: other intangible assets  (5,532)  (5,986)  (6,439)  (6,966)  (7,521) Total tangible common equity (non-GAAP) $521,541  $522,573  $515,657  $510,755  $504,047                   Asset components:                Total assets (GAAP) $5,467,237  $5,514,255  $5,645,006  $5,551,596  $5,263,024  Less: goodwill  (167,631)  (167,631)  (167,631)  (167,631)  (167,631) Less: other intangible assets  (5,532)  (5,986)  (6,439)  (6,966)  (7,521) Total tangible assets (non-GAAP) $5,294,074  $5,340,638  $5,470,936  $5,376,999  $5,087,872                   Tangible common equity / tangible assets (non-GAAP)  9.85 %   9.78 %   9.43 %   9.50 %   9.91 %   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 June 30,  March 31,  December 31,     September 30, June 30,  (in $000’s, unaudited)    2025  2025     2024     2024     2024  Capital components:                Total equity (GAAP) $717,103  $715,605  $709,379  $704,585  $697,964  Less: preferred stock  —   —   —   —   —  Total common equity  717,103   715,605   709,379   704,585   697,964  Less: goodwill  (167,631)  (167,631)  (167,631)  (167,631)  (167,631) Less: other intangible assets  (5,532)  (5,986)  (6,439)  (6,966)  (7,521) Total tangible common equity (non-GAAP) $543,940  $541,988  $535,309  $529,988  $522,812                   Asset components:                Total assets (GAAP) $5,464,618  $5,512,160  $5,641,646  $5,548,576  $5,260,500  Less: goodwill  (167,631)  (167,631)  (167,631)  (167,631)  (167,631) Less: other intangible assets  (5,532)  (5,986)  (6,439)  (6,966)  (7,521) Total tangible assets (non-GAAP) $5,291,455  $5,338,543  $5,467,576  $5,373,979  $5,085,348                   Tangible common equity / tangible assets (non-GAAP)  10.28 %   10.15 %   9.79 %   9.86 %   10.28 %  

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