HERITAGE COMMERCE CORP (: HTBK)

Heritage Commerce Corp is a bank holding company that owns Heritage Bank of Commerce a California chartered FDIC insured community focused business bank headquartered in San Jose California. The company provides a full line of banking services and products to business and individual clients with a focus on small and medium sized businesses, their owners, managers, and employees. It operates 16 full service branch offices in the San Francisco Bay and Silicon Valley areas covering Alameda, Contra Costa, Marin, San Benito, San Francisco, San Mateo, and Santa Clara counties. Heritage Bank of Commerce offers a diversified loan portfolio that includes commercial and industrial loans, commercial real estate loans, construction loans, land development loans, consumer loans, and SBA loans. The bank also provides home equity lines of credit and has purchased single family residential mortgage loans from time to time. Deposit products consist of non interest bearing demand accounts, interest bearing demand accounts, money market accounts, savings accounts, and certificates of deposit. For customers seeking full FDIC insurance on deposits above $250,000 the bank offers Insured Cash Sweep and Certificate of Deposit Account Registry Service programs. Electronic banking services include internet banking, remote deposit capture, mobile deposit capture, automated clearing house origination, electronic data interchange, and check imaging. Additional banking services comprise cashier's checks, bank by mail, night depositories, safe deposit boxes, direct deposit, automated payroll services, electronic funds transfers, online bill pay, homeowner association services, and ATM access at 5 locations. Through its Bay View Funding subsidiary Heritage Commerce Corp also offers factoring financing to small businesses across the United States.

The company generates revenue primarily from interest income on its loan portfolio which includes commercial and industrial loans, commercial real estate loans, construction loans, land development loans, consumer loans, and SBA loans. Interest income is supplemented by fees from deposit products such as non interest bearing demand accounts, interest bearing demand accounts, money market accounts, savings accounts, and certificates of deposit. Additional revenue comes from merchant processing fees charged to business clients for card transaction processing. The bank also earns fees from electronic banking services including internet banking, remote deposit capture, mobile deposit capture, automated clearing house origination, electronic data interchange, and check imaging. Other service fees are derived from cashier's checks, bank by mail, night depositories, safe deposit boxes, direct deposit, automated payroll services, electronic funds transfers, online bill pay, and homeowner association services. Through its Bay View Funding subsidiary Heritage Commerce Corp earns factoring income based on the purchase of accounts receivable from small businesses across the United States. The company’s revenue is also influenced by the yield on its investment portfolio of securities held for liquidity and collateral purposes.

Heritage Commerce Corp holds a modest position in the competitive California banking market. In the 7 county region where it operates the top three institutions control 69.58 percent of deposit market share while Heritage Bank of Commerce ranks fourteenth with 0.74 percent of total deposits based on June 30 2025 FDIC data. Larger competitors benefit from extensive branch networks, substantial marketing budgets, and higher lending limits that allow them to serve a broader client base. The company differentiates itself through community oriented personalized service, long standing relationships with clients, local promotional activities, and specialized offerings such as its preferred lender status with the Small Business Administration which enables faster SBA loan approvals. Heritage Commerce Corp also emphasizes relationship banking, seeking to obtain a substantial portion of each borrower’s banking business including deposit accounts and to provide long term credit and deposit solutions. The bank’s focus on small and medium sized businesses allows it to tailor lending solutions to the specific needs of entrepreneurs and owners in technology and real estate driven markets. Additionally, the company maintains strong credit quality as evidenced by low levels of nonperforming assets and net charge offs. These factors help Heritage Commerce Corp compete despite the presence of larger national and regional banks, credit unions, securities firms, and fintech providers operating in its footprint.

The customer base of Heritage Commerce Corp consists primarily of small and medium sized businesses operating in industries such as technology, real estate, construction, retail, and professional services. These businesses rely on the bank for working capital loans, commercial real estate financing, equipment loans, and lines of credit. The bank also serves the owners, managers, and employees of those businesses who often maintain personal checking, savings, and credit card accounts. Individual consumers in the surrounding communities use Heritage Bank of Commerce for personal loans, home equity lines of credit, mortgage loans, and deposit accounts. The company does not disclose specific customer names in the filing but its relationship driven model focuses on serving local businesses and residents throughout the San Francisco Bay Area and surrounding counties.