Heritage Commerce Corp reported its financial results for the third quarter and nine months ended September 30, 2024, showing notable changes in revenue, profitability, and strategic developments compared to the previous fiscal period.
As of September 30, 2024, total assets increased to $5,551.6 million from $5,403.3 million a year earlier, reflecting a 3% growth. Total deposits rose by 3% to $4,729.5 million, up from $4,575.5 million in the same period last year. The company also saw a significant increase in cash and cash equivalents, which surged to $956.3 million from $645.6 million year-over-year.
In terms of revenue, total interest income for Q3 2024 was $61.4 million, a slight increase from $60.8 million in Q3 2023. However, total interest expense rose sharply to $21.5 million from $15.4 million, leading to a decrease in net interest income before provision for credit losses, which fell to $39.9 million from $45.4 million in the prior year, marking a 12% decline. For the nine months ended September 30, 2024, net interest income was $119.5 million, down 15% from $140.9 million in the same period of 2023.
Net income for Q3 2024 was $10.5 million, down from $15.8 million in Q3 2023, while year-to-date net income decreased to $29.9 million from $51.1 million in the previous year. This decline in profitability was attributed to increased interest expenses and a higher cost of deposits, which rose to an average of 1.84% in Q3 2024 from 1.29% in Q3 2023.
The efficiency ratio worsened significantly, rising to 65.4% for Q3 2024 compared to 52.9% in Q3 2023, indicating increased operational costs. Total noninterest expense for the quarter increased to $27.6 million from $25.2 million, driven by higher salaries, rent, and technology expenses.
Strategically, the company announced a share repurchase program for up to $15 million, which is set to expire on July 31, 2025, although no shares were repurchased during Q3 2024. The company also maintained a strong liquidity position, with total liquidity at $3.2 billion, representing 66% of total deposits.
Overall, while Heritage Commerce Corp experienced growth in assets and deposits, it faced challenges in profitability and efficiency, reflecting the impact of rising interest rates and increased operational costs.
About HERITAGE COMMERCE CORP
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