Heritage Commerce Corp Announces $15 Million Share Repurchase

Rhea-AI Summary

Heritage Commerce Corp (NASDAQ: HTBK) has announced a $15 million share repurchase program, authorized by its Board of Directors. The program allows the company to repurchase its common stock in open market transactions under Rule 10b-18 of the Securities Exchange Act. Clay Jones, President and CEO, stated that repurchases represent a value-enhancing deployment of capital when shares are undervalued. The program aims to enhance the return on tangible common equity and is set to expire on July 31, 2025. Keefe, Bruyette & Woods will assist in the repurchase process. The timing, price, and amount of repurchases will depend on various factors, including market conditions and shareholder interests.

Positive

• Authorization of a $15 million share repurchase program
• Potential enhancement of return on tangible common equity
• Flexibility in timing and amount of share repurchases
• Engagement of Keefe, Bruyette & Woods to assist in the repurchase process

Negative

• Potential reduction in cash reserves due to share repurchases
• Possibility of overpaying for shares if market conditions change

Insights

Financial Analyst

Heritage Commerce Corp's announcement of a $15 million share repurchase program is a significant development that warrants attention. This move signals management's confidence in the company's financial health and future prospects. Share repurchases can be a double-edged sword and their impact depends on various factors:

• Positive aspects include potential earnings per share (EPS) boost and signaling undervaluation.
• Concerns may arise if the repurchase comes at the expense of growth investments or if executed at inflated prices.

The program's flexibility, with its year-long window and market-based approach, suggests a measured strategy. However, the relatively modest size ($15 million) in relation to the company's market cap indicates a cautious approach rather than an aggressive bet on undervaluation.

Investors should monitor the execution of this program, particularly its timing and the price levels at which shares are repurchased. The involvement of Keefe, Bruyette & Woods adds a layer of expertise to the process, potentially optimizing the repurchase strategy.

While this move may provide some support to the stock price, it's important to view it in the context of the broader banking sector challenges and the company's overall financial performance and growth strategy.

Market Research Analyst

Heritage Commerce Corp's share repurchase program announcement comes at an interesting time for the banking sector. Here's what investors should consider:

• Regional banks have faced increased scrutiny and volatility in 2023, making this move a potential confidence booster.
• The $15 million program size is modest, suggesting a balanced approach to capital allocation.
• The program's duration until July 31, 2025, provides ample flexibility to navigate market conditions.

CEO Clay Jones's statement about shares being 'undervalued' is noteworthy, but investors should independently assess this claim against financial metrics and peer comparisons. The focus on enhancing return on tangible common equity aligns with shareholder interests, but it's important to balance this with the need for maintaining strong capital ratios in the current banking environment.

The market's reaction to this announcement will be telling. Positive reception could indicate investor agreement with management's valuation assessment, while a muted response might suggest skepticism or that the move was already priced in.

Investors should watch for the pace and timing of repurchases, as well as any impact on the stock's liquidity. Additionally, keep an eye on how this program fits into Heritage's broader strategy, especially in terms of balancing shareholder returns with growth initiatives and risk management in a challenging banking landscape.

SAN JOSE, Calif., July 25, 2024 (GLOBE NEWSWIRE) -- Heritage Commerce Corp (NASDAQ: HTBK) (the "Company") the holding company of Heritage Bank of Commerce (the "Bank") today announced that its Board of Directors (the “Board”) adopted a share repurchase program (the “Repurchase Program”) under which the Company is authorized to repurchase up to $15 million of the Company’s shares of its issued and outstanding common stock.

“From time to time, we believe Heritage’s shares are undervalued and repurchases represent a value-enhancing deployment of capital,” said Clay Jones, President and Chief Executive Officer. “We are confident about the growth of our Company, and we believe that when our shares are undervalued, repurchases represent a value-enhancing deployment of capital. We believe this Repurchase Program will enhance the return on our tangible common equity. As we look at the broader landscape, and the strategic opportunities before us, we will remain financially disciplined with a clear focus on executing against our strategic plan and delivering value for our shareholders.”

Under the Repurchase Program, the Company is authorized to purchase up to $15 million of its common stock from time-to-time in open market transactions, made pursuant to Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The actual timing, price, value and amount of any repurchases under the Repurchase Program will depend on various factors, including the market price of the Company’s common stock, trading volume, general market conditions and other corporate and economic considerations, including the best interests of our shareholders. The Company has entered into an agreement with Keefe, Bruyette & Woods to assist in repurchasing shares of Company common stock as part of the Repurchase Program.

The Repurchase Program may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The Repurchase Program does not obligate the Company to purchase any particular number of shares. Unless otherwise suspended or terminated, the Repurchase Program expires on July 31, 2025.

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 perform a part of, this release or of our filings with the Securities and Exchange Commission.

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 may be deemed to include, among other things, statements relating to the Company’s future financial performance, projected cash flows of our investment securities portfolio, the performance of our loan portfolio, 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. The Bank does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements, whether to reflect new information, future events, or otherwise, except as required by law.

Member FDIC

For additional information, contact:
Debbie Reuter
EVP, Corporate Secretary
Direct: (408) 494-4542
Debbie.Reuter@herbank.com

FAQ

What is the size of Heritage Commerce Corp's (HTBK) new share repurchase program?

Heritage Commerce Corp (HTBK) has authorized a $15 million share repurchase program.

When does Heritage Commerce Corp's (HTBK) share repurchase program expire?

The share repurchase program for Heritage Commerce Corp (HTBK) is set to expire on July 31, 2025, unless suspended or terminated earlier.

Who will assist Heritage Commerce Corp (HTBK) in repurchasing shares?

Heritage Commerce Corp (HTBK) has entered into an agreement with Keefe, Bruyette & Woods to assist in repurchasing shares as part of the program.

What factors will determine the timing and amount of share repurchases for Heritage Commerce Corp (HTBK)?

The timing and amount of share repurchases for Heritage Commerce Corp (HTBK) will depend on factors such as market price, trading volume, general market conditions, and other corporate and economic considerations.