Heritage Commerce (HTBK) AI Stock Analysis

• Market Cap: $761.14M
• Dividend Yield: 4.19%
• Average Volume (3M): 394.92K
• Price to Earnings (P/E): 17.7
• Beta (1Y): 0.77
• Revenue Growth: 8.23%
• EPS Growth: -0.07%
• Country: US
• Employees: 350
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 0.24
• Shares Outstanding: 61,283,543
• 10 Day Avg. Volume: 375,206
• 30 Day Avg. Volume: 394,924
• PEG Ratio: -0.38
• Price to Book (P/B): 0.83
• Price to Sales (P/S): 2.29
• P/FCF Ratio: 15.39
• Enterprise Value/Market Cap: 0.84
• Enterprise Value/Revenue: 2.41
• Enterprise Value/Gross Profit: 3.41
• Enterprise Value/Ebitda: 10.00
• 1Y Price Target: $12.38
• Price Target Upside: -0.32% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 78 Outperform
• Price Target: $14.00 ▲(12.72% Upside)

Heritage Commerce's strong financial performance and strategic corporate events are the most significant factors contributing to its score. The stock's technical indicators suggest caution due to overbought conditions, while its valuation remains attractive. Overall, the stock presents a solid investment opportunity with potential for growth and income.

Positive Factors

Merger Agreement

The merger with CVB Financial is expected to enhance Heritage Commerce's market position and financial performance by expanding its footprint in California, creating synergies, and increasing asset base, which is a strategic long-term growth move.

Cash Flow Management

Strong cash flow management reflects efficient operations and financial stability, providing the company with the flexibility to invest in growth opportunities and manage debt effectively.

Dividend and Buyback Program

The increase in dividend and buyback program signals confidence in financial health and commitment to returning value to shareholders, supporting long-term investor interest.

Negative Factors

Executive Retirement

The upcoming retirement of a key executive could lead to transitional challenges and potential disruptions in risk management, affecting strategic continuity.

Decline in Gross Profit Margin

A decline in gross profit margin suggests potential cost pressures, which could impact profitability if not addressed, challenging long-term financial performance.

Return on Equity

A lower return on equity indicates reduced efficiency in generating profits from shareholders' equity, which could affect investor confidence and long-term growth potential.

Heritage Commerce Business Overview & Revenue Model

Company Description

Heritage Commerce Corp operates as the bank holding company for Heritage Bank of Commerce that provides various commercial and personal banking services to residents and the business/professional community in California. Its deposit products for business banking and retail markets include interest and non-interest bearing demand, savings, and money market accounts, as well as certificates of deposit and time deposits. The company's loan portfolio comprises commercial loans, such as operating secured and unsecured loans advanced for working capital, equipment purchases, and other business purposes; commercial real estate loans; commercial construction loans for rental properties, commercial buildings, and homes; small business administration loans; home equity lines of credit; multifamily loans on residential properties; residential mortgage loans; and consumer loans consisting of loans for financing automobiles, various consumer goods, and other personal purposes. In addition, it offers other banking services, including cashier's checks, bank by mail, night depositories, safe deposit boxes, direct deposit, automated payroll, electronic funds transfer, online bill pay, homeowner association, remote deposit capture, automated clearing house origination, electronic data interchange, and check imaging services, as well as other customary banking, factoring financing, and electronic banking services. The company operates through 17 full-service branch offices located in the general San Francisco Bay Area of California. Heritage Commerce Corp was founded in 1994 and is headquartered in San Jose, California.

How the Company Makes Money

Heritage Commerce generates revenue primarily through interest income from loans, which includes commercial and real estate loans extended to customers. The bank earns interest on these loans, which is a significant portion of its revenue. Additionally, it generates non-interest income from service fees related to deposit accounts, transaction fees, and other banking services. The company also benefits from its investment portfolio, which contributes to interest income. Strategic partnerships with local businesses and community organizations enhance its customer base and service offerings, further supporting its earnings through increased loan origination and deposit growth.

Heritage Commerce Financial Statement Overview

Summary

Heritage Commerce demonstrates a stable financial position with strong gross margins and low leverage. However, declining profitability and cash flow growth present challenges. The company needs to address operational efficiency to enhance profitability and cash flow generation.

Income Statement

Heritage Commerce shows a stable revenue growth trajectory with a TTM revenue growth rate of 1.79%. However, the net profit margin has decreased to 8.11% in the TTM from 16.12% in the previous year, indicating pressure on profitability. The gross profit margin remains strong at 68.98%, but the declining EBIT and EBITDA margins suggest rising operational costs.

Balance Sheet

The company maintains a solid balance sheet with a low debt-to-equity ratio of 0.057, indicating conservative leverage. The return on equity has decreased to 3.06% in the TTM, reflecting reduced profitability. The equity ratio remains healthy, showcasing strong financial stability.

Cash Flow

Cash flow analysis reveals a decline in free cash flow growth by -4.09% in the TTM, highlighting potential cash management challenges. The operating cash flow to net income ratio is low at 0.0095, suggesting limited cash conversion efficiency. However, the free cash flow to net income ratio remains robust at 98.77%, indicating effective cash generation relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	265.21M	251.45M	243.30M	198.94M	162.94M	160.39M
Gross Profit	187.22M	170.26M	191.47M	189.22M	158.95M	138.58M
EBITDA	63.78M	60.20M	93.94M	98.12M	69.94M	53.77M
Net Income	43.33M	40.53M	64.44M	66.56M	47.70M	35.30M
Balance Sheet
Total Assets	5.62B	5.65B	5.19B	5.15B	5.50B	4.63B
Cash, Cash Equivalents and Short-Term Investments	1.10B	1.22B	850.76M	796.20M	1.41B	1.37B
Total Debt	39.77M	39.65M	39.50M	39.35M	39.92M	39.74M
Total Liabilities	4.92B	4.96B	4.52B	4.52B	4.90B	4.06B
Stockholders Equity	700.01M	689.73M	672.90M	632.46M	598.03M	577.89M
Cash Flow
Free Cash Flow	57.16M	37.35M	71.34M	69.07M	56.60M	54.13M
Operating Cash Flow	57.52M	38.97M	73.01M	69.85M	56.85M	57.30M
Investing Cash Flow	-278.54M	110.62M	70.18M	-669.49M	-696.83M	146.38M
Financing Cash Flow	12.45M	410.40M	-41.67M	-399.98M	815.13M	470.02M

Heritage Commerce Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 12.42
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HTBK, the sentiment is Positive. The current price of 12.42 is above the 20-day moving average (MA) of 11.55, above the 50-day MA of 10.74, and above the 200-day MA of 9.72, indicating a bullish trend. The MACD of 0.48 indicates Negative momentum. The RSI at 81.49 is Negative, neither overbought nor oversold. The STOCH value of 78.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HTBK.

Heritage Commerce Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SMBC	79 Outperform	$696.86M	11.31	11.54%	1.56%	9.34%	25.21%
SMBK	79 Outperform	$658.98M	14.12	9.01%	0.83%	13.41%	41.78%
SPFI	79 Outperform	$654.46M	11.49	12.97%	1.54%	5.87%	37.99%
HTBK	78 Outperform	$761.14M	17.67	6.26%	4.19%	8.23%	-0.07%
HIFS	69 Neutral	$644.35M	14.40	10.23%	0.85%	8.26%	94.53%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
MOFG	64 Neutral	$835.63M	14.42	10.01%	2.40%	89.00%	―

Heritage Commerce Corporate Events

Heritage Commerce Announces $811M Merger Agreement

On December 17, 2025, Heritage Commerce Corp and CVB Financial Corp announced a definitive merger agreement in an all-stock transaction valued at approximately $811 million. The merger will position Citizens Business Bank to expand its footprint in California’s Bay Area, resulting in a combined entity with assets exceeding $22 billion and over 75 branches across the state. The deal, unanimously approved by both companies’ boards, is expected to close in Q2 2026, subject to regulatory and shareholder approvals, and will enhance Citizens Business Bank’s financial performance while promoting synergies between the two organizations.

Heritage Commerce Announces Dividend and Buyback Increase

On October 23, 2025, Heritage Commerce Corp announced a quarterly cash dividend of $0.13 per share, payable on November 20, 2025, and an increase in its share repurchase program from $15 million to $30 million, extending its term to October 31, 2026. The company reported strong financial results for the third quarter of 2025, with net income of $14.7 million and a 40% increase in earnings per share compared to the previous year. The company experienced growth in loans and deposits, improved asset quality, and expanded its net interest margin, positioning itself for continued profitable growth.

Heritage Commerce Announces Executive Retirement Plans

On September 18, 2025, Heritage Commerce Corp announced the upcoming retirement of Deborah K. Reuter, Executive Vice President and Chief Risk Officer, effective January 5, 2026. The company has begun the search for her successor and plans a smooth transition with Ms. Reuter assisting in the process. She will continue as a non-executive employee advisor until March 31, 2026, and will receive compensation based on her current salary.