NasdaqGS:HTBK

Stock Analysis Report

Executive Summary

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.

Rewards

Trading at 42.9% below its fair value

Earnings are forecast to grow 21.7% per year

Earnings grew by 14.5% over the past year

Risk Analysis

Unstable dividend track record

Significant insider selling over the past 3 months

Shareholders have been diluted in the past year



Snowflake Analysis

Flawless balance sheet, good value and pays a dividend.


Similar Companies

Share Price & News

How has Heritage Commerce's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: HTBK has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.2%

HTBK

0.5%

US Banks

1.5%

US Market


1 Year Return

-16.2%

HTBK

12.1%

US Banks

20.1%

US Market

Return vs Industry: HTBK underperformed the US Banks industry which returned 12.1% over the past year.

Return vs Market: HTBK underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

HTBKIndustryMarket
7 Day0.2%0.5%1.5%
30 Day-7.3%-1.3%1.4%
90 Day-7.2%1.2%8.7%
1 Year-12.7%-16.2%15.4%12.1%22.7%20.1%
3 Year-9.3%-17.9%25.2%16.2%50.1%40.5%
5 Year59.3%35.1%75.9%55.9%73.1%54.1%

Price Volatility Vs. Market

How volatile is Heritage Commerce's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Heritage Commerce undervalued compared to its fair value and its price relative to the market?

42.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: HTBK ($11.67) is trading below our estimate of fair value ($20.43)

Significantly Below Fair Value: HTBK is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: HTBK is poor value based on its PE Ratio (13.5x) compared to the Banks industry average (12.6x).

PE vs Market: HTBK is good value based on its PE Ratio (13.5x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: HTBK is good value based on its PEG Ratio (0.6x)


Price to Book Ratio

PB vs Industry: HTBK is overvalued based on its PB Ratio (1.2x) compared to the US Banks industry average (1.2x).


Next Steps

Future Growth

How is Heritage Commerce forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

21.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HTBK's forecast earnings growth (21.7% per year) is above the savings rate (1.7%).

Earnings vs Market: HTBK's earnings (21.7% per year) are forecast to grow faster than the US market (14.5% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: HTBK's revenue (9.6% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: HTBK's revenue (9.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: HTBK's Return on Equity is forecast to be low in 3 years time (10.6%).


Next Steps

Past Performance

How has Heritage Commerce performed over the past 5 years?

26.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: HTBK has high quality earnings.

Growing Profit Margin: HTBK's current net profit margins (28.7%) are higher than last year (28.5%).


Past Earnings Growth Analysis

Earnings Trend: HTBK's earnings have grown significantly by 26.3% per year over the past 5 years.

Accelerating Growth: HTBK's earnings growth over the past year (14.5%) is below its 5-year average (26.3% per year).

Earnings vs Industry: HTBK earnings growth over the past year (14.5%) exceeded the Banks industry 12.1%.


Return on Equity

High ROE: HTBK's Return on Equity (7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Heritage Commerce's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: HTBK has a low level of unsold assets or inventory.

Debt Coverage by Assets: HTBK's debt is covered by short term assets (assets are 4.5x debt).


Financial Institutions Analysis

Asset Level: HTBK's level of assets compared to its equity is low.

Allowance for Bad Loans: HTBK has a sufficient allowance for bad loans.

Low Risk Liabilities: HTBK's liabilities are made up of primarily low risk sources of funding.

Loan Level: HTBK has an acceptable proportion of non-loan assets held.

Low Risk Deposits: HTBK's loans are broadly funded by customer deposits.

Level of Bad Loans: HTBK has an appropriate level of bad loans (0.39%)


Next Steps

Dividend

What is Heritage Commerce's current dividend yield, its reliability and sustainability?

4.46%

Current Dividend Yield


Dividend Yield vs Market

company4.5%marketbottom25%1.4%markettop25%3.7%industryaverage2.8%forecastin3Years4.6%

Current dividend yield vs market & industry

Notable Dividend: HTBK's dividend (4.46%) is higher than the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: HTBK's dividend (4.46%) is in the top 25% of dividend payers in the US market (3.69%)


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, HTBK has been paying a dividend for less than 10 years.

Growing Dividend: HTBK's dividend payments have increased, but the company has only paid a dividend for 7 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (55.4%), HTBK's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: HTBK's dividends in 3 years are forecast to be covered by earnings (50.7% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

5.8yrs

Average management tenure


CEO

Keith Wilton (61yo)

0.5yrs

Tenure

US$681,879

Compensation

Mr. Keith A. Wilton has been the Chief Executive Officer and President at Heritage Commerce Corp. since August 8, 2019. Mr. Wilton has been the President of Heritage Bank of Commerce, a subsidiary of Herit ...


CEO Compensation Analysis

Compensation vs Market: Keith's total compensation ($USD681.88K) is below average for companies of similar size in the US market ($USD2.47M).

Compensation vs Earnings: Keith's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Keith Wilton
CEO, President & Director0.5yrsUS$681.88k0.18% $1.3m
Walter Kaczmarek
Director14.9yrsUS$1.11m0.21% $1.5m
Lawrence McGovern
Executive VP & CFO21.6yrsUS$563.07k0.15% $1.1m
Michael Hansen
Senior Vice President of Corporate Finance Division5.8yrsno datano data
Larry St. Regis
Executive VP & CTO0yrsno datano data
Jeffrey Javits
EVP & Chief Information Officer0yrsno datano data
Deborah Reuter
Executive VP10.1yrsno datano data
Diana Olveira
Vice President and Marketing Director0yrsno datano data
Robert Gionfriddo
Executive VP & Director of Business Development4.5yrsUS$201.93kno data
May K. Wong
Executive VP & Controller2.8yrsno datano data

5.8yrs

Average Tenure

65.5yo

Average Age

Experienced Management: HTBK's management team is seasoned and experienced (5.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Keith Wilton
CEO, President & Director0.5yrsUS$681.88k0.18% $1.3m
Walter Kaczmarek
Director14.9yrsUS$1.11m0.21% $1.5m
Jason Dinapoli
Independent Director1.6yrsUS$25.00k0.55% $3.8m
Frank Bisceglia
Independent Director26.1yrsUS$77.44k0.20% $1.4m
Robert Moles
Independent Director15.3yrsUS$70.78k0.089% $612.0k
Ranson Webster
Independent Director15.7yrsUS$77.56k1.04% $7.2m
Jack Conner
Chairman of the Board13.6yrsUS$100.79k0.21% $1.4m
Laura Roden
Independent Director8.6yrsUS$76.78k0.034% $231.4k
Steven Hallgrimson
Independent Director8.7yrsUS$76.78k0.22% $1.5m
Julianne Biagini-Komas
Independent Director4.5yrsUS$76.54kno data

11.1yrs

Average Tenure

65.5yo

Average Age

Experienced Board: HTBK's board of directors are seasoned and experienced ( 11.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: HTBK insiders have sold more shares than they have bought in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 12.6%.


Top Shareholders

Company Information

Heritage Commerce Corp's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Heritage Commerce Corp
  • Ticker: HTBK
  • Exchange: NasdaqGS
  • Founded: 1997
  • Industry: Regional Banks
  • Sector: Banks
  • Market Cap: US$690.867m
  • Shares outstanding: 59.20m
  • Website: https://www.heritagecommercecorp.com

Number of Employees


Location

  • Heritage Commerce Corp
  • 150 Almaden Boulevard
  • San Jose
  • California
  • 95113
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
HTBKNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDJul 1998

Biography

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. It offers a range of deposit products for business banking and retail markets, including interest and non-interest bearing demand, savings accounts, certificate of deposit, money market accounts, and time deposits. The company also provides various loan products comprising 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; home equity lines of credit; consumer loans consisting of loans for financing automobiles, various consumer goods, and other personal purposes; and small business administration loans. In addition, it offers other banking services, including cashier's checks, bank-by-mail, ATMs, 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 provides its banking products and services through 14 full service branch offices in the southern and eastern regions of the general San Francisco Bay Area of California in the counties of Santa Clara, Alameda, Contra Costa, and San Benito. Heritage Commerce Corp was founded in 1997 and is based in San Jose, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 23:42
End of Day Share Price2020/02/14 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.