This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Heritage Commerce Corp Exits TARP By Repurchasing $40 Million In Preferred Stock From The U.S. Treasury

Heritage Commerce Corp (Nasdaq: HTBK), the holding company (“the Company”) of Heritage Bank of Commerce (“HBC”), announced today that it has fully repaid the $40 million of Series A preferred stock issued to the U.S. Treasury Department under the TARP Capital Purchase Program.

The Company’s strong capital levels, balance sheet, and profitability allowed the Company to exit TARP without raising any additional capital or debt. The Company used available cash (including a $30 million cash distribution from HBC) to fund the repurchase of the preferred stock of $40 million and payment of the final dividend of approximately $122,000.

The Company’s and HBC’s December 31, 2011 regulatory capital ratios and pro forma capital ratios, excluding the repurchased $40 million preferred stock and the $30 million cash contribution from HBC, are detailed in the tables below. The Company’s and HBC’s pro forma December 31, 2011 regulatory capital ratios all significantly exceed the well-capitalized requirements.
              Pro Forma      
December 31, Well
Actual 2011 Capitalized
December 31, Excluding Regulatory
Heritage Commerce Corp: 2011

TARP (1)
Total risk-based capital ratio 21.9% 17.7% 10.0%
Tier 1 risk-based capital ratio 20.6% 16.5% 6.0%
Leverage ratio 15.3% 12.2% N/A

Assumes redemption of $40 million Series A Preferred Stock at December 31, 2011.
Pro Forma
December 31, Well
Actual 2011 Capitalized
December 31, Excluding Regulatory
Heritage Bank of Commerce: 2011 TARP (2) Requirements
Total risk-based capital ratio 19.7% 16.6% 10.0%
Tier 1 risk-based capital ratio 18.5% 15.4% 6.0%
Leverage ratio 13.7% 11.4% 5.0%

Assumes HBC $30 million cash distribution at December 31, 2011.

The preferred stock was issued at a discount and the repurchase will accelerate the accretion of the discount on the preferred stock. While the accelerated accretion will not impact net income, it will result in a one-time non-cash reduction in net income available to common shareholders of approximately $765,000 in the first quarter of 2012. Total dividends and discount accretion on preferred stock, including the accelerated accretion, will reduce net income available to common shareholders by approximately $1.2 million in the first quarter of 2012. While participating in the TARP Capital Purchase Program, the Company paid $6.6 million in cash dividends to the U.S. Treasury. The repayment of the TARP funds will save the Company $2.0 million in preferred dividend payments on an annual basis, beginning in the second quarter of 2012.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs