Executive Summary

EPS and revenue beat: Q3 2025 diluted EPS was $0.24 vs S&P Global consensus $0.21 (+14%), and total revenue was $50.0M vs $48.9M consensus (+2–3%), driven by NIM expansion to 3.60% and lower deposit costs (S&P Global estimates*).
Sequential rebound and operating leverage: Net income rose to $14.7M from $6.4M in Q2 (legal-settlement-impacted), PPNR doubled to $21.0M, and the efficiency ratio improved to 58.05% from 80.23% .
Balance sheet positive: Deposits +3% q/q to $4.78B, loan-to-deposit ratio fell to 74.99%, liquidity stable at $3.3B; asset quality improved with NPAs/Assets down to 0.07% .
Capital return catalyst: Board doubled buyback authorization to $30M (remaining capacity $26M) and maintained a $0.13 dividend, supporting shareholder returns .

What Went Well and What Went Wrong

What Went Well

Margin and operating leverage: FTE NIM rose 6 bps q/q to 3.60% on higher loan/securities yields and 4 bps lower deposit costs; PPNR increased to $21.0M; efficiency ratio improved to 58.05% .
Credit quality strengthening: NPAs/Assets improved to 0.07% (from 0.11% in Q2) and NPLs/Loans to 0.10%, with ACL/Loans steady at 1.38% .
Management tone: “We executed well in the third quarter, generating double digit EPS growth and positive operating leverage … expansion in our net interest margin … and an improvement in our asset quality.” — Clay Jones, CEO .

What Went Wrong

Noninterest expense still higher y/y: $29.0M vs $27.6M in Q3’24 (+5%), driven by higher salaries/benefits and tech investments (though down vs Q2’s settlement-affected $38.3M) .
Tangible common equity ratio edged down q/q: TCE/TA declined to 9.67% from 9.85% (q/q), partly reflecting balance sheet mix and AOCI .
AOCI and HTM valuation pressure: Pre-tax unrecognized loss on HTM securities was $68.0M (≈7% of equity) at quarter-end; AFS pre-tax unrealized loss was $0.65M (de minimis) .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Total Revenue ($USD Millions)	$42.155	$47.782	$50.005
Net Interest Income ($USD Millions)	$39.329	$44.805	$46.788
Diluted EPS ($)	$0.17	$0.10	$0.24
Net Income ($USD Millions)	$10.507	$6.389	$14.698
NIM (FTE) (%)	3.15%	3.54%	3.60%
Efficiency Ratio (%)	65.37%	80.23%	58.05%
PPNR ($USD Millions)	$14.600	$9.447	$20.979

Balance Sheet & Credit KPIs	Q3 2024	Q2 2025	Q3 2025
Total Deposits ($USD Billions)	$4.730	$4.627	$4.777
Loans HFI - Period End ($USD Billions)	$3.411	$3.534	$3.582
Loan-to-Deposit Ratio (%)	72.11%	76.38%	74.99%
NPAs / Total Assets (%)	0.13%	0.11%	0.07%
NPLs / Total Loans (%)	0.21%	0.17%	0.10%
ACL / Total Loans (%)	1.40%	1.38%	1.38%
TCE / Tangible Assets (%)	9.50%	9.85%	9.67%
Total Deposit Cost (%)	1.84%	1.54%	1.50%

Note: HTBK defines “Total revenue” as net interest income before provision plus noninterest income .

Segment breakdown: Not applicable; the company does not report discrete operating segments in these materials.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per Share	Q4 2025 Payable Nov 20, 2025	$0.13	$0.13	Maintained
Share Repurchase Authorization	Through Oct 31, 2026	$15M authorization (exp. 7/31/26 per Q2 disclosure)	$30M authorization; remaining capacity $26M; term extended to 10/31/26	Raised/Extended
Formal Financial Guidance (revenue, margins, OpEx, tax, segment)	N/A	None	None	No formal guidance provided -

Earnings Call Themes & Trends

(HTBK did not have a transcript available in the dataset; themes derived from the Q3 press release and investor slides; prior “mentions” from Q2 and Q1 earnings releases.)

Topic	Previous Mentions (Q1 2025, Q2 2025)	Current Period (Q3 2025)	Trend
NIM and Deposit Costs	Q1: NIM improved to 3.39% on lower deposit rates; redeployed liquidity to securities -. Q2: NIM 3.54%; deposit costs pressured but managed .	NIM 3.60%, +6 bps q/q; deposit cost down 4 bps; mix shift helped .	Improving
Loan & Deposit Growth	Q1: Seasonally lower loan demand; deposit outflows -. Q2: Loans +$47M; deposits -$56M (seasonal) -.	Loans +$47M (+1%); deposits +$149M (+3%) q/q .	Improving
Asset Quality	Q1: NPAs 0.11%, NCOs elevated from one contractor charge-off -. Q2: NPAs 0.11%, stable .	NPAs 0.07%, NPLs 0.10%; net recoveries in Q3 .	Improving
Expenses/Operating Leverage	Q1: Efficient ops (ER 63.96%) . Q2: Legal settlement ($9.2M) inflated expenses; adj ER 61.01% -.	ER 58.05%; PPNR $21.0M (up sharply q/q) .	Improving
Capital & Returns	Q1: No repurchases; TBVPS up . Q2: Repurchased ~$1.9M; TCE 9.85% -.	Buyback doubled to $30M; dividend maintained; TCE 9.67% .	Shareholder-friendly; TCE modestly lower q/q
Securities/ALM	Q1/Q2: Incremental purchases at ~4.8–4.9% yields; HTM/AFS unrealized losses tied to rates .	AFS pre-tax UL $0.65M; HTM pre-tax UL $68.0M (≈7% of equity) .	Rate-sensitive but manageable

Management Commentary

“We executed well in the third quarter, generating double digit EPS growth and positive operating leverage. We had positive trends in loan and deposit growth, an expansion in our net interest margin, disciplined expense management, and an improvement in our asset quality.” — Clay Jones, President & CEO .
“Our financial foundation is solid — marked by high capital reserves, strong liquidity, and sound asset quality … position ourselves to deliver sustained, high-quality financial results for our shareholders.” — Clay Jones .
Drivers: Total revenue +5% q/q to $50.0M; NIM up to 3.60% on higher loan/securities yields and lower deposit costs; deposit costs down 4 bps on pricing actions and mix .
Credit: Provision $0.42M; net recoveries $0.38M; ACL/Loans 1.38%; NPAs/Assets 0.07% .

Q&A Highlights

An earnings call transcript was not available in the document set; no Q&A excerpts to report. Themes above are based on the Q3 press release and investor presentation -.

Estimates Context

Q3 2025 beats: EPS $0.24 vs $0.21 consensus; revenue $50.0M vs $48.9M consensus; both beats support the stock’s near-term narrative of margin-led recovery (consensus values from S&P Global*).
Forward estimates:
- Q4 2025 EPS consensus: $0.235*; Revenue consensus: $50.97M* (provides a baseline for sequential momentum).
- FY 2025 EPS consensus: $0.872*; Revenue: $194.73M*.
- Target price consensus: $11.83*.

Estimates vs Actuals	Q3 2025
EPS – Consensus Mean	$0.21*
EPS – Actual	$0.24
Revenue – Consensus Mean ($M)	$48.89*
Revenue – Actual ($M)	$50.01

Values marked with * retrieved from S&P Global.

KPIs

KPI	Q3 2024	Q2 2025	Q3 2025
Noninterest-bearing Deposits / Total Deposits	26.90%	24.88%	25.99%
Total Deposit Cost	1.84%	1.54%	1.50%
Liquidity & Borrowing Capacity ($B)	$3.2	$3.1	$3.3
TCE / TA	9.50%	9.85%	9.67%

Additional Q3 2025 Press Releases

Dividend: Declared regular quarterly cash dividend of $0.13 per share, payable Nov 20, 2025 (record date Nov 6, 2025) .
Share Repurchase Program: Authorization increased from $15M to $30M; term extended to Oct 31, 2026; $26M remaining capacity as of Sep 30, 2025 .

Key Takeaways for Investors

Margin inflection is intact: NIM expanded to 3.60% as deposit costs eased and earning-asset yields rose; continued pricing discipline on deposits should support NIM near term .
Operating leverage is improving: PPNR rose to $21.0M and efficiency ratio fell to 58.05%; monitor cost discipline after Q2’s settlement-related spike .
Credit quality is a tailwind: NPAs/Assets at 0.07% with robust coverage (ACL/Loans 1.38%) and net recoveries; watch CRE mix but metrics remain strong .
Capital returns accelerated: Buyback authorization doubled to $30M and dividend maintained; potential support for shares on weakness .
Balance sheet resilience: Deposits up 3% q/q; LDR moderated to ~75%; $3.3B liquidity .
Watch rate path and AOCI: HTM unrealized losses (~7% of equity) are rate-sensitive but expected to accrete back toward par over time .
Set expectations vs consensus: Q4 EPS consensus $0.235* and revenue $50.97M* set a modest bar post-Q3 beat; any further NIM gains or stable deposit costs could sustain upside (S&P Global*).

Citations: All quantitative and qualitative claims are sourced from HTBK’s Q3 2025 8-K exhibits (press release and investor presentation) and prior-quarter 8-K releases as cited. Values marked with * retrieved from S&P Global.

HERITAGE COMMERCE CORP (HTBK)·Q3 2025 Earnings Summary