Heritage Commerce Corp.

2024
ANNUAL REPORT
2024 Annual Report | On Form 10-K
2025 Notice of Annual Meeting of Shareholders
2025 Annual Meeting Proxy Statement

Vision Statement
Heritage Commerce Corp and Heritage Bank of 
Commerce will be recognized by the business 
community as the business bank of choice in 
our markets and an employer of choice where 
everyone has the opportunity to thrive.
Heritage Commerce Corp and Heritage Bank 
of Commerce will employ trusted values of 
relationship and customer-focused community 
business banking, combined with competitive 
technology, to provide solutions for the banking 
needs of businesses, professional organizations, 
non-profits and community groups and their 
team members. We will treat all of our 
stakeholders with fairness and urgency.
Mission Statement

Notice of 2025 Annual
Meeting and Proxy
Statement

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Letter to Our Shareholders
April 7, 2025
Dear Fellow Shareholders:
Thank you for your continued trust and investment in Heritage Commerce Corp. (the “Company”). This past year was especially meaningful as we celebrated the 30th
anniversary of Heritage Bank of Commerce (the “Bank”)—a milestone that reflects not just our longevity but our commitment to growth, resilience, and community impact.
A Year of Growth in a Challenging Environment
Although the economy in general, and the banking sector in particular, have remained challenging, 2024 was a year of solid progress. We saw deposit balances grow by
10% year-over-year as our team deepened relationships with local businesses. Loan growth was steady at 4%, reinforcing our role as a trusted financial partner in the Bay
Area.
We reported net income of $40.5 million, or $0.66 per average diluted common share, reflecting the impact of relatively elevated costs of funds but also demonstrating the
strength of our diversified deposit base and disciplined lending approach. Through it all, we remained focused on long-term growth while continuing to serve our clients
and communities with excellence.
Investing in People, Technology, and Growth
One of our most important steps in 2024 was to invest in the future—hiring top-tier bankers, upgrading our technology, and reinforcing our operational strength. Our
capital position remains strong, our loan portfolio is high quality, and we have the liquidity and earnings power to continue strengthening our franchise.
2024 Financial & Strategic Highlights:
Total assets grew 9% to $5.6 billion, with deposits up 10%
and loans up 4% year-over-year.
Net income came in at $40.5 million ($0.66 per diluted
share), compared to $64.4 million ($1.05 per diluted share)
in 2023.
Net interest margin declined 42 basis points to 3.28%,
reflecting the rate environment.
Credit quality remains strong—nonperforming loans
totaled $7.7 million (0.14% of total assets), and we
maintained a 1.40% allowance for credit losses on loans.
National Recognition—We were honored to be named on
Forbes’ List of World’s Best Banks and ranked 25th on S&P
Global Market Intelligence’s Top 50 Best-Performing
Community Banks list.
Raymond James Community Bankers Cup Winner—
Recognized as one of the top 10% of community banks in
the country for the fifth time.
Strong Credit Ratings—Kroll Bond Rating Agency (“KBRA”)
reaffirmed our ratings, highlighting the stability of our
deposit base and strong client relationships.
Strengthening Our Leadership Team
To support our future growth, we welcomed some outstanding new leaders over the past year:
• Thomas A. Sa, Chief Operating Officer—Bringing more than 30 years of banking experience, Tom is leading operations, risk management, and technology
initiatives and is serving as our Interim Chief Financial Officer during our search for our next CFO.
• Janisha Sabnani, General Counsel—A seasoned financial services attorney, Janisha is guiding us on public company reporting, capital markets activities,
corporate governance, regulatory matters, and compliance.
• Chris Edmonds-Waters, Chief People & Culture Officer—Focused on making the Company a great place to work and strengthening our culture to attract, develop
and retain top talent.
Looking Ahead
As we continue expanding in the Bay Area, we remain focused on what has always set us apart—personalized, high-touch banking backed by financial strength and
community commitment. While the economic landscape will always have its ups and downs, we are confident in our strategic direction, financial discipline, and ability to
deliver value to our shareholders.
Thank you for being part of our journey. We appreciate your support and look forward to seeing you at our Annual Meeting on May 22, 2025 at 1:00 p.m. (held virtually).
Please take the time to review the proxy materials, and we encourage you to vote your shares “FOR” each of our director nominees and “FOR” each proposal.
If you have any questions, don’t hesitate to reach out. Your engagement and feedback mean a lot to us.
Sincerely,
Jack W. Conner
Chairman of the Board
Robertson Clay Jones
President and Chief Executive Officer

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Notice of Annual Meeting of Shareholders
Date:
Time:
Location:
May 22, 2025
1:00 p.m., Pacific Daylight Time (PDT)
Virtual Annual Meeting
Items of Business:
1.
To elect 8 members of the Board of Directors, each for a term of one year;
2.
To approve an amendment to the Company’s Bylaws to increase the range of the permitted number of directors;
3.
To consider an advisory proposal on the Company’s 2024 executive compensation;
4.
To ratify the selection of Crowe LLP as the Company’s independent registered public accounting firm for the year ending
December 31, 2025; and
5.
To transact such other business as may properly come before the meeting, and any adjournment or postponement.
Record Date:
You can vote if you were a shareholder of record on March 31, 2025.
Mailing Date:
The proxy materials are being distributed to our shareholders on or about April 7, 2025, and include our Annual Report on Form 10-K,
Notice of Annual Meeting, this proxy statement, and a proxy or voting instruction card.
Important Notice Regarding the Internet Availability of Proxy Materials:
This proxy statement and our 2024 Annual Report on Form 10-K are available at www.heritagecommercecorp.com. Your Vote is
Important. Please vote as promptly as possible by using the Internet or telephone or by signing, dating and returning the enclosed
proxy card.
VIRTUAL ANNUAL MEETING
The Annual Meeting will be held in a virtual-only meeting format, via live video webcast that will provide shareholders with the
ability to participate in the Annual Meeting, vote their shares and ask questions. We are implementing a virtual-only meeting format
in order to leverage technology to enhance shareholder access to the Annual Meeting. We believe a virtual-only meeting format
facilitates shareholder attendance and participation by enabling all shareholders to participate fully and equally, and without cost,
using an Internet-connected device from any location around the world. In addition, the virtual-only meeting format increases our
ability to engage with all shareholders, regardless of size, resources or physical location. We will not hold an in-person meeting.
Shareholders of record and beneficial owners as of the close of the business day on March 31, 2025, the record date, will have the
ability to submit questions and vote electronically at the Annual Meeting via the virtual-only meeting platform.
ATTENDANCE AT THE VIRTUAL ANNUAL MEETING
Only shareholders of record and beneficial owners of shares of our common stock as of the close of business on March 31, 2025, the
record date, may attend and participate in the Annual Meeting, including voting and asking questions before and during the
virtual Annual Meeting. You will not be able to attend the Annual Meeting in person.
In order to attend the Annual Meeting, you must register at register.proxypush.com/HTBK. Upon completing your registration, you
will receive an email confirming your registration.

As part of the registration process, you must enter the control number located on your proxy card or voting instruction form. If you
are a beneficial owner of shares registered in the name of a broker, bank or other nominee, you will also need to provide the registered
name on your account and the name of your broker, bank or other nominee as part of the registration process.
On the day of the Annual Meeting, May 22, 2025, shareholders who register in advance of the meeting start time will receive an
email one hour before. Shareholders registering near the meeting start time will receive a confirmation email and be taken directly
to the meeting site. Fifteen (15) minutes prior to the meeting start time, shareholders can click the “Join Meeting” button. Once the
meeting starts, shareholders will be able to hear the speakers, view presentations and submit questions. The Annual Meeting will
begin promptly at 1:00 p.m., Pacific Daylight Time.
We will have technicians ready to assist you with any technical difficulties you may have accessing the Annual Meeting. If you
encounter any difficulties accessing the virtual-only Annual Meeting platform, including any difficulties voting or submitting questions,
you may call the technical support number that will be included in the link to the Meeting Access FAQs Guide included in your
confirmation email.
QUESTIONS AT THE VIRTUAL ANNUAL MEETING
Our virtual Annual Meeting will allow shareholders to submit questions before and during the Annual Meeting. During a designated
question and answer period at the Annual Meeting, we will respond to appropriate questions submitted by shareholders.
We will answer as many shareholder-submitted questions as time permits, and any questions that we are unable to address during
the Annual Meeting will be answered following the meeting, with the exception of any questions that are irrelevant to the purpose of
the Annual Meeting or our business or that contain inappropriate or derogatory references. If we receive substantially similar
questions, we will group such questions together and provide a single response to avoid repetition.
By Order of the Board of Directors,
Deborah K. Reuter
Executive Vice President, Chief Risk Officer and Corporate Secretary
April 7, 2025
San Jose, California

Table of Contents
THE BOARD AND CORPORATE
GOVERNANCE
1
DIRECTOR COMPENSATION
15
COMMITMENT TO SUSTAINABILITY
18
OUR EXECUTIVE OFFICERS
24
PROPOSAL 1—ELECTION OF
DIRECTORS
26
PROPOSAL 2—APPROVAL OF AN
AMENDMENT TO THE COMPANY’S
BYLAWS
30
PROPOSAL 3—APPROVAL OF THE
ADVISORY PROPOSAL ON 2024
EXECUTIVE COMPENSATION
31
EXECUTIVE COMPENSATION
32
BENEFICIAL OWNERSHIP OF COMMON
STOCK
66
PROPOSAL 4—RATIFICATION OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
68
2025 ANNUAL MEETING
INFORMATION ABOUT THE 2025
ANNUAL MEETING OF SHAREHOLDERS
QUESTIONS & ANSWERS
71
OTHER BUSINESS
76
SHAREHOLDER PROPOSALS FOR 2026
MEETING
77
Heritage Commerce Corp • 2025 Proxy Statement
i

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The Board and Corporate
Governance
Heritage Commerce Corp (the “Company”) is committed to achieving excellence in our corporate governance practices with an
emphasis on a culture of accountability and the conduct of our business that is fair, ethical and responsible to our shareholders and
other stakeholders. The Board of Directors (the “Board”) oversees our business and monitors the performance of management. In
accordance with corporate governance principles, the Board does not involve itself in day-to-day operations. The directors keep
themselves informed through, among other things, frequent discussions with the Chief Executive Officer, other key executives and our
principal outside advisors (legal counsel, outside auditors, and other consultants), by reading reports and other materials, and by
participating in Board and committee meetings.
The Board is committed to good business practices, transparency in financial reporting, and the highest level of corporate governance.
To that end, the Board continually reviews its governance policies and practices, as well as the requirements of the federal
securities laws and the listing standards of The Nasdaq Stock Market, to help ensure that such policies and practices are compliant
and up to date.
Corporate Governance
Accountability to Shareholders
Shareholder Voting Rights
Independent Board Leadership
• All directors elected annually
• Annual Say on Pay advisory vote
• Policy against pledging and hedging
Company common stock by officers
and directors
• Regular engagement with key
shareholders and management
accessibility to all shareholders
• Clawback policy to recoup excess
compensation as a result of
accounting restatement
• One class of voting stock
• No “poison pill”
• No super majority voting provisions
in Articles of Incorporation or Bylaws
• Separate Board Chair and Chief
Executive Officer roles
• Seven of eight nominees for election
in 2025 are independent
• All members of the Audit Committee,
Personnel and Compensation
Committee, and the Corporate
Governance and Nominating
Committee are independent
directors
Effective Board Policies and Practices
A Board composed of accomplished professionals with experience, skills and knowledge relevant to our business and industry,
including three former Chief Executive Officers and our current Chief Executive Officer
A diverse Board with three out of eight directors nominated for election in 2025 self-identifying as members of diverse groups
Each of the Audit Committee, Personnel and Compensation Committee, and Corporate Governance and Nominating Committee has a
charter that is publicly available on our website and that meets applicable legal and listing requirements and reflects our Board’s
emphasis on independence and engagement
Executive sessions of independent directors are held at the Board and Committee levels
A Code of Ethics and Conduct applicable to all employees and directors
Annual self-evaluation and assessment process for the Board and its committees through the Corporate Governance and Nominating
Committee
Special procedures and limits on related party transactions
Heritage Commerce Corp • 2025 Proxy Statement
1

Board and committee access to independent advisors
A robust insider trading policy
Regular Shareholder Engagement
Management Compensation Program Aligned with
Long-term Interests of Shareholders
We participate in investor conferences and other
shareholder engagements throughout the fiscal year
We engage in business performance and strategic,
governance, executive compensation, and human
capital matters
Our Personnel and Compensation Committee Chair
and our executive leadership conduct an annual
outreach to key shareholders and we actively invite
all shareholders to contact the Board to express their
opinions and insights
Stock ownership requirements for directors and
executive officers
Annual review by the Personnel and Compensation
Committee of incentive program design, goals and
objectives for alignment with business strategies
Compensation philosophy and practices focused on
using incentive programs to attract and retain talented
personnel in a heavily competitive market
Compensation claw-back policy applies to all senior
management
Our Independent Board of Directors
Our directors bring diverse skills to our Board. The Board is committed to strong corporate governance practices and policies. The
Board is committed to maintaining an independent Board, and a substantial majority of the Board are “independent” directors.” For
this purpose, the Board relies on the definitions of “independence” and “non-employee directors” found in rules promulgated by
the Securities and Exchange Commission (the “SEC”) and The Nasdaq Stock Market. Director biographies can be found under
Proposal 1—Election of Directors beginning at page 26 below.
Eight of 9 members of the Board, including seven of our eight nominees, are independent as follows:
Julianne M. Biagini-Komas, Vice Chair
Jason DiNapoli
Laura Roden*
Bruce H. Cabral
Stephen G. Heitel
Marina H. Park Sutton
Jack W. Conner, Chair
Kamran F. Husain
*
Ms. Roden is not standing for reelection at the 2025 Annual Meeting.
Only our current President and Chief Executive Officer, Robertson Clay Jones, is not independent.
Board Refreshment
Over the prior ten years, six new independent directors have joined our Board as follows:
Bruce H.
Cabral
Stephen G.
Heitel
Marina H.
Park Sutton
Kamran F.
Husain
Julianne M.
Biagini-Komas
Jason
DiNapoli
1
2
0
2
9
1
0
2
8
1
0
2
5
1
0
2
Board Leadership Structure
In addition to maintaining a Board almost entirely comprised of independent directors, it has long been our practice for many years
of the Company to separate the roles of Chief Executive Officer and Chair of the Board in recognition of the differences between the
two roles. The Board believes that this separation of the duties mitigates any inherent conflict of interest that may arise when the
roles are combined. The Board also believes that an independent director who has not served as an executive of the Company can best
provide the necessary leadership and objectivity required as Chair of the Board.
The Board and Corporate Governance
2
Heritage Commerce Corp • 2025 Proxy Statement

Chief Executive Officer. The Chief Executive Officer is responsible for setting the strategic direction for the Company and the
day-to-day leadership and performance of the Company.
Board Chair. The Chair of the Board provides guidance to the Chief Executive Officer, sets the agenda for Board meetings, presides
over meetings of the full Board (including executive sessions), and facilitates communication among the independent directors and
between the independent directors and the Chief Executive Officer.
Term of Office
Directors serve a one-year term or until their successors are elected and qualified. Our current bylaws provide for a board of not
fewer than nine and not more than fifteen directors, and the Board has the authority to fill vacancies created by a resignation or
retirement or by the expansion of our Board. Proposal 2, if approved, would amend the bylaws to increase the range of the number
of directors to not fewer than eight nor more than fifteen. The Board does not have term limits, instead relying upon the evaluation
procedures described herein as the primary methods of ensuring that each director continues to act in a manner consistent with
the Company’s and its shareholders’ best interest.
Board Expertise
The following section summarizes the specific skills, professional experience and background information of each director name that
led the Board to conclude that each such person should serve on the Board.
Julianne M. Biagini-Komas
Bruce H. Cabral
Jack W. Conner
Jason DiNapoli
Stephen G. Heitel
Kamran F. Husain
Robertson Clay Jones
Marina H. Park Sutton
Key Client Industries
X
X
X
X
Banking/Financial Services
X
X
X
X
X
X
X
Accounting/Auditing/Financial Reporting
X
X
X
X
X
X
X
Marketing/Sales
X
X
X
Human Capital Management
X
X
X
X
X
X
Leadership as President and/or CEO, EVP or SVP
X
X
X
X
X
X
X
Cybersecurity/Technology/Digital Innovation
X
X
Legal/ Regulatory
X
X
X
X
X
X
X
Public Company Governance
X
X
X
X
X
X
X
Risk Management
X
X
X
X
X
X
Strategic Planning/Mergers & Acquisitions
X
X
X
X
X
X
X
Community Affairs/Engagement
X
X
X
Sustainability
X
The Board and Corporate Governance
Heritage Commerce Corp • 2025 Proxy Statement
3

Risk Oversight
The Board has ultimate authority and responsibility for overseeing risk management of the Company arising out of its operations and
business strategy. This includes overseeing the Company’s enterprise-wide risk management framework, which establishes the
Company’s overall risk appetite and risk management strategy and enables senior management to understand, manage and report
on the risks faced by the Company. The Board reviews and oversees policies and practices established by management to identify,
assess, measure and manage key risks, including risk appetite metrics developed by management and approved by the Board. The
Board monitors, regularly reviews and reacts to material enterprise risks identified by management. The Board receives specific reports
from senior management with oversight responsibility for particular risks within the Company. These reports include strategic,
operational, execution, financial, investment, credit, liquidity, interest rate, capital, technology, cyber security, compensation, legal
and regulatory compliance and reputation risks, and the Company’s exposure to those risks. As part of its annual strategic plan process,
the Board reviews a risk tolerance matrix that identifies potential Company risks and evaluates the Board’s tolerance level for each.
The Board assures that senior
management is properly focused
on risk and understands that it is
responsible to the Board
regarding the Company’s risk
management process, including
by assessing and managing the
risks faced by the Company.
Senior management is
responsible for creating and
recommending to the Board for
approval appropriate risk
appetite metrics reflecting the
aggregate levels and types of
risk the Company would be
willing to accept in connection
with the operation of the
Company’s business and pursuit
of the Company’s business
objectives.
Board committees are responsible for risk oversight in specific areas. The Audit
Committee is responsible for monitoring the Company’s overall risk program.
The Audit Committee is charged with the primary responsibility for risk management,
overseeing financial, accounting, internal control, enterprise risk management and
informational technology/ cybersecurity risk management. The Company’s internal Risk
Management Steering Committee reports directly to the Audit Committee. Our Chief
Risk Officer chairs the internal Risk Management Steering Committee. The Audit
Committee receives quarterly reports from the Risk Management Steering Committee,
Chief Audit Officer and Chief Information Security Officer. The Audit Committee reports
periodically to the Board on the effectiveness of risk management processes in place,
risk trends, and the overall risk assessment of the Company’s activities.
The Personnel and Compensation Committee assesses and monitors risks in the
Company’s compensation and human capital programs, with a focus on assuring that
the Company’s compensation programs do not promote the taking of inappropriate
risks.
The Corporate Governance and Nominating Committee recommends director
candidates with appropriate experience and skills who will set the proper tone for the
Company’s risk profile and provide competent oversight over our material risks. This
Committee also monitors the Company’s risk related to environmental, social and
governance (“ESG”) concerns.
Board Self-Assessment
The Board and its committees perform a self-assessment of their performance at least annually, ordinarily conducted through the
Corporate Governance and Nominating Committee. The purpose of the assessment is to improve the functioning of the Board and its
committees as a unit, as well as reviewing the performance of each individual director.
Conduct
Evaluation
Formal opportunity
for Directors to provide
feedback on the Board
and its Committees
Review
Feedback
Take
Action
Ongoing
Review
Responses discussed
by the Board
and each Committee
Opportunities for
improvement are
identified and
addressed
Continuous assessment
performance during
of effectiveness and
executive sessions
Determine
Approach
The Corporate Governance and
Nominating Committee oversees
the self-assessment process and
timing; sets criteria
The Board’s assessment in 2024 was conducted on an anonymous basis by the Corporate Governance and Nominating Committee in
coordination with an independent consultant. As a result of the 2024 assessment, the Board has focused and will continue to
focus on succession planning, corporate strategy, and risk management.
The Board and Corporate Governance
4
Heritage Commerce Corp • 2025 Proxy Statement

Stock Ownership Guidelines
Board. The Corporate Governance and Nominating Committee has adopted stock ownership guidelines to further align the interests
of our non-employee directors with those of the Company’s shareholders. These guidelines provide that each non-employee
director is expected to hold a Board-established minimum number of shares of the Company’s common stock. In 2024, each director
was required to maintain ownership in the Company’s shares of common stock equal to not less than three times such director’s
base cash compensation (excluding additional compensation paid for committee service or board leadership roles). Directors are not
required to purchase shares to satisfy the director share ownership policy; however, a director may not sell or otherwise dispose
of shares representing fifty percent (50%) of such director’s annual compensation for the current year at any time when the director
does not own a number of shares equal to or greater than the ownership target. The Corporate Governance and Nominating
Committee reviews progress towards satisfying stock ownership guidelines at least annually. Each of our directors is, and at
December 31, 2024, each of our directors was, in compliance with these guidelines.
Executive Management. Executive management is subject to our executive management ownership and retention guidelines. Our
Chief Executive Officer is required to maintain ownership in the Company’s shares of common stock having a value equal to three times
his base salary, and the other executive officers are required to maintain ownership in the Company’s shares of common stock
equal to one times their respective base salaries. The executives are not required to purchase shares to reach these guidelines,
however, they are restricted from selling shares received as equity-based compensation (net of required holding tax) until they reach
their respective guideline level. Furthermore, executives are required to retain at least 50% of shares earned under equity-based
compensation plans once the guidelines have been met. Stock options and unvested performance-based equity awards are not
included in satisfying the guidelines. All of our executives are, and as of December 31, 2024, all such individuals were, in compliance
with these guidelines.
Director and Shareholder Meetings
The Board holds eight regular meetings each year. Special meetings may be called from time to time as circumstances warrant.
Directors are expected to attend all Board meetings and are asked to attend the annual shareholders meeting. Our independent
directors convened five executive sessions without management participation during 2024. Such sessions are generally chaired by the
Chair of the Board.
For the meetings directors were qualified to attend in 2024, each director attended at least 75% of the total number of Board
meetings and at least 75% of the meetings of each committee on which such director served.
Historically, shareholder attendance has been limited, which we attribute to our policy of regular and detailed communications with
our shareholders and investors through meetings with management and other investor relations activities. Since very few
shareholders have historically attended our annual meetings and all of our directors typically attend, we encourage but have not
adopted a policy requiring the attendance of directors at the annual meeting. All of our directors attended the 2024 annual shareholders
meeting.
Shareholder Communications and Outreach
We proactively interact with our shareholders and other interested parties throughout the year in a variety of forums. Among the
most significant of these, we conduct regular outreach annually, ordinarily in February, to key shareholders and to shareholders that
have expressed a desire for such engagement, normally in the form of telephone calls or videoconferences from a member of our
Personnel and Compensation and our Corporate Governance and Nominating Committees, along with a member of our executive
leadership team. Our interactions cover a broad range of governance and business topics, including strategy and execution,
compensation practices, risk oversight, sustainability, culture/human capital and ESG. The exchanges we have had with shareholders
provide us with a valuable understanding of our shareholders’ perspectives and meaningful opportunities to share views with
them. We have outlined a brief description of our shareholder engagement efforts in 2024 below.
The Board and Corporate Governance
Heritage Commerce Corp • 2025 Proxy Statement
5

Whom We Engage:
• Institutional investors
• Retail Shareholders
• Portfolio Managers
• Investment analysts
• Community and business leaders
• ESG rating agencies
• Representatives of Nasdaq
How We Communicate:
• Company website
• Annual Report on Form 10-K
• Quarterly Reports on Form 10-Q
• Annual Meeting Proxy Statement
• SEC periodic reports on Form 8-K
• Periodic Press Releases
• Sustainability Report
What we discussed:
• Business strategies:
• Financial performance
• Credit quality
• Securities portfolios strategy
• Loan growth initiatives
• Deposit growth and retention
• Net interest margin
• Liquidity
• Capital requirements
• Risk management
• Corporate governance
• Succession plans
• Executive compensation
• Sustainability programs and plans
How We Engage:
• Quarterly Investment analyst calls
• In-person investor conferences
• In-person individual investor
meetings
• Virtual meetings and calls
• Annual Shareholders Meeting
• On-site investor meetings
Engagements include:
• Chief Executive Officer
• Chief People and Culture Officer
• Chief Financial Officer
• Directors
During 2024 and 2025, we participated in the following engagement since we filed our 2024 Proxy Statement 
with the SEC on April 11, 2024 (as of March 15, 2025):
• Participated in one-on-one meetings with institutional investors at conferences and conducted conference calls or held
meetings with institutional investors approximately 74 times
• Participated in 8 investor conferences
• Held 24 quarterly conference calls with investment analysts and 7 other meetings or calls with investment analysts
• Direct outreach to our top 20 institutional shareholders
• Held meetings with each investor who accepted our invitation resulting in 3 meetings as of March 15, 2025
Shareholder views are communicated to the Board throughout the year at monthly Board meetings and are instrumental in the
development of our governance, compensation and environmental and social policies and inform our business strategy. Below are
some of the investor priorities discussed during our meetings:
• Ongoing Company performance, financial condition and credit quality
• Executive compensation disclosure
• Implementation of performance measures for equity grants and other compensation issues discussed below in the section of
this proxy statement entitled “Compensation Discussion and Analysis-Shareholder Outreach”
• Assessment of our sustainability strategy and progress
The Board and Corporate Governance
6
Heritage Commerce Corp • 2025 Proxy Statement

We integrated feedback from shareholders as follows:
• Enhanced and refined our Compensation Discussion and Analysis disclosures
• Continued to implement a Long-term Performance Incentive Equity Program for management that commenced with the 2023
performance year in the form of performance-based restricted stock units that vest based on the Company’s relative Return on
Average Tangible Common Equity over a three-year performance period relative to our peer group
• Established individual and differentiated goals tied to qualitative performance targets and awards under the cash incentive
program
• Began implementing succession plans for our Board and executive and senior management, including recruiting a new Chief
Operating Officer, Chief People & Culture Officer, and General Counsel, and continuing our search for our next Chief Financial
Officer and directors
• Continued communicating with shareholders about key initiatives in Sustainability and Human Capital, including by providing a
Sustainability Report which is available on our website
Our management team also commits significant time meeting with our regulators. Frequent interaction helps us learn firsthand from
regulators about matters of importance to them and their expectations of us in terms of safety and soundness, compliance,
community reinvestment, and other key regulatory initiatives. It also gives the Board and management a forum for keeping our
regulators well informed about our performance and business practices.
Communications with the Board
Shareholders may communicate with the Board, including a committee of the Board or individual directors, by writing to the
Corporate Secretary, Heritage Commerce Corp, 224 Airport Parkway, San Jose, California 95110. Each communication from a
shareholder should include the following information in order to permit shareholder status to be confirmed and to provide an address
to forward a response if deemed appropriate:
• The name, mailing address and telephone number of the shareholder sending the communication; and
• If the shareholder is not a record holder of our common stock, the name of the record holder of our common stock beneficially
owned must be identified along with the shareholder.
Our Corporate Secretary will forward all appropriate communications to the Board or individual directors specified in the
communication. Shareholders are invited, but not required, to include in their outreach letter a brief summary of the topics to be
covered in the Board discussion. Our Corporate Secretary may (but is not required to) review all correspondence addressed to the Board
or any individual member of the Board, for any inappropriate correspondence more suitably directed to management. Communications
may be deemed inappropriate for this purpose if it is reasonably apparent from the face of the correspondence that it relates
principally to a client dispute or similar issue not related to an area of Board oversight. Our policies regarding the handling of security
holder communications were approved by our independent directors.
Nomination of Directors
The Company has an independent Corporate Governance and Nominating Committee. The duties of the Corporate Governance and
Nominating Committee include the recommendation of candidates for election to the Company’s Board, including those nominated by
shareholders.
The Corporate Governance and Nominating Committee’s minimum qualifications for a director are persons of high ethical character
who have both personal and professional integrity, which is consistent with the image and values of the Company. The Corporate
Governance and Nominating Committee considers some or all of the following criteria in considering candidates to serve as directors:
• commitment to ethical conduct and personal and professional integrity as evidenced through the person’s business associations,
diversity, service as a director or executive officer or other commitment to ethical conduct and personal and professional
integrity as evidenced in organizations and/or education;
• objective perspective and mature judgment developed through business experiences and/or educational endeavors;
• the candidate’s ability to work with other members of the Board and management to further our goals and increase shareholder
value;
The Board and Corporate Governance
Heritage Commerce Corp • 2025 Proxy Statement
7

• the ability and commitment to devote sufficient time to carry out the duties and responsibilities as a director;
• demonstrated experience at policy making levels in various organizations and in areas that are relevant to our activities;
• the skills, experience and characteristics of the potential nominee in relation to the capabilities and characteristics already
represented on the Board; and
• such other attributes, including independence, relevant in constituting a board that also satisfies the requirements imposed by
the SEC and The Nasdaq Stock Market.
The Corporate Governance and Nominating Committee does not have a separate policy for evaluating director candidates
recommended by shareholders. Instead, the Corporate Governance and Nominating Committee considers any candidate meeting
the requirements for nomination by a shareholder set forth in the Company’s Bylaws (as well as applicable laws and regulations) in
the same manner as any other director candidate. The Corporate Governance and Nominating Committee believes that requiring
shareholder recommendations for director candidates to comply with the requirements for nominations in accordance with the
Company’s Bylaws ensures that the Corporate Governance and Nominating Committee receives at least the minimum information
necessary for it to begin an appropriate evaluation of any such director nominee, and time and process sufficient to afford any such
nominees the appropriate level of assessment.
Section 5.14 of the Company’s Bylaws provide that any shareholder that desires to nominate a person for service on the Board must
give advance written notice to the Company of an intention to nominate a director at a shareholder meeting. Notice of intention to
make any nominations must be delivered to the Secretary of the Company at the principal executive offices of the Company not later
than the close of business 90 days nor earlier than the close of business 120 days prior to the first anniversary of the preceding
year’s annual meeting. If the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary
date of the annual meeting, notice by the shareholder must be delivered not earlier than the close of business 120 days prior to such
annual meeting and not later than the close of business 90 days prior to such annual meeting or 10 days following the day on
which public announcement of the date of such meeting is first made by the Company.
To be in proper written form, a shareholder’s notice to the Corporate Secretary must comply with the requirements of Section 5.14
of our Bylaws. Nominees for the Board also must meet certain qualifications set forth in Section 2.2(b) of our Bylaws, which prohibit
the election as a director of any person who is a director, executive officer, branch manager or trustee for any unaffiliated commercial
bank, savings bank, trust company, savings and loan association, building and loan association, industrial bank or credit union that is
engaged in business in: (i) any city, town or village in which the Company or any affiliate or subsidiary thereof has offices; or
(ii) any city, town or village adjacent to a city, town or village in which the Company or any affiliate or subsidiary thereof has offices.
This section constitutes only a summary of the material requirements for shareholder nominations of director candidates. Any
shareholder considering a nomination must comply strictly in all respects with the requirements set forth in the bylaws and applicable
law. Accordingly, readers intending to submit such a nomination should review carefully all applicable provisions of the bylaws, as
well as the provisions of Securities Exchange Act Regulation 14A and of the California Corporations Code, prior to making any submittal.
Diversity Considerations for the Board of Directors
In considering diversity of the Board (in all aspects of that term) as a criteria for selecting nominees in accordance with its charter,
the Corporate Governance and Nominating Committee takes into account various factors and perspectives, including differences of
viewpoint, high quality business and professional experience, education, skills and other individual qualities and attributes that
contribute to Board diversity. The Corporate Governance and Nominating Committee does not assign specific weights to particular
criteria and no particular criterion is necessarily applicable to all prospective nominees. The Corporate Governance and Nominating
Committee seeks persons with leadership experience in a variety of contexts and industries, as well as diversity characteristics
that the Committee believes tend to expand the range of perspectives and experiences that increase a candidate’s value to the
Company. The Corporate Governance and Nominating Committee believes that this expansive conceptualization of diversity is the
most effective means to expand the Board’s talent pool. The Corporate Governance and Nominating Committee assesses the
effectiveness of this approach as part of its annual review of its charter. Of the eight nominees for election to our Board at the Annual
Meeting, 25% are women and 37.5% are women and underrepresented minorities.
Management Performance and Compensation
The Personnel and Compensation Committee annually reviews both the Chief Executive Officer’s performance, and the Chief
Executive Officer’s evaluation of the management team. The Board (largely through the Personnel and Compensation Committee)
The Board and Corporate Governance
8
Heritage Commerce Corp • 2025 Proxy Statement

evaluates the compensation plans for senior management and other employees to ensure they are appropriate, competitive and
properly reflect the Company’s objectives and performance.
Code of Ethics
The Board expects all directors, as well as officers and employees, to display the highest standard of ethics, consistent with the
principles that have guided the Company over the years.
The Board has adopted the HCC Code of Ethics and Conduct that applies to all employees and directors and the Principal Officers /
Senior Management Code of Ethics that applies to the Company’s Chief Executive Officer, Chief Financial Officer, other principal
financial officers, and other designated senior management personnel, to help ensure that our financial affairs are conducted
honestly, ethically, accurately, objectively, consistent with generally accepted accounting principles and in compliance with applicable
laws, rules and regulations. We will disclose any amendment to, or a waiver from a provision of our Code of Ethics and Conduct on
our website. Both documents are available on our website at www.heritagecommercecorp.com.
Reporting Complaints/Concerns Regarding Accounting or Auditing Matters
The Board has adopted procedures for receiving and responding to complaints or concerns regarding accounting and auditing
matters. These procedures were designed to provide a confidential channel of communication for employees and others who have
complaints or concerns regarding accounting or auditing matters involving the Company.
Employee concerns may be communicated to a third-party service provider in a confidential or anonymous manner, which will then
be forwarded by the third-party service provider to the Chairs of the Audit Committee and the Personnel and Compensation Committee
of the Board. The Audit Committee Chair and the Chair of the Personnel and Compensation Committee will make a determination
on the level of inquiry, investigation or disposal of the complaint. All complaints are discussed with the Company’s senior management
and monitored by the Audit Committee for handling, investigation and final disposition. The Chair of the Audit Committee will
report the status and disposition of all complaints to the Board. The Company maintains a strict anti-retaliation policy for all matters
submitted in accordance with these procedures and for these purposes.
The Board and Corporate Governance
Heritage Commerce Corp • 2025 Proxy Statement
9

Board Committees
The Board routinely delegates primary oversight of certain matters to standing committees. These committees meet at regular
intervals to attend to their particular areas of responsibility. Our Board has the following committees: Audit Committee, Personnel
and Compensation Committee, Corporate Governance and Nominating Committee, Strategic Initiatives Committee, and Finance and
Investment Committee. In addition, Heritage Bank of Commerce (the “Bank,” and together with the Company, “Heritage”)
maintains a Loan Committee. An independent director, as defined by the applicable rules and regulations of The Nasdaq Stock
Market, chairs each of these standing committees (including the Heritage Bank of Commerce’s Loan Committee). The Chair determines
the agenda, the frequency and the length of the meetings and receives input from Board members.
Audit Committee
Committee Chair:
Julianne M. Biagini-
Komas
Committee members:
Kamran F. Husain,
Laura Roden*
Marina H. Park Sutton
*Ms. Roden is not standing for
reelection at the 2025 Annual
Meeting.
Meetings in 2024: 11
The Audit Committee
Report for 2024 appears on
page 68 of this proxy
statement.
Overview:
The Company has a separately designated standing Audit Committee established in accordance with
Section 10A(m) of the Securities Exchange Act of 1934, as amended, and Nasdaq Rule 5605(c). The Audit
Committee charter adopted by the Board sets out the responsibilities, authority and specific duties of the Audit
Committee. The Audit Committee charter is available on the Company’s website at
www.heritagecommercecorp.com.
The responsibilities of the Audit Committee include the following:
• oversee our corporate accounting and financial reporting processes and the quality and integrity of our financial
statements and reports, including our internal control over financial reporting and disclosure controls and
procedures;
• oversee the appointment, compensation, retention and oversight of our independent auditors, including
conducting a review of their qualifications and independence, reviewing and approving the planned scope of
our annual audit, overseeing the independent auditors’ work, and reviewing and pre-approving any audit and
non-audit services that may be performed by them;
• review with management and our independent auditors the effectiveness of our internal controls over financial
reporting;
• oversee our information technology and cybersecurity programs, including but not limited to incident detection,
response and reporting obligations;
• oversee our risk management function, including without limitation cybersecurity incident response and related
reporting matters;
• approve the scope and engagement of external audit services and review significant accounting policies and
adjustments recommended by the independent auditors and address any significant, unresolved disagreements
between the independent auditors and management;
• review and discuss with the independent auditor our relationships and transactions with any related parties
that are significant to us, including our identification of and disclosure of related party transactions;
• review and discuss quarterly earnings releases and financial statements included within our Quarterly Reports
on Form 10-Q and Annual Reports on Form 10-K with management and the independent auditors;
• review and discuss with management and the independent auditors any significant changes, significant
deficiencies and material weaknesses regarding internal controls over financial reporting, and oversee the
corrective action taken to mitigate any significant deficiencies and material weaknesses identified;
• review with management and the independent auditors the effect of significant regulatory and accounting
initiatives, changes, and pronouncements as well as significant and unique transactions and financial
relationships;
• review with the independent auditors the matters required to be discussed by Auditing Standards No. 1301,
and receive and discuss with the independent auditors disclosures regarding the auditors’ independence;
• oversee the internal audit function, including the appointment and evaluation of our Chief Audit Officer, and the
audits directed under its auspices;
• review and discuss with management our risk assessment and risk management policies, compliance with
laws, and our major risk exposures and any steps by management to monitor or control such exposures; and
• oversee and monitor the remediation of material risk management issues.
Each member of the Audit Committee meets the independence criteria as defined by applicable rules and
regulations of the SEC for audit committee membership and is independent and is “financially sophisticated” as
defined by the applicable rules and regulations of The Nasdaq Stock Market.
The Board has determined that Julianne M. Biagini-Komas meets the definition of “audit committee financial expert” under the applicable rules and regulations of the SEC and is
“financially sophisticated” as defined by the applicable rules and regulations of The Nasdaq Stock Market. The designation of a person as an audit committee financial expert does
not result in the person being deemed an expert for any purpose, including under Section 11 of the Securities Act of 1933. The designation does not impose on the person any duties,
obligations or liability greater than those imposed on any other audit committee member or any other director and does not affect the duties, obligations or liability of any other
member of the Audit Committee or Board.
The Board and Corporate Governance
10
Heritage Commerce Corp • 2025 Proxy Statement

Personnel and
Compensation
Committee
Committee Chair:
Marina H. Park Sutton
Committee members:
Julianne M. Biagini-
Komas
Jack W. Conner
Ranson W. Webster*
* Mr. Webster retired from the
Board as of October 1, 2024.
Meetings in 2024: 10
Overview:
The Company has a separately designated Personnel and Compensation Committee, which consists entirely of
independent directors as defined by the applicable rules and regulations of The Nasdaq Stock Market. The
Personnel and Compensation Committee has adopted a charter, which is available on the Company’s website at
www.heritagecommercecorp.com.
The Personnel and Compensation Committee has the following responsibilities:
• review and approve our total rewards philosophy and human capital strategies, based in part upon industry
compensation practices and our relative compensation positioning;
• evaluate, review, and determine the types and amounts of compensation for the Company’s executive
officers;
• oversee a periodic risk assessment of the Company’s compensation programs to determine whether such
programs are reasonably likely to encourage the taking of unusual or imprudent risk ;
• establish and measure compliance with Company goals and objectives relevant to executive officer
compensation;
• review director compensation programs, plans and awards;
• oversee the Company’s employee benefits and equity compensation plans and programs, including
management incentive plans and retirement plans;
• administer the Company’s Incentive Compensation Recovery Policy, including determining events giving rise
to the interpretation of the policy, amounts to be recovered and the timing and method of recovery;
• oversee the development, implementation, and effectiveness of the Company’s human capital management
function and succession planning processes;
• review and approve corporate goals and objectives relevant to the compensation of our Chief Executive
Officer, evaluate the Chief Executive Officer’s performance in light of those goals, and determine and
recommend for Board approval compensation based on such performance; and
• review and approve the Compensation Discussion and Analysis and Pay-for-Performance disclosures included
in our proxy statement.
Corporate
Governance and
Nominating
Committee
Committee Chair:
Ranson W. Webster*
Jason DiNapoli**
* Mr. Webster retired from the
Board as of October 1, 2024.
** Mr. DiNapoli served as a
committee member and was
appointed Chair subsequent to
Mr. Webster’s departure.
Committee members:
Marina H. Park Sutton
Jack W. Conner
Bruce Cabral***
*** Mr. Cabral joined the
committee on October 1, 2024
Meetings in 2024: 7
Overview:
The Company has a separately designated Corporate Governance and Nominating Committee, which consists
entirely of independent directors as defined by the applicable rules and regulations of The Nasdaq Stock
Market. The Corporate Governance and Nominating Committee have adopted a charter, which is available on
the Company’s website at www.heritagecommercecorp.com.
The purposes of the Corporate Governance and Nominating Committee include the following
responsibilities:
• establish, monitor, oversee the operation of, and propose revisions or amendments to the Company’s policies
regarding matters of corporate governance, corporate ethics and business conduct;
• assess conflicts of interests involving directors or executive management;
• identify and review candidates for the Board and recommend to the full Board candidates for nomination and
election to the Board or for appointment by the Board to fill a vacancy;
• recommend director appointments to Board committees;
• review shareholder nominations and shareholder proposals to amend the Company’s bylaws, and propose
responses;
• conduct annual evaluations of each director and of the Board as a whole;
• work with our Chief Executive Officer to review and approve management’s recommendations regarding
management succession policies; and
• provide oversight of practices on sustainability matters.
The Board and Corporate Governance
Heritage Commerce Corp • 2025 Proxy Statement
11

Strategic
Initiatives
Committee
Committee Chair:
Kamran F. Husain
Committee members:
Jack W. Conner
Robertson Clay Jones
Ranson W. Webster*
* Mr. Webster retired from the
Board as of October 1, 2024.
Meetings in 2024: 5
Overview:
The principal duties of the Strategic Initiatives Committee are to provide oversight and guidance to senior
management regarding the strategic direction of the Company, including development of an overall strategic
business plan.
Finance and
Investment
Committee
Committee Chair:
Laura Roden*
*Ms. Roden is not standing for
reelection at the 2025 Annual
Meeting.
Committee members:
Bruce H. Cabral
Jason DiNapoli
Stephen G. Heitel
Robertson Clay Jones
Meetings in 2024: 8
Overview:
The Finance and Investment Committee is responsible for the development of policies and procedures related to
liquidity, asset-liability management, and supervision of the Company’s investments. The Committee also
oversees and reviews internal financial reports including annual forecasts and budgets, and stress test analysis
prepared by management.
Heritage Bank of
Commerce Loan
Committee
Committee Chair:
Bruce H. Cabral
Committee members:
Jason DiNapoli
Stephen G. Heitel
Robertson Clay Jones
Meetings in 2024: 20
Overview:
The Heritage Bank of Commerce Loan Committee is responsible for the approval and supervision of loans and
the development of the Company’s loan policies and procedures.
Transactions with Management
Some of the Company’s directors and executive officers, as well as other related persons (as defined under “Policies and Procedures
for Approving Related Party Transactions” below), are clients of, and have banking transactions with, the Company’s subsidiary,
Heritage Bank of Commerce, in the ordinary course of business, and Heritage Bank of Commerce expects to have such ordinary
banking transactions with these persons in the future. In the opinion of the management of the Company and Heritage Bank of
The Board and Corporate Governance
12
Heritage Commerce Corp • 2025 Proxy Statement

Commerce, any loans and commitments to lend included in such transactions would be made in the ordinary course of business, on
substantially the same terms, including interest rates and collateral, as those prevailing for comparable transactions with other
persons of similar creditworthiness, and do not involve more than the normal risk of collectability or present other unfavorable features.
Loans to individual directors, officers and related persons must comply with Heritage Bank of Commerce’s lending policies and
statutory lending limits. In addition, prior approval of the Board is required for all loans advanced to directors and executive officers.
These loans are exempt from the loan prohibitions of the Sarbanes-Oxley Act.
Policies and Procedures for Approving Related Party Transactions
The Board has adopted a written Statement of Policy with Respect to Related Party Transactions. Under this policy, any “related
party transaction” may be consummated or may continue only if the Audit Committee approves or ratifies the transaction in
accordance with the guidelines in the policy and if the transaction is on terms comparable to those that could be obtained in arm’s
length dealings with an unrelated third party. For purposes of this policy, a “related person” means: (i) any person who is, or at any time
since the beginning of the Company’s last fiscal year was, a director or executive officer of the Company or a nominee to become a
director of the Company; (ii) any person who is known to be the beneficial owner of more than 5% of any class of the Company’s voting
securities; (iii) any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent,
spouse, sibling, mother in law, father in law, son in law, daughter in law, brother in law, or sister in law of the director, executive
officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such
director, executive officer, nominee or more than 5% beneficial owner; and (iv) any firm, corporation or other entity in which any of
the foregoing persons is employed or is a partner, principal or in a similar position, or in which such person has a 10% or greater
beneficial ownership interest.
A “related party transaction” is a transaction in which the Company or any of its subsidiaries is a participant and in which a related
person had or will have a direct or indirect interest, other than transactions involving: (i) less than $5,000 when aggregated with all
similar transactions; (ii) customary bank deposits and accounts (including certificates of deposit); and (iii) loans and commitments
to lend included in such transactions that are made in the ordinary course of business on substantially the same terms, including
interest rates and collateral, as those prevailing for comparable transactions with other persons of similar creditworthiness, and do not
involve more than the normal risk of collectability or present other unfavorable features to the Company.
A related party who has a position or relationship with a firm, corporation, or other entity that engaged in a transaction with the
Company shall not be deemed to have an indirect material interest within the meaning of this policy where the interest in the
transaction arises only: (i) from such related party’s position as a director of another corporation or organization that is party to the
transaction; (ii) from the direct or indirect ownership by the related party of less than a 10% equity interest in another person (other
than a partnership) which is a party to the transaction; or (iii) from the related party’s position as a limited partner in a partnership
in which the related party has an interest of less than 10%, and the related party is not a general partner of and does not hold another
position in the partnership.
The Board has determined that the Audit Committee is best suited to review and approve related party transactions. The Audit
Committee considers all of the relevant facts and circumstances available to the Audit Committee, including (if applicable) but not
limited to: (i) the benefits to the Company; (ii) the impact on a director’s independence in the event the related person is a director, an
immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer; (iii) the
availability of other sources for comparable solutions or services; (iv) the terms of the transaction; and (v) the terms available to
unrelated third parties or to employees generally. No member of the Audit Committee may participate in any review, consideration
or approval of any related person transaction with respect to which such member or any of his or her immediate family members is the
related person. The Audit Committee will approve only those related person transactions that are in, or are not inconsistent with,
the best interests of the Company and its shareholders, as the Audit Committee determines in good faith. The Audit Committee conveys
its decision to the Chief Executive Officer, who conveys the decision to the appropriate persons within the Company.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors, executive officers and persons
who own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of
ownership and reports of changes in ownership of common stock and other equity securities. They are required by SEC rules and
regulations to furnish the Company with copies of all Section 16(a) forms they file.
To the Company’s knowledge based solely on review of the copies of such reports furnished to the Company and written
representations that no other reports were required, all Section 16(a) filing requirements applicable to our executive officers and
directors were complied with during the year ended December 31, 2024.
The Board and Corporate Governance
Heritage Commerce Corp • 2025 Proxy Statement
13

Role of Compensation Consultant
Beginning in 2022, the Personnel and Compensation Committee retained Meridian Compensation Partners, LLC (“Meridian”) as its
compensation consultant in to advise the Personnel and Compensation Committee on executive compensation matters.
The Personnel and Compensation Committee has the authority to obtain assistance and advice from advisors for evaluating
compensation matters. The Personnel and Compensation Committee uses advisors to obtain candid and direct advice independent
of management, and takes steps to satisfy this objective. First, in evaluating firms to potentially provide advisory services to the
Personnel and Compensation Committee, the Personnel and Compensation Committee considers whether the firm provides or has
recently provided any other services to the Company or its affiliates. In addition, while members of management may assist the
Personnel and Compensation Committee in the search for advisors, the Personnel and Compensation Committee ultimately and in
its sole discretion makes the decision to hire or engage a consultant and provides direction as to the scope of work to be conducted.
The Chair of the Personnel and Compensation Committee has evaluated the relationship of the compensation consultant with
both the Company and the Personnel and Compensation Committee, including the nature and amount of work performed for the
Personnel and Compensation Committee during 2024. The Personnel and Compensation Committee retained Meridian to provide
independent advice regarding existing compensation programs for directors and executive officers.
The Board and Corporate Governance
14
Heritage Commerce Corp • 2025 Proxy Statement

Director Compensation
In order to attract and retain qualified directors, our practice is to set non-employee director compensation within a competitive
range of pay at comparable companies. We engage our independent compensation consultant, Meridian, from time to time to present
a benchmarking analysis using the same peer group used to assess executive compensation levels. In setting director compensation
for 2024, the Committee relied on an analysis prepared for us by Meridian for 2023 based on the Company’s performance and
goals, the Committee recommended, and the Board determined, to keep director compensation at 2023 levels.
The following tables set forth compensation information for the fiscal year ended December 31, 2024, for the Company’s non-
employee directors. Each of our directors also serves as a director of our wholly owned subsidiary, Heritage Bank of Commerce.
Mr. Jones, our President and Chief Executive Officer whose term as a director started September 15, 2022, does not receive any
additional compensation for serving as a director of the Company or the Bank.
Cash Compensation
For 2024, the Personnel and Compensation Committee recommended and the Board approved an annual retainer fee of $50,000 for
each director, except for the Chair of the Board, whose cash retainer was $85,000, in recognition of the Chair’s additional
responsibilities. In addition to the $50,000 annual retainer fee, our Vice Chair, Julianne Biagini-Komas, who assumed the Vice Chair
role upon Mr. Webster’s retirement on October 1, 2024, received an additional $12,500 cash retainer adjusted pro-rata for the portion
of the year she served in that position, in recognition of additional responsibilities. In addition, the chair of each standing committee
of the Board received an additional $8,000 per year, except for the Chair of the Audit Committee, who received an additional
$15,000, the Chair of the Finance and Investment Committee, who received $12,000, and the Chair of the Heritage Bank of Commerce
Loan Committee, who received $10,000. Board members are not paid separate fees for attending Board or committee meetings.
Restricted Stock Awards
The Personnel and Compensation Committee also has adopted a policy to grant directors restricted stock on an annual basis in an
amount equal to the directors’ base cash compensation and including additional compensation for the Chair and Vice Chair leadership
roles. These awards are generally granted as of March 8th of the year following the year of service, with the value of the award
based on the closing stock price on the preceding trading day. The awards are subject to one year “cliff” vesting and prorated for
partial years of service (except that Mr. Webster’s vesting for his 2024 awards was accelerated upon his retirement). Based on this
policy the Personnel and Compensation Committee reviewed the compensation consultant report and recommended and the Board
approved awards of restricted stock with an economic value on the date of grant as follows:
Board Chair
$85,000
Board Vice Chair*
$62,500
Board members (non-chair)
$50,000
*
Board Vice Chair compensation beginning on October 1, 2024.
Heritage Commerce Corp • 2025 Proxy Statement
15

The following table summarizes the compensation of non-employee directors for the year ended December 31, 2024, with stock
awards depicted based on the value on the award date March 8, 2024:
Name
(a)
Fees
Earned
or Paid in
Cash
(b)
Stock
Awards
(c)(1)
Options
Awards
(d)
Non-Equity
Incentive Plan
Compensation
(e)
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
(f)(2)
All Other
Compensation
(g)(3)
Total
(h)
Julianne M. Biagini-Komas
$65,000
$49,998
—
—
—
$3,174
$118,172
Bruce H. Cabral
$60,000
$49,998
—
—
—
$3,174
$113,172
Jack W. Conner
$85,000
$84,993
—
—
—
$7,010
$177,003
Jason DiNapoli
$52,000
$49,998
—
—
—
$3,174
$105,172
Stephen G. Heitel
$50,000
$49,998
—
—
—
$3,174
$103,172
Kamran F. Husain
$58,000
$49,998
—
—
—
$3,174
$111,172
Laura Roden
$62,000
$49,998
—
—
—
$3,174
$115,172
Marina H. Park Sutton
$58,000
$49,998
—
—
—
$3,174
$111,172
Ranson W. Webster(4)
$48,333
$49,998
—
—
$1,700
$8,683
$108,714
(1)
The amounts shown in column (c) reflect the applicable full grant date value for stock awards in accordance with ASC 718 (excluding the effect of forfeitures). See Note 12 to
the Company’s consolidated financial statements for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 10,
2025.
(2)
The amounts shown in column (f) represent only the aggregate change in the actuarial present value of the accumulated benefit measured from December 31, 2023 to
December 31, 2024, under the respective director compensation benefits agreements. The amounts in column (f) were determined using interest rate and mortality rate
assumptions, consistent with those used in the Company’s consolidated financial statements, and include amounts which the named director may not currently be entitled to
receive because such amounts are not vested. Assumptions used in the calculation of these amounts are included in Note 12 to the Company’s consolidated financial statements
for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 10, 2025.
(3)
The amounts shown reflect (i) $3,174 in cash dividends on unvested restricted stock awards for each director, except $5,395 for Jack W. Conner and $2,408 for Ranson
W. Webster, and (ii) an annual income of $1,615 and $1,019 imputed to each Jack W. Conner and Ranson W. Webster, respectively, in connection with Company owned split
dollar life insurance policies for which the Company has fully paid the applicable premiums.
(4)
Amounts reflect Mr. Webster’s service on the Board until his retirement from the Board as of October 1, 2024, including in column (g) $5,256 paid under the SERP in fiscal year
2024. The amounts paid under the SERP have previously been accrued and did not result in the incurrence of additional expense.
Director Outstanding Stock Options and Stock Awards
Each of the non-employee directors owned the following stock options and stock awards as of December 31, 2024:
Director
Stock Options(1)
Stock Awards
Julianne M. Biagini-Komas
—
5,889
Bruce H. Cabral(1)
7,410
5,889
Jack W. Conner
—
10,011
Jason DiNapoli
—
5,889
Stephen G. Heitel(1)
30,875
5,889
Kamran F. Husain
—
5,889
Laura Roden
—
5,889
Marina H. Park Sutton(1)
12,350
5,889
Ranson W. Webster(2)
—
—
(1)
The stock options were granted by Presidio Bank prior to its acquisition by the Company and were assumed by the Company in connection with the acquisition.
(2)
Mr. Webster retired from the Board as of October 1, 2024. His restricted stock award vesting was accelerated in 2024.
Director Compensation Benefits Agreement
Prior to 2007, the Company entered into individual director compensation benefits agreements with each of its then directors. These
agreements were amended and restated in December 2008 (“Benefit Agreements”), and following the retirement of Ranson W.
Webster effective October 1, 2024, the only remaining agreement pending for directors is to Chair of the Board Jack Conner. The
Benefit Agreement provides an annual benefit equal to a designated applicable percentage of $1,000 times each year served as a
director, up to a maximum of 20 years and subject to a 2% increase each year from the date of the commencement of payments.
Payments of benefits will be made in equal monthly payments on the first day of each month, commencing on the first day of the
Director Compensation
16
Heritage Commerce Corp • 2025 Proxy Statement

month following the month in which the director separates from service on the Board and continuing until the director’s death
(unless the joint survivor option is elected). The Benefit Agreement terminates at any time a director is removed from the Board for
cause.
Company-owned split dollar life insurance policies support the Company’s obligations under the Benefit Agreements. The premiums
on the policies are paid by the Company. The cash value accrued on the policies supports the payment of the supplemental
benefits for each participant. In the case of death of the participant, the participant’s designated beneficiaries will receive 80% of
the net at risk insurance (which means the amount of the death benefit in excess of the cash value of the policy).
The following table shows the present value of the accumulated benefit payable to each director who has a director compensation
benefit agreement, including the number of service years credited to each director under the Benefit Agreements at December 31,
2024:
Name
(a)
Plan Name
(b)
Number
of Years
Credited
Service
(#)(c)
Present
Value of
Accumulated
Benefit(1)(2)
($)(d)
Payments
During
Last
Fiscal
Year
($)(e)
Jack W. Conner
Heritage Commerce Corp SERP
21
$103,500
—
Ranson W. Webster(3)
Heritage Commerce Corp SERP
21
$164,400
$5,256
(1)
The amounts in column (d) were determined using interest rate and mortality rate assumptions consistent with those used in the Company’s consolidated financial statements
and include amounts which the director may not currently be entitled to receive because such amounts are not vested. Assumptions used in the calculation of these amounts
are included in Note 13 to the Company’s consolidated financial statements for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K, filed
with the SEC on March 10, 2025.
(2)
Each participant is fully vested.
(3)
Mr. Webster retired from the Board as of October 1, 2024.
Director Compensation
Heritage Commerce Corp • 2025 Proxy Statement
17

Commitment to Sustainability
We believe the Company’s wholly-owned operating subsidiary, Heritage Bank of Commerce, is recognized by the business
community as the business bank of choice in our markets and an employer of choice where everyone has the opportunity to thrive.
The Company employs trusted values of relationship and customer-focused community business banking, and combines them
with competitive technology, to provide solutions for the banking needs of businesses, professional organizations, non-profits and
community groups, and their team members. Founded in 1994, we are now a $5.6 billion premier community business bank based in
the heart of Silicon Valley. With 17 offices across the Bay Area, we are committed to building long-term relationships with our
clients and communities.
At Heritage Bank of Commerce, we are dedicated to helping each client make their vision a reality. Our experienced market leaders
live and work in the communities they serve, making all their decisions local ones. Since formally launching our sustainability program
in 2021, we have continued to build upon and improve our long-standing corporate responsibility commitment. Our executive
leadership and our Board, recognizing the importance of these responsibilities, established an internal cross-functional team in 2022
tasked with driving additional progress in the initiatives that promote sustainability and further transparency. In 2023 and 2024,
we further aligned our sustainability strategy with our broader vision, focusing on what truly sets us apart—resilient, enduring
relationships and a continued focus on strong risk management. We remain committed to making informed decisions based on the
best interests of Heritage and its stakeholders.
Sustainability Oversight
Our Board ultimately oversees the management of sustainability-related matters. Much of this work is done through the Board’s
committees. In particular, the Corporate Governance and Nominating Committee provides oversight of Heritage’s practices on
sustainability matters. This Committee oversees the management team as they lead the Company’s efforts to integrate sustainability
into day-to-day operations. Against this backdrop, the Company has emphasized that our sustainability pillars include:
(1) Environmental Responsibility; (2) Our People; (3) Our Community; and (4) Governance:
THE FOUR TENETS OF OUR SUSTAINABILITY STRATEGY ARE:
GOVERNANCE
OUR COMMUNITY
OUR PEOPLE
ENVIRONMENTAL
RESPONSIBILITY
Our four pillars arose after reviewing an interrelated set of sustainability standards, in line with best practices. This integrated
approach to sustainability facilitated recognition of several sustainability priorities, which we discuss in our annual Sustainability
Reports. In preparation for our 2024 Sustainability Report, we retained a third party to again update our priority-assessment. The 2024
Sustainability Report aligns to the Sustainability Accounting Standard Board taxonomy.
18
Heritage Commerce Corp • 2025 Proxy Statement

Environmental Responsibility
We strive to create a more environmentally sustainable future for all, with a goal to reduce our impact on the environment and
promote environmentally friendly projects and practices. We are committed to addressing environmental risks throughout our
business. By focusing on environmental responsibility, we believe we can reduce costs and improve the long-term sustainability of
our operations. Highlights of our environmental efforts and accomplishments include:
IN 2024, WE:
Encouraged environmentally friendly work practices by
supporting the recycling of plastic, glass, and paper.
Collected data on client business location and collateral
related to physical risks, such as wildfire, drought, flood
and rising sea levels.
Continued the use of e-records and e-signing
technology including utilizing digital solutions such as
mobile/online banking, e-Statements, electronic bill pay
and remote deposit capture.
We are committed to making the necessary investments in
systems and technology to ensure compliance and to meet or
exceed these standards. Currently, 61.5% of our total office
space, including our headquarters building, is Leadership in
Energy and Environmental Design (“LEED”) certified. The
certification, awarded by the U.S. Green Building Council, is
based on the properties’ use of sustainable materials, water
and energy efficiency, indoor environmental quality, location
and transportation, and overall innovation. We continue to
evaluate green equipment for office use such as Energy-Star®
appliances, motion detector lighting, as well as high-efficiency
HVAC units. Over 72% of our total office space utilizes LED
lighting.
We routinely integrate information on environmental factors
into credit analyses. We have always innately incorporated
environmental issues into our credit decisions, such as
monitoring areas prone to increased risk from natural disasters.
Recently, our working group started to evaluate other
environmental considerations as part of our broader
commitment to identifying risk. After review, we determined
that we would initiate data gathering on wildfire, drought, flood,
and rising sea levels as it relates to our clients and their loan
collateral.
LED LIGHTING
IN OVER
72%
TOTAL OFFICE SPACE
LEED
CERTIFICATION
FOR
61.5%
TOTAL OFFICE SPACE
Commitment to Sustainability
Heritage Commerce Corp • 2025 Proxy Statement
19

Our People
We believe Heritage Bank of Commerce has long been a leader in the business community and strives to be the business bank of
choice in our markets. We strive to hire, develop and promote a workforce that shares our mission and values, while cultivating
teamwork. To foster these goals and to attract and retain quality employees, we aim to ensure an inclusive, safe and healthy workplace,
and we provide our employees with competitive and comprehensive compensation, professional development opportunities along
with robust health and wellness programs.
Engaging Our Workforce
We believe that our greatest differentiator is not our physical or financial assets; instead, it is our people. Our foundation is built on
caring for our nearly 400 employees. Our commitment starts with our goal of attracting, developing, and retaining a workforce with
different backgrounds, knowledge, skills, and experiences. We endeavor to hire the best possible talent for our Company, and this
is set against the backdrop of providing opportunities in recruiting, compensation, performance, and promotion decisions based on
merit, without discriminating on the basis of gender, gender identity, sexual orientation, age, family status, ethnic origin, nationality,
disability, religious belief, and any other characteristics that are legally protected.
In 2024, we had 357 full-time equivalent team members (inclusive of 10 part-time team members) with an average tenure of
8.2 years. Our turnover rate was 17%, which was a 4% increase from the prior year, and of those, 25% were due to retirement,
health reasons, or relocation out of our service footprint. We are proud to share that our workforce is multifaceted representing an
array of experiences and perspectives. In 2024, females accounted for 51% of all new hires, while racially and/or ethnically diverse
individuals accounted for 63% of all new hires.
In 2024, we furthered our commitment to our people to ensure each employee could do their best work. Some highlights include:
• Quarterly all-hands meetings to share business and initiative updates.
• Implementing training to mitigate unconscious bias—establishing methods to notice when and how it occurs—and to identify
effective solutions available to all employees to remedy this dynamic.
• Increasing efforts around our Culture Ambassador Group (akin to employee resource groups for larger organizations). Culture
Ambassadors serve an important role to help shape enterprise initiatives such as creation of corporate values, promoting
awareness of various cultures, as well as provide timely and ongoing feedback to the employee-driven Steering Committee.
• Continuing to provide Company-wide listening sessions to solicit feedback and enhance engagement.
Our Culture
Teamwork is promoted and celebrated through various recognition programs. We have continued our “Core Values Champions”
recognition program, which recognizes individuals who demonstrate our Core Values through their work and interactions. Throughout
the year, employees are encouraged to nominate colleagues who go above and beyond their regular duties in showcasing one or
more of our core values. The CEO highlights broadly shares Core Value Champions’ stories, celebrating their exemplary
accomplishments and contributions.
We continued developing our managers through our Leadership Essentials Workshop series with modules consisting of (1) Recruiting
and Hiring and Retaining Top Talent; (2) Leveraging Individual and Team Strengths; (3) Talent Development, Performance
Management and Effective Coaching; (4) Handling Employee Relations Matters, Decision Making and Accountability; and
(5) Communicating Effectively and Inspiring Positive Change. We conduct regular talent assessments along with individual
performance reviews in which managers provide regular feedback and coaching to assist with the development of our people,
including the use of individual development plans to assist with career development.
Our Company’s Code of Ethics and Conduct Policy provides specificity to members of our board of directors and employees across
various topics, such as workplace safety, protection of client and employee information, conflict of interest guidelines, anti-retaliation
policy, and procedures for reporting concerns. Senior leadership employees are subject to a more restrictive Executive and Principal
Financial Officer Code of Ethics, as well.
We continually promote a speak-up, open-door culture, so our workplace feels welcoming and safe. We take all complaints seriously
and promptly investigate concerns. Employees have the ability to report concerns through a variety of channels including their
Commitment to Sustainability
20
Heritage Commerce Corp • 2025 Proxy Statement

immediate manager, any leader at the company, Human Resources or through our external anonymous complaints telephone
hotline and/or intranet site. We have a zero tolerance, non-retaliation policy.
Human Capital Management
We have begun to transform and modernize our culture and talent management function by implementing a Human Capital
Management technology platform to enable leaders to better attract, develop and manage talent. These practices include developing
standards for setting goals, performance evaluations, succession planning, and learning and development. We are committed to
pay equity and regularly review our compensation model to ensure fair and inclusive pay practices across our business.
We are dedicated to recruiting, nurturing, advancing and retaining a workforce that embraces and cultivates a culture of excellence,
teamwork, customer focus, inclusivity, belonging and accountability. To foster these goals and to attract and retain quality
employees, we aim to ensure an inclusive, safe, and healthy workplace, and to provide our employees with training and development,
and competitive and comprehensive health and wellness offerings.
Throughout the year, employees are offered a variety of opportunities to participate in learning and education programs such as
attending internal and external seminars/workshops, on-line training courses, panel discussions and trade group conferences to enrich
one’s own development. Additionally, we offer a generous tuition reimbursement to support employees’ desire to pursue higher
education degrees. Employees also can earn industry related and/or role related professional certifications, and our Company
reimburses for classes, materials, test fees, and ongoing required education costs. Each year, we also offer certain identified leaders
an opportunity to attend Pacific Coast Banking School as part of their career development plan.
The health, safety and well-being of our employees is paramount, and our success is fundamentally connected with the well-being
of our people. To ensure the health and well-being of our team members, we aim to provide a robust health and wellness package.
Various Benefits include:
• Medical, dental and vision benefits for employee, spouse and dependents
• Health savings accounts and health reimbursement accounts
• 401(k) retirement savings program with matching contributions
• Generous paid time off policy
• Flexible spending accounts for both healthcare and dependent care
• Life insurance and short- and long- term disability insurance
• Access to wellness programs and counseling sessions through our Team Member Assistance Program, including a recent
increase from 3 to 5 counseling sessions
• The package also includes various wellness programs, including a monthly fitness stipend, tuition reimbursement, and paid
time off for volunteer initiatives
We are committed to pay equity and regularly review our compensation model to ensure fair pay practices across our business,
while also avoiding pay practices that would incentivize inappropriate or unnecessary risk-taking with the Company’s assets. The
Personnel and Compensation Committee reviews the Chief Executive Officer’s performance annually and also reviews and approves
the Chief Executive Officer’s evaluation of the management team on an annual basis. The Board (largely through the Personnel
and Compensation Committee) evaluates the compensation plans for senior management and other employees to ensure they are
appropriate, competitive and properly reflect the Company’s objectives.
Our dedicated health and safety function ensures that employees are trained on best practices to create a safe and healthy
workplace for all. Members of our People & Culture department annually review benefit offerings to ensure the wellbeing of our
people and their families.
Commitment to Sustainability
Heritage Commerce Corp • 2025 Proxy Statement
21

Our Community
Since our inception in 1994, we have been deeply committed to building relationships and making a difference in our local
communities. Investing in people, neighborhoods and local businesses is part of our mission. We are extremely grateful for the
efforts of so many local nonprofit organizations and are proud of our long-standing history of supporting these organizations. In 2024,
Heritage was proud to receive an overall CRA rating of “Satisfactory” demonstrating our commitment to the communities we serve.
We focus our philanthropic giving on initiatives that promote community and economic development, affordable housing, asset
building, financial education, and youth programs, as well as those that support human service organizations with programs that
assist low and moderate income or minority individuals. In addition, we donated over $800,000 to over 300 nonprofit organizations
while serving on over 55 nonprofit boards of directors. We are perennially named a Top Corporate Philanthropist by both the Silicon
Valley Business Journal and San Francisco Business Times, which recognizes for-profit companies that make contributions to
charitable organizations in the San Francisco Bay Area. We also invest in our local communities through the unwavering commitment
of our employees as they volunteered over 2,100 hours.
Community engagement highlights include:
• Supporting strong employee participation in volunteer events with the help and encouragement of the Heritage Hearts
ambassadors.
• Leading internal drives to support Family Giving Tree’s Holiday Wish drive, collecting over 350 physical gifts in addition to
money raised in our virtual drive for gifts to be purchased.
• Organizing and hosting an Entrepreneurship Workshop for Rudsdale High School students and volunteering at their student
Career Symposiums.
• Supporting nonprofits through event sponsorships.
• Offering financial literacy classes, career resources, staff support and other annual donations to local students including low
income.
• Maintaining our long-time support of Catholic Charities of Santa Clara County whose mission is to alleviate the conditions of
chronic poverty, reduce the effects of situational poverty, and prevent the cycle of generational poverty.
Governance
As a publicly-traded community financial institution, it is incumbent upon us to assure that we operate in a manner that is both
consistent with our sustainability initiative and supportive of our communities. Our Board and senior leadership actively support and
promote sound corporate governance and prudent risk management across the Company. This culture of accountability, integrity
and transparency affirms our unwavering commitment to building sustainable value. We conduct our business in a fair, ethical and
responsible manner to earn and maintain the trust of our stakeholders. Our corporate governance policies and practices include self-
evaluations of the Board and its committees, as well as continuing director education.
Our Principal Officers/Senior Management Code of Ethics is available on our website and, in conjunction with other Company and
Board policies, communicates our values and expectations for our directors, officers and team members. These policies are reviewed
periodically by our Board. Our Board of Directors is comprised of a majority of independent directors as defined by the NASDAQ
listing standards and our Charter for the Corporate Governance and Nominating Committee. Our Board maintains fully independent
Audit, Personnel and Compensation and Corporate Governance and Nominating committees, and each has an independent chair.
The Corporate Governance and Nominating Committee is engaged in an ongoing recruitment process designed to build a strong
pipeline of prospective directors for the near and long term. Of the 8 nominees for election to our Board at the 2025 Annual Meeting,
25% are women and at least 37.5% are women and underrepresented minorities. It has long been the practice of the Company to
separate the roles of Chief Executive Officer and Chair of the Board. This approach is designed to allow the Board to choose the
leadership structure that will best serve the interests of our shareholders.
Commitment to Sustainability
22
Heritage Commerce Corp • 2025 Proxy Statement

The Board has ultimate authority and responsibility for overseeing the Company’s risk management arising out of its operations and
business strategy. This includes overseeing the Company’s enterprise-wide risk management framework, which establishes the
Company’s overall risk appetite and risk management strategy and enables senior management to understand, manage and report
on the risks faced by the Company.
The Board monitors, regularly reviews and reacts to material enterprise risks identified by management. The Board receives specific
reports from senior management with oversight responsibility for particular risks within the Company. These reports include
strategic, operational, execution, financial, investment, credit, liquidity, interest rate, capital, technology, cyber security, legal and
regulatory compliance and reputation risks, and the Company’s degree of exposure to those risks. The Board is also heavily engaged,
through the Audit Committee, in the oversight of cybersecurity incident detection and response, including the related disclosure
and notification requirements.
Heritage implements what we believe are effective risk management programs to ensure compliance with applicable laws and
regulations governing ethical business practices. We maintain a publicly available Employee Complaint and Whistleblower Policy
monitored by an independent third party to receive notice of financial irregularities, breaches of internal controls, conflicts of interest,
and fraud. The Company is subject to rigorous controls and audits. Our risk management teams ensure compliance with applicable
laws and regulations and coordinate with subject-matter experts (“SMEs”) throughout the business to identify, monitor, and mitigate
material risks. Management provides mandatory ongoing team member and director training on a variety of topics including, but
not limited to, the areas of Cybersecurity, Fair Lending, Fraud and Anti-Money Laundering (“AML”), which includes recognizing and
reporting unusual or suspicious activity.
We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-
wide culture of cybersecurity risk management. We enhanced our cybersecurity expertise by adding, in 2023, a Chief Information
Security Officer (CISO) and strengthening our response and disclosure policies in 2024 to assure the timely and appropriate detection
of cybersecurity incidents. Our cybersecurity program provides what we believe is an effective level of protection of client information
and our operating systems while also promoting the timely detection of, and defense against, cyberattacks and other unauthorized
access to our information technology systems. We use industry leading tools to help protect stakeholders against cybercriminals.
We also leverage the latest encryption practices and cyber technologies on our systems, devices, and third-party connections and
further review third party encryption to ensure proper information security safeguards are maintained. Our employees are responsible
for complying with our cybersecurity standards and complete training to understand the behaviors and technical requirements to
keep information secure.
In order to accomplish our cybersecurity goals, we invest in up-to-date information security and monitoring controls, which we
believe provide the best mechanism to mitigate cybersecurity risks and threats. We maintain an Artificial Intelligence (“AI”) Policy
that provides guidelines for usage of AI. In order to further mitigate our cybersecurity risks, our Chief Information Security Officer, who
reports directly to the Chief Operating Officer and who reports regularly to our Board’s Audit Committee, oversees certain policies
and procedures that are intended to guard against, detect, and respond to potential breaches of our IT systems.
We routinely engage with our stakeholders to better understand their views on sustainability matters, carefully considering the
feedback we receive and acting when appropriate. Heritage is committed to being transparent about our approach to and performance
on sustainability topics. We publish a Sustainability Report, which provides information on how we are addressing the sustainability-
related matters that we and our stakeholders view as important to our business. For more information on our sustainability
program or policies, please visit: www.heritagecommercecorp.com.
Commitment to Sustainability
Heritage Commerce Corp • 2025 Proxy Statement
23

Our Executive Officers
The Board has designated the following individuals as executive officers of the Company and/or Heritage Bank of Commerce. Set
forth below is certain information with respect to the executive officers:
Name
Position
Robertson Clay Jones
President and Chief Executive Officer of Heritage Commerce Corp and Heritage Bank of Commerce
Thomas A. Sa
Executive Vice President, Chief Operating Officer and Interim Chief Financial Officer of Heritage
Commerce Corp and Heritage Bank of Commerce
Susan S. Just
Executive Vice President and Chief Credit Officer of Heritage Bank of Commerce
Janisha Sabnani
Executive Vice President and General Counsel of Heritage Commerce Corp and Heritage Bank of
Commerce
Chris Edmonds-Waters
Executive Vice President and Chief People and Culture Officer of Heritage Bank of Commerce
Deborah K. Reuter
Executive Vice President, Chief Risk Officer and Corporate Secretary of Heritage Commerce Corp
and Heritage Bank of Commerce
Glen E. Shu
Executive Vice President, President of Specialty Finance Group of Heritage Bank of Commerce and
President of Bay View Funding
Dustin M. Warford
Executive Vice President, Chief Banking Officer of Heritage Bank of Commerce
Biographical information for Robertson Clay Jones is found under “Proposal 1—Election of Directors.”
Thomas A. Sa, age 63, has served as Executive Vice President, Chief Operating Officer of Heritage Commerce Corp and Heritage
Bank of Commerce since September 2024. In November 2024, he was appointed as Interim Chief Financial Officer of Heritage
Commerce Corp and Heritage Bank of Commerce. Mr. Sa served most recently as President, Chief Operating Officer and Chief Financial
Officer at California BanCorp and its subsidiary, California Bank of Commerce, a position he had held from May 2019 until July 2024,
when that company completed a merger of equals with Southern California Bancorp. Mr. Sa continued in a transitional role with
the surviving company until September 2024. Mr. Sa had previously served in various executive positions, including Chief Risk Officer,
with Western Alliance Bancorp and Chief Financial Officer of Bridge Capital Holdings and its subsidiary Bridge Bank, N.A. Mr. Sa
also served as a director of Bridge Capital Holdings and Bridge Bank. He began his career as a CPA with Deloitte & Touche, specializing
in financial institutions and technology companies in Silicon Valley. Mr. Sa holds a Bachelor of Science in Business Administration
and Accounting from Humboldt State University and is a licensed CPA in California.
Susan S. Just, age 59 has served as Executive Vice President and Chief Credit Officer of Heritage Bank of Commerce since
September 2023. Prior to joining Heritage Bank of Commerce, Ms. Just served as Executive Vice President and Chief Credit Officer of
Santa Cruz County Bank from July 2021 until September 2023. Prior to that she served as a consultant to Salo LLC and Noumena
Partners, Inc. from October 2018 until July 2021. Ms. Just has also previously served in senior credit administration roles at J.P. Morgan
Chase, First Chicago Bank & Trust, Northern Trust Bank and TCF Bank. Ms. Just holds a Bachelor of Business Administration from
Loyola University of Chicago and a Master of Business Administration from Kellogg School of Management at Northwestern University.
Janisha Sabnani, age 42, has served as Executive Vice President and General Counsel of Heritage Commerce Corp and Heritage
Bank of Commerce since February 2025. Prior to her time at Heritage, Ms. Sabnani served in a progression of roles, since July 2014,
at First Republic Bank, culminating as Senior Vice President, Deputy General Counsel and Assistant Secretary from March 2018
until First Republic’s acquisition by JPMorgan Chase (“JPMC”) in May 2023. From that acquisition until her departure from JPMC,
she served as a leader assisting with the integration of First Republic Bank into JPMC. Ms. Sabnani also spent several years in private
practice as a corporate attorney at Skadden, Arps, Slate, Meagher & Flom, LLP. She currently serves in a variety of advisory and
board roles in Northern California, including with The BASIC Fund. Ms. Sabnani comes to us with more than 15 years of experience
in the financial services industry and private practice. Ms. Sabnani holds a J.D. from the New York University School of Law, an M.B.A.
from the New York University Leonard N. Stern School of Business, and a B.A. in Political Science and Mass Communications from
the University of California, Berkeley.
24
Heritage Commerce Corp • 2025 Proxy Statement

Chris Edmonds-Waters, age 62, joined Heritage Bank of Commerce in April 2024 serving as the Executive Vice President, Chief
People and Culture Officer. Mr. Edmonds-Waters joined Heritage Bank of Commerce after having led the human resources function
at Silicon Valley Financial Group, Inc., the parent company of Silicon Valley Bank (“SVB”), where he began in 2003, increasing his
responsibilities over time. Of note, during Mr. Edmonds-Waters’ tenure, as Chief Human Resources Officer from 2006 to 2023, he
played a key role in preparing the workforce-and the company as a whole-for expansion into new off-shore markets and new product
lines. He accomplished this through partnering with the Chief Executive Officer and executive team in establishing a culture known
for its strong values and the belief that in order to support their clients, SVB needed to first support their employees. Prior to SVB,
Chris honed his expertise through various Human Resources Director positions at Charles Schwab & Co., Inc. Mr. Edmonds-Waters
holds a Master of Arts in Human Resources & Organization Development from the University of San Francisco, complemented by a
Bachelor of Arts in Intercultural Communication and a Spanish Minor from Arizona State University.
Deborah K. Reuter, age 71, has served as Executive Vice President, Chief Risk Officer and Corporate Secretary of Heritage Commerce
Corp and Heritage Bank of Commerce since April 2014. She was appointed Corporate Secretary in January 2010. Ms. Reuter joined
Heritage Bank of Commerce in June 1994, as Vice President/Loan Support Services Manager. She formerly served with several
independent community banks in the San Francisco Bay Area including Cupertino National Bank. Ms. Reuter is a graduate of the
ABA National Compliance School and a Certified Regulatory Compliance Manager.
Glen E. Shu, age 56, has served as Executive Vice President, President of Specialty Finance Group of Heritage Bank of Commerce
and President of Bay View Funding since October 2019. As President of Heritage Bank of Commerce’s Specialty Finance Group, he
has led the factoring, asset-based lending, Small Business Administration and Homeowners Associations business units. Prior to that,
Mr. Shu served as Executive Vice President of underwriting and operations for the factoring division of Bay View Commercial
Finance Group, a division of Bay View Bank. A graduate of San Jose State University with a Bachelor of Science degree in Finance,
he has spent more than 30 years in the financial services industry including various roles with KBK Financial and Concord Growth
Corporation from 1992 to 1998.
Dustin M. Warford, age 45, has served as the Executive Vice President, Chief Banking Officer since June 2022. He joined Heritage
Bank of Commerce in 2006, starting in Commercial and Private Banking. In 2012, he was chosen to lead the Real Estate Industries
Division and Peninsula market, where he was consistently a key contributor to the Bank’s growth and success. He earned a Bachelor
of Science degree in Finance and an MBA in Finance from Santa Clara University and is also a graduate of The Pacific Coast
Banking School. Over the years, he has stayed connected to his community by serving on numerous boards and finance committees,
including 19 for Life, The Bronco Bench Foundation, San Jose Sports Hall of Fame and Sacred Heart Nativity School.
Our Executive Officers
Heritage Commerce Corp • 2025 Proxy Statement
25

Proposal 1—Election of
Directors
The Bylaws of the Company currently provide that the number of directors shall not be less than 9 nor more than 15, with the Board
having the authority to fix the number within that range. The Board is currently comprised of 9 directors. In anticipation of the
matter set forth in Proposal 2—Approval of an Amendment to the Company’s Bylaws, the board is currently nominating 8 directors.
Proxies may not be voted for a number of persons greater than the number of nominees named herein. All of our directors serve
one year terms that expire at the next following annual meeting. For information on our nomination and election procedures see
“Corporate Governance and Board Matters—Nomination of Directors.” Nominations not made in accordance with the procedures may
be disregarded by the Chair of the Annual Meeting and upon his instructions, the inspector of election will disregard all votes cast
for such nominees.
The Board, upon the recommendation of the Corporate Governance and Nominating Committee, has recommended the nomination
of 8 of the current members of the Board for one year terms that will expire at the Annual Meeting to be held in 2026. If any nominee
should become unable or unwilling to serve as a director, the proxies will be voted at the Annual Meeting for substitute nominees
designated by the Board. Each nominee has expressed a willingness to serve if elected, and the Board presently has no knowledge that
any of the nominees will be unable or unwilling to serve.
The following provides information with respect to each individual nominated and recommended to be elected to the Board. Each
individual below is also a director on the Board of Heritage Bank of Commerce:
Julianne M. Biagini-Komas
Age 62
Background:
Formerly a member on the Focus Business Bank board of directors and joined the Board of Directors of the
Company in August 2015 and has served as Vice Chair of the Board since October 2024. Ms. Biagini-Komas
was formerly the Vice President, Finance and Human Resources of CNEX Labs, Inc., from March 2015 until her
retirement in April 2021. She was also previously the Chief Financial Officer of Quantumscape Corporation,
from 2011 to 2014. Prior to that, she was the Chief Financial Officer of Endwave Corporation, a previously
Nasdaq-listed company, from 1994 to 2007. Ms. Biagini-Komas has a Bachelor of Science degree in Accounting
from San Jose State University and a Masters in Business Administration degree from Santa Clara University.
With her experience as a chief financial officer and her background as a Certified Public Accountant,
Ms. Biagini-Komas provides valuable insight and perspective regarding accounting and tax issues and is
particularly suited to serve as the Chair of the Audit Committee. Ms. Biagini-Komas also brings 20 years of
human resource administration experience, as a member of the Personnel and Compensation Committee.
Bruce H. Cabral
Age 70
Background:
Became a director of the Company in October 2019 when the Company acquired Presidio Bank, where he had
also served as a director. Mr. Cabral is the former Senior Executive Vice President and Chief Credit Officer of
Union Bank. Mr. Cabral retired from Union Bank in January, 2010 after a 32 year tenure which lasted from 1977
until his retirement. Mr. Cabral brings to the Board his previous experience and knowledge of the business of
Presidio Bank and his vast experience in the banking industry. He serves as a member of the Corporate
Governance and Nominating Committee and Finance and Investment Committee and as Chair of the Bank’s
Loan Committee.
26
Heritage Commerce Corp • 2025 Proxy Statement

Jack W. Conner
Age 85
Background:
Became a director of the Company in 2004 and has served as Chairman of the Board since July, 2006.
Mr. Conner was elected Chairman of the Board in July, 2006. Mr. Conner was Chairman and Chief Executive
Officer of Comerica California from 1991 until his retirement in 1998 and remained a director until 2002. He
was President and a director of Plaza Bank of Commerce from 1979 to 1991. Prior to joining Plaza Bank of
Commerce, he held various positions with Union Bank of California (formerly Union Bank) where he began his
banking career in 1964. Mr. Conner has a Bachelor of Arts degree from San Jose State University. Mr. Conner
contributes to the Board over 20 years of executive leadership and substantial experience in the community
banking industry. Having served as a Chief Executive Officer and President at several successful community
banks in the Company’s primary market, he brings a wide-ranging understanding of bank management,
finance, operations and strategic planning. His demonstrated leadership ability, judgment and executive
experience led the Board to elect him as Chairman of the Board. Mr. Conner is also a member of the Strategic
Initiatives Committee, Corporate Governance and Nominating Committee and the Personnel and Compensation
Committee.
Jason DiNapoli
Age 56
Background:
Became a director of the Company in 2018. In 2003 he co-founded 1st Century Bank, N.A., a wholly owned
subsidiary of 1st Century Bancshares, Inc., headquartered in Los Angeles, California. In 2008, Mr. DiNapoli
assumed the role of the President and Chief Executive Officer of 1st Century Bank and President of 1st Century
Bancshares, Inc. He served in this role until July 1, 2016, when 1st Century Bancshares, Inc. was acquired by
Midland Financial Co., a privately held bank holding company based in Oklahoma City, Oklahoma, as a division
of MidFirst Bank, a subsidiary of Midland. Mr. DiNapoli presently serves as an Executive Vice President of
MidFirst Bank and President and Chief Executive Officer of the 1st Century Bank division. Before joining 1st
Century Bank, Mr. DiNapoli was Vice President of Finance for JP DiNapoli Companies Inc., a real estate
investment, development and property management organization. Prior thereto, he served as a Vice President
at Union Bank of California (formerly Union Bank). Mr. DiNapoli earned a bachelor’s degree from the University
of California, Berkeley. He is active in numerous community organizations. Mr. DiNapoli brings to the Board his
extensive experience and knowledge in banking and finance and management experience in the financial
industry as well as experience as a board member of a publicly traded bank holding company. Mr. DiNapoli
serves as Chair of the Corporate Governance and Nominating Committee and a member of the Finance and
Investment Committee and the Bank’s Loan Committee.
Proposal 1—Election of Directors
Heritage Commerce Corp • 2025 Proxy Statement
27

Stephen G. Heitel
Age 66
Background:
Became a director of the Company in October 2019 when the Company acquired Presidio Bank. Mr. Heitel
formerly served as the Chief Executive Officer and director of Presidio Bank from October 2008 until the
acquisition. Prior to joining Presidio Bank in October 2008, he served as President and Chief Executive Officer of
Mid-Peninsula Bank based in Palo Alto, California. Mr. Heitel served in other senior positions at Greater Bay
Bancorp, including President and Chief Executive Officer of San Jose National Bank from December 2003 to
November 2005, and as Executive Vice President and Chief Operating Officer of Cupertino National Bank from
August 2001 to December 2003. Mr. Heitel’s additional experience also includes executive roles with Bank of
America including serving as head of Commercial Banking activities for the Bay Area, focusing on middle
market businesses. Mr. Heitel brings to the Board an understanding and knowledge of the business and
personnel of Presidio Bank as well as his previous executive experience and knowledge of the community
banking industry. Mr. Heitel is a member of the Finance and Investment Committee and the Bank’s Loan
Committee.
Kamran F. Husain
Age 59
Background:
Became a director of the Company in December 2021. Mr. Husain is an experienced finance and accounting
executive with deep banking and financial services experience and almost 30 years in the financial services
industry. Most recently he served as the Chief Financial Officer at Tribal Credit, a B2B payments FinTech
focused serving SMBs in Latin America and MENA from December 2021 to August 2023. Prior to that, he was
the Chief Accounting Officer of SVB Financial Group and Silicon Valley Bank from September 2008 to
November 2019. He started his career in investment banking followed by seven years at PwC in the audit
practice and nine years at Greater Bay Bancorp. Throughout his career, he has also worked on and led several
merger and acquisition projects. Over the last fifteen years, he has directly managed relationships and
communications with auditors as well as with bank regulators on matters related to reporting and compliance.
Mr. Husain is also experienced in corporate governance matters from his prior positions. Mr. Husain holds a
Masters in Business Administration degree from the Haas School of Business at University of California,
Berkeley and a Bachelor of Arts degree from Ohio Wesleyan University. With his background and experience
Mr. Husain is particularly suited to serve as Chair of the Strategic Initiatives Committee and as a member of the
Audit Committee.
Proposal 1—Election of Directors
28
Heritage Commerce Corp • 2025 Proxy Statement

Robertson Clay Jones
Age 54
Background:
Became a director and President and Chief Executive officer of the Company and the Bank in September 2022.
Previously he served as President and Chief Operating Officer of the Bank from December 2021 after joining as
Executive Vice President/ President Community Business Banking Group for the Bank in October 2019.
Mr. Jones was formerly the President of Presidio Bank assuming the position in July 2018. Mr. Jones joined
Presidio Bank in 2010 as Executive Vice President and Mid-Peninsula Market President. Prior to joining Presidio
Bank, Mr. Jones was the organizing and initial President and Chief Executive Officer of New Resource Bank.
From October 1993 to May 2005, Mr. Jones served in ever increasing corporate capacities for subsidiaries of
Greater Bay Bancorp and Comerica Bank, including his position as Executive Vice President and Chief
Operating Officer at Cupertino National Bank and Executive Vice President and Manager of the Venture
Banking Group. As the Company’s President and Chief Executive Officer, Mr. Jones provides the Board with an
overall perspective of the Company’s business, financial condition and its strategic direction. Mr. Jones serves
on the Finance and Investment Committee, the Strategic Initiatives Committee and the Bank’s Loan
Committee.
Marina H. Park Sutton
Age 68
Background:
Became a director of the Company in October 2019 when the Company acquired Presidio Bank, where she had
previously served as a director. Ms. Park Sutton retired in December 2022 as Chief Executive Officer of Girl
Scouts of Northern California, which serves 19 counties in Northern California with almost 30,000 girls and
25,000 adults taking part in programs each year. Prior to joining Girl Scouts of Northern California in 2007,
Ms. Park Sutton held a variety of progressively more senior positions at Pillsbury Winthrop Shaw Pittman LLP,
an international law firm. Ms. Park Sutton has a Bachelor of Arts degree from the University of California,
Berkeley and a Juris Doctor degree from the University of Michigan Law School. The Board benefits from
Ms. Park Sutton’s experience as a director and member of the audit, corporate governance and compensation
committees at Presidio Bank, as well as her valuable general business insight and legal experience. With her
background she is suited to serve as the Chair of the Personnel and Compensation Committee, and as a
member of the Audit Committee and the Corporate Governance and Nominating Committee.
Recommendation of the Board of Directors
The Board of Directors recommends the election of each nominee. The
proxy holders intend to vote all proxies they hold in favor of the election
of each of the nominees. If no instruction is given, the proxy holders
intend to vote FOR each nominee listed.
Proposal 1—Election of Directors
Heritage Commerce Corp • 2025 Proxy Statement
29

Proposal 2—Approval of an
Amendment to the Company’s
Bylaws
Our Board regularly reviews corporate governance matters and has considered from time to time increasing the range of the size of
the Board to provide greater flexibility for evaluating, recruiting and appointing desirable director candidates. Consistent with these
objectives, the Board has authorized, and has recommended that the shareholders approve, an amendment to Section 2.2(a) of the
Company’s Bylaws (“Bylaws”) that would increase the range of the permitted number of directors to eight (8) to fifteen (15) directors
(the “Bylaw Amendment”). The Board believes providing greater flexibility for evaluating, recruiting and appointing desirable
director candidates pursuant to the Bylaw Amendment is in the best interest of the Company and will allow the Board continue in
its succession and refreshment activities in order to assure an orderly transition following Mr. Webster and Ms. Roden’s retirements,
allowing us to recruit and retain well-qualified directors whose perspectives are advantageous to the Company and our shareholders.
By expanding this range, we believe we can assure an orderly process that will allow us to optimize the breadth of experience,
capabilities, backgrounds and insights and to provide for an appropriate allocation of workload among directors.
Article II, Section 2.2(a) of the Bylaws, will be amended in its entirety to read as follows:
(a)
The number of directors of the Corporation shall be not less than eight (8) nor more than fifteen (15). The exact number of
directors shall be set, from time to time, within the limits specified above from time to time by resolution of the Board of
Directors. The maximum number or minimum number of directors may be changed, or a definite number fixed without
provision for a maximum or minimum number, by a duly adopted amendment to the Articles of Incorporation or by
amendment to these Bylaws duly adopted by the vote of holders of a majority of the outstanding shares entitled to vote;
provided, however, that an amendment reducing the fixed number or the minimum number of directors to a number less
than five (5) cannot be adopted if the votes cast against its adoption at a meeting of the shareholders, or the shares not
consenting in the case of action by written consent, are equal to more than sixteen and two-thirds percent (16-2/3%) of the
outstanding shares entitled to vote. No amendment may change the stated maximum number of authorized directors to
a number greater than two times the stated minimum number minus one.
Section 2.2(a) of the Company’s Bylaws and applicable law require that any change in the range of the authorized number of
directors must be approved by the shareholders. The amendment requires the affirmative vote of a majority of the outstanding
shares entitled to vote. If the Bylaw Amendment is approved, it will become effective immediately.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the approval of the
amendment to the Company’s Bylaws to increase the range of the size of
the permitted number of directors to 8 to 15. The proxy holders intend to
vote all proxies in favor of the Bylaw Amendment. If no instruction is
given, the proxy holders intend to vote FOR the proposal.
30
Heritage Commerce Corp • 2025 Proxy Statement

Proposal 3—Approval of the
Advisory Proposal on 2024
Executive Compensation
The Dodd-Frank Act requires, among other things, that we permit a non-binding, advisory vote on the 2024 compensation of our
named executive officers, as described in the Compensation Discussion and Analysis, compensation tables and accompanying
narrative discussion contained in this proxy statement.
As described in greater detail under the heading “Compensation Discussion and Analysis,” we seek to closely align the interests of
our named executive officers with the interests of our shareholders. Our compensation practices are designed to encourage and
motivate our named executive officers to achieve superior performance on both a short term and long-term basis while at the
same time avoiding the encouragement of unnecessary or excessive risk taking. The Personnel and Compensation Committee of the
Board believes that the executive compensation for 2024 was reasonable and appropriate, and was the result of a carefully
considered approach.
Accordingly, the Company is presenting this proposal, which gives you as a shareholder the opportunity to endorse or not endorse
our executive pay program by voting for or against the following resolution:
“RESOLVED, that the shareholders approve the 2024 compensation of our named executive officers, as disclosed in the Compensation
Discussion and Analysis, the compensation tables, and the related disclosures required by Item 402 of Regulation S-K contained in
the proxy statement.”
The vote on this resolution is not intended to address any specific item of compensation, but rather that the overall compensation of
our named executive officers and the policies and practices described in this proxy statement. In the event this non-binding
proposal is not approved by our shareholders, such a vote shall not be construed as overruling a decision by the Board or the Personnel
and Compensation Committee, nor create or imply any additional fiduciary duty of the Board or the Personnel and Compensation
Committee, nor shall such a vote be construed to restrict or omit the ability of our shareholders to make proposals for inclusion in proxy
materials related to executive compensation. Notwithstanding the foregoing, the Board and the Personnel and Compensation
Committee will consider the non-binding vote of our shareholders to this proposal when reviewing compensation policies and practices
in the future.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the Advisory Proposal on
2024 Executive Compensation. The proxy holders intend to vote all
proxies they hold in favor of this proposal. If no instruction is given, the
proxy holders intend to vote FOR the proposal.
Heritage Commerce Corp • 2025 Proxy Statement
31

Executive Compensation
Compensation Discussion and Analysis
This Compensation Discussion and Analysis outlines our executive compensation philosophy and objectives, describes the elements
of our executive compensation program, and explains how the Personnel and Compensation Committee (“Committee”) of the
Company’s Board arrived at its compensation decisions for our 2024 named executive officers (“NEOs”). This section also comprises
the annual report of the Committee, which is charged with the independent oversight of our compensation philosophies, programs
and policies for all employees, including our NEOs, listed below:
Name of NEO
Title
Robertson Clay Jones
President and Chief Executive Officer of Heritage Commerce Corp and Heritage Bank of Commerce
Susan Just
Executive Vice President and Chief Credit Officer of Heritage Bank of Commerce
Lawrence D. McGovern(1)
Former Executive Vice President and Chief Financial Officer of Heritage Commerce Corp and
Heritage Bank of Commerce
Deborah K. Reuter
Executive Vice President, Chief Risk Officer and Corporate Secretary of Heritage Commerce Corp
and Heritage Bank of Commerce
Thomas A. Sa
Executive Vice President, Chief Operating Officer and Interim Chief Financial Officer of Heritage
Commerce Corp and Heritage Bank of Commerce
Dustin M. Warford
Executive Vice President, Chief Banking Officer of Heritage Bank of Commerce
(1)
On November 18, 2024, Mr. Sa succeeded Lawrence D. McGovern on an interim basis following Mr. McGovern’s departure from the role of Chief Financial Officer. Mr. McGovern
continued in a transitional role with the Company’s executive management team until his final departure on February 14, 2025. Mr. McGovern’s compensation data through
December 31, 2024, is disclosed herein. Mr. McGovern has been included as a named executive officer pursuant to Item 402(a)(3)(ii) of Regulation S-K as an individual who served
as the principal financial officer, or in a similar capacity, at any time during the last fiscal year.
EXECUTIVE SUMMARY
The compensation programs in which our NEOs participate are designed to drive our financial results, align with our business
strategy and create long-term value for our shareholders. Our pay-for-performance compensation philosophy places a heavy emphasis
on variable (at-risk) compensation through short- and long-term incentive programs.
In 2024, Committee took the following actions:
• Continued our standing policy of responding and affirmatively reaching out to shareholders to engage in meaningful and
transparent discussions regarding executive compensation programs, practices and policies. As discussed in greater detail
under “Compensation Discussion and Analysis—Role of Shareholder Input,” below, we believe shareholder feedback is
critical, facilitating the Committee’s design and administration of our executive compensation program.
• Reviewed and considered the appropriate peer groups for measuring performance and compensation metrics.
• Established and measured individualized, qualitative goals in our Executive Officer Cash Incentive Program based on
executives’ individual roles, tied to the participants’ identified roles in promoting the Board’s strategic priorities.
• Maintained our Long-term Incentive Equity Program (“LTIEP”), in which 50% of the NEOs’ award values were in the form of
performance-based restricted stock units (“PRSUs”).
• Continued our longstanding policy of reviewing incentive programs to ensure metrics and goals do not encourage undue risk
taking or imprudent actions by our executives.
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Heritage Commerce Corp • 2025 Proxy Statement

Our ongoing endeavors
Link Pay for Performance to Equity Based Compensation
In 2024, NEOs participated in the LTIEP, in which 50% of the NEO’s award value were
in the form of performance-based restricted stock units. Vesting is contingent on
Return on Average Tangible Common Equity (“ROATCE”) which is measured on a
relative basis to a peer group at the end of a three-year performance period. The
remaining 50% of the NEO’s award value were in the form of time-based restricted
stock units (“RSUs”) with ratably 3-year vesting to encourage stock ownership and
satisfy the stock ownership and retention guidelines.
Considered Other Metrics for Performance Based Equity Awards
In addition to ROATCE, Shareholders have suggested using other metrics such as Total
Shareholder Return (“TSR”) and/or Earnings Per Share (“EPS”). The Committee
continued to work with management and our compensation consultant to consider
other metrics as well as to refine our peer group.
Created Differentiated Qualitative Goals for Individual NEOs
In 2024, the Executive Officer Cash Incentive Program (the “Program”) included
differentiated qualitative goals based on executive’s individual roles.
Advisory Vote on Executive Compensation
Our shareholders approved the compensation of our NEOs in an advisory vote at our 2024 annual meeting of shareholders. The
advisory vote received the support of 97.2% of the votes cast. The Committee considered the results of this advisory vote to be
overwhelmingly favorable.
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
33

2024 Financial Accomplishments
In many ways, the Company successfully confronted the same challenges that continue to plague the banking and financial
institutions industry throughout 2024: elevated and unstable interest rate markets; fluctuating values in investment portfolios;
increases in personnel and operating expenses; and growing competition from both within and outside the traditional banking market.
In spite of these challenges, the Company had a successful year, growing total deposits by 10%, and total loans by 4%, in comparison
to 2023 by focusing on opportunities in our local business market.
Our earnings performance, while relatively lower than the previous year, reflects substantial strategic investments, including hiring
a new Chief Operating Officer, Thomas A. Sa; beginning a succession process and search for our next Chief Financial Officer; continuing
to invest in our information technology and cybersecurity infrastructure; increasing our loan loss reserves while maintaining low
levels of classified and non-performing assets; and successfully resolving two litigation matters that had created uncertainty and risk
for several years.
Our focus remains on orderly organic growth, minimizing our reliance on borrowed funds and eschewing brokered deposits. Our
local retail and commercial deposit relationships serve as a stable and lower-cost funding source, reflecting our disciplined management
approach. We have a strong balance sheet, evidenced by robust capital, ample liquidity, and a diversified loan portfolio. We
continued to add to loan reserves reflecting solid loan growth while credit costs were modest. Nonperforming assets totaled
$7.7 million, or 0.22% of total loans, at December 31, 2024, and our loan loss reserves represented 638% of nonperforming assets as
of that date.
Net income decreased
Net interest income decreased
Total deposits increased
(37)% to
$40.5M
(11)% to
$163.6M
10%
The efficiency ratio
Nonperforming assets totaled
65.88%
$7.7M
Executive Compensation
34
Heritage Commerce Corp • 2025 Proxy Statement

Governance Best Practices
The Company aims to support the long-term interests of shareholders through best-practice compensation programs, practices and
policies. The Committee reviews the Company’s executive compensation program on an ongoing basis to evaluate whether it supports
the Company’s executive compensation philosophies and objectives and is aligned with shareholder interests. Our executive
compensation practices are comprised of the following, each of which the Committee believes reinforces our executive compensation
objectives:
What We Do
✔
Shareholder Outreach. Our Committee, in conjunction with our executive management conduct regular and
transparent outreach to our shareholders, seeking their feedback in the determination of pay levels, practices, and
policies and offering an opportunity for those shareholders to ask questions regarding our philosophies, objectives and
decision-making.
✔
Incentive Plans with Pre-Established Financial Criteria. Our Executive Officer Cash Incentive Plan is comprised
primarily of formula-based objective financial measures. Qualitative goals, which represent a minority weighting, seek to
balance the financial goals with objectives that support the Company’s strategic goals and long-term sustainability.
NEOs received 50% of their long-term incentive value in the form of Performance Restricted Stock Units, in which
vesting is contingent on achieving certain levels of relative ROATCE performance over a three-year performance period.
✔
Incentive Plan Risk Mitigation. The Executive Officer Cash Incentive Program uses multiple measures to reduce
overreliance on any one metric. An Executive Officer Cash Incentive Program risk review is conducted annually to ensure
prudent risk management.
✔
Clawback Policy. We were among the earliest public companies in our industry to adopt a recoupment policy that
provides the Board with the ability to recover compensation in the case of fraud or if the Company is required to restate
its financial statements to correct a material error.
✔
Share Ownership Guidelines. We require our President and Chief Executive Officer owns shares with a market value
equal to three times base salary and that the other NEOs own shares equal to one times base salary. NEOs who have
not satisfied their ownership requirements must retain 50% of their vested shares earned under equity-based
compensation plans. We maintain similar policies for directors. After giving effect to the accumulation period
established under these guidelines, all our executives and directors were in compliance with this policy at December 31,
2024.
✔
Anti-Hedging/Pledging Policy. We have “anti-hedging” and “anti-pledging” policies on Company shares.
✔
Independent Compensation Consultant. The Committee retains an independent compensation consultant that
provides no other services to the Company and that is free from relationships that would call into question the validity of
their advice.
What We Don’t Do
X
No Tax Gross Ups. We do not provide for tax gross-ups in the event of a change of control.
X
No Repricing or Repurchase of Underwater Equity Awards. We do not permit the repricing or repurchase of
underwater stock options or stock appreciation rights without shareholder approval.
X
No Multi-Year Guarantees. We do not provide multi-year guaranteed salary increases, equity awards or non-Heritage
performance incentive arrangements.
X
No “Single Trigger” Cash Severance Payments on Change in Control in Executive Contracts. In the event of a
change in control, our executive employment agreements require both completion of the change in control and an
involuntary or Good Reason termination in order to receive cash severance benefits.
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
35

Summary of Executive Compensation Actions
The Committee made the following decisions in 2024.
Action
✔
Adjusted Mr. Jones’ base salary from $622,000 to $673,014 based on performance and market adjustment due to results of market
compensation benchmarking data included in the Company’s Compensation Peer Group.
✔
Adjusted other NEO base salaries 3.7%, and approved an additional market adjustment of 11.1% for Mr. Warford, based on a review
of peer market data.
✔
Approved award payouts under the 2023 Executive Officer Cash Incentive Program and grants under the 2024 Long-term
Performance Incentive Equity Program.
✔
Granted restricted stock awards to two new executive officers who joined in May and October 2024.
✔
Participated in discussions with shareholders concerning the Company’s executive compensation programs.
✔
Continued its engagement with Meridian to provide data and advice; and assist in the further development of market-based
programs for 2025 based on shareholder input received in 2024 and during the first quarter of 2025.
✔
Continued to review performance-based incentive equity program for our NEO’s, including PRSU performance metrics.
HOW COMPENSATION DECISIONS ARE MADE
Primary Role and Responsibilities Relating to Compensation Decisions
Responsible Party
Primary Role and Responsibilities Relating to Compensation Decisions
Personnel & Compensation
Committee
(Composed solely of
independent,
non-employee Directors
and reports to the Board)(1)
• Oversees our executive compensation program, policies, and practices
• Conducts an annual evaluation of the President and CEO’s performance in consultation with the full
Board
• Reviews and approves the President and CEO’s recommendations for compensation for the other
NEOs
• Approves performance goals for purposes of compensation decisions for the NEOs
• At least annually, reviews the executive compensation program overall, and establishes base salaries,
target annual variable cash incentive opportunities and equity grants (if any) for the fiscal year
• Approves all changes to the composition of the Compensation and PRSU Peer Groups
• Reviews compensation risk on an annual basis
• Reviews and makes recommendations to the Board with respect to director compensation
Independent Consultant
to the Committee (Meridian(2))
• Provides the Committee with analysis and advice pertaining to compensation program design,
including proxy and survey analysis, explanation of current and developing best practices, and
regulatory changes
• Recommends and assists in identifying and refining a relevant group of peer companies and
appropriate sources of survey data in which to compare the competitiveness and structure of the
amounts and forms of compensation, (e.g., cash and equity)
• Analyzes peer company data to assist the Committee in determining the appropriateness and
competitiveness of compensation levels
• Reviews proposed changes to compensation program design
• Reviews compensation disclosure materials
• Provides specific analysis and advice periodically as requested by the Committee
Executive Management
• The President and CEO recommends to the Committee annual compensation for the other NEOs and
other senior executives based on his assessment of their performance
• Members of management support the Committee in establishing agendas with the Chair, developing
materials for Committee meetings, attending meetings at the request of the Committee and preparing
meeting minutes
• No member of management is present in Committee meetings when matters related to his or her
individual compensation is under discussion, or when the Committee is approving or deliberating on
the President and Chief Executive Officer’s compensation
(1)
The Committee Charter can be found at www.heritagecommercecorp.com which provides a complete listing of duties.
(2)
The Committee has concluded that Meridian is independent of the Company and services performed by Meridian and the individual consultants employed by Meridian raised
no conflicts of interest.
Executive Compensation
36
Heritage Commerce Corp • 2025 Proxy Statement

Role of Shareholder Input
Our Board and Committee value investors’ views on our executive compensation program, as gathered from our shareholder
outreach and reflected in our shareholders’ voting decisions. More specifically:
• The Committee takes seriously, and believes it is important to respond to, shareholders’ input on our executive compensation
program.
• The Committee also considers the views and recommendations provided by proxy advisors who can help us contextualize our
executive compensation programs by comparison to similarly situated companies and who make recommendations and provide
analyses to their institutional investor clients.
• We have historically welcomed comments and suggestions from shareholders, and beginning in 2023 we began a more
proactive outreach to key shareholders with regard to executive compensation matters. These contacts ordinarily involve one or
two Committee members along with our Chief People and Culture Officer.
Based on that extensive shareholder input, our Committee has focused on the following initiatives:
• Align pay with performance by implementing the use of performance-based equity awards by using one or more financial
metrics.
• Enhance disclosure about our compensation practices, philosophies and objectives.
• Review compensation peer groups for both compensation and PRSU performance, to assure a close correlation with the
Company and its business.
• Review use of linear interpolation for cash incentives and PRSUs.
At our 2024 Annual Meeting, our non-binding advisory proposal was approved with the vast majority of the shareholders casting
their votes in favor of the Say-on-Pay resolution. Our management team and Board continue to reach out to shareholders and provide
them with opportunities to discuss our executive compensation program. Since the 2024 Annual Meeting, our Chief Executive
Officer, Chief Financial Officer and other invited members of our executive team attended eight investment conferences and held
approximately 74 one-on-one meetings with shareholders and potential investors. Also during this period, we contacted our top 20
institutional shareholders as a part of our routine outreach process. The Chair of our Personnel & Compensation Committee, together
with executive team members, held meetings with eight of these investors in 2024 and three of these investors in 2025. This
outreach affords us valuable shareholder perspectives, as a result of which, in 2024, we:
• Refined our Executive Officer Cash Incentive Program to focus each executive’s differentiated goals in a manner that promotes
profitability, safety and soundness, and workforce development.
• Continued the LTIEP established in 2023 such that 50% of the NEO’s award value are in the form of PRSUs. Vesting is
contingent on ROATCE which is measured on a relative basis to our peer group at the end of a three-year performance period.
The remaining 50% of the NEO’s award value are in the form of RSUs.
• Maintain robust stock ownership and retention guidelines for our executive officers.
• Continue to monitor the prevalence of single-trigger equity vesting acceleration on a change of control for current and/or future
NEOs. This practice is prevalent for banks of similar size and enables award recipients to share in value creation alongside
shareholders on a change in control.
We welcome feedback regarding our executive compensation program and will continue to engage with our shareholders in 2025.
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
37

Overview of Total Rewards Philosophy
The Committee believes that the Company’s continued success in achieving its strategic objectives depends in large part on the
talent and leadership at all levels, including the alignment of our employees’ interests with those of our shareholders. We view all of
the elements our employees enjoy as “Total Rewards,” meaning that we take into account both the relative and the absolute
values of base salaries, short-term and long-term incentives and other benefits plans.
• Competitive Total Rewards. We provide total rewards opportunities to our employees that, in the aggregate, reflect the
median practices of similarly sized banks in our geographical region, adjusted for individual performance, skills, and expertise.
This approach promotes attracting and retaining the best talent in our industry and markets. By benchmarking our total rewards
against peers, we maintain competitiveness and fairness, ensuring our employees are rewarded for their unique contributions
on the basis of our overall mission and their individualized goals and performance.
• Pay-for-Performance. To earn competitive total pay levels, employees must achieve financial and operating objectives derived
from our internal business plan. Pay is aligned with short-and long-term performance that is comparable or exceeds the
performance of our peers. This alignment incents our employees to drive the Company’s success in ways that benefit all
stakeholders, including shareholders, customers, and employees.
• Link Compensation and Accountability. To attract, retain and develop superior talent, we assess the leadership skills of our
employees as part of an assessment of their individual performance. Managers at all levels (executives included) are held
accountable for providing leadership within the organization and for achieving financial and non-financial objectives, as well
as identifying and developing successors. These assessments are used in deliberations regarding salary increases and incentive
awards. This ensures our managers continually develop—and that the Company is well-prepared for future leadership
transitions.
• Avoid Encouraging Excessive Risk Taking. To reduce compensation risk, the NEO’s compensation programs are developed to
include risk mitigation elements. We balance fixed and variable pay opportunities, use short-and long-term incentive plan
horizons and subject payments to our clawback recovery policy. Furthermore, the Executive Officer Cash Incentive Program
uses multiple performance measures and includes meeting a capital requirement threshold as a condition to receiving a payout.
• Provide Reasonable Income Security. Specific to our executives are employment agreements designed to be consistent with
market practices. These agreements are designed to foster stability and retain well-qualified executives by providing reasonable
income protection upon termination of employment following a change of control. Our executive equity incentive programs
provide for accelerated vesting of equity awards upon a change of control (i.e. “single trigger equity vesting”). The Committee
continues to monitor this practice with input from our compensation consultant, and we believe that this approach ensures that
our executives are secure in their positions, allowing them to focus on driving the Company’s success.
Executive Compensation
38
Heritage Commerce Corp • 2025 Proxy Statement

COMPENSATION PROGRAM OBJECTIVES AND REWARDS
Summary of Components of Executive Compensation
Total compensation for our NEOs consists of base salary, cash and equity-based incentive compensation. Each of these elements of
compensation is described below.
Compensation Element
Purpose
Base Salary
• Provides a fixed amount of compensation to recognize the duties, responsibilities, and scope of
influence of the executive’s role. The level of base salary also takes into consideration the
executive’s experience, skills, and performance.
Executive Officer Cash Incentive
Program
• Rewards the achievement of annual goals for financial performance, as well as key annual
individual goals that strengthen the business and position the Company for long-term success.
Long-Term Incentives
• Rewards long-term performance through increases in share appreciation and aligns executives
with shareholder interests. In 2024, 50% of each NEO’s award value was in the form of PRSUs.
Vesting is contingent on ROATCE which is measured on a relative basis to our peer group at the
end of a three-year performance period.
Other Compensation
• NEOs participate in the benefit and retirement programs generally available to all full-time
Company employees with the purpose of providing health, welfare and financial stability.
Perquisites are generally limited to those that assist our NEOs in conducting their business
duties productively. Employment agreements and other separation benefits are provided to
ensure that executives act in the best interest of the Company regardless of future employment
status.
Compensation Mix
The Committee evaluates the mix of compensation components. Pay mix is balanced considering short-and long-term time horizons,
allocation between cash and equity, and between fixed and variable compensation components. In determining the compensation
mix, the Committee strives to motivate near-term performance, while also focusing the executives on longer-term corporate goals that
drive shareholder value. The following reflects the compensation mix for 2024.
Salary
Short-term incentive
Long-term incentive
Salary
Short-term incentive
Long-term incentive
40%
19%
41%
At
 
R
is
k 
6
0
%
CEO
Pay
50%
19%
31%
At
 
R
is
k 
5
0
%
NEO
Average
Pay
Pay Positioning
Generally, base salaries are targeted near the median of the market, adjusted for wage rates in the California Bay Area, which are
higher than the national average. Individual factors also may be considered by the Committee including individual performance, the
importance of the role in achieving strategic objectives, and other factors that the Committee deems relevant on an individualized
or Company-wide basis.
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
39

Use of Peer Group and Market Data
The Committee engaged Meridian to conduct a competitive review of the Company’s executive compensation program, which was
used to inform 2023 and 2024 pay decisions. One data source used in setting market-competitive guidelines for the executive officers
is the information publicly disclosed by a peer group of other publicly traded banks which the Committee uses as a competitive
reference point.
Banks selected as peers for compensation purposes are public and actively traded banks which align with some or all of the
following criteria:
• Asset sizes between $2.4 billion and $13 billion
• Similarity of product lines and business focus
• Comparable performance criteria including, asset growth, profitability, credit quality, capitalization and total shareholder return
Based on these criteria, the following companies were included in the Company’s Compensation Peer Group for 2024 decision making:
Banc of California, Inc.
Heritage Financial Corporation
Bank of Marin Bancorp
HomeStreet Inc.
BayCom Corp
Luther Burbank Corporation*
Central Valley Community Bancorp*
PCB Bancorp
Farmers & Merchants Bancorp
Sierra Bancorp
First Foundation Inc.
TriCo Bancshares
Five Star Bancorp
Westamerica Bancorporation
*
Subsequently aquired
The competitive review also included Data from McLagan’s Regional & Community Banking Survey database. National survey data
was adjusted upward 29.5% to account for wage rates in San Jose, California, relative to the national average. Subsequently, we
applied a 4% anticipated salary adjustment factor to ensure competitiveness of our compensation, helping retain executive talent.
Chief Executive Officer Compensation
The Committee annually reviews and approves goals and objectives relevant to the Chief Executive Officer and evaluates the Chief
Executive Officer’s performance against those objectives and other relevant factors. The Committee typically considers company-
wide financial performance, and the Company’s achievement of its short and long-term goals versus its strategic objectives and
financial targets. With the assistance of our compensation consultant, the Committee also considers the compensation data related
to the Compensation Peer Group for base pay, total cash compensation, and total direct compensation. The Chief Executive
Officer does not participate in any deliberations regarding his own compensation.
Base Salary Decisions for the Other Named Executive Officers
The Committee approved the following salaries and adjustments for the other named executive officers effective April 1, 2024:
Base Salary
NEO
2023
2024
Change from
2023
Robertson Clay Jones
$622,000
$673,014
8.2%
Susan Just
$340,000
$352,580
3.7%
Lawrence D. McGovern(1)
$415,880
$431,268
3.7%
Deborah K. Reuter
$348,395
$361,286
3.7%
Thomas A. Sa
N/A
$475,000
N/A
Dustin M. Warford
$315,400
$362,070
14.87%
(1)
Mr. McGovern served as Executive Vice President and Chief Financial Officer until November 18, 2024, after which he continued to serve in an advisory role to assist with the
transition of the new Interim Chief Financial Officer until his departure on February 14, 2025. Mr. McGovern did not receive cash bonus or LTIEP awards for performance in 2024.
Executive Officer Cash Incentive Program
Our NEOs participate in the Executive Officer Cash Incentive Program, which is an annual cash-based incentive program linked to
achievement of certain corporate and individual performance goals.
Executive Compensation
40
Heritage Commerce Corp • 2025 Proxy Statement

Taking into consideration the recommendations of its independent compensation consultant and the President and Chief Executive
Officer’s recommendations for the other participating NEOs, as well as soliciting and considering the input of other directors who are
not committee members, the Committee approves an incentive award target as a percentage of base salary for those NEOs.
% of Base Salary
Named Executive(
Threshold
Target
Maximum
Robertson Clay Jones
37.5%
75%
112.5%
Susan Just
22.5%
45%
67.5%
Lawrence D. McGovern
25%
50%
75%
Deborah K. Reuter
22.5%
45%
67.5%
Thomas A. Sa
25%
50%
75%
Dustin M. Warford
22.5%
45%
67.5%
The Committee also assigned weightings between a Company scorecard based on financial metrics (75%) and a qualitative
scorecard based on differentiated goals for each executive that further our growth, safety and soundness, and the development of a
strong and diverse workforce (25%). The following performance metrics along with the relative weights of each metric were
established by the Committee in the first quarter of 2024 and results were calculated as of December 31, 2024:
Performance Metrics
Weight
Threshold
Target
Maximum
YTD Pre-Tax Income
20%
$
54,933,205
$
70,628,407
$
86,323,609
Nonperforming Assets
20%
$
17,142,857
$
13,333,333
$
10,909,091
Loan Growth(1)
17.5%
$2,061,012,723
$2,649,873,566
$3,238,734,358
Deposit Growth(2)
17.5%
$3,263,056,065
$4,195,357,798
$5,127,659,531
Qualitative Factors(3)
25%
(Differentiated goals for each executive)
(1)
Loan Threshold, Target and Maximum are established at 70%, 90% and 110% of the Company’s budget, respectively. Includes factored accounts receivable but excludes
purchased mortgage loans in 2024 and Paycheck Protection Program (“PPP”) loans.
(2)
Deposits exclusive of brokered, state certificates of deposit. Includes clients’ Insured Cash Sweep / Certificate of Deposit Account Registry Service deposits. The Deposit
Threshold, Target and Maximum are established at 70%, 90% and 110% of the Company’s budget, respectively.
(3)
The qualitative factors were based on differentiated goals for each executive to achieve the Company’s strategic plan for 2024.
We apply a straight-line interpolation to determine the percentage of the cash bonus where the performance falls between two
levels in the table above.
The qualitative factors were based on differentiated customized goals for each executive to achieve the Company’s strategic plan for
2024.
The Executive Officer Cash Incentive Program includes a performance “gate” requiring a year-end total risk-based capital ratio at or
above 10.5%. Otherwise, no payment would be made under the Executive Officer Cash Incentive Program.
The Committee has the right, in its sole discretion, to adjust performance goals within the defined parameters set forth in the
Executive Officer Cash Incentive Program, which may apply to one-time, non-recurring, or extraordinary events or to other events or
circumstances that the Committee deems appropriate. Additionally, the Committee may adjust awards considering factors such as
regulatory compliance and credit quality; and to reduce or eliminate any cash award otherwise payable.
Both quantitative and qualitative performance metrics were identified through our annual financial planning and budgeting process
and were intended to align with the Board’s strategic plan for 2024. The Committee received recommendations from the senior
management along with other relevant data including economic forecasts and historical goal setting and achievement. The Committee
believed that the Threshold, Target, and Maximum levels established for the Executive Officer Cash Incentive Program in 2024
were sufficiently challenging to meet the Company’s long-term performance objectives.
Each fiscal year we establish certain financial metrics that serve as Threshold, Target and Maximum performance levels. For 2024
these metrics included the Company’s pre-tax income, non-performing asset levels, loan and deposit growth, and qualitative factors
that are based on differentiated goals based on each executive’s expected contributions toward the Company’s overall strategic
goals. For 2024, the Company achieved its maximum performance level regarding successes in managing non-performing assets,
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
41

falling into the upper end of target ranges in loan and deposit growth, and below target levels in pre-tax income. Individualized
qualitative goals are discussed in greater detail for each executive below.
Qualitative Performance Metrics
Clay Jones:
• Mr. Jones’ performance is most clearly reflected in his leadership through a series of significant and strategically critical
management changes, including recruiting a new Chief Operating Officer, Chief People & Culture Officer, and Chief Audit Officer,
as well as the succession process following the departure of our longtime Chief Financial Officer. Mr. Jones also oversaw
substantial investments in cybersecurity and network infrastructure projects, while making critical progress on production-
oriented initiatives such as sales leadership maturity, accountability and development. The hiring of our new COO, a key position
identified by Mr. Jones, has enabled greater external client engagement, reducing direct reports count, allowing more
external client and community engagement by the CEO. Mr. Jones also focused on enhanced profitability, including realigning
leadership in one underperforming business unit and closing another.
Susan Just:
• Ms. Just’s performance has been considered in light of her achievements in significantly reduced credit metric preparation
time, as well as implementing a new decentralized Relationship Credit Manager (“RCM”) model and launching Credit College
for RCMs. Ms. Just also led our policy review, focusing on efficiency and delegation of responsibilities. We believe that her
implementation of SOX controls and testing for mortgage servicers strengthened the effectiveness of our controls and audit
processes, strengthening our regulatory compliance and helping us achieve near-perfect results on our loan reviews.
Lawrence D. McGovern:*
* Lawrence D. McGovern served as Executive Vice President and Chief Financial Officer until November 18, 2024, after which he
continued to serve in an advisory role to assist with the transition of the new Interim Chief Financial Officer until his departure
on February 14, 2025. Mr. McGovern did not earn a cash bonus or equity incentive compensation for performance in 2024
because he was not serving as CFO as of December 31, 2024.
Deborah K. Reuter:
• Ms. Reuter’s performance has been evaluated against her achievements throughout the year, including adopting all enterprise
compliance related responsibilities, modernizing the Company’s risk and compliance reporting processes and adapting and
implementing a new and comprehensive Enterprise Risk Management Policy, focused on standardized risk, effective controls
and direction ratings. Throughout the year, she also worked to help improve management succession planning bench strength
and establish a Diligent-based Resource Center for our directors. Her efforts to standardize the definition of risk ratings and
utilize more key metrics have enhanced the quality of information presented to our Risk Management and Steering Committee,
further strengthening our risk management processes as a whole.
Thomas A. Sa:*
* Thomas A. Sa joined the Company in September 2024 and did not have qualitative goals for the year ended December 31,
2024.
Dustin M. Warford:
• Mr. Warford’s performance has been evaluated against his achievements throughout the year, including achieving his sales
targets, his adoption of a foundational sales culture, effective risk management practices—and his performance management
practices.
Executive Compensation
42
Heritage Commerce Corp • 2025 Proxy Statement

The Committee approved the following incentive cash awards for 2024 performance. Awards are calculated using 2024 base
earnings, which may differ from 2024 base salaries due to the timing of salary adjustments promotions and partial year participation.
Named Executive
Award
Payout
Robertson Clay Jones
$306,000
Susan Just
$125,000
Lawrence D. McGovern(1)
N/A
Deborah K. Reuter
$125,000
Thomas A. Sa
$ 65,000
Dustin M. Warford
$150,000
(1)
Mr. McGovern served as Executive Vice President and Chief Financial Officer until November 18, 2024, after which he continued to serve in an advisory role to assist with the
transition of the new Interim Chief Financial Officer until his departure on February 14, 2025. Mr. McGovern did not receive awards for fiscal year 2024.
2024 Equity Awards
Equity awards for 2024 were awarded under the 2023 Equity Plan on March 8, 2024, in the form of RSUs and PRSUs, vesting ratably
over three-years and PRSUs which vest based on ROATCE performance relative to a peer group over a three year performance
period. The Committee established a target long-term incentive (“LTI”) value for each of our NEOs based on a percentage of the
NEO’s current base salary. With the exception of Mr. Sa, who received a RSU award in October upon commencement of his
employment, each NEO’s LTI Value was equally split between RSUs and PRSUs. For 2024, the Committee approved a one time increase
in the percentage of base salary used for equity awards in partial recognition for our strong performance relative to peers in 2023.
This increase is reflected in the following awards:
RSU Award
PRSU Award
Named Executive
% of Base Salary
Number of Shares
Dollar Value
Number of Shares
Dollar Value
Robertson Clay Jones
100%
39,636
$336,510
39,635
$336,501
Susan Just
60%
12,459
$105,777
12,458
$105,768
Lawrence D. McGovern(1)
70%
17,779
$150,944
17,7798
$150,935
Deborah K. Reuter
60%
12,766
$108,383
12,766
$108,383
Thomas A. Sa(2)
N/A
37,664
$399,992
—
$
—
Dustin M. Warford
60%
12,794
$108,621
12,793
$108,613
(1)
Mr. McGovern served as Executive Vice President and Chief Financial Officer until November 18, 2024, after which he continued to serve in an advisory role to assist with the
transition of the new Interim Chief Financial Officer until his departure on February 14, 2025. All RSU and PRSUs outstanding were canceled after Mr. McGovern left the Company
on February 14, 2024.
(2)
Mr. Sa received a one-time RSU award in connection with his appointment as Chief Operating Officer in October 2024. Mr. Sa did not receive any other RSU or PRSU awards in
2024.
Performance Based Long-Term Incentive Equity Program
Under the LTIEP, 50% of the NEO’s award value is granted in PRSUs. The remaining 50% is granted in RSUs. The company has
continued to seek shareholder input—including PRSU performance metrics and peer group composition.
PRSUs. Awards vest at the end of a three-year performance period (2025—2027) based on the ROATCE as compared to a peer
group of banks approved by the Committee.
PRSUs vest based on percentile performance using the table below. The Committee will use straight-line interpolation to reward
incremental achievements between performance levels. Performance below threshold will result in no PRSU vesting.
Performance Levels
Performance Metrics
Threshold
Target
Maximum
ROATCE Percentile Rank
35th
50th
75th
Percent of PRSUs Vested
50%
100%
150%
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
43

RSUs. Each RSU will vest ratably over three years of continual employment and will accelerate upon a change of control, death or
disability.
Dividend Equivalents
Holders of RSUs and PRSUs are entitled to receive dividend equivalents with respect to the payment of cash dividends on the
Company’s common stock. Dividends are deferred until vesting.
Perquisites
Perquisites are generally limited to those that assist our NEOs in conducting their business duties productively and are limited to car
allowances for the NEOs and two memberships for the Chief Executive Officer, a gold and social club membership.
Supplemental Executive Retirement Plan—SERP
Our 2005 Amended and Restated Supplemental Retirement Plan (“SERP”) is a legacy arrangement in which after giving effect to
Mr. McGovern’s departure in February 2025, only our CEO, Mr. Jones, and our Chief Risk Officer, Deborah Reuter, participate. While
the SERP remains active for existing participants, other than including the Chief Executive Officer as a result of the Presidio
acquisition, we have not approved any new participation in the program since 2011.
The SERP is a non-qualified defined benefit plan which is unsecured and unfunded. Upon normal retirement, as defined in the SERP,
a participant receives 100% of his or her supplemental retirement benefit, payable monthly, commencing on the first of the month
following retirement (unless selected otherwise by the participant and except executive officers who will receive their benefit six months
following retirement) and continuing until the death of the participant (unless the joint survivor option is selected). For information
on the plan, see the “Summary Compensation” table and the “Supplemental Retirement Plan for Executive Officers.”
Employment Agreements and Change of Control Provisions
We provide employment agreements to our executive officers consistent with what the Committee considers to be market practices.
These agreements are designed to foster stability and retain well-qualified executives by providing reasonable income protection
upon termination of employment following voluntary and involuntary termination as defined by the agreement. These agreements
generally do not provide for a guaranteed term of employment, and instead establish a severance (conditioned upon a release of
claims) based upon the executive’s most recent year’s salary and prorated bonus. The agreements also provide some benefits due
to death or disability. Gross-up provisions are not provided in any employment agreements.
The Committee and the Board believe that the likelihood of a change of control transaction would result in our executives facing
uncertainties about their future employment and may result in concern over how the potential transaction might affect them. To allow
our executives to focus solely on making decisions that are in the best interests of our shareholders, our NEOs have change of
Executive Compensation control provisions in their respective employment agreements that provide them with certain payments and
benefits in the event of the termination of their employment upon a change of control of the Company.
All NEO employment agreements require both a change of control and termination in order to receive severance benefits (commonly
referred to as “double-trigger” arrangements). We have disclosed the severance and/or change in control payouts that would be
payable to each NEO if the triggering event occurred on December 31, 2024, in the “Change in Control Arrangements and Termination
of Employment” section in this proxy statement.
Executive Compensation
44
Heritage Commerce Corp • 2025 Proxy Statement

Compensation Policies and Practices
Summary
Stock
Ownership and
Retention
Guidelines
The Company has established stock ownership guidelines to encourage Company share
ownership by our NEOs and directors through retention of shares granted under the Company’s
incentive plans. The stock ownership guidelines are summarized at page 5 above.
Clawback Policy
If the Company restates its financial statements to correct a material error in previously
reported financial statements due to the Company’s material noncompliance with any financial
reporting requirement under the securities laws, the Committee, in its capacity as administrator
of the Incentive Compensation Recovery (or “Clawback”) policy will require reimbursement or
forfeiture of any excess incentive compensation received by any executive officer during the
three completed fiscal years immediately preceding the date on which the Company is required
to prepare an accounting restatement. The recovery is required on a “no fault” basis, without
regard to whether any misconduct occurred or an executive officer’s responsibility for the
erroneous financial statements.
Insider Trading Policy
Our policy applies to directors, officers, employees and consultants with respect to the trading
of Company’s securities, as well as the securities of publicly traded companies with whom we
have a business relationship. Our Insider Trading Policy is designed to promote compliance with
all applicable insider trading laws, listing standards, rules and regulations. The Company
prohibits the unauthorized disclosure of any nonpublic information acquired in the workplace or
otherwise as a result of an individual’s employment or other relationship with the Company or
any of its subsidiaries, as well as the misuse of any material nonpublic information about the
Company or any of its subsidiaries or their respective businesses in securities trading.
Prohibition on Hedging
Our stock trading guidelines prohibit executive officers and directors from speculating in our
stock, which includes, but is not limited to, short selling (profiting if the market price of the
securities decreases), buying or selling publicly traded options, including writing covered calls,
and hedging or any other type of derivative arrangement that has a similar economic effect.
Prohibition on Pledging
Executive officers and directors are prohibited from purchasing Company securities on margin,
borrowing against Company securities held in a margin account, or pledging Company
securities as collateral for a loan.
Equity Grant Practices
The Company’s practice is to approve annual equity awards to eligible recipients, including our
NEOs, on a pre-determined date in March of each year, with the exception of grants related to
new hires or other off-cycle awards.
We do not backdate equity awards. In addition, we do not coordinate grants of equity awards
so that they are made before announcement of favorable information, or after announcement of
unfavorable information. The Company’s equity awards are granted at fair market value on a
fixed date. We do not grant stock options with a so-called “reload” feature, nor do we lend
funds to employees to enable them to exercise stock options. We have never re-priced stock
options.
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
45

Compensation Risk
Assessment
The Committee oversees a periodic risk assessment of the Company’s compensation programs
to determine whether such programs create an incentive to take unnecessary or inappropriate
business risks. For 2024, the Committee concluded that the Company’s compensation programs
were appropriately balanced to mitigate compensation-related risk with cash and stock
elements, financial and non-financial goals, formal goals and discretion, and short-term and
long-term rewards. In addition to the above-described compensation and equity award policies,
the Committee believes the Company’s policies on ethics and compliance along with its internal
controls also mitigate unnecessary or excessive risk-taking.
The Executive Vice President/People and Culture Officer works with the Committee and external
compensation advisors to ensure compensation programs and payouts are aligned with short
term and long-term compensation plans and the spirit of such plans.
Tax Considerations
In light of Section 162(m) of the Code, it is the policy of the Committee to examine our executive
compensation program to maximize the tax deductibility of compensation paid to our executive
officers when and if the $1 million threshold becomes an issue. At the same time, the
Committee also believes that the overall performance of our executives cannot in all cases be
reduced to a fixed formula and that the prudent use of discretion in determining pay levels is in
our best interests and those of our shareholders. Under some circumstances, the Committee’s
use of discretion in determining appropriate amounts of compensation may be essential. In
those situations where discretion is or can be used by the Committee, compensation may not
be fully deductible.
Compensation Committee
Interlocks and Insider
Participation
No member of the Committee serves or has served as an employee of the Company or its
subsidiaries, and none have or had any relationships with Company that are required to be
disclosed under Item 404 of Regulation S-K. Additionally, none of our executive officers serve or
have served as a member of the compensation committee or board of directors of any other
entity that has one or more executive officers who served on our Board.
Compensation Committee Report
The Personnel and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by
Item 401(b) of Regulation S-K with management and based on such review and discussions, the Compensation Committee
recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
Compensation Committee of the Board
Marina H. Park Sutton, Chair
Julianne M. Biagini-Komas
Jack W. Connor
Executive Compensation
46
Heritage Commerce Corp • 2025 Proxy Statement

Executive Compensation Tables
The following table provides for the periods shown, information as to compensation for services of the Company’s principal
executive officer, principal financial officer, interim principal financial officer and three other executive officers of the Company who
had the highest total compensation (as defined in accordance with applicable regulations), with respect to the year ended 2024
(collectively referred to as “NEOs”):
Summary Compensation Table
Name and
Principal Position
(a)
Year
(b)
Salary
(c)(1)
Bonus
(d)
Stock
Awards
(e)(2)
Option
Awards
(f)(2)
Non-Equity
Incentive Plan
Compensation
(g)(3)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
(h)(4)
All Other
Compensation
(i)(5)
Total
($)(j)
Robertson Clay Jones*
President and Chief Executive
Officer of Heritage Commerce
Corp and Heritage Bank of
Commerce
2024
$660,261
—
$678,577
—
$306,000
$ 18,800
$30,701
$1,694,339
2023
$606,500
—
$466,497
—
$322,476
$ 33,400
$53,018
$1,481,891
2022
$447,282
—
$488,996
—
$232,452
—
$28,284
$1,197,014
Susan Just**
Executive Vice President/Chief
Credit Officer of Heritage Bank of
Commerce
2024
$349,435
—
$211,545
—
$125,000
—
$15,651
$ 701,631
Lawrence D. McGovern***
Executive Vice President/Chief
Financial Officer of Heritage
Commerce Corp and Heritage
Bank of Commerce
2024
$427,421
—
$304,350
—
$
—
$ 18,900
$27,595
$ 778,226
2023
$411,881
—
$207,939
—
$152,656
$133,300
$42,047
$ 947,823
2022
$391,841
—
$183,848
—
$180,897
—
$52,427
$ 809,014
Deborah K. Reuter****
Executive Vice President/Chief
Risk Officer and Corporate
Secretary of Heritage Commerce
Corp and Heritage Bank of
Commerce
2024
$358,063
—
$218,622
—
$125,000
—
$34,107
$ 735,792
2023
$345,045
—
$156,773
—
$115,098
$ 46,800
$36,559
$ 700,275
2022
$331,007
—
$143,566
—
$143,988
—
$28,140
$ 646,701
Thomas A. Sa*****
Executive Vice President/Chief
Operating Officer and Interim
Chief Financial Officer of
Heritage Commerce Corp and
Heritage Bank of Commerce
2024
$124,231
—
$399,992
—
$ 65,000
—
$ 6,464
$ 595,687
Dustin M. Warford******
Executive Vice President, Chief
Banking Officer of Heritage Bank
of Commerce
2024
$350,403
—
$218,917
—
$150,000
—
$15,794
$ 735,114
*
Mr. Jones was promoted to President and Chief Executive Officer effective September 15, 2022. Prior to his promotion he was serving as President and Chief Operating
Officer of Heritage Bank of Commerce.
**
Ms. Just joined the Company as the Executive Vice President and Chief Credit Officer of Heritage Bank of Commerce in September 2023. The Company determined Ms. Just
was one of the top three next highest paid executive officers, after principal executive officers and principal financial officers, in fiscal year 2024.
***
Mr. McGovern served as Executive Vice President and Chief Financial Officer until November 18, 2024, after which he continued to serve in an advisory role to assist with the
transition of the new Interim Chief Financial Officer until his departure on February 14, 2025.
****
Ms. Reuter joined Heritage Bank of Commerce at its inception in June 1994. The Company determined Ms. Reuter was one of the top three next highest paid executive
officers, after principal executive officers and principal financial officers, in fiscal year 2024.
*****
Mr. Sa joined the Company as Executive Vice President and Chief Operating Officer in September 2024, and subsequently and additionally appointed as Interim Financial
Officer in November 2024.
****** Mr. Warford has been with the Company since 2006. The Company determined Mr. Warford was one of the top three next highest paid executive officers, after principal
executive officers and principal financial officers, in fiscal year 2024.
(1)
The amounts in column (c) include amounts voluntarily deferred by each of the named executive officers into their 401(k) plan accounts. For 2024, each executive officer
deferred $30,500, except for Mr. Warford who deferred $22,500, Ms. Just who deferred $24,000 and Mr. Sa who deferred 3,600.
(2)
The amounts shown in columns (e) and (f) reflect the applicable full grant date fair values for stock options and stock awards in accordance with ASC 718 (excluding the
effect of forfeitures), and are reported for the fiscal year during which the stock options and stock awards were issued. The assumptions used in calculating the valuation for
stock options and stock awards may be found in Note 12 to the Company’s consolidated financial statements for the year ended December 31, 2024, included in the
Company’s Annual Report on Form 10-K, filed with the SEC on March 10, 2025.
(3)
The amounts shown in column (g) reflect payments made under the terms of the Executive Officer Cash Incentive Program for 2024 performance and paid in the first quarter
of 2025.
(4)
The amounts shown in column (h) for 2024 represent only the aggregate change in the actuarial present value of the accumulated benefit under the Company’s SERP from
December 31, 2023 to December 31, 2024. The amounts in column (h) were determined using interest rate and mortality rate assumptions consistent with those used in the
Company’s consolidated financial statements and include amounts which the named executive officer may not currently be entitled to receive because such amounts are not
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
47

vested. Assumptions used in the calculation of these amounts are included in Note 13 to the Company’s consolidated financial statements for the year ended December 31,
2024, included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 10, 2025.
Mr. Jones has a fully vested Supplemental Executive Retirement Agreement, dated November 28, 2017 (amended November 9, 2018) that was entered into with Presidio Bank.
The agreement was assumed by the Company when the Company acquired Presidio Bank. Under the agreement, Mr. Jones is entitled to a present value accumulated benefit
of $164,500 as of December 31, 2024. The amount shown in column (h) for 2024 represents only the aggregate change in the actuarial present value of the accumulated benefit
from December 31, 2023 to December 31, 2024.
(5)
The amounts shown in column (i) for 2024 include the following for each named executive:
Named Executive
Economic
Value of Death
Benefit of Life
Insurance for
Beneficiaries(*)
401(k) Plan
Company
Matching
Contributions
Other
Insurance
Benefit
Vacation
Auto
Compensation
Cash
Dividend on
Unvested
Restricted
Stock Award
Total
Robertson Clay Jones
$1,240
$3,000
$ 1,518
—
$12,000
$12,943
$30,701
Susan Just
—
$3,000
$ 2,838
—
$ 6,000
$ 3,813
$15,651
Lawrence D. McGovern
$2,819
$3,000
$ 8,383
—
$ 8,400
$ 4,993
$27,595
Deborah K. Reuter
$5,211
$3,000
$13,597
—
$ 8,400
$ 3,899
$34,107
Thomas A. Sa
—
$3,000
$ 1,089
—
$ 2,375
—
$ 6,467
Dustin M. Warford
—
$3,000
$
990
—
$ 9,400
$ 2,404
$15,794
(*)
The economic value of the death benefit amounts shown above reflects the annual income imputed to each executive in connection with Company owned split dollar
life insurance policies for which the Company has fully paid the applicable premiums. These policies are discussed under “Supplemental Retirement Plan for Executive
Officers.”
CEO Pay Ratio
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and SEC rules require us to disclose the
pay ratio of our CEO to our median employee. The pay ratio disclosure below is a reasonable estimate calculated in a manner consistent
with SEC rules and guidance.
We identified the median employee for 2024 by examining the 2024 total W-2 compensation from our payroll and employment
records, including 401(k) deferrals and 401(k) matching of up to $3,000 per employee, for all individuals, excluding our CEO, who was
employed by us on December 31, 2024. We included all employees, whether employed on a full-time, part-time, temporary or
seasonal basis as of that payroll date. We did not make any assumptions, adjustments or estimates with respect to such total W-2
reported compensation except for the 401(k) matching as described above. We did not annualize the compensation for any full or part-
time employees that were not employed by us for all of 2024. We believe the use of total W-2 compensation, including 401(k)
deferrals and 401(k) matching of up to $3,000 per employee, for all employees is a consistently applied compensation measure.
After identifying the median employee based upon the methodology described above, we calculated annual total compensation for
such employee using the same methodology we used for our CEO and other named executive officers as set forth in the 2024 Summary
Compensation Table in this proxy statement. The annual total compensation in 2024 for our median employee using this methodology
was $105,399. The annual total compensation in 2024 for our CEO using this methodology is shown in the Summary Compensation
Table and was $1,694,339. The ratio of the annual total compensation of our CEO to the annual total compensation of our median
employee in 2024 was 16.08 to 1.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment
records and the methodology described above. Because the SEC rules identifying the median compensated employee and calculating
the pay ratio based on the employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply
certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported
by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment
and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own
pay ratios.
Executive Compensation
48
Heritage Commerce Corp • 2025 Proxy Statement

Pay Versus Performance
The following table sets forth information concerning the compensation of our NEOs for each of the fiscal years ended December 31,
2020, 2021, 2022, 2023 and 2024, and our financial performance for each such fiscal year:
Pay Versus Performance Table for 2024
Year
(a)
Summary
Compensation
Table Total
for CEO(1)
(b)
Compensation
Actually
Paid(4)
(c)
Summary
Compensation
Table Total
for CEO(2)
(d)
Compensation
Actually
Paid(4)
(e)
Summary
Compensation
Table Total for
CEO(3)
(f)
Compensation
Actually
Paid(4)
(g)
Average
Summary
Compensation
Table Total
for
Other
NEOs(5)
(h)
Average
Compensation
Actually
Paid to
Other
NEOs(6)
(i)
Value of Initial Fixed
$100 Investment
Based on:
Net
Income(9)
($000’s)
(l)
Pre-Tax
Income(10)
($000’s)
(m)
Cumulative
TSR(7)
(j)
KBW
NASDAQ
Bank
Index(8)
(k)
2024
n/a
n/a
n/a
n/a
$1,694,339
1,297,177
$709,298
$585,714
$ 95.61
$132.60
$40,528
$56,674
2023
n/a
n/a
n/a
n/a
$1,481,891
$1,527,827
$703,591
$665,330
$ 95.50
$ 96.65
$64,443
$90,419
2022
n/a
n/a
$1,510,963
$1,502,691
$1,197,014
$1,310,688
$622,794
$650,479
$118.17
$ 97.52
$66,555
$94,366
2021
$1,756,569
$1,498,586
$1,659,046
$1,754,118
n/a
n/a
$753,751
$839,014
$104.04
$124.06
$47,700
$65,870
2020
$1,237,428
$1,076,898
n/a
n/a
n/a
n/a
$785,615
$588,764
$ 73.78
$ 89.69
$35,299
$49,068
(1)
The dollar amounts reported in column (b) are the amounts of total compensation reported for Keith A. Wilton (Former President and CEO) for 2021 and 2020. Mr. Wilton
retired from the Company on March 12, 2021.
(2)
The dollar amounts reported in column (d) are the amounts of total compensation reported for Walter T. Kaczmarek (Former President and CEO) for 2022 and 2021. Mr. Kaczmarek
served as the President and Chief Executive Officer in 2019 until he retired in August of 2019. He was not an officer or employee of the Company in 2020. He rejoined the
Company on March 15, 2021 and retired on September 15, 2022, but remained on the Board until the Company’s 2023 Annual Meeting of Shareholders.
(3)
The dollar amounts reported in column (f) are the amounts of total compensation reported for Robertson Clay Jones (President and CEO) for each corresponding year in the
“Total” column of the “Summary Compensation Table” for 2023 and 2022. Mr. Jones was promoted to President and Chief Executive Officer effective September 15, 2022.
(4)
The dollar amounts reported in column (c), (e) and (g) represent the amount of “compensation actually paid” to (1) Mr. Wilton, (2) Mr. Kaczmarek, and (3) Mr. Jones, as
computed in accordance with Item 402(v) of SEC Regulation S-K. The dollar amounts reported do not reflect the actual amount of compensation earned by or paid to (1) Mr. Wilton,
(2) Mr. Kaczmarek, and (3) Mr. Jones during the applicable year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were
made to (1) Mr. Wilton’s, (2) Mr. Kaczmarek’s, and (3) Mr. Jones’s total compensation for each year to determine the compensation actually paid to (1) Mr. Wilton, (2) Mr. Kaczmarek,
and (3) Mr. Jones, respectively:
Year
Reported
Summary
Compensation
Table Total for
CEO
Reported
Grant Date
Fair Value of
Equity
Awards
(a)
Equity Award
Adjustments
(b)
Reported
Change in
the
Actuarial
Present
Value of
Pension
Benefits
(c)
Pension
Benefit
Adjustments
(d)
Fair Value of
Awards
Forfeited
(e)
Compensation
Actually Paid
to CEO
(1)
2024
—
—
—
—
—
—
—
2023
—
—
—
—
—
—
—
2022
—
—
—
—
—
—
—
2021
$1,756,569
—
$ 46,772
—
—
$(304,755)
$1,498,586
2020
$1,237,428
$(330,000)
$169,470
—
—
—
$1,076,898
(2)
2024
—
—
—
—
—
—
—
2023
—
—
—
—
—
—
—
2022
$1,510,963
$(539,996)
$531,724
—
—
—
$1,502,691
2021
$1,659,046
$(540,000)
$635,072
—
—
—
$1,754,118
2020
—
—
—
—
—
—
—
(3)
2024
$1,694,339
$(678,577)
$275,415
$(18,800)
$24,800
—
$1,297,177
2023
$1,481,891
$(466,497)
$522,933
$(33,400)
$22,900
—
$1,527,827
2022
$1,197,014
$(488,996)
$569,915
—
$32,755
—
$1,310,688
2021
—
—
—
—
—
—
—
2020
—
—
—
—
—
—
—
(a)
The “reported grant date fair value of equity awards” represents the amount reported in the “Stock Awards” column in the “Summary Compensation Table” for 2024,
2023, 2022, 2021 and 2020.
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
49

(b)
The “equity award adjustments” for each applicable year include the addition or (subtraction, as applicable) of the following: (i) the year- end fair value of any equity
awards granted in the applicable year that were outstanding and unvested as of the end of the applicable year; (ii) change in fair value from end of prior fiscal year to end
of current fiscal year for awards made in prior fiscal years that were outstanding and unvested at the end of current fiscal year; (iii) change in fair value from end of
prior fiscal year to vesting date for awards made in prior fiscal years that vested during current fiscal year; (iv) for equity awards that were granted and vested in the same
applicable year, the fair value of the equity awards as of the vesting date; and (v) Dividends paid on unvested shares/share units and stock options. Note that for
calculation purposes unvested stock dividends are already included in the “Summary Compensation Table” under “All Other Compensation” for the applicable year (for
Equity Awards granted prior to 2023). Dividends earned on unvested PRSUs and RSUs (2023 and 2024 Equity Awards) are reflected in the fiscal year-end fair value of
outstanding and unvested awards. The fair value for all unvested equity awards is based on restricted stock awards with vesting periods of three and four years. The
fair value for all PRSU equity awards is based on the expected vesting percentile of PRSUs for a given year which would be earned under the PRSU award. The amounts
deducted or added in calculating the “equity award adjustments” are as follows for (1) Mr. Wilton, (2) Mr. Kaczmarek, and (3) Mr. Jones, respectively:
Year
Year-End Fair
Value of
Outstanding
and Unvested
Equity Awards
Granted in
Applicable Year
Year over Year
Change in Fair
Value of
Outstanding
Unvested Equity
Awards Granted
in Prior Years
Year over Year
Change in Fair
Value of Equity
Awards Granted
in Prior Years
That Vested in
The Year
Fair Value as of
Vesting Date of
Equity Awards
Granted and
Vested in the
Year
Dollar Value of
Dividends or
Other Earnings
Paid on Equity
Awards not
Otherwise
Reflected in Fair
Value or Total
Compensation
Total Equity
Award
Adjustments
(1)
2024
—
—
—
—
—
—
2023
—
—
—
—
—
—
2022
—
—
—
—
—
—
2021
—
—
$ 46,772
—
—
$ 46,772
2020
$328,518
$ (88,438)
$ (70,610)
—
—
$169,470
(2)
2024
—
—
—
—
—
—
2023
—
—
—
—
—
—
2022
—
—
$ (34,219)
$565,943
—
$531,724
2021
$533,300
$ 44,773
$ 56,999
—
—
$635,072
2020
—
—
—
—
—
—
(3)
2024
$387,440
$ (74,515)
$ (37,510)
—
—
$275,415
2023
$736,651
$(103,855)
$(109,863)
—
—
$522,933
2022
$560,716
$ 13,096
$
(3,897)
—
—
$569,915
2021
—
—
—
—
—
—
2020
—
—
—
—
—
—
(c)
The amounts included in this column are the amounts reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the
“Summary Compensation Table” for the applicable year.
(d)
The total “pension benefit adjustments” for each applicable year include the aggregate of two components: (i) the actuarially determined pension service cost for
services rendered by the CEOs during the applicable year (the “SERP service cost”) and (ii) the entire cost of benefits granted in a plan amendment (or initiation) during
the applicable year that are attributed by the benefit formula to services rendered in periods prior to the plan amendment or initiation (the “SERP Prior Service Cost”), in
each case, calculated in accordance with U.S. GAAP. The amounts included in this column is the SERP service cost for services rendered by Mr. Jones during 2022,
2023 and 2024.
(e)
The amounts in this column reflect the fair value of awards forfeited by Mr. Wilton when he retired from the Company on March 12, 2021. The Fair value of forfeited
awards are determined at the end of the prior year for awards made in prior fiscal years that were forfeited during the current fiscal year.
(5)
The dollar amounts reported in column (h) represent the average of the amounts reported for the Company’s NEOs as a group (excluding the CEOs) in the “Total” column of the
“Summary Compensation Table” for 2024, 2023, 2022, 2021 and 2020. The names of the NEOs for each applicable year are as follows:
Executive Compensation
50
Heritage Commerce Corp • 2025 Proxy Statement

Year
Other NEOs
Position
2024
Susan Just
Executive Vice President & Chief Credit Officer of Heritage Bank of Commerce
Lawrence D. McGovern
Former Executive Vice President & Chief Financial Officer
Deborah K. Reuter
Executive Vice President & Chief Risk Officer and Corporate Secretary
Thomas A. Sa
Executive Vice President, Chief Operating Officer & Interim Chief Financial Officer
Dustin M. Warford
Executive Vice President, Chief Banking Officer of Heritage Bank of Commerce
2023
Margo G. Butsch
Executive Vice President & Chief Credit Officer of Heritage Bank of Commerce
Janice Y. Coonley
Executive Vice President & Chief People and Diversity Officer of Heritage Bank of Commerce
Lawrence D. McGovern
Executive Vice President & Chief Financial Officer
Deborah K. Reuter
Executive Vice President & Chief Risk Officer and Corporate Secretary
Glen E. Shu
Executive Vice President, President of Specialty Finance Group of Heritage Bank of Commerce and
President of Bay View Funding
2022
Margo G. Butsch
Executive Vice President & Chief Credit Officer of Heritage Bank of Commerce
Janice Y. Coonley
Executive Vice President & Chief People and Diversity Officer of Heritage Bank of Commerce
Lawrence D. McGovern
Executive Vice President & Chief Financial Officer
Deborah K. Reuter
Executive Vice President & Chief Risk Officer and Corporate Secretary
2021
Michael E. Benito
Executive Vice President /Business Banking Manager of Heritage Bank of Commerce
Margo G. Butsch
Executive Vice President & Chief Credit Officer of Heritage Bank of Commerce
Robertson Clay Jones
President and Chief Operating Officer of Heritage Bank of Commerce
Lawrence D. McGovern
Executive Vice President & Chief Financial Officer
2020
Michael E. Benito
Executive Vice President /Business Banking Manager of Heritage Bank of Commerce
Margo G. Butsch
Executive Vice President & Chief Credit Officer of Heritage Bank of Commerce
Robertson Clay Jones
Executive Vice President & President of Community Business Bank Group of Heritage Bank of Commerce
Lawrence D. McGovern
Executive Vice President & Chief Financial Officer
(6)
The dollar amounts reported in column (i) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding the CEOs) as computed in
accordance with Item 402(v) of SEC Regulation S-K. The names of the NEOs (excluding the CEOs) included for the purposes of calculating the average amounts in each applicable
year are the same as the table noted in footnote (5) above. The dollar amounts reported do not reflect the actual average amount of compensation earned by or paid to the
NEOs as a group (excluding the CEOs) during the applicable year. In accordance with the requirements of Item 402(v) of SEC Regulation S-K, the following adjustments were made
to average total compensation for the NEOs as a group (excluding the CEOs) for each year to determine the compensation actually paid, using the same methodology
described above in footnote (4).
Year
Average
Reported
Summary
Compensation
Table Total
for NEOs
Average
Reported
Grant Date
Fair Value
of Equity
Awards
Average
Equity Award
Adjustments(a)
Average
Reported
Change in the
Actuarial
Present
Value of
Pension
Benefits
Average
Pension
Benefit
Adjustments(b)
Average Fair
Value of
Awards
Forfeited
Average
Compensation
Actually Paid
to NEOs
2024
$709,298
$(270,685)
$150,881
$
(3,780)
—
—
$585,714
2023
$703,591
$(163,198)
$160,957
$ (36,020)
—
—
$665,330
2022
$622,794
$(151,996)
$179,681
—
—
—
$650,479
2021
$753,751
$(162,275)
$232,544
$ (21,925)
$36,919
—
$839,014
2020
$785,615
$(115,964)
$ 42,875
$(190,950)
$67,188
—
$588,764
(a)
The amounts deducted or added in calculating the total average equity award adjustments were determined In the same method described in footnote (4)b above and
are as follows:
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
51

Year
Average Year-
End Fair
Value of
Outstanding
and Unvested
Equity
Awards
Granted in
Applicable
Year
Average
Year over
Year Change
in Fair Value
of
Outstanding
Unvested
Equity
Awards
Granted in
Prior Years
Average Year
over Year
Change in Fair
Value of Equity
Awards Granted
in Prior Years
that Vested in
the Year
Average Fair
Value as of
Vesting Date
of Equity
Awards
Granted and
Vested in the
Year
Average Dollar
Value of Dividends
or Other Earnings
Paid on Equity
Awards not
Otherwise Reflected
in Fair Value or
Total Compensation
Total Average
Equity Award
Adjustments
2024
$179,742
$(16,528)
$(12,333)
—
—
$150,881
2023
$257,703
$(37,755)
$(58,991)
—
—
$160,957
2022
$177,057
$ 10,798
$ (8,174)
—
—
$179,681
2021
$160,262
$ 40,836
$ 31,446
—
—
$232,544
2020
$115,443
$(40,684)
$(31,884)
—
—
$ 42,875
(b)
The amounts added in calculating the total average pension benefit adjustments are as follows:
Year
Average
Pension
Service Cost
Average
SERP Prior
Service Cost
Average
SERP
Service Cost
Total Average
Pension
Benefit
Adjustments
2024
—
—
—
—
2023
—
—
—
—
2022
—
—
—
—
2021
—
—
$36,919
$36,919
2020
—
$36,244
$30,944
$67,188
(7)
Represents the cumulative five-year total return to shareholders of our common stock and assumes that the value of the investment was $100 on December 31, 2019 and that
the subsequent dividends were reinvested. The stock price performance included in this column is not necessarily indicative of future stock price performance.
(8)
Represents a cumulative five-year total return to shareholders of a peer group. The peer group used is the “KBW NASDAQ Bank Index” as listed under Item 5 of our Annual
Report on Form 10-K for the years ended December 31, 2020, 2021, 2022, 2023 and 2024, respectively.
(9)
The dollar amounts reported represent the amount of net income (in thousands) reflected in the Company’s audited consolidated financial statements for the applicable year.
(10)
Pre-tax income has been chosen as a “Selected Performance Measure.” While the Company uses numerous financial and non-financial performance measures for the purpose
of evaluating performance for the Company’s compensation programs, the Company has determined that Pre-tax income is the financial performance measure that, in the
Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in this table) used by the Company to link
compensation actually paid to the Company’s NEOs for the most recently completed fiscal year, to the Company’s performance.
Financial Performance Measures
As described in greater detail in the section captioned “Executive Compensation—Compensation Discussion and Analysis” The
Company’s executive compensation program includes variable components in the form of annual incentive compensation and long-term
incentive awards. The metrics that the Company uses for both annual incentive compensation and long-term incentive awards are
selected based on an objective of incentivizing our CEO and NEOs (excluding the CEO) to increase shareholder value. The metrics are
also correlated with the Company’s strategic plan as approved each year by the Board. Changes in shareholder value are reflected
in compensation actually paid above through the fair value of the Company’s equity awards. Compensation actually paid for 2021
reflects an increase in the fair value of these equity awards as a result of an increase in the Company’s common share price from
$8.87 at December 31, 2020 to $11.94 at December 31, 2021. Compensation actually paid for 2022 reflects an increase in the fair value
of these equity awards as a result of an increase in the Company’s common share price from $11.94 at December 31, 2021 to
$13.00 at December 31, 2022. Compensation actually paid for 2023 reflects a decrease in the fair value of these equity awards as a
result of a decrease in the Company’s common share price from $13.00 at December 31, 2022 to $9.92 at December 31, 2023, partially
offset by an increase in the estimated vesting percentile. Compensation actually paid for 2024 reflects a decrease in the fair value
of these equity awards primarily as a result of the decrease in the estimated vesting percentile and also partially as a result of a
decrease in the Company’s common share price from $9.92 at December 31, 2023 to $9.38 at December 31, 2024. The most important
financial performance measures used by the Company to link executive compensation actually paid to the CEO and other NEOs
(excluding the CEO) for the most recently completed fiscal year, to the Company’s performance are as follows:
• Pre-tax Income
• Nonperforming Assets
• Loan Growth
• Deposit Growth
Executive Compensation
52
Heritage Commerce Corp • 2025 Proxy Statement

Analysis of the Information Presented in the Pay Versus Performance Table
As described in more detail in the section captioned “Executive Compensation—Compensation Discussion and Analysis” the
Company’s executive compensation program includes variable components in the form of annual incentive compensation and long-
term incentive awards. While the Company utilizes several performance measures to align executive compensation with performance,
all of those measures are not presented in the “Pay Versus Performance Table for 2024.” Moreover, the Company generally
seeks to incentivize long-term performance and, therefore, does not specifically align the Company’s performance measures with
compensation actually paid (as computed in accordance with Item 402(v) of SEC Regulation S-K) for a particular year. In accordance
with Item 402(v) of SEC Regulation S-K, the Company is providing the following descriptions of the relationships between
information presented in the “Pay Versus Performance Table for 2024.”
The following graphs show the relationship between the average of the compensation actually paid to our NEOs and the compensation
actually paid to our CEOs (compensation actually paid is aggregated by year) to our total shareholder return, net income and pre-
tax income, and the relationship between our cumulative total shareholder return and the cumulative total shareholder return of the
peer group, each over the five fiscal years ending December 31, 2024 as reported in the table above.
$73.8 
$104.0 
$118.2 
$95.5
$95.6
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
2020
2021
2022
2024
2023
Cumulative TSR 
(Value of initial $100 Investment)
Compensation Actually Paid
Aggregate CEO
Average for NEO
TSR
Compensation Actually Paid vs. Cumulative TSR
$-
$20
$40
$60
$80
$100
$120
$160
$140
2020
2021
2022
2023
2024
Heritage Commerce
Corp TSR
KBW NASDAQ Bank
Index
Heritage TSR vs. KBW NASDAQ Bank Index
Though, the Company does not use net income as a performance measure in the overall executive compensation program, the
measure of net income is correlated with the measure of pre-tax income which is a measure used in the overall executive compensation
program.
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
53

2020
2021
2022
2024
2023
$35,299 
$47,700 
$66,555 
$64,443
$40,528 
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
 $-
 $500,000
 $1,000,000
 $1,500,000
 $2,000,000
 $2,500,000
 $3,000,000
 $3,500,000
Net Income (Thousands)
Compensation Actually Paid
Aggregate CEO
Average for NEO
Net Income
Compensation Actually Paid vs. Net Income
The Company uses pre-tax income as one of the performance measures in the overall executive compensation program including
equity awards.
$49,068 
$65,870 
$94,366 
$90,419 
$56,674
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
 $-
 $500,000
 $1,000,000
 $1,500,000
 $2,000,000
 $2,500,000
 $3,000,000
 $3,500,000
Pre-Tax Income (Thousands)
Compensation Actually Paid
Aggregate CEO
Average for NEO
Pre-Tax Income
Compensation Actually Paid vs. Pre-Tax Income
2020
2021
2022
2024
2023
Executive Contracts
Robertson Clay Jones—On September 15, 2022, the Company and Heritage Bank of Commerce entered into a new employment
agreement with Mr. Jones at the time when he assumed his new position as President and Chief Executive Officer of the Company
and Heritage Bank of Commerce. The employment agreement is for one year and is automatically renewed for one year terms. Under
the agreement, Mr. Jones received an annual salary of $673,014 for 2024. Mr. Jones is entitled to annual increases as determined
by the Personnel and Compensation Committee in connection with his annual review. Mr. Jones also is entitled to participate in the
Executive Officer Cash Incentive Program and in the Company’s 401(k) plan, under which he may receive matching contributions
up to $3,000. The Company provides Mr. Jones, at no cost to him, group life, health, accident and disability insurance coverage for
himself and his dependents. Mr. Jones also receives Company-paid life insurance coverage in the amount of $700,000. The Company
will reimburse Mr. Jones for up to $1,200 for tax consultation and tax return preparation. He is also reimbursed for expenses that
exceed insurance coverage for an annual physical examination, certain long-term care policy expenses, monthly dues for one country
club membership and one social club membership. He receives an automobile allowance in the amount of $1,000 per month,
together with reimbursements for gasoline and maintenance expenditures. Under his employment agreement, Mr. Jones is entitled
Executive Compensation
54
Heritage Commerce Corp • 2025 Proxy Statement

to certain severance benefits on termination of his employment, including a change of control. See “Change of Control Arrangements
and Termination of Employment.”
Susan Just—On February 1, 2024, the Company entered into an amended and restated employment agreement with Susan Just.
The employment agreement was for a one-year initial term based on the effective date of her original employment agreement,
September 7, 2023, after which her employment became at-will. Under the agreement, Ms. Just received an annual salary of $352,580
for 2024, with annual increases as determined by the Company’s Chief Executive Officer and the Personnel and Compensation
Committee based upon her annual performance review. In addition to her salary, she was eligible to participate in the Executive
Officer Cash Incentive Program. Ms. Just participates in the Company’s 401(k) plan, under which she receives matching contributions
up to $3,000, and in the Company’s Employee Stock Ownership Plan. The Company provides to Ms. Just, at no cost to her, group
life, health, accident and disability insurance coverage for herself and her dependents. Ms. Just also receives an automobile allowance
in the amount of $500 per month. Ms. Just was provided with life insurance coverage in the amount of two times her salary not to
exceed $700,000. She was also provided with long term care insurance, with a lifetime benefit of up to $72,000. Under her employment
agreement, Ms. Just is entitled to certain severance benefits on termination of her employment, including a change of control. See
“Change of Control Arrangements and Termination of Employment.”
Lawrence D. McGovern—On July 1, 2011, the Company entered into an employment agreement with Lawrence D. McGovern.
Mr. McGovern’s employment agreement had an initial term of one year and provided for automatic one-year extensions. The
agreement provided for annual increases in compensation as determined by the Chief Executive Officer and the Compensation
Committee based upon his annual performance review, and he received an annual salary for 2024 of $431,268. He was also entitled
to participate in the Executive Officer Cash Incentive Program, although because he did not serve as CFO as of December 31,
2024, he received no awards under that program for that fiscal year. Mr. McGovern also participated in the Company’s 401(k) plan,
under which he could receive matching contributions up to $3,000, and in the Company’s Employee Stock Ownership Plan.
Mr. McGovern also received certain other perquisites summarized in the Summary Compensation Table at page 47, and upon his
termination he received a one-time payment of COBRA benefits in the amount of $95,000. Mr. McGovern served as Chief Financial
Officer until November 18, 2024, after which he remained with the Company in an advisory capacity until his departure on February 14,
2025. The Company has no additional obligations under Mr. McGovern’s employment agreement, although he is entitled to certain
benefits under the SERP program described at page 60.
Deborah K. Reuter—On March 23, 2023, the Company entered into an employment agreement with Deborah K. Reuter, which
became effective on April 1, 2023. The employment agreement is for one year and is automatically renewed for one year terms. Under
the agreement, Ms. Reuter received an annual salary of $361,286 for 2024 with annual increases as determined by the Company’s
Chief Executive Officer and the Personnel and Compensation Committee based upon her annual review. In addition to her salary, she
is eligible to participate in the Executive Officer Cash Incentive Program. Ms. Reuter also participates in the Company’s 401(k) plan,
under which she may receive matching contributions up to $3,000. The Company provides to Ms. Reuter, at no cost to her, group life,
health, accident and disability insurance coverage for herself and her dependents. Ms. Reuter receives an automobile allowance in
the amount of $700 per month, as well as Company-paid life insurance coverage in the amount of two times her salary not to exceed
$700,000. She is also provided with long term care insurance, with a lifetime benefit of up to $72,000. Under her employment
agreement, Ms. Reuter is entitled to certain severance benefits on termination of her employment, including a change of control.
See “Change of Control Arrangements and Termination of Employment.”
Thomas A. Sa—On September 26, 2024, the Company entered into an at-will employment agreement with Thomas A. Sa. Under the
agreement, Mr. Sa receives an initial annual salary of $475,000 with annual increases as determined by the Company’s Chief
Executive Officer and the Personnel and Compensation Committee in connection with his annual review. In addition to his salary, he
is eligible to participate in the Executive Officer Cash Incentive Program. Mr. Sa participates in the Company’s 401(k) plan, under
which he may receive matching contributions up to $3,000. The Company provides to Mr. Sa, at no cost to him, group life, health,
accident and disability insurance coverage for himself and his dependents. Mr. Sa receives an automobile allowance in the amount
of $750 per month, as well as Company-paid life insurance coverage in the amount of two times his salary not to exceed $700,000. He
is also provided with long term care insurance, with a lifetime benefit of up to $72,000. At the time the employment agreement
was entered into, Mr. Sa was awarded restricted stock units with a value of $400,000 that vests over three years. Under his
employment agreement, Mr. Sa is entitled to certain severance benefits on termination of his employment, including a change of
control. See “Change of Control Arrangements and Termination of Employment.”
Dustin M. Warford—On February 1, 2024, the Company entered into an employment agreement with Dustin M. Warford. Under the
agreement, Mr. Warford receives an initial annual salary of $362,070 with annual increases as determined by the Company’s Chief
Executive Officer and the Personnel and Compensation Committee in connection with his annual review. In addition to his salary, he
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
55

is eligible to participate in the Executive Officer Cash Incentive Program. Mr. Warford participates in the Company’s 401(k) plan,
under which he may receive matching contributions up to $3,000. The Company provides to Mr. Warford, at no cost to him, group
life, health, accident and disability insurance coverage for himself and his dependents. Mr. Warford receives an automobile allowance
in the amount of $800 per month. Mr. Warford is provided with life insurance coverage in the amount of two times his salary not to
exceed $700,000. He is also provided with long term care insurance, with a lifetime benefit of up to $72,000. Under his employment
agreement, Mr. Warford is entitled to certain severance benefits on termination of his employment, including a change of control.
See “Change of Control Arrangements and Termination of Employment.”
Plan Based Awards
Equity Based Plans. In 2013, the Board approved the Heritage Commerce Corp 2013 Equity Incentive Plan (“2013 Equity Plan”) to
replace its previous 2004 Equity Plan. The 2013 Equity Plan was approved by the Company’s shareholders at the 2013 Annual Meeting.
At the 2020 Annual Meeting the shareholders approved an amendment to the 2013 Equity Plan to increase the number of shares
authorized under the 2013 Equity Plan from 3,000,000 to 5,000,000.
In 2023, the Board of Directors approved the 2023 Equity Incentive Plan (“2023 Equity Plan”) to replace the 2013 Equity Plan which
expired by its terms in 2023. The 2023 Equity Plan was approved by the Company’s shareholders at the 2023 Annual Meeting. The
purpose of the 2023 Equity Plan is to promote the long-term success of the Company and the creation of shareholder value. The
Board believes that the availability of stock awards is a key factor in the ability of the Company to attract and retain qualified individuals
to serve as directors, officers and employees. Under the 2023 Equity Plan incentives are provided through the grant of stock options,
restricted stock, RSUs and PRSUs awards.
In connection with its acquisition of Presidio Bank in October 2019, the Company assumed the Presidio Bank Amended and Restated
2006 Stock Option Plan and the Presidio Bank 2016 Equity Incentive Plan (collectively the “Presidio Equity Plans”) and the options
issued and outstanding at the time of the acquisition. The issued and outstanding options were exchanged for options to acquire an
aggregate of 1,176,757 shares of the Company’s common stock at an adjusted weighted average exercise price of $5.05.
Executive Officer Cash Incentive Program. On September 21, 2023, the Board granted the Committee full authority over the
administration and decisions outlined in the Executive Officer Cash Incentive Plan, which governs the Executive Officer Cash Incentive
Program, and which is reviewed and updated annually. Under the Executive Officer Cash Incentive Program executives are eligible
for target bonuses which are expressed as a percentage of their respective base salaries which increase as the level of performance
of established goals increases. The bonuses are tied directly to the satisfaction of overall Company performance and qualitative
objectives for the year. See “Compensation Discussion and Analysis—Executive Officer Cash Incentive Program.”
The following table provides information on the potential performance-based awards available if defined performance objectives
were achieved in 2024 for each of the Company’s named executive officers under the Company’s Executive Officer Cash Incentive Plan,
and stock units or other stock awards granted to the named executive officers for the year ended December 31, 2024:
Executive Compensation
56
Heritage Commerce Corp • 2025 Proxy Statement

Grants of Plan-Based Awards
Name
(a)
Grant
Date
(b)
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)
Estimated Future Payouts
Under Equity
Incentive Plan Awards
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#)(i)(2)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(i)
Exercise
or Base
Price of
Option
Awards
($/Sh)
(k)(1)(3)
Grant
Date
Fair
Value
of
Stock
And
Options
Awards
(l)(1)
Threshold
(c)
Target
(d)
Maximum
(e)
Threshold
(f)
Target
(g)
Maximum
(h)
Robertson Clay Jones
5/2/2024
—
—
—
—
—
—
678
—
—
$
5,566
3/8/2024
—
—
—
—
—
—
39,635
—
—
$336,501
3/8/2024
—
—
—
—
—
—
39,636
—
—
$336,510
2/29/2024
$252,380
$504,761
$757,141
—
—
—
—
—
—
—
Susan Just
3/8/2024
—
—
—
—
—
—
12,458
—
—
$105,768
3/8/2024
—
—
—
—
—
—
12,459
—
—
$105,777
2/29/2024
$ 79,331
$158,661
$237,991
—
—
—
—
—
—
—
Lawrence D. McGovern*
5/2/2024
—
—
—
—
—
—
301
—
—
$
2,471
3/8/2024
—
—
—
—
—
—
17,778
—
—
$150,935
3/8/2024
—
—
—
—
—
—
17,779
—
—
$150,944
2/29/2024
$107,817
$215,634
$323,451
—
—
—
—
—
—
—
Deborah K. Reuter
5/2/2024
—
—
—
—
—
—
226
—
—
$
1,855
3/8/2024
—
—
—
—
—
—
12,766
—
—
$108,383
3/8/2024
—
—
—
—
—
—
12,766
—
—
$108,383
2/29/2024
$ 81,289
$162,579
$243,868
—
—
—
—
—
—
—
Thomas A. Sa
11/18/2024
—
—
—
—
—
—
37,664
—
—
$399,992
5/31/2024
$118,750
$237,500
$356,250
—
—
—
—
—
—
—
Dustin M. Warford
5/2/2024
—
—
—
—
—
—
205
—
—
$
1,683
3/8/2024
—
—
—
—
—
—
12,793
—
—
$108,613
3/8/2024
—
—
—
—
—
—
12,794
—
—
$108,621
2/29/2024
$ 81,466
$162,932
$244,397
—
—
—
—
—
—
—
*
Mr. McGovern served as the Executive Vice President and Chief Financial Officer until November 18, 2024, after which he continued to serve in an advisory role until his
departure on February 14, 2025.
(1)
These potential performance based awards were established under the Executive Officer Cash Incentive Program if the indicated level of performance was achieved in 2024 as
described further in the “Compensation and Discussion Analysis—Executive Officer Cash Incentive Program” and in the discussion under “Plan Based Awards—Executive
Officer Cash Incentive Program.” They do not represent the actual payments made to the named executive officers. The payments made for actual performance in 2024 are
reflected in column (g) in the Summary Compensation Table.
(2)
This column reflects restricted stock, RSUs and PRSUs awards granted in 2024 pursuant to the 2023 Equity Plan.
(3)
The amounts shown in column (l) reflect the applicable full grant date fair values for restricted stock award in accordance with ASC 718 (excluding the effect of forfeitures),
and are reported for the fiscal year during which the restricted stock awards were issued. The assumptions used in calculating the valuation for stock and options awards may
be found in Note 12 to the Company’s consolidated financial statements for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K,
filed with the SEC on March 10, 2025.
Grants of Certain Equity Awards Close in Time to the Release of Material Nonpublic
Information
We do not grant stock options or similar equity awards in anticipation of the release of material nonpublic information, such as a
significant positive or negative earnings announcement, and do not time the public release of such information based on grant dates.
Additionally, we do not grant stock options or similar equity awards during periods in which there is material nonpublic information
about the Company or Bank, including (i) during our “blackout” periods or outside “trading windows” established under our Insider
Trading Policy or (ii) at any time between four business days prior to or one business day following the filing of our periodic reports
or a Form 8-K that discloses material nonpublic information. These restrictions do not apply to RSUs or other types of equity awards that
do not include an exercise price related to the market price of our common stock.
Our executive officers are not permitted to choose the grant date for their grants. The Company’s practice is to approve annual
equity awards to eligible recipients, including our NEOs, on a pre-determined date in March of each year, with the exception of grants
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
57

related to new hires or other off-cycle awards. The grants are effective on the date on which they are approved (or on the next
trading day following such date if it is not a trading day).
In accordance with our policy, during the 2024 fiscal year, none of our NEOs were awarded options with an effective grant date
during any period beginning four business days before the filing or furnishing of a Form 10-Q, Form 10-K, or Form 8-K that disclosed
material nonpublic information (other than a Form 8-K that disclosed a material new option award grant under Item 5.02(e)), and
ending one business day after the filing or furnishing of such reports.
Equity Compensation Plan Information
The following table shows the number and weighted average exercise price of securities to be issued upon exercise of outstanding
options, warrants and rights, and the number of securities remaining available for future issuance under equity compensation plans at
December 31, 2024:
Number of securities
to be issued upon
exercise of outstanding
options, warrants and
rights
(a)
Weighted average
exercise price of
outstanding
options, warrants
and rights
(b)
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in
column (a))
(c)
Equity compensation plans approved by security holders
2,222,496(1)
$10.73
900,292(2)
Equity compensation plans not approved by security
holders
N/A
N/A
N/A
(1)
Consists of 20,000 options to acquire shares under the Company’s 2023 Equity Plan, 1,976,873 options to acquire shares under the Company’s 2013 Equity Plan, and the
aggregate amount of 225,623 stock options assumed under the Presidio Plans.
(2)
Available under the Company’s 2023 Equity Plan.
Outstanding Equity Awards
The following table shows the number of Company shares of common stock covered by exercisable and unexercisable stock options
and the number of Company unvested shares of restricted common stock held by the Company’s named executive officers as of
December 31, 2024:
Executive Compensation
58
Heritage Commerce Corp • 2025 Proxy Statement

Outstanding Equity Awards at Year End
Name
(a)
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b)
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(c)
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)(d)
Options
Exercise
Price
($)(e)
Options
Expiration
Date
(f)
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)(g)(1)
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
(h)(2)
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)(i)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(j)
Robertson Clay Jones
49,399(3)
—
—
$10.74
7/1/2028
14,378
134,866
—
—
—
—
—
—
—
64,591
605,864
—
—
—
—
—
—
—
76,229
715,028
—
—
Susan Just
—
—
—
—
—
5,334
50,033
—
—
—
—
—
—
—
12,982
121,771
—
—
—
—
—
—
—
12,981
121,762
—
—
Lawrence D. McGovern*
—
—
—
—
—
5,556
52,115
—
—
—
—
—
—
—
28,905
271,129
—
—
—
—
—
—
—
34,092
319,783
—
—
Deborah K. Reuter
—
—
—
—
—
4,338
40,690
—
—
—
—
—
—
—
21,128
198,181
—
—
—
—
—
—
—
25,037
234,847
—
—
Thomas A. Sa
—
—
—
—
—
37,664
353,288
—
—
Dustin M. Warford
11,000
1,000
—
$12.09
4/27/2031
3,083
28,909
—
—
10,000
—
—
$ 8.91
4/28/2030
20,414
191,483
—
—
10,000
—
—
$12.16
5/22/2029
23,953
224,679
—
—
10,000
—
—
$16.80
5/1/2028
—
—
—
—
10,000
—
—
$14.48
5/2/2027
—
—
—
—
*
Mr. McGovern served as the Executive Vice President and Chief Financial Officer until November 18, 2024, after which his served in an advisory role until his departure on
February 14, 2025.
(1)
This column represents the unvested shares for restricted stock, RSU and PRSU awards granted. Restricted stock awards vest 33% per year from the date of grant for the 2021
and 2022 awards. RSUs vest 33% per year from the date of the grant for the 2024 grant. PRSUs are subject to cliff vesting after a three year performance period commencing
in the initial year of the grant. The earned PRSUs, if any, shall vest on the date on which the Board certifies whether and to what extent the performance goal has been achieved
following the end of the performance period.
(2)
The market value of the shares of restricted stock that have not vested is calculated by multiplying the number of shares of stock that have not vested by the closing price of
our common stock at December 31, 2024, as reported on The Nasdaq Global Select Market, which was $9.38.
(3)
Stock options granted by Presidio Bank under the Presidio Plans which the Company assumed at the effective time of the acquisition of Presidio Bank. The options were
adjusted to reflect the acquisition exchange ratio. The options are fully vested.
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
59

Option Exercises and Vested Stock Awards
The following table sets forth information with regard to the exercise and vesting of stock options and vesting of shares of restricted
stock for the year ended December 31, 2024, for each of the named executive officers:
Option Exercises and Stock Vested
Option Awards
Stock Awards
Name
(a)
Number of
Shares
Acquired on
Exercise
(#)(b)
Value Realized
upon Exercise
(c)
Number of
Shares
Acquired on
Vesting
(#)(d)
Value
Realized on
Vesting
(e)(1)
Robertson Clay Jones
31,750
—
30,512
$265,169
Susan Just
—
—
2,666
$ 25,807
Lawrence D. McGovern*
—
—
10,926
$128,147
Deborah K. Reuter
—
—
12,050
$ 98,967
Thomas A. Sa
—
—
—
—
Dustin M. Warford
—
—
6,478
$ 53,801
*
Mr. McGovern served as the Executive Vice President and Chief Financial Officer until November 18, 2024, after which his served in an advisory role until his departure on
February 14, 2025.
(1)
The number of vested shares reflects the gross amount of shares, without netting any shares surrendered to pay taxes. The aggregate dollar amount realized upon vesting was
calculated by multiplying the number of shares by the fair market value on the vesting date.
401(k) Plan
The Company has established a broad based employee benefit plan under Section 401(k) of the Internal Revenue Code of 1986
(“401(k) Plan”). The purpose of the 401(k) Plan is to encourage employees to save for retirement. Eligible employees may make
contributions to the plan subject to the limitations of Section 401(k). The 401(k) Plan trustees administer the 401(k) Plan. The Company
matched up to $3,000 of each employee’s contributions in 2024. The 401(k) Plan allows highly compensated employees to
contribute up to a maximum percentage of their base salary, up to the limits imposed by the Internal Revenue Code, on a pre-tax
basis. Participants choose to invest their account balances from an array of investment options as selected by plan fiduciaries. The
401(k) Plan is designed to provide for distributions in a lump sum after termination of service. However, loans and in service distributions
under certain circumstances such as hardship, attainment of age 59 1/2, or a disability are permitted. For named executive officers,
these amounts are included in the Summary Compensation Table under “All Other Compensation.”
Employee Stock Ownership Plan
In 1997, Heritage Bank of Commerce initiated a broad based employee stock ownership plan (“Stock Ownership Plan”). The Stock
Ownership Plan was subsequently adopted by the Company as the successor corporation to Heritage Bank of Commerce. The Stock
Ownership Plan allows the Company, at its option, to purchase shares of the Company common stock on the open market. To be
eligible to receive an award of shares under the Stock Ownership Plan, an employee must have worked at least 1,000 hours during
the year and must be employed by the Company on December 31. The executive officers have the same eligibility to receive awards as
other employees of the Company. Awards under the Stock Ownership Plan generally vest over four years. In addition, the value of
a participant’s account becomes fully vested upon reaching the age of 65 or termination of employment by death or disability. Since
2010, the Company has suspended contributions to the Stock Ownership Plan. The Stock Ownership Plan was “frozen” as of
January 1, 2019. The amounts of contributions to the Stock Ownership Plan for named executive officers are included in the Summary
Compensation Table in the column entitled “All Other Compensation.”
Supplemental Retirement Plan for Executive Officers
The Company has established the 2005 Amended and Restated Supplemental Executive Retirement Plan (the “SERP”) covering key
employees, including several of the named executive officers. The SERP is a nonqualified defined benefit plan and is unsecured and
unfunded and there are no plan assets. When the Company offers key executives participation in the SERP, the supplemental
retirement benefit awarded is based on the individual’s position within the Company and a vesting schedule determined by the
desirability of incentivizing the retention element of the program. Normally the participant is 100% vested in his or her benefit at
Executive Compensation
60
Heritage Commerce Corp • 2025 Proxy Statement

retirement, upon termination within two years from a change in control, or upon disability. However, the participant’s vested benefit
is reduced for payment prior to retirement age in accordance with the SERP terms, should that be selected by the participant.
The Company has reduced its use of the SERP as a program to attract and retain executives and key employees. Other than the
inclusion of the Chief Executive Officer as a result of the Presidio acquisition in 2019, it has been more than nine years since the
Company has offered SERP benefits to new executives and key employees.
Normal Retirement. A participant whose employment terminates after normal retirement (as defined in the SERP) will receive 100%
of his or her supplemental retirement benefit, payable monthly, commencing on the first of the month following retirement (unless
selected otherwise by the participant and except executive officers who receive their benefit six months after retirement) and continuing
until the death of the participant (unless the joint survivor option is selected).
Early Retirement. In order to be eligible for early retirement benefits, the SERP requires the participant to terminate employment (for
reasons other than for cause or within two years from a change of control) after the date that the participant is at least 55 years
old but prior to normal retirement as defined in the participant’s participation agreement. The participant will then receive the portion
of the supplemental retirement benefit that has vested as of the actual early retirement date. However, for each year (or partial
year) before normal retirement age the participant receives an early retirement benefit, the vested benefit is reduced by five percent.
Unless otherwise selected by the participant, the early retirement benefit will be paid monthly, with payments to commence on the
first day of the month following the participant’s separation from service (except executive officers who receive their benefit six months
from retirement) and continuing until the death of the participant (unless the joint survivor option is selected).
Termination before Early Retirement. If a participant’s employment is terminated without cause or the participant resigns, the
participant shall be eligible to receive the portion of the supplemental retirement benefit that has vested as of the effective date of
termination reduced by 5% for each year (or partial year) that the participant’s benefits are paid prior to the participant’s normal
retirement age. Benefits are payable monthly commencing on the first of the month elected by the participant but not before the
participant’s early retirement age (except executive officers who receive their benefit six months from retirement), and continuing until
the death of the participant (unless the joint survivor option is selected).
Disability. In the event a participant becomes disabled, the participant will receive the actuarial equivalent of his or her supplemental
retirement benefit, payable monthly, commencing on the first of the month following determination that the participant is disabled
and continuing until the death of the participant.
Cause. If a participant’s employment is terminated for cause, the participant forfeits any rights the participant may have under the
SERP.
Change of Control. If a participant’s employment is terminated for any reason (except cause or after qualifying for normal retirement)
within two years following a change of control, the participant will receive 100% of his or her supplemental retirement benefit
commencing at the later of the first month following the age selected by the participant or the first month following the participant’s
separation from service (except executive officers who receive their benefit six months from separation of service), and continuing
until the death of the participant (unless the joint survivor option is selected). In the event payments commence prior to the participant’s
normal retirement age, then the benefit due to the participant will be reduced by 5% for each year (or partial year) that the
participant’s benefit is paid prior to the participant’s normal retirement age.
The Company has purchased life insurance contracts on the participants in order to finance the cost of these benefits and it is
anticipated that, because of the tax advantaged effect of this life insurance investment, the return on the life insurance contracts
will be approximately equal to the accrued benefits to the participants under the SERP, other than in the event of accelerated vesting
because of the change of control.
The following table shows the present value of the accumulated benefit payable to each of the named executive officers that
participate in the SERP, including the number of service years credited to each named executive officer at December 31, 2024:
Name
(a)
Plan Name
(b)
Number
of Years
Credited
Service
(#)(c)
Present Value
of Accumulated
Benefit(1)(2)
($)(d)
Payments
During Last
Fiscal Year
($)(e)
Robertson Clay Jones
Heritage Commerce Corp SERP
14
$ 164,500
—
Lawrence D. McGovern*
Heritage Commerce Corp SERP
26
$1,614,800
—
Deborah K. Reuter
Heritage Commerce Corp SERP
31
$1,012,900
—
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
61

*
Mr. McGovern served as the Executive Vice President and Chief Financial Officer until November 18, 2024, after which his served in an advisory role until his departure on
February 14, 2025.
(1)
The amounts in column (d) were determined using interest rate and mortality rate assumptions consistent with those used in the Company’s consolidated financial statements
and include amounts which the named executive officer may not currently be entitled to receive because such amounts are not vested. Assumptions used in the calculation
of these amounts are included in Note 13 to the Company’s consolidated financial statements for the fiscal year ended December 31, 2024, included in the Company’s Annual
Report on Form 10-K, filed with the SEC on March 10, 2025.
(2)
All SERP agreements are fully vested.
Deferred Compensation Plan
In January 2004, the Company adopted the Heritage Commerce Corp Nonqualified Deferred Compensation Plan for certain
executive officers. The purpose of the plan is to offer those employees an opportunity to elect to defer the receipt of compensation
in order to provide termination of employment and related benefits taxable pursuant to Section 451 of the Internal Revenue Code of
1986, as amended. The plan is intended to be a “top hat” plan (i.e., an unfunded deferred compensation plan maintained for a
select group of management or highly compensated employees) under Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974. The executive may elect to defer up to 100% of any bonus and 50% of any regular salary
into the Deferred Compensation Plan. Amounts deferred are invested in a portfolio of approved investment choices as directed by the
executive. Under the Deferred Compensation Plan, the Company may make discretionary contributions for the executive, but has
not done so. Amounts deferred by executives to the plan will be distributed at a future date they have selected or upon termination
of employment. The executive can select a distribution schedule of up to fifteen years.
Change of Control Arrangements and Termination of Employment
Equity Plans. Several of the named executive officers hold options granted under the 2013 Equity Plan. Under these plans, option
holders will be given 30 days advance notice of the consummation of a change of control transaction during which time the option
holders will have the right to exercise their options, and all outstanding options become immediately vested. The options terminate on
the consummation of the change of control. In the event the option holder dies or becomes disabled, the option holder or his or her
estate will have 12 months to exercise those options that have vested as of the date of termination of employment from a disability or
death.
Equity Awards. Equity awards held by named executive officers are generally subject to vesting requirements. Except for a limited
number of options awarded under our 2013 Equity Plan, the terms of these awards provide that the vesting of the award will accelerate
upon a change of control of the Company, or the holder’s death or disability.
Supplemental Executive Retirement Plan. Several of the named executives are participants in the 2005 Amended and Restated
Supplemental Executive Retirement Plan. If a participant’s employment is terminated without cause or the participant resigns, the
participant shall be eligible to receive the portion of the supplemental retirement benefit that has vested as of the effective date of
termination reduced by 5% for each year (or partial year) that the participant’s benefits are paid prior to the participant’s normal
retirement age. Benefits are payable monthly commencing on the first of the month elected by the participant (except executive
officers who receive their benefits six months from separation from service), but not before the participant’s early retirement age,
and continuing until the death of the participant (unless the joint survivor option is selected). In the event a participant becomes
disabled, the participant will receive the actuarial equivalent of his or her supplemental retirement benefit, payable monthly,
commencing on the first of the month following determination that the participant is disabled and continuing until the death of the
participant. If a participant’s employment is terminated for cause, the participant forfeits any rights the participant may have under the
plan. If a participant’s employment is terminated for any reason (except cause or after qualifying for normal retirement) within
two years following a change of control, the participant will receive 100% of his or her supplemental retirement benefits commencing
at the later of the first month following the age selected by the participant, or the first month following the participant’s separation
from service (except executive officers who receive their benefits six months from separation from service), and continuing until the
death of the participant (unless the joint survivor option is selected). In the event payments commence prior to the participant’s
normal retirement age, then the benefit due to the participant will be reduced by 5% for each year (or partial year) that the participant’s
benefit is paid prior to the participant’s normal retirement age.
Mr. Jones’ Employment Agreement. If Mr. Jones’ employment agreement is terminated without cause, he will be entitled to a lump
sum payment equal to two times his base salary and his average annual bonus during the last three years. If Mr. Jones’ employment
is terminated by the Company or he resigns for good reason 120 days before or within two years after a change in control, he will be
entitled to a lump sum payment of 2.75 times his base salary and his average annual bonus during the last three years. If Mr. Jones’
employment is terminated by the Company without cause, his participation in group insurance coverage will continue on at least the
Executive Compensation
62
Heritage Commerce Corp • 2025 Proxy Statement

same level as at the time of termination for a period of 12 months from the date of termination. If Mr. Jones’ employment is
terminated by the Company as a result of a change in control, or he resigns for a good reason as a result of a change in control,
these benefits will continue for an additional 24 months from the date of termination. Additionally, following the termination of his
employment, Mr. Jones has agreed to refrain from certain activities that would be competitive with the Company within the counties
in California in which the Company has located its headquarters or branch offices, including refraining for 12 months from the date
of termination from soliciting Company employees or clients.
Ms. Just’s Employment Agreement. If Ms. Just’s employment is terminated without cause, she will be entitled to a lump sum
payment equal to one times her base salary and her average annual bonus during the last three years. If Ms. Just’s employment is
terminated by the Company or she resigned for good reason 120 days before or within two years after a change in control, she will be
entitled to a lump sum payment of two times her base salary and her average annual bonus during the last three years. If Ms. Just’s
employment is terminated by the Company without cause, her participation in group insurance coverage will continue on at least
the same level as at the time of termination for a period of 12 months from the date of termination. If Ms. Just’s employment is
terminated by the Company as a result of a change in control, or she resigns for a good reason as a result of a change in control, these
benefits will continue for an additional 24 months from the date of termination. Additionally, following the termination of her
employment, Ms. Just has agreed to refrain from certain activities that would be competitive with the Company within the counties
in California in which the Company has located its headquarters or branch offices, including refraining for 12 months from the
date of termination from soliciting Company employees or clients.
Mr. Sa’s Employment Agreement. If Mr. Sa’s employment agreement is terminated without cause, he will be entitled to a lump sum
payment equal to one times his base salary and his average annual bonus during the last three years. If Mr. Sa’s employment is
terminated by the Company or he resigns for good reason 120 days before or within two years after a change in control, he will be
entitled to a lump sum payment of two times his base salary and his average annual bonus during the last three years. If Mr. Sa’s
employment is terminated by the Company without cause, his participation in group insurance coverage will continue on at least
the same level as at the time of termination for a period of 12 months from the date of termination. If Mr. Sa’s employment is
terminated by the Company as a result of a change in control, or he resigns for a good reason as a result of a change in control, these
benefits will continue for an additional 24 months from the date of termination. Additionally, following the termination of his
employment, Mr. Sa has agreed to refrain from certain activities that would be competitive with the Company within the counties in
California in which the Company has located its headquarters or branch offices, including refraining for 12 months from the date
of termination from soliciting Company employees or clients.
Mr. McGovern’s Employment Agreement. Mr. McGovern served as Executive Vice President and Chief Financial Officer of the
Company until November 18, 2024, and he continued in an advisory role until February 14, 2025. Under Mr. McGovern’s employment
agreement, if Mr. McGovern’s employment was terminated without cause, he would be entitled to a lump sum payment equal to
one times his base salary, his highest annual bonus in the last three years and his annual automobile allowance. In connection with
this agreement the Company paid Mr. McGovern a severance benefit of $661,041 on his separation date. Further, because the
employment agreement was terminated by the Company without cause, his participation in group insurance coverage was to continue
on at least the same level as at the time of termination for a period of 12 months from the date of termination, as a result of which
the Company made a one-time payment of $95,000 upon termination of his employment. Additionally, following the termination of his
employment, Mr. McGovern agreed to refrain from certain activities that would be competitive with the Company within the
counties in California in which the Company has located its headquarters or branch offices, including refraining for 12 months from
the date of termination from soliciting Company employees or clients.
Ms. Reuter’s Employment Agreement. If Ms. Reuter’s employment agreement is terminated without cause, she will be entitled to a
lump sum payment equal to one times her base salary and her average annual bonus during the last three years. If Ms. Reuter’s
employment is terminated by the Company or she resigns for good reason 120 days before or within two years after a change in control,
she will be entitled to a lump sum payment of two times her base salary and her average annual bonus during the last three years.
If Ms. Reuter’s employment is terminated by the Company without cause, her participation in group insurance coverage will continue
on at least the same level as at the time of termination for a period of 12 months from the date of termination. If Ms. Reuter’s
employment is terminated by the Company as a result of a change in control, or she resigns for a good reason as a result of a change
in control, these benefits will continue for an additional 24 months from the date of termination. Additionally, following the
termination of her employment, Ms. Reuter has agreed to refrain from certain activities that would be competitive with the Company
within the counties in California in which the Company has located its headquarters or branch offices, including refraining for
12 months from the date of termination from soliciting Company employees or clients.
Mr. Warford’s Employment Agreement. If Mr. Warford’s employment agreement is terminated without cause, he will be entitled to
a lump sum payment equal to one times his base salary and his average annual bonus during the last three years. If Mr. Warford’s
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
63

employment is terminated by the Company or he resigns for good reason 120 days before or within two years after a change in
control, he will be entitled to a lump sum payment of two times his base salary and his average annual bonus during the last
three years. If Mr. Warford’s employment is terminated by the Company without cause, his participation in group insurance coverage
will continue on at least the same level as at the time of termination for a period of 12 months from the date of termination. If
Mr. Warford’s employment is terminated by the Company as a result of a change in control, or he resigns for a good reason as a
result of a change in control, these benefits will continue for an additional 24 months from the date of termination. Additionally,
following the termination of his employment, Mr. Warford has agreed to refrain from certain activities that would be competitive with
the Company within the counties in California in which the Company has located its headquarters or branch offices, including
refraining for 12 months from the date of termination from soliciting Company employees or clients.
The following tables summarize the payments which would be payable to our named executive officers in the event of various
termination scenarios as of December 31, 2024. This information is for illustrative purposes only. Regardless of the manner in which
a named executive’s employment terminates, the officer would be entitled to: (i) the vested portion of any stock option or restricted
stock, and (ii) the vested portion of the officer’s benefit under the SERP.
Change in
Control
Involuntary
Termination
Without Cause
Termination for
Good Reason
Death
Disability
Robertson Clay Jones
Cash severance under employment agreement
$ 2,557,219
$ 1,859,795
$ 1,859,795
$
— $
—
Health insurance premiums
116,196
58,098
58,098
—
—
Life insurance benefits
—
—
—
700,000
180,000(1)
Long-term care insurance benefits
—
—
—
—
72,000
Split-dollar death benefits (upon death)
—
—
—
1,190,270
—
Unvested restricted stock awards, RSU and PRSU
(accelerated)
1,455,757
—
—
1,455,757
1,455,757
Outplacement services
5,000
—
—
—
—
Total:
$4,134,172
$1,917,893
$1,917,893
$3,346,027 $1,707,757
Susan Just
Cash severance under employment agreement
$
785,262
$
432,682
$
—
$
— $
—
Health insurance premiums
82,364
41,182
—
—
—
Life insurance benefits
—
—
—
700,000
180,000(1)
Long-term care insurance benefits
—
—
—
—
72,000
Unvested restricted stock awards, RSU and PRSU
(accelerated)
293,566
—
—
293,566
293,566
Total:
$1,161,192
$ 473,864
$
—
$ 993,566 $ 545,566
Lawrence D. McGovern(2)
Cash severance under employment agreement
$ 1,305,802
$
652,901
$
—
$
— $
—
Health insurance premiums
82,364
41,182
—
—
—
Life insurance benefits
—
—
—
700,000
180,000(1)
Long-term care insurance benefits
—
—
—
—
72,000
Split-dollar death benefits (upon death)
—
—
—
777,107
—
Unvested restricted stock awards, RSU and PRSU
(accelerated)
643,027
—
—
643,027
643,027
Total:
$2,031,193
$ 694,083
$
—
$2,120,134 $ 895,027
Executive Compensation
64
Heritage Commerce Corp • 2025 Proxy Statement

Change in
Control
Involuntary
Termination
Without Cause
Termination for
Good Reason
Death
Disability
Deborah K. Reuter
Cash severance under employment agreement
$ 1,012,987
$ 506,494
$
—
$
—
$
—
Health insurance premiums
65,413
32,707
—
—
—
Life insurance benefits
—
—
—
700,000
180,000(1)
Long-term care insurance benefits
—
—
—
—
72,000
Split-dollar death benefits (upon death)
—
—
—
561,431
—
Unvested restricted stock awards, RSU and PRSU
(accelerated)
473,718
—
—
473,718
474,718
Total:
$1,552,118
$539,201
$
—
$1,735,149
$725,718
Thomas A. Sa
Cash severance under employment agreement
$ 1,015,000
$ 540,000
$
—
$
—
$
—
Health insurance premiums
51,884
25,942
—
—
—
Life insurance benefits
—
—
—
700,000
180,000(1)
Long-term care insurance benefits
—
—
—
—
72,000
Unvested restricted stock awards, RSU and PRSU
(accelerated)
353,288
—
—
353,288
353,288
Total:
$1,420,172
$565,942
$
—
$1,053,288
$605,288
Dustin M. Warford
Cash severance under employment agreement
$
830,807
$ 468,737
$
—
$
—
$
—
Health insurance premiums
70,751
35,375
—
—
—
Life insurance benefits
—
—
—
700,000
180,000(1)
Long-term care insurance benefits
—
—
—
—
72,000
Unvested restricted stock awards, RSU and PRSU
(accelerated)
445,072
—
—
445,072
445,072
Total:
$1,346,630
$504,112
$
—
$1,145,072
$697,072
(1)
This balance represents the annual payment of long-term disability for the named executive officers. This long-term payment would begin after an elimination period and a twenty-
five week short term disability period. This long-term disability payment will increase by 3% (cost of living adjustment) over the first ten years of payments and cease at age
65.
(2)
Mr. McGovern served as the Executive Vice President and Chief Financial Officer until November 18, 2024, after which his served in an advisory role until his departure on
February 14, 2025.
Executive Compensation
Heritage Commerce Corp • 2025 Proxy Statement
65

Beneficial Ownership of
Common Stock
The following table sets forth information as of February 28, 2025, pertaining to beneficial ownership of the Company’s common
stock by persons known to the Company to own 5% or more of the Company’s common stock, directors and nominees to be elected
to the Board, the executive officers named in the Summary Compensation Table presented in this proxy statement, and all
directors and executive officers of the Company, as a group. This information has been obtained from the Company’s records, or
from information furnished directly by the individual or entity to the Company.
For purposes of the following table, shares issuable pursuant to stock options which may be exercised within 60 days of February 28,
2025, are deemed to be issued and outstanding and have been treated as outstanding in determining the amount and nature of
beneficial ownership and in calculating the percentage of ownership of those individuals possessing such interest, but not for any
other individuals.
Name of Beneficial Owner(1)
Position
Shares
Beneficially
Owned(2)(3)
Exercisable
Options
Percent of
Class(3)
Julianne M. Biagini-Komas
Director
53,560(4)
—
*
Bruce H. Cabral
Director
131,612(5)
7,410
*
Jack W. Conner
Director and Chairman of the Board
161,876(6)
—
*
Jason DiNapoli
Director
377,933(7)
—
*
Stephen G. Heitel
Director
207,066(8)
—
*
Kamran F. Husain
Director
19,072(9)
—
*
Robertson Clay Jones
President and Chief Executive Officer
294,838(10)(21)
49,399
*
Susan Just
Executive Vice President and Chief Credit Officer of
Heritage Bank of Commerce
8,000(11)(21)
—
*
Lawrence D. McGovern(23)
Former Executive Vice President and Chief Financial
Officer
139,972(12)(21)
—
*
Deborah K. Reuter
Executive Vice President/Chief Risk Officer and
Corporate Secretary
89,736(13)(21)
—
*
Laura Roden
Director
50,947(14)
—
*
Thomas A. Sa
ExecutiveVicePresident,ChiefOperatingOfficerand
Interim Financial Officer
—(15)(21)
—
*
Marina H. Park Sutton
Director
125,479(16)
12,350
*
Dustin M. Warford
Executive Vice President, Chief Banking Officer of
Heritage Bank of Commerce
65,026(17)(21)
52,000
*
All directors, and executive officers
(16 individuals)(22)
1,667,273
134,159
2.71%
BlackRock Inc.
5,305,057(18)
—
8.63%
Dimensional Fund Advisors LP
3,262,544(19)
—
5.31%
FJ Capital Management LLC
3,383,156(20)
—
5.50%
*
Less than one percent (1%).
(1)
Except as otherwise noted, the address for all persons is c/o Heritage Commerce Corp, 224 Airport Parkway, San Jose, California, 95110.
(2)
Subject to applicable community property laws and shared voting and investment power with a spouse, the persons listed have sole voting and investment power with respect
to such shares unless otherwise noted. Listed amounts reflect all previous stock splits and stock dividends.
(3)
Includes shares beneficially owned (including options exercisable within 60 days of February 28, 2025, see “Exercisable Options”).
(4)
Includes 5,889 shares of restricted stock that have not vested and of which Ms. Biagini-Komas has the right to vote.
(5)
Includes 118,313 shares held indirectly by trust. Also includes 5,889 shares of restricted stock that have not vested and of which Mr. Cabral has the right to vote.
66
Heritage Commerce Corp • 2025 Proxy Statement

(6)
Includes 44,344 shares held by Mr. Conner’s spouse. Also includes 10,011 shares of restricted stock that have not vested and of which Mr. Conner has the right to vote.
(7)
Includes 342,437 shares held by a partnership. Also includes 5,889 shares of restricted stock that have not vested and of which Mr. DiNapoli has the right to vote.
(8)
Includes 48,308 shares held by Individual Retirement Account. Also includes 5,889 shares of restricted stock that have not vested and of which Mr. Heitel has the right to vote.
(9)
Includes 5,889 shares of restricted stock that have not vested and of which Mr. Husain has the right to vote.
(10)
Also includes 14,378 shares of restricted stock that have not vested and of which Mr. Jones has the right to vote.
(11)
Includes 5,334 shares of restricted stock that have not vested and of which Ms. Just has the right to vote.
(12)
Includes 4,980 shares held by Mr. McGovern in a personal Individual Retirement Account. Includes 113,550 shares held indirectly by trust.
(13)
Includes 4,338 shares of restricted stock that have not vested and of which Ms. Reuter has the right to vote.
(14)
Includes 35,000 shares held by living trust. Includes 5,889 shares of restricted stock that have not vested and of which Ms. Roden has the right to vote.
(15)
As of February 28, 2025, Mr. Sa did not own any shares, including any options exercisable within 60 days of February 28, 2025.
(16)
Includes 48,165 shares held indirectly by a trust. Includes 5,889 shares of restricted stock that have not vested and of which Ms. Sutton has the right to vote.
(17)
Includes 3,082 shares of restricted stock that have not vested and of which Mr. Warford has the right to vote.
(18)
BlackRock, Inc. is an investment management firm and may be deemed to beneficially own 5,305,057 shares of the Company, which are held of record by clients of BlackRock,
Inc. The address for BlackRock, Inc. is 50 Hudson Yards, New York, NY 10001. All of the foregoing information has been obtained by Schedule 13G filed with the SEC on
February 7, 2025.
(19)
Dimensional Fund Advisors LP is an investment advisor to four registered investment companies and serves as investment manager or sub-adviser to certain commingled
funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively the “Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors
LP may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional Fund Advisors LP or its subsidiaries
(collectively, “Dimensional”) may possess voting and/or investment power over the securities of the Issuer that are owned by the Funds, and may be deemed to be the beneficial
owner of the shares of the Issuer held by the Funds. However, all securities reported in this schedule are owned by the Funds. Dimensional disclaims beneficial ownership of
such securities. The address for Dimension Fund Advisors LP is 6300 Bee Cave Road, Building One, Austin, TX 78746. All of the foregoing information has been obtained by
Schedule 13G filed with the SEC on October 31, 2024.
(20)
Consists of 2,907,845 shares of common stock of the Issuer held by Financial Opportunity Fund LLC and 94,775 shares of common stock of the Issuer held by Financial
Opportunity Long/Short Fund LLC, of which FJ Capital Management LLC is the managing member, and 380,536 shares of common stock of the Issuer held by managed accounts
that FJ Capital Management manages. Martin Friedman is the Managing Member of FJ Capital Management LLC; as such, Mr. Friedman may be deemed to be a beneficial
owner of reported shares but as to which Mr. Friedman disclaims beneficial ownership. The address for FJ Capital Management LLC is 7901 Jones Branch Drive, Suite 210 McLean,
VA 22102. All of the foregoing information has been obtained by Schedule 13G filed with the SEC on February 12, 2025.
(21)
The Company’s Employee Stock Ownership Plan owns 83,319 shares of our common stock, all of which have been allocated. These include shares held for the account of the
following named executive officers and includes in the table for Mr. McGovern 5,839 shares, Ms. Reuter 4,078 shares, Mr. Warford 385 shares, and zero shares for Ms. Just, Mr. Sa
and Mr. Jones. Mr. Sa is one of the three trustees of the Employee Stock Ownership Plan. As trustees, they have the power to vote any unallocated shares of the Employee
Stock Ownership Plan (currently no shares are unallocated) and allocated shares for which voting instructions are not otherwise provided.
(22)
Includes directors, director nominees and current executive officers.
(23)
Mr. McGovern served as Executive Vice President and Chief Financial Officer until November 18, 2024, after which he continued to serve in an advisory role to assist with the
transition of the new Interim Chief Financial Officer until his departure on February 14, 2025.
Beneficial Ownership of Common Stock
Heritage Commerce Corp • 2025 Proxy Statement
67

Proposal 4—Ratification of
Independent Registered Public
Accounting Firm
The Board, upon the recommendation of its Audit Committee, has ratified the selection of Crowe LLP to serve as our independent
registered public accounting firm for 2025, subject to ratification by our shareholders. A representative of Crowe LLP will be present
at the Annual Meeting to answer questions and will have the opportunity to make a statement if so desired.
We are asking our shareholders to ratify the selection of Crowe LLP as our independent registered public accounting firm. Although
ratification is not required by our Bylaws, the SEC or The Nasdaq Stock Market, the Board is submitting the selection of Crowe LLP
to our shareholders for ratification because we value our shareholders’ views on the Company’s independent registered public
accounting firm and as a matter of good corporate practice. In the event that our shareholders fail to ratify the selection of Crowe
LLP, however, we reserve the discretion to retain Crowe LLP as our independent registered public accounting firm for 2025. Even if the
selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at
any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders.
Audit Committee Report
In accordance with its written charter adopted by the Company’s Board, the Audit Committee assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the accounting, auditing, and financial reporting practices of the Company.
During 2024, the Audit Committee met 11 times. The Audit Committee discussed the interim financial information contained in
each quarterly earnings announcement with the Chief Financial Officer prior to public release. The Audit Committee also discussed
the interim financial statements with the Chief Financial Officer and the independent auditors prior, with and without management
present, to the filing of each quarterly Form 10-Q and the annual report on Form 10-K.
In discharging its oversight responsibility as to the audit process, the Audit Committee obtained from the independent auditors a
formal written statement describing all relationships between the auditors and the Company that might bear on the auditors’
independence, discussed with the auditors any relationships that may impact their objectivity and independence and satisfied itself
as to the auditors’ independence. The Audit Committee reviewed with both the independent auditors and the internal auditor’s
audit plans, scope, and results.
The Audit Committee discussed and reviewed with the independent auditor all communications required by the standards of the
Public Company Accounting Oversights Board (“PCAOB”), including those described in Auditing Standard No. 1301, Communication
with Audit Committees, and discussed and reviewed the results of the independent auditor’s audit of the consolidated financial
statements. The Audit Committee also reviewed and discussed the results of the internal audit examinations.
The Audit Committee reviewed the audited financial statements of the Company as of and for the year ended December 31, 2024,
with management and the independent auditors. The Audit Committee has also reviewed “Management’s Assessment over Financial
Reporting” and the independent registered public accounting firm’s opinion on the effectiveness of the Company’s internal control
over financial reporting, and discussed these reports and opinions with management and the independent registered public accounting
firm prior to the Company’s filing of its Annual Report on Form 10-K for the year ended December 31, 2024.
68
Heritage Commerce Corp • 2025 Proxy Statement

Based on the above mentioned review and discussion with management and the independent auditors, the Audit Committee
recommended to the Board of Directors that the Company’s audited financial statements be included in its Annual Report on Form 10-K
for the year ended December 31, 2024, for filing with the SEC.
Heritage Commerce Corp
Audit Committee
Julianne M. Biagini-Komas, Chair
Kamran F. Husain
Laura Roden
Marina H. Park Sutton
March 7, 2025
The Audit Committee report shall not be deemed incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or the Securities Act of 1934, and shall not otherwise be
deemed filed under these Acts.
Independent Registered Public Accounting Firm Fees
The following table summarizes the aggregate fees billed to the Company by its independent auditor:
Category of Services
Fiscal Year
2024
Fiscal Year
2023
Audit fees(1)
$760,500
$685,000
Audit related fees(2)
75,000
45,000
Tax fees(3)
100,000
100,650
All other fees(4)
11,000
10,500
Total accounting fees
$946,500
$841,150
(1)
Fees for audit services for 2024 and 2023 consisted of the audit of the Company’s annual financial statements, review of the consolidated financial statements
included in the Company’s Quarterly Reports on Form 10-Q, and the audit of the Company’s internal control over financial reporting as required by Section 404 of the
Sarbanes-Oxley Act of 2002.
(2)
Fees for audit related services for 2024 and 2023 consisted of financial accounting and reporting consultations, consents and other services related to SEC matters,
and audits of the consolidated financial statements of the Company’s employee benefit plans.
(3)
Fees for tax services for 2024 and 2023 consisted of tax compliance and tax planning and advice.
• Fees for tax compliance services totaled $86,000 and $69,000 in 2024 and 2023, respectively. Tax compliance services are those rendered based upon facts already
in existence or transactions that have already occurred to document, compute, and obtain government approval for amounts to be included in tax filings. Such
services consisted primarily of preparation of the Company’s consolidated federal and state income tax returns, trust preferred returns and a limited liability company
tax return for a subsidiary entity.
• Tax planning and advice services are those rendered with respect to proposed transactions, assistance regarding the Internal Revenue Code Section 280(G) “excise
tax gross up” disclosures in the proxy statement for hypothetical events, and consultation with management regarding various internal control and accounting
matters. Tax planning and advice services totaled $14,000 in 2024 and $31,650 in 2023, respectively.
(4)
All other fees consisted primarily of consulting services for the Company’s strategic objectives merger and acquisitions, and other discussions.
The ratio of tax planning and advice fees and all other fees to audit fees, audit related fees and tax compliance fees was 2.71% for
2024 and 5.28% for 2023.
In considering the nature of the services provided by the independent registered public accounting firm, the Audit Committee
determined that such services are compatible with the provision of independent audit services. The Audit Committee discussed
these services with the independent registered public accounting firm and Company management to determine that they are
permitted under the rules and regulations concerning auditor independence promulgated by the SEC and the Public Company
Accounting Oversight Board.
Proposal 4—Ratification of Independent Registered Public Accounting Firm
Heritage Commerce Corp • 2025 Proxy Statement
69

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services
of Independent Registered Public Accounting Firm
Under applicable SEC rules, the Audit Committee is required to pre-approve the audit and non-audit services performed by the
independent registered public accountants in order to ensure that they do not impair the auditors’ independence. The SEC’s rules
specify the types of non-audit services that the independent registered public accountants may not provide to its audit client and
establish the Audit Committee’s responsibility for administration of the engagement of the independent registered public accountants.
Consistent with the SEC’s rules, the Audit Committee Charter requires that the Audit Committee review and pre-approve all audit
services and permitted non-audit services provided by the independent registered public accountants to the Company or any of its
subsidiaries. The Audit Committee may delegate pre-approval authority to the Chair of the Audit Committee and if it does, the decisions
of that member must be presented to the full Audit Committee at its next scheduled meeting.
Recommendation of the Audit Committee and the Board of Directors
The Audit Committee of the Board of Directors and the Board of Directors
recommends approval of the ratification of the appointment of Crowe LLP
as the Company’s independent registered public accounting firm for the
year ending December 31, 2025. The proxy holders intend to vote all
proxies they hold in favor of the proposal. If no instruction is given, the
proxy holders intend to vote FOR approval of the proposal.
Proposal 4—Ratification of Independent Registered Public Accounting Firm
70
Heritage Commerce Corp • 2025 Proxy Statement

2025 Annual Meeting
Information About the 2025
Annual Meeting of
Shareholders Questions &
Answers
Why did you send me this proxy statement?
We sent you this proxy statement and the enclosed proxy card because our Board is soliciting your proxy to vote at the 2025 Annual
Meeting of Shareholders (“Annual Meeting”). This proxy statement summarizes the information you need to know to cast an
informed vote at the Annual Meeting. Heritage Commerce Corp is referred to in this proxy statement as the “Company.” Along with
this proxy statement, we are also sending you the Heritage Commerce Corp 2024 Annual Report on Form 10-K, which includes our
consolidated financial statements.
How will our Annual Meeting be held?
The Annual Meeting will be held in a virtual-only meeting format, via live video webcast that will provide shareholders with the
ability to participate in the Annual Meeting, vote their shares and ask questions. We are implementing a virtual-only meeting format
in order to leverage technology to enhance shareholder access to the Annual Meeting by enabling attendance and participation
from any location around the world. We believe that the virtual-only meeting format will give shareholders the opportunity to exercise
the same rights as if they had attended an in-person meeting and believe that these measures will enhance shareholder access
and encourage participation and communication with our Board and management.
We believe a virtual-only meeting format facilitates shareholder attendance and participation by enabling all shareholders to
participate fully and equally, and without cost, using an Internet-connected device from any location. In addition, the virtual-only
meeting format increases our ability to engage with all shareholders, regardless of size, resources or physical location.
Shareholders of record and beneficial owners at the close of the business day on March 31, 2025, the record date, will have the
ability to submit questions and vote electronically at the Annual Meeting via the virtual-only meeting platform.
Only shareholders of record and beneficial owners of shares of our common stock as of the close of the business day on March 31,
2025, the record date, may attend and participate in the Annual Meeting, including voting and asking questions electronically before
and during the virtual Annual Meeting via the virtual-only meeting platform. You will not be able to attend the Annual Meeting in
person.
In order to attend the Annual Meeting, you must register at register.proxypush.com/HTBK. Upon completing your registration, you
will receive further instructions via email, including a unique link that will allow you access to the Annual Meeting and to vote and
submit questions before and during the Annual Meeting via the virtual-only meeting platform.
As part of the registration process, you must enter the control number located on your proxy card or voting instruction form. If you
are a beneficial owner of shares registered in the name of a broker, bank or other nominee, you will also need to provide the registered
name on your account and the name of your broker, bank or other nominee as part of the registration process.
On the day of the Annual Meeting, May 22, 2025, shareholders may begin to log in to the virtual-only Annual Meeting 15 minutes
prior to the Annual Meeting. The Annual Meeting will begin promptly at 1:00 p.m., Pacific Daylight Time.
We will have technicians ready to assist you with any technical difficulties you may have accessing the Annual Meeting. If you
encounter any difficulties accessing the virtual-only Annual Meeting platform, including any difficulties voting or submitting questions,
you may call the technical support number that will be posted in your instructional email.
Heritage Commerce Corp • 2025 Proxy Statement
71

Our virtual Annual Meeting will allow shareholders to submit questions before and during the Annual Meeting. During a designated
question and answer period at the Annual Meeting, we will respond to appropriate questions submitted by shareholders.
We will answer as many shareholder-submitted questions as time permits, and any questions that we are unable to address during
the Annual Meeting will be answered following the meeting, with the exception of any questions that are irrelevant to the purpose of
the Annual Meeting or our business or that contain inappropriate or derogatory references. If we receive substantially similar
questions, we will group such questions together and provide a single response to avoid repetition.
Who is entitled to vote?
We will begin sending this proxy statement, the attached Notice of Annual Meeting and the enclosed proxy card on or about April 7,
2025, to all shareholders entitled to vote. Shareholders who were the record owners of the Company’s common stock at the close
of the business day on March 31, 2025, are entitled to vote. On this record date, there were 61,611,121 shares of common stock
outstanding.
What constitutes a quorum?
A majority of the outstanding shares of the common stock entitled to vote at the Annual Meeting must be present, in person or by
proxy, in order to constitute a quorum. We can only conduct the business of the Annual Meeting if a quorum has been established. We
will include proxies marked as abstentions and broker non-votes in determining the number of shares present at the Annual
Meeting.
How many votes do I have?
Each share of common stock entitles you to one vote in person or by proxy, for each share of common stock outstanding in your
name on the books of the Company as of March 31, 2025, the record date for the Annual Meeting on any matter submitted to a vote
of the shareholders, except that in connection with the election of directors (Proposal 1), you may cumulate your shares (see
“What is cumulative voting and how do I cumulate my shares?” on page 73). The proxy card indicates the number of votes that you
have as of the record date.
Is voting confidential?
We have a confidential voting policy to protect the privacy of our shareholders’ votes. Under this policy, ballots, proxy cards and
voting instructions returned to banks, brokers and other nominees are kept confidential. Only the proxy tabulator and the Inspector
of Election have access to the ballots, proxy cards and voting instructions.
How do I vote by proxy?
You may vote by granting a proxy or, for shares held in street name, by submitting voting instructions to your broker or other
nominee. If your shares are held by a broker or other nominee, you will receive instructions that you must follow to have your shares
voted. If you hold your shares as a shareholder of record, you may vote by completing, signing and dating the enclosed proxy card
and returning it promptly in the envelope provided. You may also vote by telephone or over the Internet (see proxy card). Returning the
proxy card will not affect your right to participate on line at the virtual the Annual Meeting and vote.
If you properly fill in your proxy card and send it to us in time to vote, your “proxy” (one of the individuals named on your proxy card)
will vote your shares as you have directed. If you sign the proxy card but do not make specific choices, your proxy will vote your
shares as recommended by the Board as follows:
• “FOR” the election of all 8 nominees for director;
• “FOR” the approval of an amendment to the Company’s Bylaws to increase the range of the permitted number of directors;
• “FOR” the approval of the advisory proposal on the Company’s 2024 executive compensation; and
• “FOR” the ratification of the selection of Crowe LLP as our independent registered public accounting firm for 2025.
For the election of directors (Proposal 1), a shareholder may withhold authority for the proxy holders to vote for any one or more of
the nominees by marking the enclosed proxy card in the manner instructed on the proxy card. Unless authority to vote for the nominees
is withheld, the proxy holders will vote the proxies received by them for the election of the nominees listed on the proxy card as
directors of the Company. Your proxy does not have an obligation to vote for nominees not identified on the preprinted proxy card
(that is, write in candidates). Should any shareholder attempt to “write in” a vote for a nominee not identified on the preprinted card
(and described in these proxy materials), your proxy will NOT vote the shares represented by your proxy card for any such write in
2025 Annual Meeting Information About the 2025 Annual Meeting of Shareholders Questions & Answers
72
Heritage Commerce Corp • 2025 Proxy Statement

candidate, but will instead vote the shares for any and all other indicated candidates. If any of the nominees should be unable or
decline to serve, which is not now anticipated, your proxy will have discretionary authority to vote for a substitute who shall be
designated by the present Board to fill the vacancy. In the event that additional persons are nominated for election as directors, your
proxy intends to vote all of the proxies in such a manner, in accordance with the cumulative voting, as will assure the election of as
many of the nominees identified on the proxy card as possible. In such event, the specific nominees to be voted for will be determined
by the proxy holders, in their sole discretion.
What do I have to do to vote my shares if they are held in the name of my broker?
If your shares are held by your broker, sometimes called “street name” shares, you must vote your shares through your broker. You
should receive a form from your broker asking how you want to vote your shares. Follow the instructions on that form to give voting
instructions to your broker. Under the rules that govern brokers who are voting with respect to shares held in street name, brokers
have the discretion to vote such shares on routine, but not on non-routine matters. A “broker non vote” occurs when your broker does
not vote on a particular proposal because the broker does not receive instructions from the beneficial owner and does not have
discretionary authority. Proposal 1 (election of directors), Proposal 2 (amendment to the Company’s Bylaws) and Proposal 3 (advisory
proposal on the 2024 executive compensation) are non-routine items on which a broker may vote only if the beneficial owner has
provided voting instructions. Proposal 4 (ratification of independent registered public accounting firm for 2025) is a routine item.
How do I vote at the virtual meeting?
If you plan to attend the virtual Annual Meeting and desire to vote at the meeting you will have the opportunity to do so, but we
recommend you send in a proxy card to vote. However, if your shares are held in the name of your broker, bank or other nominee, you
must provide the proper codes as set forth in the proxy card.
May I vote over the Internet or by telephone?
Shareholders whose shares are registered in their own names may vote either over the Internet or by telephone. Special instructions
for voting over the Internet or by telephone are set forth on the enclosed proxy card. The Internet and telephone voting procedures
are designed to authenticate the shareholder’s identity and to allow shareholders to vote their shares and confirm that their voting
instructions have been properly recorded.
If your shares are registered in the name of a bank or brokerage firm, you may be eligible to vote your shares by telephone or over
the Internet. Most U.S. banks and brokerage firms are clients of Broadridge Financial Solutions (“Broadridge”). As such, shareholders
who receive either a paper copy of their proxy statement or electronic delivery notification have the opportunity to vote by
telephone or over the Internet. If your bank or brokerage firm is a Broadridge client, your proxy card or Voting Instruction Form
(“VIF”) will provide the instructions. If your proxy card or VIF does not provide instructions for Internet and telephone voting, please
complete and return the proxy card in the self-addressed, postage paid envelope provided.
What is cumulative voting and how do I cumulate my shares?
For the election of directors (Proposal 1), California law provides that a shareholder of a California corporation, or his/her proxy, may
cumulate votes in the election of directors. That is, each shareholder may cast that number of votes equal to the number of shares
owned by the shareholder, multiplied by the number of directors to be elected, and he/she may cumulate such votes for a single
candidate or distribute such votes among as many candidates as he/she deems appropriate.
Certain affirmative steps must be taken by you in order to be entitled to vote your shares cumulatively for the election of directors.
At the shareholders’ meeting at which directors are to be elected, no shareholder is entitled to cumulate votes (i.e., cast for any one
or more candidates a number of votes greater than the number of the shareholder’s shares) unless the candidates’ names have
been placed in nomination at the meeting and prior to the commencement of the voting and at least one shareholder has given notice
at the meeting and prior to commencement of the voting of the shareholder’s intention to cumulate votes. If any shareholder has
given such notice, then every shareholder entitled to vote may cumulate votes for candidates in nomination and give one candidate
a number of votes equal to the number of directors to be elected multiplied by the number of votes to which that shareholder’s
shares are entitled, or distribute the shareholder’s votes on the same principle among any or all of the candidates, as the shareholder
thinks appropriate. The candidates receiving the highest number of votes, up to the number of directors to be elected, will be
elected.
The proxies designated on your proxy card do not, at this time, intend to cumulate votes, to the extent they have the shareholder’s
discretionary authority to do so, pursuant to the proxies solicited in this proxy statement unless another shareholder gives notice to
2025 Annual Meeting Information About the 2025 Annual Meeting of Shareholders Questions & Answers
Heritage Commerce Corp • 2025 Proxy Statement
73

cumulate, in which case your proxy may cumulate votes in accordance with the recommendations of the Board. Therefore,
discretionary authority to cumulate votes in such an event is solicited in this proxy statement.
May I change my vote after I return my proxy?
If you fill out and return the enclosed proxy card, or vote by telephone or over the Internet, you may change your vote at any time
before the vote is conducted at the Annual Meeting. You may change your vote in any one of four ways:
• You may send to the Company’s Corporate Secretary another completed proxy card with a later date.
• You may notify the Company’s Corporate Secretary in writing before the Annual Meeting that you have revoked your proxy.
• You may virtually attend the Annual Meeting and vote online.
• If you have voted your shares by telephone or over the Internet, you can revoke your prior telephone or Internet vote by
recording a different vote, or by signing and returning a proxy card dated as of a date that is later than your last telephone or
Internet vote.
What if I receive multiple proxy cards?
If you receive multiple proxy cards, your shares are probably registered differently or are in more than one account. Vote all proxy
cards received to ensure that all your shares are voted. Unless you need multiple accounts for specific purposes, we recommend that
you consolidate as many of your accounts as possible under the same name and address. If the shares are registered in your name,
contact our transfer agent, EQ Shareowner Services, 1-866-883-3382; otherwise, contact your bank, broker or other nominee.
The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure called
“householding.” Under this procedure, multiple shareholders who reside at the same address may receive a single copy of our annual
report and proxy materials, unless the affected shareholder has provided contrary instructions. This procedure reduces printing
costs and postage fees and helps protect the environment. Upon written or oral request, the Company will undertake to promptly
deliver a separate copy of the annual report and other proxy materials to any shareholder at a shared address to which a single copy
of any of those documents was delivered. To receive a separate copy of the materials, you may contact our transfer agent, EQ
Shareowner Services, 1-866-883-3382; otherwise, contact your bank, broker or other nominee. Any shareholders who share the
same address and currently receive multiple copies of the Company’s annual report and other proxy materials who wish to receive
only one copy in the future can contact our transfer agent at the telephone number listed above or their bank, broker or other nominee.
What vote is required to approve each proposal?
Approval of Proposal 1 (election of directors) requires a plurality of votes cast for each nominee. This means that the 8 nominees
who receive the most votes will be elected. So, if you do not vote for a particular nominee, or you indicate “WITHHOLD AUTHORITY”
to vote for a particular nominee on your proxy card, your vote will not count either “for” or “against” the nominee. Abstentions will
not have any effect on the outcome of the vote. You may cumulate your votes in the election of directors as described under “What is
cumulative voting and how do I cumulate my shares?” on page 73. Broker non-votes will not count as a vote on the proposal and
will not affect the outcome of the vote.
Approval of Proposal 2 (approval of an amendment to the Company’s Bylaws to increase the range of the permitted number of
directors) requires the affirmative vote of a majority of the outstanding shares entitled to vote.
Approval of Proposal 3 (approval of the advisory proposal on the 2023 executive compensation) and Proposal 4 (ratification of
independent registered public accounting firm for 2024) each requires a vote that satisfies two criteria: (i) the affirmative vote for the
proposal must constitute a majority of the common shares present or represented by proxy and voting on the proposal at the
Annual Meeting and (ii) the affirmative vote for the proposal must constitute a majority of the common shares required to constitute
the quorum. For purposes of Proposals 3 and 4, abstentions and broker non-votes will not affect the outcome under clause (i),
which recognizes only actual votes cast. However, abstentions and broker non-votes will affect the outcome under clause (ii) if the
number of affirmative votes, though a majority of the votes represented, does not constitute a majority of the voting power required to
constitute a quorum. The ratification of the appointment of the independent registered public accounting firm for 2025 is a matter
on which a broker or other nominee is generally empowered to vote and, therefore, no broker non-votes are expected to exist with
respect to Proposal 4.
How will voting on any other business be conducted?
Your proxy card confers discretionary authority to your proxy to vote your shares on the matters which may properly be presented for
action at the Annual Meeting, and may include action with respect to procedural matters pertaining to the conduct of the Annual
Meeting.
2025 Annual Meeting Information About the 2025 Annual Meeting of Shareholders Questions & Answers
74
Heritage Commerce Corp • 2025 Proxy Statement

What are the costs of soliciting these proxies?
We will pay all the costs of soliciting these proxies. In addition to mailing proxy soliciting material, our directors, officers and
employees also may solicit proxies in person, by telephone or by other electronic means of communication for which they will receive
no compensation. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to
their principals and to obtain authority to execute proxies. We will then reimburse them for their reasonable expenses. We have hired
Advantage Proxy to seek the proxies of custodians, such as brokers, which hold shares which belong to other people. This service
will cost the Company approximately $5,500 plus expenses.
How do I obtain an Annual Report on Form 10-K?
A copy of our 2024 Annual Report on Form 10-K accompanies this proxy statement. If you would like another copy of this report, we
will send you one without charge. The Annual Report on Form 10-K includes a list of exhibits filed with the Securities and Exchange
Commission (“SEC”), but does not include the exhibits. If you wish to receive copies of the exhibits, we will send them to you. Please
write to:
Heritage Commerce Corp
224 Airport Parkway
San Jose, California 95110
Attention: Executive Vice President and Corporate Secretary
You can also find out more information about us at our website www.heritagecommercecorp.com.
Our website is available for information purposes only and should not be relied upon for investment purposes, nor is it
incorporated by reference into this proxy statement. On our website you can access electronically filed copies of our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Section 16 filings, and amendments to those
reports and filings, free of charge. The SEC also maintains a website at www.sec.gov that contains reports, proxy statements
and other information regarding SEC registrants, including the Company.
2025 Annual Meeting Information About the 2025 Annual Meeting of Shareholders Questions & Answers
Heritage Commerce Corp • 2025 Proxy Statement
75

Other Business
If any matters not referred to in this proxy statement come before the meeting, including matters incident to conducting the
meeting, the proxy holders will vote the shares represented by proxies in accordance with their best judgment. Management is not
aware of any other business to come before the meeting and, as of the date of the preparation of this proxy statement, no shareholder
has submitted to management any proposal to be acted upon at the meeting.
76
Heritage Commerce Corp • 2025 Proxy Statement

Shareholder Proposals for
2026 Meeting
For a shareholder proposal to be included in the proxy statement for the 2026 Annual Meeting, it must comply with SEC Rule 14a-8
and be received by the Secretary of the Company at the address below no later than December 8, 2025.
A shareholder who intends to present a proposal at the Company’s 2026 Annual Meeting other than pursuant to Rule 14a-8 must
comply with our Bylaws, which provide that the notice of such intention must be received by the Secretary of the Company at the
address set forth below no earlier than close of business on January 22, 2026 and no later than close of business on February 21, 2026,
and such proposal must be a proper matter for shareholder action under California law. Any such notice must meet the other
requirements in our Bylaws.
Shareholders who intend to solicit proxies in reliance on the SEC’s universal proxy rule for director nominees submitted under the
advance notice requirements of our Bylaws must comply with the additional requirements of SEC Rule 14a-19(b).
Notices of intention to present proposals or nominate directors at the 2026 Annual Meeting, and all supporting materials required by
our Bylaws, must be submitted by mail to Corporate Secretary, Heritage Commerce Corp, 224 Airport Parkway, San Jose, California,
95110.
The Company reserves the right to reject, rule out of order, or take other appropriate action with respect to any proposal or
nomination that does not comply with these and other applicable requirements. The submission of a shareholder proposal or proxy
access or other director nomination does not guarantee that it will be included in our proxy statement.
HERITAGE COMMERCE CORP
Deborah K. Reuter
Executive Vice President, Chief Risk Officer and Corporate Secretary
April 7, 2025
Heritage Commerce Corp • 2025 Proxy Statement
77

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2024 Annual Report |
On Form 10-K

(This page has been left blank intentionally.)

UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 
 
FORM 10-K 
 
(MARK ONE) 
☒ 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934  
 
For the fiscal year ended December 31, 2024 
 
 
OR 
 
☐ 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934 
 
FOR THE TRANSITION PERIOD FROM                                      TO 
Commission file number 000-23877 
Heritage Commerce Corp 
(Exact name of Registrant as Specified in its Charter) 
 
California 
(State or Other Jurisdiction of 
Incorporation or Organization) 
77-0469558 
(I.R.S. Employer 
Identification Number) 
 
224 Airport Parkway 
San Jose, California 95110 
(Address of Principal Executive Offices including Zip Code) 
(408) 947-6900 
(Registrant’s Telephone Number, Including Area Code) 
Securities registered pursuant to Section 12(b) of the Act: 
 
 
 
 
 
Title of Each Class 
     
Trading Symbol 
     Name of each exchange on which Registered 
Common Stock, No Par Value 
 
HTBK 
 
The Nasdaq Stock Market LLC 
(The Nasdaq Global Select Market) 
Securities registered pursuant to Section 12(g) of the Act: None 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes   No  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes   No  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No  
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T 
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth 
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer  
Accelerated filer  
Non-accelerated filer  
Smaller reporting company ☐
 
 
 
 
 
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised 
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial 
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report  ☒ 
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the 
correction of an error to previously issued financial statements.   
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the 
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐  No  
The aggregate market value of the common stock held by non-affiliates of the Registrant as of June 30, 2024, based upon the closing price on that date of $8.70 per share as 
reported on the Nasdaq Global Select Market, and 47,494,947 shares held, was approximately $413.2 million. 
As of February 14, 2025, there were 61,442,934 shares of the Registrant’s common stock (no par value) outstanding. 
 
DOCUMENTS INCORPORATED BY REFERENCE 
Portions of the Registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the 2025 
Annual Meeting of Shareholders to be held on May 22, 2025 are incorporated by reference into Part III of this Report. The proxy statement will be filed with the Securities and Exchange 
Commission not later than 120 days after the Registrant’s fiscal year ended December 31, 2024. 
 
 

HERITAGE COMMERCE CORP 
INDEX TO ANNUAL REPORT ON FORM 10-K 
FOR YEAR ENDED DECEMBER 31, 2024 
Page
PART I.
Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38
Item 1C. Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38
Item 2.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
Item 3.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43
Item 4.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43
PART II.
Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases 
of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43
Item 6.
[RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . .
45
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
Item 8.
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures . . . . . .
82
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
83
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . .
83
PART III.
Item 10.
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
Item 11.
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder 
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
Item 13.
Certain Relationships and Related Transactions and Director Independence . . . . . . . . . . . . . . . . . . .
85
Item 14.
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85
PART IV.
Item 15.
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85
Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
88
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
89
 
2
 
Heritage Commerce Corp • 2024 Annual Report

 
Cautionary Note Regarding Forward-Looking Statements 
This Annual Report on Form 10-K contains various statements that may constitute forward-looking statements 
within the meaning of Section 27A of the Securities Act of 1933, as amended, Rule 175 promulgated thereunder, and 
Section 21E of the Securities Exchange Act of 1934, as amended, Rule 3b-6 promulgated thereunder and are intended to 
be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements about our 
expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be 
forward-looking. These forward-looking statements often can be, but are not always, identified by the use of words such 
as “assume,” “expect,” “intend,” “plan,” “project,” “believe,” “estimate,” “predict,” “anticipate,” “may,” “might,” 
“should,” “could,” “goal,” “potential” and similar expressions. We base these forward-looking statements on our current 
expectations and projections about future events, our assumptions regarding these events and our knowledge of facts at 
the time the statements are made. Forward-looking statements may include, among other things, statements relating to our 
projected growth, anticipated future financial performance, management’s long-term performance goals and operational 
strategies, the performance of our loan and investment portfolios, as well as statements relating to the anticipated effects 
of those conditions, events and developments on the Company’s financial condition and results of operations. 
These forward looking statements are subject to various risks and uncertainties that may be outside our control 
and our actual results could differ materially from our projected results. Risks and uncertainties that could cause our 
financial performance to differ materially from our goals, plans, expectations and projections expressed in forward-looking 
statements include those set forth in our filings with the Securities and Exchange Commission (“SEC”), Item 1A of this 
Annual Report on Form 10-K, and the following listed below: 
• risks of geographic concentration of our client base, our loans, and the collateral securing our loans, as those 
clients and assets may be particularly subject to natural disasters and to events and conditions that directly or 
indirectly affect those regions, including the particular risks of natural disasters (including earthquakes, fires, 
and flooding) and other events that disproportionately affect that region;  
• cybersecurity risks that may affect us directly or may impact us indirectly by virtue of their effects on our 
clients, markets or vendors, including our ability to identify and address cybersecurity risks, including those 
posed by the increasing use of artificial intelligence, (such as, but not limited to, ransomware, data security 
breaches, “denial of service” attacks, “hacking” and identity theft) affecting us, our clients, and our third-party 
vendors and service providers;  
• political events that have accompanied or that may in the future accompany or result from recent political 
changes, particularly including sociopolitical events and conditions that result from political conflicts and law 
enforcement activities that may adversely affect our markets or our clients;  
• media items and consumer confidence as those factors affect our clients’ confidence in the banking system 
generally and in our bank specifically; 
• adequacy of our risk management framework, disclosure controls and procedures and internal control over 
financial reporting;  
• market, geographic and sociopolitical factors that arise by virtue of the fact that we operate primarily in the 
general San Francisco Bay Area of Northern California; 
• the effects of recent wildfires affecting Southern California, which have affected certain clients and certain 
loans secured by mortgages in Los Angeles County, and which are affecting or may, in the future, affect other 
clients in those and other markets throughout California; 
• factors that affect our liquidity and our ability to meet client demands for withdrawals from deposit accounts 
and undrawn lines of credit, including our cash on hand and the availability of funds from our own lines of 
credit;  
• factors that affect the value and liquidity of our investment portfolios, particularly the values of securities 
available-for-sale; 
3
Heritage Commerce Corp • 2024 Annual Report

 
• our ability to estimate accurately, and to establish adequate reserves against, the risk of loss associated with 
our loan and lease portfolios and our factoring business; 
• inflationary pressures and changes in the interest rate environment that reduce our margins and yields, the fair 
value of financial instruments or our level of loan originations, or increase the level of defaults, losses and 
prepayments on loans to clients, whether held in the portfolio or in the secondary market; 
• increased capital requirements for our continual growth or as imposed by banking regulators, which may 
require us to raise capital at a time when capital is not available on favorable terms or at all; 
• operational issues stemming from, and/or capital spending necessitated by, the potential need to adapt to 
industry changes in information technology systems, on which we are highly dependent; 
• events that affect our ability to attract, recruit, and retain qualified officers and other personnel to implement 
our strategic plan, and that enable current and future personnel to protect and develop our relationships with 
clients, and to promote our business, results of operations and growth prospects; 
• the expense and uncertain resolution of litigation matters whether occurring in the ordinary course of business 
or otherwise, particularly including but not limited to the effects of recent and ongoing developments in 
California labor and employment laws, regulations and court decisions; and  
• our success in managing the risks involved in the foregoing factors. 
Forward-looking statements speak only as of the date they are made. The Company does not undertake to update 
forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are 
made or to reflect the occurrence of unanticipated events. You should consider any forward looking statements in light of 
this explanation, and we caution you about relying on forward-looking statements. 
 
 
4
 
Heritage Commerce Corp • 2024 Annual Report

 
PART I 
ITEM 1.  BUSINESS 
General 
We are a bank holding company formed in 1997 as the sole shareholder of Heritage Bank of Commerce (“HBC” 
or the “Bank”), a California-chartered, FDIC-insured community-focused business bank headquartered in San Jose, 
California, since its formation in 1994. We provide a full line of banking services and products to business and individual 
clients, with a focus on small and medium-sized business and their owners, managers and employees. We have an extensive 
suite of online banking services, but our business is based largely on our network of seventeen full-service branches around 
the San Francisco Bay and Silicon Valley areas of coastal Central California, including locations in Alameda, Contra 
Costa, Marin, San Benito, San Francisco, San Mateo and Santa Clara counties.  
We made progress in 2024 that we believe is quite substantial, positioning the Company for even more significant 
progress in 2025 and beyond. Among these critical steps, during 2024 and the first two months of 2025, we: 
• 
Grew deposit balances 10% during 2024, driven by our team’s success at cultivating local community 
commercial deposit relationships. Additionally, total loans increased 4% during 2024. 
• 
Continued our positive credit trends during 2024, with nonperforming assets and net charge-offs remaining 
low at December 31, 2024. 
 
• 
Hired a new Chief Operating Officer, Thomas A. Sa, who has extensive experience in banking operations, 
finance and personnel. We believe this key initiative will allow us to place greater focus on streamlining our 
branch operations and back-office functions, and will allow our Chief Executive Officer to concentrate his 
primary attention to growth and strategy, including business development and organic and potential strategic 
expansion. 
• 
Hired a new Chief People and Culture Officer, Chris Edmonds-Waters, to replace our departing Chief People 
and Diversity Officer, who relocated outside our market area. 
• 
Hired a new General Counsel, Janisha Sabnani, who has more than 15 years’ experience with increasing 
levels of responsibility for corporate, securities and regulatory matters within publicly traded financial 
institutions. We believe Ms. Sabnani’s accession will allow us to provide more hands-on responses to internal 
legal demands across all our departments and operations and will afford significant efficiencies in our 
employment of outside counsel. 
• 
Began a search for a new Chief Financial Officer following the departure of our long-time CFO, Larry 
McGovern. Our search is centered on executives with proven experience with accounting and finance 
technology and modernization efforts, and we believe this will provide more efficient, accurate and prompt 
reporting and will enhance our responsiveness to investors and regulators.  
• 
Began a refreshment process that led to the retirement of one long-time director and plans for bringing in 
talented, experienced individuals with a breadth of talent and experience to facilitate the anticipated 
retirements of highly talented, experienced and capable, but longer-tenured, directors. 
In addition to these personnel and strategy initiatives, we continued to enhance our information technology and 
cybersecurity infrastructure and capabilities, adapting to keep pace with a rapidly growing and evolving threat 
environment. We also were able to resolve [two] litigation matters whose uncertainty and ongoing cost had plagued the 
Company and the Bank and had created distractions for our management team for several years.  
These successes, of course, were accompanied by significant costs, including additional compensation, legal and 
severance, which together with other one-time operating costs, amounted to $1.5 million. However, we view these costs 
as an investment in preserving and growing our talent pool in the face of transitions involving several highly experienced 
5
Heritage Commerce Corp • 2024 Annual Report

 
personnel, and in significantly reducing our overall risk profile. We are enthusiastic in our belief that these initiatives have 
positioned HCC and HBC for years of continuing growth and success both strategically and financially. 
As we look forward to the benefits we expect to reap from these investments, we are proud and confident in our 
more routine accomplishments, as well. We believe our loan portfolio is well-diversified among the commercial, real 
estate, construction and land development, consumer and Small Business Administration (“SBA”) sectors. Both our loan 
and deposit bases are originated primarily on the basis of our physical presence through our branch offices. We offer a 
wide range of deposit products and loans for business banking and retail markets. We offer a multitude of other products 
and services to complement those lending and deposit services. Through the Bank’s Bay View Funding subsidiary, we 
also provide factoring financing to small businesses located throughout the United States. 
When we use “we”, “us”, “our” or the “Company”, we mean the Company on a consolidated basis with Heritage 
Bank of Commerce. When we refer to “HCC” or the “holding company”, we are referring to Heritage Commerce Corp on 
a standalone basis. When we use the “Bank” or “HBC”, we mean Heritage Bank of Commerce on a standalone basis. 
The Internet address of the Company’s website is “http://www.heritagecommercecorp.com,” and the Bank’s 
website is “http://www.heritagebankofcommerce.com.” The contents of our websites are not incorporated into and do not 
form a part of this or any other report or document we file with the SEC. The Company makes available free of charge 
through the Company’s website, the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current 
reports on Form 8-K and amendments to these reports. The Company makes these reports available on its website on the 
same day they appear on the SEC’s website. 
Heritage Bank of Commerce 
HBC is a California state-chartered bank headquartered in San Jose, California. It was incorporated in 
November 1993 and opened for business in June 1994. HBC operates through seventeen full-service branch offices.  
Lending Activities 
We offer a diversified mix of business loans encompassing the following loan products: (i) commercial and 
industrial loans; (ii) commercial real estate loans; (iii) construction loans; and (iv) SBA loans. From time to time the 
Company has purchased single family residential mortgage loans. We also offer home equity lines of credit, to 
accommodate the needs of business owners and individual clients, as well as consumer loans (both secured and unsecured). 
While no specific industry concentration is considered significant, our lending operations are located in market areas 
dependent on technology and real estate industries and their supporting companies. In the event creditworthy loan clients’ 
borrowing needs exceed our legal lending limit, we have the ability to sell participations in those loans to other banks. Our 
focus on relationship banking allows us to obtain a substantial portion of each borrower’s banking business, including 
deposit accounts, and provide long-term credit and deposit solutions to support our clients and their businesses.  
Deposit Products 
As a full-service commercial bank, we focus deposit generation on relationship accounts, encompassing non-
interest bearing demand, interest bearing demand, and money market accounts. In order to facilitate the generation of non-
interest bearing demand deposits, we require, depending on the circumstances and the type of relationship, our borrowers 
to maintain deposit balances with us as a typical condition of granting loans. We also offer certificates of deposit and 
savings accounts. We offer “remote deposit capture” and “mobile deposit capture” products that allow deposits to be made 
via computer at the client’s business location or the client’s mobile phone. We also offer clients “e-statements” that allows 
clients to receive statements electronically, which is more convenient and secure than receiving paper statements.  
For clients seeking full Federal Deposit Insurance Corporation (“FDIC”) insurance on certificates of deposit in 
excess of $250,000, we offer the Insured Cash Sweep (“ICS”) and Certificate of Deposit Account Registry Service 
(“CDARS”) programs, which allows HBC to place the deposits with other participating banks to maximize the clients’ 
FDIC insurance. HBC also receives reciprocal deposits from other participating financial institutions. 
6
 
Heritage Commerce Corp • 2024 Annual Report

 
Electronic Banking  
While personalized, service-oriented banking is the cornerstone of our business plan, we use technology and the 
Internet as a secondary means for servicing clients, to compete with larger banks and to provide a convenient platform for 
clients to review and transact business. We offer sophisticated electronic or “internet banking” opportunities that permit 
commercial clients to conduct much of their banking business remotely from their home or business, with the additional 
assistance of third party products designed to mitigate fraud risk. All of HBC’s electronic banking services allow clients 
to review transactions and statements, review images of paid items, transfer funds between accounts at HBC, place stop 
orders, pay bills and export to various business and personal software applications. HBC online commercial banking also 
allows clients to initiate domestic wire transfers and ACH transactions. However, our clients always have the opportunity 
to personally discuss specific banking needs with knowledgeable bank officers and staff who are directly accessible in the 
branches and offices as well as by telephone and email.  
Other Banking Services 
We offer a multitude of other products and services to complement our lending and deposit services. These 
include cashier’s checks, bank by mail, night depositories, safe deposit boxes, direct deposit, automated payroll services, 
electronic funds transfers, online bill pay, homeowner association services, and other customary banking services. HBC 
currently operates ATMs at five different locations. In addition, we have established a convenient client service group 
accessible by toll free telephone to answer questions and promote a high level of client service. HBC does not have a trust 
department. In addition to the traditional financial services offered, HBC offers remote deposit capture and mobile deposit 
capture, automated clearing house origination, electronic data interchange and check imaging. HBC continues to 
investigate products and services that it believes address the growing needs of its clients and to analyze other markets for 
potential expansion opportunities. 
Investments 
Our investment policy is established by the Board of Directors (the “Board”). The general investment strategies 
are developed and authorized by our Finance and Investment Committee of the Board. The investment policy is reviewed 
annually by the Finance and Investment Committee, and any changes to the policy are subject to approval by the full 
Board. The overall objectives of the investment policy are to maintain a portfolio of high quality investments to maximize 
interest income over the long term and to minimize risk, to manage liquidity, to provide collateral for borrowings, and to 
provide additional earnings when loan production is low. The policy dictates that investment decisions take into 
consideration the safety of principal, liquidity requirements and interest rate risk management. All securities transactions 
are reported to the Board’s Finance and Investment Committee on a quarterly basis.  
Correspondent Banks 
Correspondent bank deposit accounts are maintained to enable the Company to transact types of activity that it 
would otherwise be unable to perform or would not be cost effective due to the size of the Company or volume of activity. 
The Company has utilized several correspondent banks to process a variety of transactions. 
Competition 
The banking and financial services business in California generally, and in the Company’s market areas 
specifically, is highly competitive. The industry continues to consolidate and unregulated competitors have entered 
banking markets with products targeted at highly profitable client segments. Many larger unregulated competitors are able 
to compete across geographic boundaries, and provide clients with meaningful alternatives to most significant banking 
services and products. These consolidation trends are likely to continue. The increasingly competitive environment is a 
result primarily of changes in regulation, changes in technology and product delivery systems, and the consolidation among 
financial service providers. 
With respect to commercial bank competitors, the business is dominated by a relatively small number of major 
banks that operate a large number of offices within our geographic footprint. For the combined Alameda, Contra Costa, 
Marin, San Benito, San Francisco, San Mateo, and Santa Clara county region, the seven counties within which the 
Company operates, the top three institutions are all multi-billion dollar entities with an aggregate of 520 offices that control 
7
Heritage Commerce Corp • 2024 Annual Report

 
a combined 69.45% of deposit market share based on June 30, 2024 FDIC market share data. HBC ranks fourteenth with 
0.74% share of total deposits based on June 30, 2024 market share data. Larger institutions have, among other advantages, 
the ability to finance wide-ranging advertising campaigns and to allocate their resources to regions of highest yield and 
demand. Larger banks are seeking to expand lending to small businesses, which are traditionally community bank clients. 
They can also offer certain services that we do not offer directly, but may offer indirectly through correspondent 
institutions. By virtue of their greater total capitalization, these banks also have substantially higher lending limits than we 
do. For clients whose needs exceed our legal lending limit, we arrange for the sale, or “participation,” of some of the 
balances to financial institutions that are not within our geographic footprint. 
In addition to other large regional banks and local community banks, our competitors include savings institutions, 
securities and brokerage companies, asset management groups, mortgage banking companies, credit unions, finance and 
insurance companies, internet-based companies, and money market funds. In recent years, we have also witnessed 
increased competition from specialized companies that offer wholesale finance, credit card, and other consumer finance 
services, as well as services that circumvent the banking system by facilitating payments via the internet, wireless devices, 
prepaid cards, or other means. Technological innovations have lowered traditional barriers of entry and enabled many of 
these companies to compete in financial services markets. Such innovation has, for example, made it possible for 
non-depository institutions to offer clients automated transfer payment services that previously were considered traditional 
banking products. In addition, many clients now expect a choice of delivery channels, including telephone and smart 
phones, mail, personal computer, ATMs, self-service branches, and/or in-store branches. 
Strong competition for deposits and loans among financial institutions and non-banks alike affects interest rates 
and other terms on which financial products are offered to clients. Mergers between financial institutions have placed 
additional pressure on other banks within the industry to remain competitive by streamlining operations, reducing 
expenses, and increasing revenues.  
In order to compete with the other financial service providers, the Company principally relies upon 
community-oriented, personalized service, local promotional activities, personal relationships established by officers, 
directors, and team members with its clients, and specialized services tailored to meet its clients’ needs. Our “preferred 
lender” status with the Small Business Administration allows us to approve SBA loans faster than many of our competitors. 
In those instances where the Company is unable to accommodate a client’s needs, the Company seeks to arrange for such 
loans on a participation basis with other financial institutions or to have those services provided in whole or in part by its 
correspondent banks. See Item 1 — “Business — Correspondent Banks.” 
HBC is a California state-chartered bank headquartered in San Jose, California. It was incorporated in 
November 1993 and opened for business in June 1994. HBC operates through seventeen full-service branch offices. The 
locations of HBC’s current offices and the administrative office of CSNK Working Capital Finance Corp. d/b/a Bay View 
Funding (“Bay View Funding”) are: 
San Jose: 
Administrative Office 
     Oakland: 
Branch Office 
 
Main Branch 
 
 
1111 Broadway 
 
224 Airport Parkway 
 
 
Suite 1650 
 
Suite 100 
 
 
Oakland, CA 94607 
 
San Jose, CA 95110 
 
 
 
 
 
 
 
 
Danville: 
Branch Office 
 
Palo Alto: 
Branch Office 
 
387 Diablo Road 
 
 
325 Lytton Avenue 
 
Danville, CA 94526 
 
 
Suite 100 
 
 
 
 
Palo Alto, CA 94301 
 
 
 
 
 
Fremont: 
Branch Office 
 
Pleasanton: 
Branch Office 
 
3137 Stevenson Boulevard 
 
 
300 Main Street 
 
Fremont, CA 94538 
 
 
Pleasanton, CA 94566 
 
 
 
8
 
Heritage Commerce Corp • 2024 Annual Report

 
Gilroy: 
Branch Office 
     Redwood City: 
Branch Office 
 
7598 Monterey Street 
 
 
2400 Broadway 
 
Suite 110 
 
 
Suite 100 
 
Gilroy, CA 95020 
 
 
Redwood City, CA 94063 
 
 
 
 
 
Hollister: 
Branch Office 
 
San Francisco: 
Branch Office 
 
351 Tres Pinos Road 
 
 
120 Kearny Street 
 
Suite 102A 
 
 
Suite 2300 
 
Hollister, CA 95023 
 
 
San Francisco, CA 94108 
 
 
 
 
 
Livermore: 
Branch Office 
 
San Mateo: 
Branch Office 
 
1987 First Street 
 
 
400 S. El Camino Real 
 
Livermore, CA 94550 
 
 
Suite 150 
 
 
 
 
San Mateo, CA 94402 
 
 
 
 
 
Los Altos: 
Branch Office 
 
San Rafael: 
Branch Office 
 
419 South San Antonio Road 
 
 
999 5th Avenue 
 
Los Altos, CA 94022 
 
 
Suite 100 
 
 
 
 
San Rafael, CA 94901 
 
 
 
 
 
Los Gatos: 
Branch Office 
 
Walnut Creek: 
Branch Office 
 
15575 Los Gatos Boulevard 
 
 
1990 N. California Boulevard 
 
Bldg. B 
 
 
Suite 100 
 
Los Gatos, CA 95032 
 
 
Walnut Creek, CA 94596 
 
 
 
 
 
Morgan Hill: Branch Office 
 
Bay View Funding: 
Administrative Office 
 
18625 Sutter Boulevard 
 
 
224 Airport Parkway 
 
Suite 100 
 
 
Suite 200 
 
Morgan Hill, CA 95037 
 
 
San Jose, CA 95110 
 
 
 
9
Heritage Commerce Corp • 2024 Annual Report

 
HUMAN CAPITAL  
 
We strive to be the employer of choice among banks in our markets, by building a reputation as a place where 
every team member can thrive. We believe deeply that team members drive our Company’s stability and success. With 
this in mind, we are dedicated to recruiting, nurturing, advancing and retaining a workforce that embraces and cultivates 
a culture of excellence, teamwork, client focus, engagement, equity, inclusivity, belonging, and accountability. We 
constantly work on finding ways to improve our culture, recruitment strategies, training and retention. Progress on these 
human capital efforts and programming are shared regularly with the Board’s Personnel and Compensation Committee 
throughout the year because we believe their perspective and feedback are invaluable to our continuous improvement. Our 
ultimate goal is to deepen client and community relationships and to deliver exceptional experience to all whom we serve. 
 
In 2024, we had: 
 
 
 
The Culture We Are Building: Engagement 
In the fourth quarter of 2024 we shifted our framework from one of diversity to a business-focused team member 
engagement effort. While diversity efforts will continue – we will be administering a team member engagement survey in 
2025 that assesses all of the diversity metrics and concerns we deeply care about. We believe our initiatives will continue 
to provide a strong foundation that correlates our client-facing net promoter scores to our internal engagement results. We 
expect that this shift will occur seamlessly, and we are optimistic that this evolution will continue to foster our team 
members’ interests and capabilities to serve our clients.  
Management continued to provide Company-wide listening sessions to solicit feedback, enhance engagement, 
and cultivate positive culture. Based on feedback from listening sessions, we also created a Culture Ambassador Group 
(akin to employee resource groups for larger organizations) comprised of non-executive team members from various 
departments and locations. Through self-identification, the Culture Ambassadors represent 77% female and 62% 
ethnic/racial diversity. Culture Ambassadors serve an important role to help shape enterprise initiatives such as creation 
of corporate values. 
 
 
355
Full-time equivalent
employees (includes
part-time)
10
Part-time employees
8.2 yrs
average tenure
16.6%
turnover rate
3.9%
Increase
from the 
prior year
60%
Female
54%
Racial/ethnic
Diversity 
10
 
Heritage Commerce Corp • 2024 Annual Report

 
In 2024, our Core Values focus continued: 
 
 
Continuing in our core value of serving with purpose and passion, our Heritage Hearts Committee continued with 
a mission to source nonprofit volunteer and board opportunities for Company team members across the Bay Area. In 2024, 
we contributed more than 2,100 hours to strengthen our relationship with local nonprofit organizations. More than 40 team 
members serve on over 55 boards. Our broad outreach efforts cover a variety of focus areas like economic development, 
education, financial literacy, health and human services, housing and homelessness, small business and entrepreneurship 
support, animal services, environmental, arts and culture. 
We continued to expand on existing communication efforts such as our anonymous “Ask CEO” portal with our 
Chief Executive Officer providing answers and updates during regularly scheduled all-hands meetings throughout the year. 
In 2024, we continued our CEO welcome luncheon so all new team members can establish a direct connection to the CEO. 
We also encourage team members to submit suggestions through our “Big Idea” electronic portal. Furthermore, multiple 
executives facilitate periodic cross-functional focus groups to gather input on our strengths and areas where we can further 
improve. 
Compensation 
Our Company’s pay-for-performance compensation philosophy offers all team members the opportunity to earn 
annual bonuses in addition to base salaries depending on individual, team, and company performance results. The company 
reviews its compensation model regularly to ensure equitable pay practices. When we identify chances to enhance pay 
equity, we proactively take steps to address them. 
We adhere to the California Senate Bill 1162 Pay Transparency Regulations, both as to specific requirements and 
the spirit behind the bill. We use a balanced performance evaluation approach to assess four core areas: Business Results, 
Internal/External Client Experience, Teamwork/Leadership and Risk/Compliance/Controls. 
Talent Development and Succession Planning 
Throughout the year, team members are offered a variety of opportunities to participate in learning and education 
programs such as attending internal and external seminars/workshops, on-line training courses, panel discussions and trade 
group conferences to enrich one’s own development. Additionally, we offer a generous tuition reimbursement to support 
 
 
Core Values
We act with integrity and transparency
Client, shareholder and
community success is our success
We help each other thrive
We have fun with a healthy
sense of humor!
We continually adapt,
learn and grow
We serve with purpose and passion
We cultivate an environment where we
strive for excellence in everything we do
and we bring our best selves to work
each and every day.
We strive to do the right thing, embodying the
highest level of integrity and committing to
always doing what’s best for our clients,
our colleagues, and our company.
We measure our success by the
service we provide to our clients,
the value we bring to our shareholders,
and the support we deliver to the
communities we serve.
We are each other’s biggest advocates
extending support and encouragement,
expressing appreciation, and
collaborating as a team.
We foster a culture of belonging and an
environment that is fulfilling, energizing,
and fun!
We learn from each other,
grow through experience
and pivot as needed to
ensure our continued
success.
11
Heritage Commerce Corp • 2024 Annual Report

 
team members’ desire to pursue higher education degrees. Team members also have the opportunity to earn industry 
related and/or role related professional certifications, and our Company reimburses for classes, materials, test fees, and 
ongoing required education costs. Each year, we also offer certain identified leaders an opportunity to attend Pacific Coast 
Banking School as part of their career development plan. 
In 2024, we continued our Leadership Essentials Workshop series with modules consisting of (1) Recruiting and 
Hiring and Retaining Top Talent; (2) Leveraging Individual and Team Strengths; (3) Talent Development, Performance 
Management and Effective Coaching; (4) Handling Employee Relations Matters, Decision Making and Accountability; 
and (5) Communicating Effectively and Inspiring Positive Change. 
We further refined our Talent Management and Succession Planning framework, and progress updates are 
provided to the Board throughout the year. We created a robust Succession Planning roadmap that clearly outlines a plan 
for executive ranks and critical roles. Additionally, career mobility continues to be an important part of team member 
engagement and development. 
 
Culture and Conduct 
Teamwork is not only promoted but celebrated through various recognition programs. Our “Core Values 
Champions” continues to recognize individuals who demonstrate our Company’s Core Values through their work and 
interactions. Throughout the year, team members are encouraged to nominate colleagues who go above and beyond their 
regular duties in showcasing one or more of our core values. The CEO highlights and publicly applauds Core Value 
Champions’ stories, celebrating their exemplary accomplishments and contributions. 
We continually promote a speak-up culture, so our workplace feels welcoming and safe. We expect team members 
always to treat clients and stakeholders with courtesy and respect. Our Company’s Code of Ethics and Conduct continues 
to offer specificity to directors and team members across different sections, embodying such principles as workplace 
safety, protection of client and team member information, conflict of interest guidelines, anti-retaliation policy, and 
procedures for reporting concerns. Every team member must annually confirm their acknowledgement of the Company’s 
Code of Ethics and Conduct, and senior leadership team members are subject to a more restrictive Executive and Principal 
Financial Officer Code of Ethics, as well. Team members can report concerns to their manager, any company leader, 
Human Resources, or via the anonymous hotline and intranet site. We take all complaints seriously and promptly 
investigate concerns. We have a zero-tolerance anti-retaliation policy. 
Health, Safety and Wellbeing 
Our team members are our most valuable resource, and their safety, health, and wellbeing are key to our 
Company’s success. We support the wellness of all colleagues through various programs, including Employee Assistance 
Program (“EAP”), health seminars, education programs and health club memberships. All team members are eligible to 
take advantage of our EAP programs which offer counseling services, family support, help on financial and legal issues, 
and mental health support. In 2024, we continued offering employee assistance program (EAP) private counseling 
sessions, monthly fitness stipend for all team members and hosted in-person and virtual meditation sessions to promote 
the importance of self-care. 
 
Supervision and Regulation 
 
General  
 
Like all depositary institutions, both Heritage Commerce Corp and Heritage Bank of Commerce, as well as their 
operating subsidiaries and affiliates, are regulated extensively under federal and state law. The effects of these laws and 
regulations affect our ability to make management decisions and to conduct our operations, and over recent years the 
volume, scope and complexity of these regulations have expanded substantially. The combined application of these laws 
and regulations applies to virtually every aspect of our business, and to a substantial degree affects our relationships with 
clients, vendors, and affiliates as well. Further, the cost of complying with these laws and regulations, and the potential 
penalties, liabilities or other consequences of failure to comply, has risen dramatically in recent years, and we do not expect 
that these costs or associated risks will be ameliorated in the foreseeable future. 
12
 
Heritage Commerce Corp • 2024 Annual Report

 
With respect to the Company, we are regulated and examined by the California Department of Financial 
Protection and Innovation (“DFPI”), the Federal Reserve Bank of San Francisco. Heritage Bank of Commerce files reports 
with and is examined by the FDIC, the DFPI, and the Consumer Financial Protection Bureau (“CFPB”). In addition to 
banking and financial institutions laws and regulations, we are subject to a broad swath of other regulatory frameworks 
applicable to public companies generally, including federal and state tax laws, accounting rules developed by the Financial 
Accounting Standards Board (“FASB”), and federal and state securities laws. These statutes, regulations, regulatory 
policies and rules are significant to the financial condition and results of operations of the Company and its subsidiaries, 
including HBC. This section offers a brief summary of the most significant aspects of applicable banking laws and 
regulations, but the implications and effects of these laws and regulations upon our business is far too extensive to be 
described completely, and readers should refer to the section of this Report entitled “Item 1A, Risk Factors,” for certain 
effects of these laws and regulations that may have a particular effect on our assets, results of operations and financial 
condition. We have not attempted to summarize laws of general applicability, such as corporate, tax, securities and 
accounting regulations, or other laws, such as employment laws, that may also have a material impact upon our business.  
Regulatory Capital Requirements 
The Company and HBC are subject to a comprehensive capital framework (the “Capital Rules”) adopted by 
Federal banking regulators (including the Federal Reserve and the FDIC). The Capital Rules implement the Basel III 
framework for strengthening the regulation, supervision and risk management of banks, as well as certain provisions of 
Dodd-Frank. The Capital Rules generally recognize three components, or tiers, of capital: common equity Tier 1 capital, 
additional Tier 1 capital and Tier 2 capital. Common equity Tier 1 capital generally consists of retained earnings and 
common stock instruments (subject to certain adjustments), as well as accumulated other comprehensive income 
(“AOCI”). Additional Tier 1 capital generally includes non-cumulative preferred stock and related surplus subject to 
certain adjustments and limitations. Tier 2 capital generally includes certain capital instruments (such as subordinated 
debt) and portions of the amounts of the allowance for credit losses, subject to certain requirements and deductions. The 
term “Tier 1 capital” means common equity Tier 1 capital plus additional Tier 1 capital, and the term “total capital” means 
Tier 1 capital plus Tier 2 capital. 
The Capital Rules generally measure an institution’s capital using four capital measures or ratios. The common 
equity Tier 1 capital ratio is the ratio of the institution’s common equity Tier 1 capital to its total risk-weighted assets. The 
Tier 1 risk-based capital ratio is the ratio of the institution’s Tier 1 capital to its total risk-weighted assets. The total risk-
based capital ratio is the ratio of the institution’s total capital to its total risk-weighted assets. The Tier 1 leverage ratio is 
the ratio of the institution’s Tier 1 capital to its average total consolidated assets. To determine risk-weighted assets, assets 
of an institution are generally placed into a risk category as prescribed by the regulations and given a percentage weight 
based on the relative risk of that category. An asset’s risk-weighted value will generally be its percentage weight multiplied 
by the asset’s value as determined under generally accepted accounting principles. In addition, certain off-balance-sheet 
items are converted to balance-sheet credit equivalent amounts, and each amount is then assigned to one of the risk 
categories.  
To be adequately capitalized, both the Company and HBC are required to have a common equity Tier 1 capital 
ratio of at least 4.5% or more, a Tier 1 leverage ratio of 4.0% or more, a Tier 1 risk-based ratio of 6.0% or more and a total 
risk-based ratio of 8.0% or more. In addition to the preceding requirements, both the Company and HBC are required to 
maintain a “conservation buffer” consisting of common equity Tier 1 capital, which is at least 2.5% above each of the 
required minimum levels. An institution that does not meet the conservation buffer will be subject to restrictions on certain 
activities including payment of dividends, stock repurchases and discretionary bonuses to executive officers. 
The Capital Rules also prescribe the methods for mitigating the impact of intangible assets on our capital ratios, 
and for calculating risk-based assets and ratios. Higher or more sensitive risk weights are assigned to various categories of 
assets, among which are credit facilities that finance the acquisition, development or construction of real property, certain 
exposures or credits that are 90 days past due or are nonaccrual, foreign exposures, certain corporate exposures, 
securitization exposures, equity exposures and in certain cases mortgage servicing rights and deferred tax assets. An 
institution’s federal regulator also may require the institution to hold more capital than would otherwise be required under 
the Capital Rules if the regulator determines that the institution’s capital requirements under the Capital Rules are not 
commensurate with the institution’s credit, market, operational or other risks. 
13
Heritage Commerce Corp • 2024 Annual Report

 
Supervision and Regulation of Heritage Commerce Corp 
General. As a bank holding company, HCC is subject to regulation, supervision and periodic examination by the 
Federal Reserve under the Bank Holding Company Act of 1956, as amended (the “BHCA”), and by the DFPI in accordance 
with the California Financial Code. HCC is required to file with the Federal Reserve periodic reports of its operations and 
such additional information as the Federal Reserve may require. In accordance with Federal Reserve laws and regulations, 
HCC is required to act as a source of financial strength to HBC and to commit resources to support HBC in circumstances 
where HCC might not otherwise do so. 
Permitted Activities. The BHCA generally prohibits HCC from acquiring direct or indirect ownership or control 
of more than 5% of the voting shares of any company that is not a bank or whose business is not “closely related to 
banking.” The Federal Reserve has the power to order any bank holding company or its subsidiaries to terminate any 
activity or to terminate its ownership or control of any subsidiary when the Federal Reserve has reasonable grounds to 
believe that continuing such activity, ownership or control constitutes a serious risk to a subsidiary’s financial soundness, 
safety or stability. 
Source of Strength Doctrine. Federal Reserve policy historically required bank holding companies to act as a 
source of financial and managerial strength to their subsidiary banks. Dodd-Frank codified this policy as a statutory 
requirement. HCC is required to act as a source of strength to HBC and to commit capital and financial resources to support 
HBC, including at times when HCC may not be in a financial position to do so. HCC must stand ready to use its available 
resources to provide adequate capital to HBC during periods of financial stress or adversity. HCC must also maintain the 
financial flexibility and capital raising capacity to obtain additional resources for assisting HBC. HCC’s failure to meet its 
source of strength obligations may constitute an unsafe and unsound practice, a violation of the Federal Reserve’s 
regulations, or both. The source of strength doctrine most directly affects bank holding companies whose subsidiary bank 
fails to maintain adequate capital levels. In such situation, the subsidiary bank will be required by the bank’s federal 
regulator to take “prompt corrective action.” Any capital loans by a bank holding company to its subsidiary bank are 
subordinate in right of payment to deposits and to certain other indebtedness of the bank. In the event of a bank holding 
company’s bankruptcy, its commitment to a federal bank regulatory agency to maintain the capital of its subsidiary bank 
will be assumed by the bankruptcy trustee and entitled to priority of payment. 
Dividend Payments, Stock Redemptions and Repurchases. In addition to the requirements of the California 
Corporations Code, which imposes certain solvency tests and board-level approval requirements, the Federal Reserve may 
require a bank holding company to eliminate, defer or significantly reduce dividends to shareholders if: (i) the bank holding 
company’s net income available to shareholders for the past four quarters, net of dividends previously paid during that 
period, is not sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention is inconsistent with the 
bank holding company’s capital needs and overall current and prospective financial condition; or (iii) the bank holding 
company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. The Capital Rules 
also require that a holding company seeking to pay dividends must maintain 2.5% in common equity Tier 1 capital 
attributable to the capital conservation buffer. See “Supervision and Regulation—Regulatory Capital Requirements,” 
above. 
Acquisitions, Activities and Change in Control. The BHCA and the California Financial Code also substantially 
govern an institution’s ability to grow by acquisition. These regulations include extensive application filing and approval 
requirements as well as substantive regulation over the projected operations and financial performance of institutions 
proposing to merge or to be acquired. These laws and regulations afford regulators, including the Federal Reserve, the 
FDIC and the DFPI with expansive authority and discretion and may affect the availability, timing and cost of initiatives 
that financial institutions might take as a means to effectuate strategic growth.  
Supervision and Regulation of Heritage Bank of Commerce 
General. HBC is a California state-chartered commercial bank that is a member of the Federal Reserve System 
and whose deposits are insured by the FDIC. HBC is thus subject to regulation, supervision, and regular examination by 
the DFPI and the Federal Reserve as HBC’s primary federal regulator. The regulations of these agencies govern most 
aspects of a bank’s business.  
14
 
Heritage Commerce Corp • 2024 Annual Report

 
Brokered Deposit Restrictions. Well capitalized institutions are not subject to limitations on brokered deposits, 
while an adequately capitalized institution is able to accept, renew or roll over brokered deposits only with a waiver from 
the FDIC and subject to certain restrictions on the yield paid on such deposits. Undercapitalized institutions are generally 
not permitted to accept, renew, or roll over brokered deposits. As of December 31, 2024, HBC was eligible to accept 
brokered deposits without limitations. 
Loans to One Borrower. With certain limited exceptions, the maximum amount that a California bank may lend 
to any borrower at any one time (including the obligations to the bank of certain related entities and related persons of the 
borrower) may not exceed 25% (and unsecured loans may not exceed 15%) of the bank’s shareholders’ equity, allowance 
for credit losses on loans, and any capital notes and debentures of the bank. We generally do not have banking relationships 
that approach these limitations.  
Tie in Arrangements. Federal law prohibits a bank holding company and any subsidiary banks from engaging in 
certain tie in arrangements in connection with the extension of credit. For example, HBC may not extend credit, lease or 
sell property, furnish any services, fix or vary the consideration for any of the foregoing on the condition that: (i) the client 
must obtain or provide some additional credit, property or services from or to HBC other than a loan, discount, deposit or 
trust services; (ii) the client must obtain or provide some additional credit, property or service from or to HCC or HBC; or 
(iii) the client must not obtain some other credit, property or services from competitors, except reasonable requirements to 
assure soundness of credit extended. 
Deposit Insurance. HBC is a member of the Deposit Insurance Fund (“DIF”) administered by the FDIC, which 
insures client deposit accounts. The amount of federal deposit insurance coverage is $250,000 per depositor, for each 
account ownership category at each depository institution. The $250,000 amount is subject to periodic adjustments. In 
order to maintain the DIF, member institutions are assessed insurance premiums based on an insured institution’s average 
consolidated total assets less its average tangible equity capital. 
Each institution is provided an assessment rate, which is generally based on the risk that the institution presents 
to the DIF. Institutions with less than $10 billion in assets generally have an assessment rate that can range from 2.5 to 32 
basis points per annum. However, the FDIC has flexibility to adopt assessment rates without additional rule-making 
provided that the total base assessment rate increase or decrease does not exceed 2 basis points.  
Dividend Payments. Heritage Commerce Corp has paid a quarterly dividend to our shareholders every quarter 
since 2013. The primary source of funds for HCC is dividends from HBC. Under the California Financial Code, HBC is 
permitted to pay a dividend in the following circumstances: (i) without the consent of either the DFPI or HBC’s 
shareholders, in an amount not exceeding the lesser of (a) the retained earnings of HBC; or (b) the net income of HBC for 
its last three fiscal years, less the amount of any distributions made during the prior period; (ii) with the prior approval of 
the DFPI, in an amount not exceeding the greatest of: (a) the retained earnings of HBC; (b) the net income of HBC for its 
last fiscal year; or (c) the net income for HBC for its current fiscal year; and (iii) with the prior approval of the DFPI and 
HBC’s shareholders (i.e., HCC) in connection with a reduction of its contributed capital.  
Risk Management. Bank regulatory agencies have increasingly emphasized the importance of sound risk 
management processes and strong internal controls when evaluating the activities of the financial institutions they 
supervise. Properly managing risks has been identified as critical to the conduct of safe and sound banking activities and 
has become even more important as new technologies, product innovation, and the size and speed of financial transactions 
have changed the nature of banking markets. The agencies have identified a spectrum of risks facing a banking institution 
including, but not limited to, credit, market, liquidity, operational, legal, and reputational risk. In particular, recent 
regulatory pronouncements have focused on operational risk, which arises from the potential that inadequate information 
systems, operational problems, breaches in internal controls, fraud, or unforeseen catastrophes will result in unexpected 
losses. New products and services, third-party risk management and cybersecurity are critical sources of operational risk 
that financial institutions are expected to address in the current environment. HBC is expected to have active board and 
senior management oversight; adequate policies, procedures, and limits; adequate risk measurement, monitoring, and 
management information systems; and comprehensive internal controls.  
Anti-Money Laundering and Office of Foreign Assets Control Regulation. We are subject to federal laws 
aiming to counter money laundering and terrorist financing, as well as transactions with persons, companies and foreign 
governments sanctioned by the United States. These laws and regulations are intended to detect, identify, track and prevent 
15
Heritage Commerce Corp • 2024 Annual Report

 
money-laundering, money transfers to prohibited nations and entities, and certain types of financial crimes. These laws 
and regulations impose strict reporting and compliance obligations on financial institutions, and violations can carry 
substantial fines, civil money penalties and other sanctions, as well as restrictions on an institution’s business. Regulatory 
authorities routinely examine financial institutions for compliance with these obligations, and failure of a financial 
institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply 
with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution, 
including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory 
approval is required or to prohibit such transactions even if approval is not required. Regulatory authorities have imposed 
cease and desist orders and civil money penalties against institutions found to be violating these obligations. 
Concentrations in Commercial Real Estate. Concentration risk exists when a financial institution deploys too 
many assets to a specific industry or segment of the economy with the potential to produce losses large enough to threaten 
the financial institution’s health. Concentration stemming from CRE is one area of regulatory concern. Regulatory 
guidance provides supervisory criteria, including the following numerical indicators, to assist bank examiners in 
identifying banks with potentially significant CRE loan concentrations that may warrant greater supervisory scrutiny: 
(i) CRE loans exceeding 300% of capital and increasing 50% or more in the preceding three years; or (ii) construction and 
land development loans exceeding 100% of capital. The guidance does not limit banks’ levels of CRE lending activities, 
but rather guides institutions in developing risk management practices and levels of capital that are commensurate with 
the level and nature of their CRE concentrations. As of December 31, 2024, using regulatory definitions in the CRE 
Concentration Guidance, our CRE loans represented 311% of HBC total risk-based capital, as compared to 306% as of 
December 31, 2023. If the regulatory agencies become concerned about our CRE loan concentrations, they could limit our 
ability to grow by restricting approvals for the establishment or acquisition of branches, or approvals of mergers or other 
acquisition opportunities.  
Readers also should note that in addition to the formal concentration guidance, substantially all our activities, 
operations and assets are located in the San Francisco Bay Area of Central California, or in other areas of that State. 
Accordingly, we are subject to geographic concentration risks that are described in greater detail in “Item 1A, Risk 
Factors.” 
Consumer Protection. We are subject to a number of federal and state consumer protection laws that extensively 
govern our relationship with our clients. These laws include, among others, the Equal Credit Opportunity Act, the Fair 
Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited 
Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures 
Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act, the Military Lending Act, and these 
laws’ respective state law counterparts, as well as state usury laws and laws regarding unfair, deceptive or abusive acts 
and practices (“UDAAP”). The consumer protection laws applicable to us, among other things, require disclosures of the 
cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit 
transactions, regulate the use of credit report information, provide financial privacy protections, prohibit UDAAP 
practices, restrict our ability to raise interest rates and subject us to substantial regulatory oversight. Many states and local 
jurisdictions have consumer protection laws analogous to those listed above. 
Violations of applicable consumer protection laws can result in significant potential liability from litigation 
brought by clients, including actual and statutory damages, restitution and attorneys’ fees. Federal bank regulators, state 
attorneys general, and state and local consumer protection agencies may also seek to enforce consumer protection 
requirements and obtain these and other remedies, including regulatory sanctions, client rescission rights, and civil money 
penalties. Non-compliance with consumer protection requirements may also result in our failure to obtain any required 
bank regulatory approval for merger or acquisition transactions we may wish to pursue or prohibition from engaging in 
such transactions even if approval is not required. 
Enforcement Powers of Federal and State Banking Agencies. The federal bank regulatory agencies have broad 
enforcement powers, including the power to terminate deposit insurance, impose substantial fines and other civil and 
criminal penalties, and appoint a conservator or receiver for financial institutions. Failure to comply with applicable laws 
and regulations could subject us and our officers and directors to administrative sanctions and potentially substantial civil 
16
 
Heritage Commerce Corp • 2024 Annual Report

 
money penalties. The DFPI also has broad enforcement powers over us, including the power to impose orders, remove 
officers and directors, impose fines and appoint supervisors and conservators. 
ITEM 1A.  RISK FACTORS 
Our business, financial condition and results of operations are subject to various risks, including those discussed 
below. The risks discussed below are those that we believe are the most significant risks, although additional risks not 
presently known to us or that we currently deem less significant may also materially and adversely affect our business, 
financial condition and results of operations. 
Summary of Risk Factors 
Risks Related to Our Operations 
 
• 
Interruptions, cyberattacks, fraud and other security breaches 
• 
Difficulties from our third-party providers 
• 
Failure to attract and retain well-qualified directors, management and other skilled professionals 
• 
The soundness of other financial institutions  
• 
Failure of our risk management framework 
• 
Team member misconduct 
• 
Inaccurate information provided to us by clients or counterparties 
• 
Environmental, social and governance practices  
• 
Severe weather, natural disasters, pandemics, acts of war or terrorism, social unrest and other external events  
 
Risks Related to Our Business 
 
• 
Geographic concentration in the Greater San Francisco Bay Area 
• 
Failure to maintain a favorable reputation with our clients and communities 
 
Risks Related to Our Loans 
 
• 
Negative changes affecting real estate values and liquidity 
• 
Risks involved with land and construction development loans 
• 
Increased scrutiny by regulators of commercial real estate concentrations 
• 
Unreliability of loan appraisals used in real property loan decisions 
• 
Commercial loans are more sensitive to the borrower’s successful operations or property development 
• 
Small and medium business loans are subject to greater risks from adverse business developments 
 
Risks Related to Our SBA Loan Program 
 
• 
Dependence on U.S. federal government SBA loan program 
• 
Recognition of gains on sale of loans and servicing asset valuations reflect certain assumptions we use 
 
Risks Related to Our Credit Quality 
 
• 
Managing credit risk 
• 
The allowance for credit losses on loans may be insufficient 
• 
Nonperforming assets can affect our financial results and require management time to resolve 
• 
Exposure to environmental liabilities on foreclosed real estate collateral 
 
Risks Related to our Growth Strategy 
 
• 
Risks associated with acquisitions, including availability of suitable targets and integration risks 
• 
Impairment of the goodwill recorded from an acquisition 
• 
Managing our branch growth strategy 
• 
Managing risks of adding new lines of business and new products 
 
Risks Related to Our Financial Strength and Liquidity 
 
• 
Actual or perceived reduction in our financial strength  
• 
Increased challenges in credit markets 
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Heritage Commerce Corp • 2024 Annual Report

 
• 
Fluctuations in interest rates may reduce net income and impact our business 
• 
Failure to maintain effective internal controls over financial reporting 
• 
Significant deferred tax assets may not be fully realized 
• 
Unrealized losses on our securities portfolio, particularly from the impact of increased interest rates on our 
securities available-for-sale portfolio 
• 
Adverse changes in credit ratings 
• 
Liquidity risks, particularly from limited access to lines of credit, deposits, and other traditional forms of 
funding 
 
Risks Related to Our Capital 
 
• 
More stringent capital requirements 
 
Risks Related to Our Legal and Regulatory Environment 
 
• 
Complexity and scope of regulatory oversight and the costs of managing compliance with applicable laws 
and regulations 
• 
Changes in accounting standards 
• 
Litigation, regulatory actions, investigations or similar matters, could subject us to uninsured liabilities and 
reputational harm and otherwise materially affect our business, financial condition and results of operations.  
• 
Costs and risks associated with potential data breaches and associated litigation or regulatory actions 
 
Risks from Competition 
 
• 
Competition for client deposits and other business 
• 
Rapid technological developments in the financial services industry 
 
Risks Related to Our Common Stock 
 
• 
Investment in our common stock is not an insured deposit 
• 
Dilution affect resulting from the issuance of common stock consideration for acquisitions 
• 
Limited trading volume  
• 
Volatile trading price of our common stock 
• 
Dividends may change without notice and payment thereof is subject to restrictions 
• 
Limitations on director liability for monetary damages for failure to exercise their fiduciary duty 
• 
Issuance of preferred stock which may have rights and preferences over our common stock 
• 
Holders of our debt obligations may have rights and preferences over holders of our common stock 
• 
Our charter documents and California law may have an anti-takeover effect limiting changes of control 
 
Risks Relating to Our Operations 
Interruptions, cyberattacks, fraudulent activity or other security breaches may have a material adverse effect on our 
business. 
In the normal course of business, we (directly or through third parties) collect, store, share, process and retain 
sensitive and confidential information regarding our clients. We also rely heavily upon electronic infrastructure that we 
own or that we obtain via license or other contractual arrangements with third parties. This infrastructure is essential in 
the conduct of our business, including for allowing our clients to access and transfer funds, initiate and pay loans and 
leases, communicating with our client service teams, and a variety of other activities that form the foundation of modern 
financial services businesses. There have been a number of recent and well-publicized incidents involving various types 
of cybersecurity lapses, and many of these have had substantial impacts upon targeted businesses and on clients of even 
some of the world’s most prominent cybersecurity firms. One of the most recent events resulted in a widespread failure of 
a large cybersecurity platform, some of the consequences of which are ongoing and may not be fully known or estimable. 
Similarly, extremely sophisticated criminal and nation-state organizations routinely target and exploit information 
technology networks, data systems, and other critical infrastructure.  
We devote significant financial and management resources to ensure the integrity of our systems against 
cybercriminals and similar actors, as well as against threats from fires and other natural disasters; power or 
telecommunications failures; acts of terrorism or wars or other catastrophic events; breaches, physical break-ins or errors 
18
 
Heritage Commerce Corp • 2024 Annual Report

 
resulting in interruptions and unauthorized disclosure of confidential information, through information security and 
business continuity programs.  
Notwithstanding these efforts, cybersecurity measures are, by their nature, largely reactive, and threats are 
constantly evolving. We expect that the development of AI-based technology will cause a rapid expansion in both the 
number and the sophistication of these threats. While we believe we maintain state-of-the-art defensive measures, we 
routinely experience attempts to exploit our networks and systems, and we must continue investing in increasingly 
sophisticated (and concomitantly expensive) technology to counteract these threats. Further, if our systems cannot timely 
detect and mitigate vulnerabilities, or cannot promptly respond to threats, we may experience damage to or interruptions 
in the availability of our computer networks, or we may experience a loss of data, unauthorized use or disclosure of client 
information, or a loss of client funds as a result of unauthorized access to client accounts. 
Additionally, as financial institutions and technology systems become more interconnected and more complex, 
any operational incident at a third party, such as a vendor or client, may increase our operational risks, including from 
information breaches or loss, breakdowns, disruptions or failures of their own systems or infrastructure, or any deficiencies 
in the performance of their responsibilities. These risks are increased to the extent we rely on a single-source vendor or 
provider.  
The access by unauthorized persons to, or the improper disclosure by us or our third-party vendors of, confidential 
information regarding our clients or our own proprietary information, software, methodologies and business secrets, 
failures or disruptions in our communications, information and technology systems, or our failure to adequately address 
them, could negatively affect our client relationship management, online banking, accounting or other systems. We cannot 
assure readers that such breaches, failures or interruptions will not occur or, if they do occur, that they will be adequately 
addressed by us or the third parties on which we rely. Our insurance may not fully cover all types of losses. 
Accordingly, any failures or interruptions of our communications, information and technology systems could 
damage our reputation, result in a loss of client business, subject us to additional regulatory scrutiny or expose us to civil 
litigation and possible financial liability, any of which could have a material adverse effect on our business, financial 
condition or results of operations. 
Our operations could be disrupted by our third-party service providers experiencing difficulty in providing their 
services, terminating their services or failing to comply with banking regulations.  
We depend to a significant extent on relationships with third-party service providers. Specifically, we utilize third 
party core banking services and receive credit card and debit card services, branch capture services, Internet banking 
services and services complementary to our banking products from various third party service providers. These types of 
third-party relationships are subject to increasingly demanding regulatory requirements that require us to maintain and 
continue to enhance our due diligence and ongoing monitoring and control over our third-party vendors. We may be 
required to renegotiate our agreements to meet these enhanced requirements, which could increase our costs or which may 
be impracticable. If our service providers experience difficulties or terminate their services and we are unable to replace 
them, our operations could be interrupted. It may be difficult for us to timely replace some of our service providers, which 
may be at a higher cost due to the unique services they provide. A third-party provider may fail to provide the services we 
require, or meet contractual requirements, comply with applicable laws and regulations, or suffer a cyberattack or other 
security breach. We expect that our regulators would hold us responsible for deficiencies of our third-party relationships 
which could result in enforcement actions, including civil money penalties or other administrative or judicial penalties or 
fines, or client remediation, any of which could have a material adverse effect on our business, financial condition and 
results of operations. 
Commercial banking requires substantial board and management expertise, knowledge, and community and industry 
relationships. If we cannot retain our existing Board or leadership team or recruit experienced, well-qualified 
successors, our business may suffer.  
Our success depends, in large degree, on the skills of our Board and management team and our ability to retain, 
recruit and motivate key directors, officers and team members. Our Board and senior management team have significant 
industry experience, as well as significant experience in our local markets, and their knowledge and relationships would 
be difficult to replace. We recently announced a search for a Chief Financial Officer to replace Lawrence McGovern, who 
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Heritage Commerce Corp • 2024 Annual Report

 
had served in that role for more than 25 years, and the recruitment of a well-qualified, long-term successor, is expected to 
be time-consuming and may result in an increased risk of internal control deficiencies or in financial statement inaccuracies 
during this process. The substitution of our recently-hired Chief Operating Officer into the Chief Financial Officer role 
may also result in a distraction from other critical management functions in one or both of those leadership positions. 
Additional Board and/or leadership changes will occur from time to time, and we cannot always anticipate or control the 
timing of these changes, Similarly, we cannot offer assurance that we would be able to recruit additional qualified 
personnel on a timely basis, either to fill vacancies created by departures or to grow our executive team to respond to and 
prepare for the expansion of our business. Competition for senior executives and skilled personnel in the financial services 
and banking industry is intense, which means the cost of hiring, paying incentives and retaining skilled personnel may 
continue to increase. Our ability to compete effectively for senior executives and other qualified leadership personnel may 
increase our compensation and administrative expenses and may be restricted by applicable banking laws and regulations. 
The loss of the services of any director, senior executive or other key personnel, or the inability to recruit and retain 
qualified personnel in the future, could have a material adverse effect on our business, financial condition and results of 
operations. 
Our ability to access markets for funding and acquire and retain clients could be adversely affected by the deterioration 
of other financial institutions or the financial service industry’s reputation. 
Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial 
soundness of other financial institutions. Financial services companies are interrelated as a result of trading, clearing, 
counterparty and other relationships. We have exposure to different industries and counterparties, and through transactions 
with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks 
and other institutional clients. As a result, defaults by, or even rumors or questions about, one or more financial services 
companies, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses 
or defaults by us or by other institutions, as well as impact the trading prices of our common stock. These losses or defaults 
could have a material adverse effect on our business, financial condition and results of operations.  
The 2023 high-profile bank failures of Silicon Valley Bank, Signature Bank and First Republic have generated 
significant market volatility among publicly traded bank holding companies. These market developments have negatively 
impacted client confidence in the safety and soundness in the financial services industry, which persisted throughout 2024. 
We cannot offer assurances that the risks underlying negative publicity and public opinion have ameliorated or that adverse 
media stories, other bank failures, or geopolitical and market conditions will not exacerbate or continue these conditions. 
Partly as a result of these conditions, some community and regional bank depositors have chosen to place their deposits 
with larger financial institutions or to invest in higher yielding short-term fixed income securities, all of which have 
unfavorably affected, and may continue to materially adversely impact our liquidity, cost of funding, loan funding capacity, 
net interest margin, capital, and results of operations. In connection with high-profile bank failures, uncertainty and 
concern has been, and may be in the future, compounded by advances in technology that increase the speed at which 
deposits can be moved, as well as the speed and reach of media attention, including social media, and its ability to 
disseminate concerns or rumors, in each case potentially exacerbating liquidity concerns. Further, any current or future 
measures announced by the Department of the Treasury, the Federal Reserve, and the Federal Deposit Insurance 
Corporation (“FDIC”) intended to reassure depositors of the availability of their deposits may not be successful in restoring 
client confidence in the banking system. 
Events such as these may also result in potentially adverse changes to laws or regulations governing banks and 
bank holding companies or result in the imposition of restrictions through supervisory or enforcement activities, including 
higher capital requirements, which could have a material impact on our business. 
Our risk management framework may not be effective in mitigating risks and/or losses to us.  
Our risk management framework is comprised of various processes, systems and strategies, and is designed to 
manage the types of risk to which we are subject, including, among others, credit, market, liquidity, interest rate and 
compliance. Our risk management framework may not be effective under all circumstances and may not adequately 
mitigate any risk or loss. If our risk management framework is not effective, we could suffer unexpected losses and our 
business, financial condition and results of operations could be materially and adversely affected. We may also be subject 
to potentially adverse regulatory consequences.  
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Heritage Commerce Corp • 2024 Annual Report

 
Team member misconduct could expose us to significant legal liability and reputational harm. 
We are vulnerable to reputational harm because we operate in an industry in which integrity and the confidence 
of our clients are of critical importance. Conduct by our team members that reflects fraudulent, illegal, wrongful or 
suspicious activities, or they act in a manner that results in consumer harm, may adversely affect our clients and/or our 
business. The precautions we take to detect and prevent such misconduct may not always be effective and could result in 
regulatory sanctions and/or penalties, criminal or civil penalties and, serious harm to our reputation, financial condition, 
client relationships, team member relationships and ability to attract new clients. In addition, improper use or disclosure 
of confidential information by our team members, even if inadvertent, could result in serious harm to our reputation, 
financial condition and current and future business relationships. If our internal controls against operational risks fail to 
prevent or detect an occurrence of such team member error or misconduct, or if any resulting loss is not insured or exceeds 
applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of 
operations. 
We depend on the accuracy and completeness of information provided by clients and counterparties and any 
misrepresented information could adversely affect our business, financial condition and results of operations.  
In deciding whether to extend credit or to enter into other transactions with clients and counterparties, we may 
rely on information furnished to us by or on behalf of clients and counterparties, including financial statements and other 
financial information. Some of the information regarding clients provided to us is also used in our proprietary credit 
decision making and scoring models, which we use to determine whether to do business with clients, Further, the risk 
profiles of such clients may subsequently be utilized by counterparties who may lend us capital to fund our operations. 
We may also rely on representations of clients and counterparties as to the accuracy and completeness of that information. 
In deciding whether to extend credit, we may rely upon our clients’ representations that their financial statements conform 
to stated accounting principles and present fairly, in all material respects, the financial condition, results of operations and 
cash flows of the client. We also may rely on client representations and certifications, or other audit or accountants’ reports, 
with respect to the business and financial condition of our clients. Whether a misrepresentation is made by the applicant, 
another third party or one of our team members, we generally bear the risk of loss associated with the misrepresentation. 
We may not detect all misrepresented information in our originations or from service providers we engage to assist in the 
approval process. Any such misrepresented information could have a material adverse effect on our business, financial 
condition and results of operations. 
Increasing scrutiny and evolving expectations from clients, regulators, investors, and other stakeholders with respect 
to our environmental, social and governance practices may impose additional costs on us or expose us to new or 
additional risks. 
Companies are facing increasing scrutiny from clients, regulators, investors, and other stakeholders related to 
their environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds 
and influential investors are also increasingly focused on these practices, especially as they relate to the environment, 
health and safety, diversity, labor conditions and human rights. Increased ESG-related compliance costs for us as well as 
among our suppliers, vendors and various other parties within our supply chain could result in increases to our overall 
operational costs. New government regulations could also result in new or more stringent forms of ESG oversight and 
expanding mandatory and voluntary reporting, diligence, and disclosure. However, over the last few years there has been 
an increase in anti-ESG measures and proposals by investor advocacy groups, shareholders and policymakers. The 
potential impact of the new presidential administration on additional changes in agency personnel, policies and priorities 
on the financial services industry cannot be predicted at this time. Failure to adapt to or comply with evolving regulatory 
requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do 
business with certain partners, access to capital, and our stock price.  
Severe weather, natural disasters, pandemics, acts of war or terrorism, social unrest and other external events could 
significantly impact our operations.  
Severe weather, natural disasters (including fires, earthquakes, and floods), wide spread disease or pandemics, 
such as the COVID-19 pandemic, acts of war or terrorism, social unrest and other adverse external events have had in the 
past and could have in the future a significant impact on our ability to conduct business and create significant volatility 
and disruption in global and U.S. economies. Such events could affect the financial markets, reduce access to liquidity, 
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Heritage Commerce Corp • 2024 Annual Report

 
impair our client’s financial condition, affect the stability of our deposit base, impair the ability of borrowers to repay 
outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue 
and/or cause us to incur additional expenses. The majority of our branches are located in the San Jose, San Francisco, 
Oakland areas, which in the past have experienced both severe earthquakes and wildfires. We do not carry earthquake 
insurance on our properties. Earthquakes, wildfires or other natural disasters could severely disrupt our operations. 
Operations in our market could be disrupted by both the evacuation of large portions of the population as well as damage 
to and/or lack of access to our banking and operation facilities. Although management has established disaster recovery 
policies and procedures, the occurrence of any such events could have a material adverse effect on our business, financial 
condition and results of operations. 
Risks Relating to Our Business 
Our profitability is dependent upon the geographic concentration of the markets in which we operate. 
We operate primarily in the general San Francisco Bay Area of California in the counties of Alameda, Contra 
Costa, Marin, San Benito, San Francisco, San Mateo, and Santa Clara and, as a result, our business, financial condition 
and results of operations are subject to the demand for our products in those areas and is also subject to changes in the 
economic conditions in those areas. Our success depends upon the business activity, population, income levels, deposits 
and real estate activity in these markets. Although Bay View Funding, the Bank’s factoring subsidiary, and our clients’ 
business and financial interests may extend well beyond these market areas, adverse economic conditions that affect these 
market areas could reduce our growth rate, affect the ability of our clients to repay their loans to us, could impair the value 
of the collateral securing our loans, or otherwise generally could affect our business, financial condition and results of 
operations. Because of our geographic concentration, we are less able than regional or national financial institutions to 
diversify demand for our products or our credit risks across multiple markets. 
Similarly, geologic, weather-related, and other hazards such as wildfires, earthquakes, droughts, floods and 
storms, frequently threaten our markets, and in certain circumstances could be expected to have a disproportionate effect 
on our business as compared to financial institutions whose client and asset bases are more diversified. Such events may 
harm our business directly or may harm our clients and prospective clients in a way that increases the risks of defaults on 
our loans, reduces the value of our collateral, and increases clients’ need for liquidity, thus reducing our deposit base and 
potentially increasing our costs of funds.  
Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially 
adversely affect our business, financial condition and results of operations.  
We are a community bank, and our reputation is one of the most valuable components of our business. Threats 
to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical 
practices, team member misconduct, cybersecurity failures or disruptions, failure to deliver minimum standards of service 
or quality, compliance deficiencies, and questionable or fraudulent activities of our clients or third parties. Negative 
publicity regarding our business, team members, or clients, with or without merit, may result in the loss of clients, investors 
and team members, costly litigation, a decline in revenues and increased governmental regulation and have a material 
adverse effect on business, financial condition and results of operations. 
Risks Related to Our Loans 
Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes affecting real 
estate values and liquidity could impair the value of collateral securing our loans and result in loan and other losses.  
Real estate lending (including commercial, land development and construction, home equity, multifamily, and 
residential mortgage loans) is a large portion of our loan portfolio. At December 31, 2024, approximately $2.9 billion, or 
84% of our loan portfolio, was comprised of loans with real estate as a primary or secondary component of collateral. 
Included in CRE loans were owner occupied loans of $601.6 million, or 17 % of total loans. The real estate securing our 
loan portfolio is concentrated in California. The market value of real estate can fluctuate significantly in a short period of 
time as a result of market conditions in the geographic area in which the real estate is located. Real estate values and real 
estate markets are generally affected by changes in national, regional or local economic conditions, the rate of 
unemployment, fluctuations in interest rates and the availability of loans to potential purchasers, fluctuations in vacancy 
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Heritage Commerce Corp • 2024 Annual Report

 
rates, changes in tax laws and other governmental statutes, regulations and policies, access to insurance coverage, and acts 
of nature, such as wildfires, earthquakes and other natural disasters or adverse events. Adverse changes affecting real estate 
values and the liquidity of real estate in one or more of our markets could increase the credit risk associated with our loan 
portfolio, significantly impair the value of property pledged as collateral on loans and affect our ability to sell the collateral 
upon foreclosure without a loss or additional losses, which would adversely affect profitability. Such declines and losses 
would have a material adverse effect on our business, financial condition, and results of operations. 
Our land and construction development loans are based upon estimates of costs and value associated with the completed 
project. These estimates may be inaccurate and we may be exposed to more losses on these projects than on other loans. 
At December 31, 2024, land and construction loans, (including land acquisition and development loans) totaled 
$127.8 million or 4% of our portfolio. Of these loans, 18% were comprised of owner occupied and 82% non-owner 
occupied land and construction loans. These loans involve additional risks because funds are advanced upon the security 
of the project, which is of uncertain value prior to its completion, and costs may exceed realizable values in declining real 
estate markets. Because of the uncertainties inherent in estimating construction costs and the realizable market value of 
the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate 
accurately the total funds required to complete a project and the related loan-to-value ratio. As a result, construction loans 
often involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate 
project and the ability of the borrower to sell or lease the property, rather than the ability of the borrower or guarantor to 
repay principal and interest. If our appraisal of the value of the completed project proves to be overstated or market values 
or rental rates decline, we may have inadequate security for the repayment of the loan upon completion of project 
construction. If we are forced to foreclose on a project prior to or at completion due to a default, we may not be able to 
recover all of the unpaid balance of, and accrued interest on, the loan as well as related foreclosure and holding costs. In 
addition, we may be required to fund additional amounts to complete the project and may have to hold the property for an 
unspecified period of time while we attempt to dispose of it. 
Increased scrutiny by regulators of commercial real estate concentrations could restrict our activities and impose 
financial requirements or limits on the conduct of our business.  
Banking regulators are giving commercial real estate lending greater scrutiny, and may require banks with higher 
levels of commercial real estate loans to implement improved underwriting, internal controls, risk management policies 
and portfolio stress testing, as well as possibly higher levels of allowances for credit losses on loans and capital levels as 
a result of commercial real estate lending growth and exposures. Therefore, we could be required to raise additional capital 
or restrict our future growth as a result of our higher level of commercial real estate loans. 
Our use of appraisals in deciding whether to make a loan on or secured by real property does not ensure the value of 
the real property collateral. 
In considering whether to make a loan secured by real property we generally require an appraisal of the property. 
However, an appraisal is only an estimate of the value of the property at the time the appraisal is conducted, and an error 
in fact or judgment could adversely affect the reliability of an appraisal. In addition, events occurring after the initial 
appraisal may cause the value of the real estate to decrease. As a result of any of these factors the value of collateral 
securing a loan may be less than estimated, and if a default occurs, we may not recover the outstanding balance of the loan. 
Many of our loans are to commercial borrowers, which may have a higher degree of risk than other types of borrowers. 
At December 31, 2024, commercial loans totaled $531.4 million or 15% of our loan portfolio (including SBA 
loans, asset-based lending, and factored receivables). Commercial loans are often larger and involve greater risks than 
other types of lending. Because payments on such loans are often dependent on the successful operation or development 
of the property or business involved, repayment of such loans is often more sensitive than other types of loans to adverse 
conditions in the real estate market or the general business climate and economy. Accordingly, a downturn in the real 
estate market and a challenging business and economic environment may increase our risk related to commercial loans, 
particularly commercial real estate loans. Unlike home mortgage loans, which generally are made on the basis of the 
borrowers’ ability to make repayment from their employment and other income and which are secured by real property 
whose value tends to be more easily ascertainable, commercial loans typically are made on the basis of the borrowers’ 
 
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Heritage Commerce Corp • 2024 Annual Report

 
ability to make repayment from the cash flow of the commercial venture. Our commercial and industrial loans are primarily 
made based on the identified cash flow of the borrower and secondarily on the collateral underlying the loans. Most often, 
collateral consists of accounts receivable, inventory and equipment and may incorporate a personal guarantee. Inventory 
and equipment may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of 
the business. Accounts receivable may be uncollectable. If the cash flow from business operations is reduced, the 
borrower’s ability to repay the loan may be impaired. Vacancy rates can also negatively impact cash flows from business 
operations. Thus, HBC’s borrowers and their guarantors could be adversely impacted by a downturn in these sectors of 
the economy which could further impact the borrower’s ability to repay their loans. Due to the larger average size of each 
commercial loan as compared with other loans such as residential loans, as well as collateral that is generally less readily-
marketable, losses incurred on a small number of commercial loans could have a material adverse effect on our business, 
financial condition and results of operations. 
The small and medium-sized businesses that we lend to may have fewer resources to weather adverse business 
developments, which may impair a borrower’s ability to repay a loan, and such impairment could adversely affect our 
business, financial condition and results of operation.  
We target our business development and marketing strategy primarily to serve the banking and financial services 
needs of small to medium-sized businesses. These businesses generally have fewer financial resources in terms of capital 
or borrowing capacity than larger entities, frequently have smaller market shares than their competition, may be more 
vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience 
substantial volatility in operating results, any of which may impair a borrower’s ability to repay a loan. In addition, the 
success of a small and medium-sized business often depends on the management talents and efforts of one or two people 
or a small group of people, and the death, disability or resignation of one or more of these people could have a material 
adverse impact on the business and its ability to repay its loan. Negative general economic conditions in our markets where 
we operate that adversely affect our medium-sized business borrowers may impair the borrower’s ability to repay a loan 
and such impairment could have a material adverse effect on our business, financial condition and results of operation. 
Risks Related to our SBA Loan Program 
Small Business Administration lending is an important part of our business. Our SBA lending program is dependent 
upon the U.S. federal government, and we face specific risks associated with originating SBA loans. 
At December 31, 2024, SBA loans totaled $29.9 million, which are included in the commercial loan portfolio. 
SBA loans held-for-sale totaled $2.4 million at December 31, 2024. Our SBA lending program is dependent upon the U.S. 
federal government. As an approved participant in the SBA Preferred Lender’s Program (an “SBA Preferred Lender”), we 
enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary 
for lenders that are not SBA Preferred Lenders. The SBA periodically reviews the lending operations of participating 
lenders to assess, among other things, whether the lender exhibits prudent risk management. When weaknesses are 
identified, the SBA may request corrective actions or impose enforcement actions, including revocation of the lender’s 
SBA Preferred Lender status. If we lose our status as an SBA Preferred Lender, we may lose some or all of our clients to 
lenders who are SBA Preferred Lenders, and as a result we could experience a material adverse effect to our financial 
results. Any changes to the SBA program, including but not limited to changes to the level of guarantee provided by the 
federal government on SBA loans, changes to program specific rules impacting volume eligibility under the guaranty 
program, as well as changes to the program amounts authorized by Congress may also have a material adverse effect on 
our business. In addition, any default by the U.S. government on its obligations or any prolonged government shutdown 
could, among other things, impede our ability to originate SBA loans or sell such loans in the secondary market, which 
could have a material adverse effect on our business, financial condition and results of operations. 
The SBA’s 7(a) Loan Program is the SBA’s primary program for helping start-up and existing small businesses, 
with financing guaranteed for a variety of general business purposes. Generally, we sell the guaranteed portion of our SBA 
7(a) loans in the secondary market. These sales result in premium income for us at the time of sale and create a stream of 
future servicing income, as we retain the servicing rights to these loans. For the reasons described above, we may not be 
able to continue originating these loans or sell them in the secondary market. Furthermore, even if we are able to continue 
to originate and sell SBA 7(a) loans in the secondary market, we might not continue to realize premiums upon the sale of 
the guaranteed portion of these loans or the premiums may decline due to economic and competitive factors. When we 
originate SBA loans, we incur credit risk on the non-guaranteed portion of the loans, and if a client defaults on a loan, we 
24
 
Heritage Commerce Corp • 2024 Annual Report

 
share any loss and recovery related to the loan pro-rata with the SBA. If the SBA establishes that a loss on an SBA 
guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded 
or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us. Generally, we do not 
maintain reserves or loss allowances for such potential claims and any such claims could materially adversely affect our 
business, financial condition and results of operations. 
In addition, the Company’s SBA loans include loans under the U.S. Department of Agriculture guaranteed 
lending programs. 
The laws, regulations and standard operating procedures that are applicable to SBA loan products may change in 
the future. We cannot predict the effects of these changes on our business and profitability. Because government regulation 
greatly affects the business and financial results of all commercial banks and bank holding companies and especially our 
organization, changes in the laws, regulations and procedures applicable to SBA loans could adversely affect our ability 
to operate profitably. 
The recognition of gains on the sale of loans and servicing asset valuations reflect certain assumptions. 
We expect that gains on the sale of U.S. government guaranteed loans will contribute to noninterest income. The 
gains on such sales recognized for the year ended December 31, 2024 was $473,000. The determination of these gains is 
based on assumptions regarding the value of unguaranteed loans retained, servicing rights retained and deferred fees and 
costs, and net premiums paid by purchasers of the guaranteed portions of U.S. government guaranteed loans. The value of 
retained unguaranteed loans and servicing rights are determined based on market derived factors such as prepayment rates, 
current market conditions and recent loan sales. Deferred fees and costs are determined using internal analysis of the cost 
to originate loans. Significant errors in assumptions used to compute gains on sale of loans or servicing asset valuations 
could result in material revenue misstatements, which may have a material adverse effect on our business, financial 
condition and results of operations. 
We originated $38.8 million of SBA loans for the year ended December 31, 2024. We sold $5.9 million of the 
guaranteed portion of our SBA loans for the year ended December 31, 2024. We generally retain the non-guaranteed 
portions of the SBA loans that we originate. Consequently, as of December 31, 2024, we held $32.3 million of SBA loans 
(including loans held-for-sale) on our balance sheet, $18.3 million of which consisted of the non-guaranteed portion of 
SBA loans, and $14.0 million of which consisted of the guaranteed portion of SBA loans. At December 31, 2024, 
$2.4 million, or 7.35%, consisted of the guaranteed portion of SBA loans which we intend to sell in 2025. The non-
guaranteed portion of SBA loans have a higher degree of credit risk and risk of loss as compared to the guaranteed portion 
of such loans and make up a substantial majority of our remaining SBA loans. 
When we sell the guaranteed portion of SBA loans in the ordinary course of business, we are required to make 
certain representations and warranties to the purchaser about the SBA loans and the manner in which they were originated. 
Under these agreements, we may be required to repurchase the guaranteed portion of the SBA loan if we have breached 
any of these representations or warranties, in which case we may record a loss. In addition, if repurchase and indemnity 
demands increase on loans that we sell from our portfolios, our liquidity, results of operations and financial condition 
could be adversely affected. Further, we generally retain the non-guaranteed portions of the SBA loans that we originate 
and sell, and to the extent the borrowers of such loans experience financial difficulties, our financial condition and results 
of operations could be adversely impacted. 
Risks Related to our Credit Quality 
Our business depends on our ability to successfully manage credit risk.  
The operation of our business requires us to manage credit risk. As a lender, we are exposed to the risk that our 
borrowers will be unable to repay their loans according to their terms, and that the collateral securing repayment of their 
loans, if any, may not be sufficient to ensure repayment. In addition, there are risks inherent in making any loan, including 
risks with respect to the period of time over which the loan may be repaid, risks relating to proper loan underwriting, risks 
resulting from changes in economic and industry conditions and risks inherent in dealing with individual borrowers. In 
order to successfully manage credit risk, we must, among other things, maintain disciplined and prudent underwriting 
standards and ensure that our bankers follow those standards. The weakening of these standards for any reason, a lack of 
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Heritage Commerce Corp • 2024 Annual Report

 
discipline or diligence by our team members in underwriting and monitoring loans, the inability of our team members to 
adequately adapt policies and procedures to changes in economic or any other conditions affecting borrowers and the 
quality of our loan portfolio, may result in loan defaults, foreclosures and additional charge-offs and may necessitate that 
we significantly increase our allowance for credit losses on loans, each of which could adversely affect our net income. 
As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial 
condition and results of operations. 
Our allowance for credit losses on loans may prove to be insufficient to absorb potential losses in our loan portfolio.  
We maintain an allowance for credit losses on loans to provide for loan defaults and non-performance, which 
reflects our estimate of the current expected credit losses in our loan portfolio at the relevant balance sheet date. Our 
allowance for credit losses was $49.0 million, or 1.40% expressed as a percentage of loans, at December 31, 2024. 
Allowance for credit losses on loans is funded from a provision for credit losses on loans, which is a charge to our income 
statement. The Company had a provision for credit losses on loans of $2.1 million for the year ended December 31, 2024. 
The processes we use to estimate the allowance for credit losses on loans and to measure the fair value of financial 
instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on 
our financial condition and results of operations, depends upon the use of analytical models which takes into account 
known risks, composition and growth of the loan portfolio and economic forecasts. These models may not be accurate, 
particularly in times of market stress, unforeseen circumstances or due to flaws in the model’s design or implementation. 
If the models we use for interest rate risk and asset-liability management are inadequate, we may incur increased or 
unexpected losses upon changes in market interest rates or other market measures. If the models we use for determining 
the allowance for credit losses on loans are inadequate, the allowance for credit losses on loans may not be sufficient to 
support future charge-offs. If the models we use to measure the fair value of financial instruments are inadequate, the fair 
value of such financial instruments may fluctuate unexpectedly or may not accurately reflect what we could realize upon 
sale or settlement of such financial instruments. Any such failure in our analytical models could result in losses that could 
have a material adverse effect on our business, financial condition and results of operations. 
In addition, we evaluate all loans identified as individually evaluated loans and allocate an allowance based upon 
our estimation of the potential loss associated with those problem loans. While we strive to carefully manage and monitor 
credit quality and to identify loans that may be deteriorating, at any time there are loans included in the portfolio that may 
result in losses, but that have not yet been identified as nonperforming or potential problem loans. Through established 
credit practices, we attempt to identify deteriorating loans and adjust the allowance for credit losses on loans accordingly. 
However, because future events are uncertain and because we may not successfully identify all deteriorating loans in a 
timely manner, there may be loans that deteriorate in an accelerated time frame. We cannot be sure that we will be able to 
identify deteriorating loans before they become nonperforming assets, or that we will be able to limit losses on those loans 
that have been so identified. 
Although management believes that the allowance for credit losses on loans is adequate to absorb losses on any 
existing loans that may become uncollectible, we may be required to take additional provisions for credit losses on loans 
in the future to further supplement the allowance for credit losses on loans, either due to management’s decision to do so 
or because our banking regulators require us to do so. Our bank regulatory agencies will periodically review our allowance 
for credit losses on loans and the value attributed to nonaccrual loans or to real estate acquired through foreclosure and 
may require us to adjust our determination of the value for these items. If our allowance for credit losses on loans is 
inaccurate, for any of the reasons discussed above (or other reasons), and is inadequate to cover the loan losses that we 
actually experience, the resulting losses could have a material adverse effect on our business, financial condition and 
results of operations. 
Nonperforming assets adversely affect our results of operations and financial condition, and take significant time to 
resolve. 
As of December 31, 2024, our nonperforming loans (which consist of nonaccrual loans, loans past due 90 days 
or more and still accruing interest) totaled $7.7 million, or 0.22% of our loan portfolio, and our nonperforming assets 
(which include nonperforming loans plus other real estate owned) also totaled $7.7 million, or 0.14% of total assets.  
Our nonperforming assets adversely affect our net income in various ways. We do not record interest income on 
nonaccrual loans or other real estate owned, thereby adversely affecting our net interest income, net income and returns 
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Heritage Commerce Corp • 2024 Annual Report

 
on assets and equity, and our loan administration costs increase, which together with reduced interest income adversely 
affects our efficiency ratio. Further, when we place a loan on nonaccrual status, we reverse any accrued but unpaid interest 
receivable, which decreases interest income. Subsequently, we continue to have a cost to fund the loan, which is reflected 
as interest expense, without any interest income to offset the associated funding expense. When we take collateral in 
foreclosure and similar proceedings, we are required to mark the collateral to its then-fair market value, which may result 
in a loss. These nonperforming loans and other real estate owned also increase our risk profile and the level of capital our 
regulators believe is appropriate for us to maintain in light of such risks. The resolution of nonperforming assets requires 
significant time commitments from management and can be detrimental to the performance of their other responsibilities. 
If we experience increases in nonperforming loans and nonperforming assets, our net interest income may be negatively 
impacted and our loan administration costs could increase, each of which could have a material adverse effect on our 
business, financial condition and results of operations. 
We could be exposed to risk of environmental liabilities with respect to properties to which we take title. 
In the course of our business, we may foreclose and take title to real estate, and could be subject to environmental 
liabilities with respect to these properties. We may be held liable to a governmental entity or to third parties for property 
damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental 
contamination, or may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a 
property. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the 
owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages 
and costs resulting from environmental contamination emanating from the property. Significant environmental liabilities 
could have a material adverse effect on our business, financial condition, and results of operations. 
Risks Related to Our Growth Strategy 
We face risks related to any future acquisitions we make. 
We plan to continue to grow our business organically. However, from time to time, we may consider opportunistic 
strategic acquisitions that we believe support our long-term business strategy. We face significant competition from 
numerous other financial services institutions, many of which will have greater financial resources than we do, when 
considering acquisition opportunities. Additionally, the process for obtaining any required regulatory approvals has 
become substantially more difficult, which could affect our evaluation or completion of strategic and competitively 
significant business opportunities. Accordingly, attractive acquisition opportunities may not be available to us. We may 
not be successful in identifying or completing any future acquisitions, and we may incur expenses as a result of seeking 
these opportunities regardless of whether they are consummated. Acquisitions of financial institutions involve operational 
risks and uncertainties and acquired companies may have unforeseen liabilities, exposure to asset quality problems, key 
employee and client retention problems and other problems that could negatively affect our organization. 
If we complete any future acquisitions, we may not be able to successfully integrate the operations, management, 
products and services of the entities that we acquire and eliminate redundancies. The integration process could result in 
the loss of key employees or disruption of the combined entity’s ongoing business that adversely affect our ability to 
maintain relationships with clients and employees or achieve the anticipated benefits of the transaction. The integration 
process may also require significant time and attention from our management that they would otherwise direct at servicing 
existing business and developing new business. We may not be able to realize any projected cost savings, synergies or 
other benefits associated with any such acquisition we complete. We cannot determine all potential events, facts and 
circumstances that could result in loss and our investigation or mitigation efforts may be insufficient to protect against any 
such loss. 
If the goodwill that we recorded in connection with a business acquisition becomes impaired, it could require charges 
to earnings, which would have a negative impact on our financial condition and results of operations. 
Goodwill represents the amount by which the cost of an acquisition exceeded the fair value of net assets we 
acquired in connection with the purchase. At December 31, 2024, our acquisition-related goodwill as reflected on our 
balance sheet was $167.6 million. Management assesses whether it is necessary to perform a quantitative impairment test 
of goodwill on a quarterly basis. In addition, the Company hires a third-party vendor to test goodwill for impairment 
annually as of November 30, or on an interim basis if an event triggering impairment assessment may have occurred. We 
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Heritage Commerce Corp • 2024 Annual Report

 
determine impairment by comparing the implied fair value of the reporting unit goodwill with the carrying amount of that 
goodwill. Estimates of fair value are determined based on a complex model using cash flows, the fair value of our Company 
as determined by our stock price, and company comparisons. If management’s estimates of future cash flows are 
inaccurate, fair value determined could be inaccurate and impairment may not be recognized in a timely manner. If the 
carrying amount (book value) of the reporting unit exceeds the fair value of the reporting unit, an impairment loss is 
recognized in an amount equal to that excess. Any such adjustments are reflected in our results of operations in the periods 
in which they become known. There can be no assurance that our future evaluations of goodwill will not result in findings 
of impairment and related write-downs, which may have a material adverse effect on our financial condition and results 
of operations. 
We must effectively manage our branch growth strategy. 
We seek to expand our franchise safely and consistently. A successful growth strategy requires us to manage 
multiple aspects of our business simultaneously, such as following adequate loan underwriting standards, balancing loan 
and deposit growth without increasing interest rate risk or compressing our net interest margin, maintaining sufficient 
capital, maintaining proper system and controls, and recruiting, training and retaining qualified professionals. We also 
may experience a lag in profitability associated with new branch openings. As part of our general growth strategy we may 
expand into additional communities or attempt to strengthen our position in our current markets by opening new offices, 
subject to any regulatory constraints on our ability to open new offices. To the extent that we are able to open additional 
offices, we are likely to experience the effects of higher operating expenses relative to operating income from the new 
operations for a period of time which could have a material adverse effect on our business, financial condition and results 
of operations. 
New lines of business or new products and services may subject us to additional risks. 
From time to time, we may implement or may acquire new lines of business or offer new products and services 
within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in 
instances where the markets are not fully developed. In developing and marketing new lines of business and new products 
and services we may invest significant time and resources. We may not achieve target timetables for the introduction and 
development of new lines of business and new products or services and price and profitability targets may not prove 
feasible. External factors, such as regulatory compliance obligations, competitive alternatives, and shifting market 
preferences, may also impact the successful implementation of a new line of business or a new product or service. 
Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness 
of our system of internal controls. Failure to successfully manage these risks in the development and implementation of 
new lines of business or new products or services could have a material adverse effect on our business, financial condition 
and results of operations. 
Risks Related to Our Financial Strength and Liquidity  
An actual or perceived reduction in our financial strength may cause others to reduce or cease doing business with us, 
which could result in a decrease in our net interest income and fee revenues. 
Our clients rely upon our financial strength and stability and evaluate the risks of doing business with us. If we 
experience diminished financial strength or stability, actual or perceived, including due to market or regulatory 
developments, announced or rumored business developments or results of operations, or a decline in stock price, clients 
may withdraw their deposits or otherwise seek services from other banking institutions and prospective clients may select 
other service providers. The risk that we may be perceived as less creditworthy relative to other market participants is 
increased in the current market environment, where the consolidation of financial institutions, including major global 
financial institutions, is resulting in a smaller number of much larger counterparties and competitors. If clients reduce their 
deposits with us or select other service providers for all or a portion of the services that we provide them, net interest 
income and fee revenues will decrease accordingly, and could have a material adverse effect on our results of operations. 
Increasing challenges in credit markets and the effects on our current and future borrowers have adversely affected, 
and in the future may adversely affect, our loan portfolio and may result in losses or increasing provision expense. 
Although the Federal Reserve System (commonly referred to as “the Fed”) has recently made modest incremental 
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Heritage Commerce Corp • 2024 Annual Report

 
reductions in benchmark interest rates, the current interest rate environment remains significantly elevated from those of 
the recent past, and recent indications as of the date of this report are that further reductions are unlikely in the near future. 
Interest rates affect both our ability to reprice variable-rate loans and to originate new fixed-rate loans, and in times of 
significant uncertainty about interest rates, such as the present, clients and prospective investors often reduce their 
borrowing levels, which tends to have a deflating effect on our outstanding loan balances and thus on our interest income. 
During the third and fourth quarters of 2024, the Federal Reserve Open Markets Committee cut benchmark 
interest rates three times and for the first time since 2020. While we do not presently expect that the Fed will resume 
increases to benchmark interest rates, we are unable to predict changes in future interest rates. Further, the conditions that 
led the Fed to make these reductions remain uncertain and volatile, and thus are highly unpredictable. This is particularly 
true of the risks of political instability associated with the new presidential administration and subsequent governmental 
and economic reactions. If rates resume increasing, or if they continue to remain at relatively elevated levels for prolonged 
periods, our borrowers may experience increasing difficulty in repaying their loans. Further, borrowers may defer 
additional borrowing decisions pending the resolution of both the political uncertainties and the potential for further market 
adjustments in response to those matters and to general economic conditions. 
To the extent interest rates remain relatively elevated, or if economic conditions affecting our borrowers worsen, 
our allowance for credit losses and related provision could be negatively impacted, which would result in a reduction in 
net income for the corresponding period, or in some cases we may experience losses in excess of established reserves, 
which would have a similar effect. At the same time, even if interest rates stabilize or if reductions are less significant than 
clients expect, we may confront a loss of demand that adversely affects our interest earning assets. Either of these 
outcomes, alone or in combination with other factors, may have a material adverse effect on our results of operations. 
Fluctuations in interest rates may reduce net interest income and otherwise negatively affect our business, financial 
condition and results of operations. 
Shifts in short-term interest rates may reduce net interest income, which is the principal component of our 
earnings. Net interest income is the difference between the amounts received by us on our interest-earning assets and the 
interest paid by us on our interest-bearing liabilities. When interest rates rise, the rate of interest we receive on our assets, 
such as floating interest rate loans, rises more quickly than the rate of interest that we pay on our interest-bearing liabilities, 
such as deposits, which may cause our profits to increase. When interest rates decrease, the rate of interest we receive on 
our assets, such as floating interest rate loans, declines more quickly than the rate of interest that we pay on our interest-
bearing liabilities, such as deposits, which may cause our profits to decrease.  
Changes in interest rates could influence our ability to originate loans and deposits. Historically, there has been 
an inverse correlation between the demand for loans and interest rates. Loan origination volume usually declines during 
periods of rising or high interest rates and increases during periods of declining or low interest rates.  
Changes in interest rates can also affect the level of loan refinancing activity, which impacts the amount of 
prepayment penalty income we receive on loans we hold. Because prepayment penalties are recorded as interest income 
when received, the extent to which they increase or decrease during any given period could have a significant impact on 
the level of net interest income and net income we generate during that time. A decrease in our prepayment penalty income 
resulting from any change in interest rates or as a result of regulatory limitations on our ability to charge prepayment 
penalties could therefore adversely affect our net interest income, net income or results of operations. 
An increase in interest rates that adversely affects the ability of borrowers to pay the principal or interest on loans 
may lead to an increase in nonperforming assets and a reduction of income recognized, which could have a material adverse 
effect on our results of operations and cash flows. Further, when we place a loan on nonaccrual status, we reverse any 
accrued but unpaid interest receivable, which decreases interest income. Subsequently, we continue to have a cost to fund 
the loan, which is reflected as interest expense, without any interest income to offset the associated funding expense. Thus, 
an increase in the amount of nonperforming assets would have an adverse impact on net interest income. 
Changes in interest rates also can affect the value of loans, securities and other assets. Rising interest rates will 
result in a decline in value of the fixed-rate debt securities we hold in our investment securities portfolio. The unrealized 
losses resulting from holding these securities would be recognized in accumulated other comprehensive income and reduce 
total shareholders’ equity. Unrealized losses do not negatively impact our regulatory capital ratios. However, tangible 
29
Heritage Commerce Corp • 2024 Annual Report

 
common equity and the associated ratios would be reduced. If debt securities in an unrealized loss position are sold, such 
losses become realized and will reduce our regulatory capital ratios. 
Failure to maintain effective internal controls over financial reporting could have a material adverse effect on our 
business and stock price.  
We are required to comply with the Securities and Exchange Commission’s (“SEC”) rules implementing 
Section 302, Section 404, and Section 906 of the Sarbanes-Oxley Act, which will require management to certify financial 
and other information in our quarterly and annual reports and provide an annual management report as to the effectiveness 
of controls over financial reporting. If we identify any material weaknesses in our internal control over financial reporting 
or are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over 
financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as 
to the effectiveness of our internal control over financial reporting, investors, counterparties and clients may lose 
confidence in the accuracy and completeness of our financial statements and reports; our liquidity, access to capital markets 
and perceptions of our creditworthiness could be adversely affected; and the market price of our common stock could 
decline. In addition, we could become subject to investigations by the stock exchange on which our securities are listed, 
the SEC, the Federal Reserve, the FDIC, the California Department of Financial Protection and Innovation (“DFPI”) or 
other regulatory authorities, which could require additional financial and management resources. These events could have 
a material adverse effect on our business and stock price. 
We have significant deferred tax assets and cannot assure that they will be fully realized. 
Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between the 
carrying amounts and tax basis of assets and liabilities computed using enacted tax rates. We regularly assess available 
positive and negative evidence to determine whether it is more likely than not that our net deferred tax assets will be 
realized. Realization of a deferred tax asset requires us to apply significant judgment and is inherently speculative because 
it requires estimates that cannot be made with certainty. At December 31, 2024, we had a net deferred tax asset of 
$27.8 million. If we were to determine at some point in the future that we will not achieve sufficient future taxable income 
to realize our net deferred tax asset, we would be required, under generally accepted accounting principles, to establish a 
full or partial valuation allowance which would require us to incur a charge to income for the period in which the 
determination was made. 
Fluctuations in market interest rates may have a material effect on the value of the Company’s securities portfolio.  
As of December 31, 2024, the fair value of our securities portfolio was approximately $753.3 million, of which 
approximately $256.3 million were categorized as available-for-sale. Fixed-rate investment securities, such as bonds, 
treasuries and mortgage-backed securities, generally decline in value when interest rates rise above the rates applicable to 
such securities. Correspondingly, declining interest rates tend to increase the value of fixed-rate securities issued in times 
of relatively higher rates, but those declines also affect our net interest income because they force us to pay above-market 
rates on certificates of deposit and other longer-term obligations, and clients tend to exit those investments less frequently 
under those conditions because their earning capacity in other investments is relatively less attractive. 
In response to inflationary pressures and other general economic conditions, the Federal Open Market Committee 
of the Board of Governors of the Fed rapidly and significantly increased interest rates between early 2022 and mid-2024, 
which resulted in declines in the carrying value of both our held-to-maturity and, particularly, our available-for-sale 
securities portfolios. Market interest rates have declined modestly in response to the Fed’s recent interest rate reductions. 
However, the economy remains highly uncertain with respect to various factors, including inflation and employment 
statistics, and it is thus extremely difficult for management to predict when, to what degree, or in which direction the Fed 
may attempt to adjust rates further. Such fluctuations have in the past resulted in declines, and in the future may cause 
further declines, in the carrying value of our available-for-sale securities portfolio and our portfolio of fixed rate loans, as 
well as the value of securities pledged as collateral for certain borrowing lines. These trends can be exacerbated if the 
Company were required to sell such securities to meet liquidity needs, including in the event of deposit outflows or slower 
deposit growth. Correspondingly, additional rate reductions may affect our net interest income as we seek to price our 
deposit products in a way that remains competitive and attractive to clients, while also mitigating the risk that future 
declines may leave us with elevated borrowing costs.  
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Heritage Commerce Corp • 2024 Annual Report

 
Additional factors beyond our control can further significantly influence the fair value of securities in our portfolio 
and can cause potential adverse changes to the fair value of these securities. Additional factors include, but are not limited 
to, rating agency downgrades of the securities or our own analysis of the value of the security, defaults by the issuer or 
individual mortgagors with respect to the underlying securities, and continued instability in the credit markets. Any of the 
foregoing factors could cause credit-related impairment in future periods and result in realized losses. The process for 
determining whether impairment is credit related usually requires difficult, subjective judgments about the future financial 
performance of the issuer and any collateral underlying the security in order to assess the probability of receiving all 
contractual principal and interest payments on the security. Because of changing economic and market conditions affecting 
interest rates, we may recognize realized and/or unrealized losses in future periods, or we may face periods of compressed 
net interest margins, either of which could have a material adverse effect on our business, financial condition and results 
of operations.  
Adverse changes to our credit ratings could limit our access to funding and increase our borrowing costs. 
Credit ratings are subject to ongoing review by rating agencies, which consider a number of factors, including 
our financial strength, performance, prospects and operations as well as factors not under our control. Other factors that 
influence our credit ratings include changes to the rating agencies’ methodologies for our industry or certain security types; 
the rating agencies’ assessment of the general operating environment for financial services companies; our relative 
positions in the markets in which we compete; our various risk exposures and risk management policies and activities; 
pending litigation and other contingencies; our reputation; our liquidity position, diversity of funding sources and funding 
costs; the current and expected level and volatility of our earnings; our capital position and capital management practices; 
our corporate governance; current or future regulatory and legislative initiatives; and the agencies’ views on whether the 
U.S. government would provide meaningful support to us or our subsidiaries in a crisis. Rating agencies could make 
adjustments to our credit ratings at any time, and there can be no assurance that they will maintain our ratings at current 
levels or that downgrades will not occur. 
Any downgrade in our credit ratings could potentially adversely affect the cost and other terms upon which we 
are able to borrow or obtain funding, increase our cost of capital and/or limit our access to capital markets. Credit rating 
downgrades or negative watch warnings could negatively impact our reputation with lenders, investors and other third 
parties, which could also impair our ability to compete in certain markets or engage in certain transactions. In particular, 
holders of deposits may perceive such a downgrade or warning negatively and withdraw all or a portion of such deposits. 
While certain aspects of a credit rating downgrade are quantifiable, the impact that such a downgrade would have on our 
liquidity, business and results of operations in future periods is inherently uncertain and would depend on a number of 
interrelated factors, including, among other things, the magnitude of the downgrade, the rating relative to peers, the rating 
assigned by the relevant agency pre-downgrade, individual client behavior and future mitigating actions we might take. 
Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations.  
Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans 
and/or investment securities, and from other sources could have a substantial negative effect on our liquidity. Our most 
important source of funds consists of our client deposits. If the Company is unable to maintain or grow its deposits, it may 
be subject to paying higher funding costs. The composition of our deposit base, and particularly the extent to which our 
deposits are not federally insured, may present a heightened risk of withdrawal. Such deposit balances can decrease during 
periods of economic uncertainty or when clients perceive alternative investments are providing a better risk/return tradeoff. 
Our measures to mitigate these risks, including correspondent deposit relationships, may not be completely effective in 
retaining and reassuring clients about their deposits and may increase the costs of maintaining or growing those deposits 
resulting in higher funding costs. Further, significant economic fluctuations, or clients’ expectations about such events 
(whether or not those expectations materialize) may exacerbate depositors’ sensitivity to the availability of cash to fund 
immediate withdrawals. If clients move money out of bank deposits and into other investments, we could face a material 
decrease in the volume of our deposits and lose a relatively low cost source of funds, thereby increasing our funding costs 
and reducing net interest income and net income. We could have to raise interest rates to retain deposits, thereby increasing 
our funding costs and reducing net interest income and net income. 
Additional liquidity is provided by our ability to borrow from the Federal Reserve Bank of San Francisco and the 
Federal Home Loan Bank of San Francisco. We also may borrow from third-party lenders from time to time. Our access 
to funding sources in amounts adequate to finance or capitalize our activities on terms that are acceptable to us could be 
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Heritage Commerce Corp • 2024 Annual Report

 
impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in 
the financial markets or negative views and expectations about the prospects for the financial services industry.  
Any decline in available funding could adversely impact our ability to continue to implement our strategic plan, 
including our ability to originate loans, invest in securities, meet our expenses, or to fulfill obligations such as repaying 
our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse effect on our liquidity, 
business, financial condition and results of operations. 
Risks Related to Our Capital  
We may be subject to more stringent capital requirements in the future. 
We are subject to current and changing regulatory requirements specifying minimum amounts and types of capital 
that we must maintain. The failure to meet applicable regulatory capital requirements could result in one or more of our 
regulators placing limitations or conditions on our activities, including our growth initiatives, or restricting the 
commencement of new activities, and could affect client and investor confidence, our costs of funds and FDIC insurance 
costs, our ability to pay dividends on our common stock, our ability to fund share repurchases, our ability to make 
acquisitions, and could materially adversely affect our business, financial condition and results of operations.  
We may need to raise additional capital in the future, and if we fail to maintain sufficient capital, whether due to losses, 
an inability to raise additional capital or otherwise, our financial condition, liquidity and results of operations, as well as 
our ability to maintain regulatory compliance, would be adversely affected.  
We face significant capital and other regulatory requirements as a financial institution. We may need to raise 
additional capital in the future to provide us with sufficient capital resources and liquidity to meet our commitments and 
business needs, which could include the possibility of financing acquisitions. Our ability to raise additional capital depends 
on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions 
regarding the banking industry, market conditions and governmental activities, and on our financial condition and 
performance. Any occurrence that may limit our access to the capital markets may adversely affect our capital costs and 
our ability to raise capital. Moreover, if we need to raise capital in the future, we may have to do so when many other 
financial institutions are also seeking to raise capital and would have to compete with those institutions for investors. We, 
therefore, may not be able to raise additional capital if needed or on terms acceptable to us.  
Risks Related to Our Legal and Regulatory Environment 
We are subject to extensive and complex regulations which are costly to comply with and may subject us to significant 
penalties for noncompliance. 
Our operations are subject to extensive regulation by federal, state and local governmental authorities, including 
the FDIC, the Federal Reserve and the California Department of Financial Protection and Innovation, and to various laws 
and judicial and administrative decisions imposing requirements and restrictions on part or all of our operations. Many of 
these laws are complex, especially those governing fair lending, predatory or unfair or deceptive practices, and other 
consumer-focused practices. Similarly, these laws and regulations have expanded substantially in terms of scope and 
complexity in recent years, and this expansion can be expected to continue. The complexity of those rules creates additional 
potential liability for us because noncompliance could result in significant regulatory action, including restrictions on 
operations and fines, and could lead to class action lawsuits from shareholders, consumers and employees. In addition, 
various states, particularly California, where substantially all our operations and banking activities take place, have their 
own laws and regulations. These state-specific regulations include heightened data privacy, employment law and consumer 
protection regulations, and the cost of complying with state rules that differ from federal rules can significantly increase 
compliance costs. 
The laws, rules and regulations to which we are subject evolve and change frequently, including changes that 
come from judicial or administrative agency interpretations of laws and regulations outside of the legislative process that 
may be more difficult to anticipate, and changes to our regulatory environment are often driven by shifts of political power 
in the federal government. In addition, we are subject to various examinations by our regulators during the course of the 
year. Regulatory authorities who conduct these examinations have extensive discretion in their interpretation of various 
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Heritage Commerce Corp • 2024 Annual Report

 
laws and regulations and in their supervisory and enforcement activities, including the authority to restrict our operations 
and certain corporate actions. Administrative and judicial interpretations of the rules that apply to our business may change 
the way such rules are applied, which also increases our compliance risk if the interpretation differs from our understanding 
or prior practice. Moreover, an increasing amount of the regulatory authority that pertains to financial institutions is in the 
form of informal “guidance” such as handbooks, guidelines, examination manuals, field interpretations by regulators or 
similar provisions that could affect our business or require changes in our practices in the future even if they are not 
formally adopted as laws or regulations. Any such changes could adversely affect our cost of doing business and our 
profitability and may create operational and legal risks that are difficult to anticipate or to mitigate. 
In addition, changes in regulation of our industry have the potential to create higher costs of compliance, including 
short-term costs to meet new compliance standards, limit our ability to pursue business opportunities and increase our 
exposure to potential fines, penalties and litigation. 
Changes in accounting standards could materially impact our financial statements. 
From time to time, the Financial Accounting Standards Board or the SEC, may change the financial accounting 
and reporting standards that govern the preparation of our financial statements. Such changes may result in us being subject 
to new or changing accounting and reporting standards. In addition, the bodies that interpret the accounting standards (such 
as banking regulators or outside auditors) may change their interpretations or positions on how these standards should be 
applied. These changes may be beyond our control, can be hard to predict and can materially impact how we record and 
report our financial condition and results of operations. In some cases, we could be required to apply a new or revised 
standard retrospectively, or apply an existing standard differently, also retrospectively, in each case resulting in our needing 
to revise or restate prior period financial statements. Restating or revising our financial statements may result in 
reputational harm or may have other adverse effects on us. 
Litigation, regulatory actions, investigations or similar matters, could subject us to uninsured liabilities and 
reputational harm and otherwise materially affect our business, financial condition and results of operations.  
 
We are and will continue to be involved from time to time in a variety of litigation, regulatory actions, 
investigations or similar matters arising out of our business. These matters may include supervisory or enforcement actions 
by our regulators, criminal proceedings by prosecutorial authorities, claims by clients or by former and current employees, 
including class, collective and representative actions, or environmental lawsuits stemming from property that we may hold 
as OREO following a foreclosure action in the course of our business. It is inherently difficult to assess the outcome of 
these matters, and we may not prevail in any proceedings or litigation. Any such matters could be time-consuming and 
expensive to resolve, involve regulatory sanctions, civil money penalties or fines, divert management attention from 
executing our business plan, and lead to attempts on the part of other parties to pursue similar claims. Any proceedings or 
claims asserted against us, regardless of merit or eventual outcome may harm our reputation. To mitigate the cost of some 
of these matters, we maintain insurance coverage in amounts and with deductibles that we believe are appropriate for our 
operations. However, our insurance coverage does not cover any civil monetary penalties, punitive damages or fines 
imposed by government authorities and may not cover all other claims that might be brought against us, including certain 
wage and hour class, collective and representative actions brought by clients, team members or former team members, and 
ponzi schemes. In addition, such insurance coverage may not continue to be available to us at a reasonable cost or at all. 
As a result, we may be exposed to substantial uninsured liabilities, reputational harm, regulatory sanctions or other effects 
which could adversely affect our business, prospects, financial condition, results of operations and capital position.  
 
The failure to protect our clients’ confidential information, data and privacy could adversely affect our business. 
We are subject to federal and state privacy regulations and confidentiality obligations, including the California 
Consumer Privacy Act of 2018 and the California Privacy Rights Act of 2020, that, among other things restrict the use and 
dissemination of, and access to, certain information that we produce, store or maintain in the course of our business and 
establishes a new state agency to enforce these rules. We also have contractual obligations to protect certain confidential 
information we obtain from our existing vendors and clients. These obligations generally include protecting such 
confidential information in the same manner and to the same extent as we protect our own confidential information, and 
in some instances may impose indemnity obligations on us relating to unlawful or unauthorized disclosure of any such 
 
 
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Heritage Commerce Corp • 2024 Annual Report

 
information. 
The continued development and enhancement of our information security controls, processes and practices 
designed to protect client information, our systems, computers, software, data and networks from attack, damage or 
unauthorized access remain a priority for our management as we increase our online and mobile banking offerings. As 
cyber threats continue to evolve, including supply chain risks, our costs to combat the cybersecurity threat can be expected 
to increase. Nonetheless, our measures may be insufficient to prevent all physical and electronic break-ins, denial of service 
and other cyber-attacks or security breaches. 
If we do not properly comply with privacy regulations and contractual obligations that require us to protect 
confidential information, or if we experience a security breach or network compromise, we could face regulatory sanctions, 
penalties or fines, increased compliance costs, remedial costs such as providing credit monitoring or other services to 
affected clients, litigation and damage to our reputation, which in turn could result in decreased revenues and loss of 
clients, any or all of which would have a material adverse effect on our business, financial condition, results of operations 
and capital position. 
Risks from Competition  
We face strong competition from financial services companies and other companies that offer commercial banking 
services, which could harm our business.  
We face substantial competition in all phases of our operations from a variety of different competitors. Our 
competitors, including larger commercial banks, community banks, savings and loan associations, mutual savings banks, 
credit unions, consumer finance companies, insurance companies, securities dealers, brokers, mortgage bankers, 
investment advisors, money market mutual funds and other financial institutions, compete with lending and deposit 
gathering services offered by us. Many of these competing institutions have much greater financial and marketing 
resources than we have. Due to their size, many competitors can achieve larger economies of scale and may offer a broader 
range of products and services than we can. If we are unable to offer competitive products and services, our business may 
be negatively affected. Some of the financial services organizations with which we compete are not subject to the same 
degree of regulation as is imposed on bank holding companies and federally insured financial institutions or are not subject 
to increased supervisory oversight arising from regulatory examinations. As a result, these non-bank competitors have 
certain advantages over us in accessing funding and in providing various services. 
We anticipate intense competition will continue for the coming year due to the recent consolidation of many 
financial institutions and more changes in legislation, regulation and technology. Further, we expect loan demand to 
continue to be challenging due to the uncertain economic climate and the intensifying competition for creditworthy 
borrowers, both of which could lead to loan rate concession pressure and could impact our ability to generate profitable 
loans. We expect we may see tighter competition in the industry as banks seek to take market share in the most profitable 
client segments, particularly the small business segment and the mass affluent segment, which offers a rich source of 
deposits as well as more profitable and less risky client relationships. Further, if there is a rebound of higher interest rates 
our deposit clients may perceive alternative investment opportunities as providing superior expected returns. Efforts and 
initiatives we undertake to retain and increase deposits, including deposit pricing, can increase our costs. When our clients 
move money into higher yielding deposits or in favor of alternative investments, we can lose a relatively inexpensive 
source of funds, thus increasing our funding costs. 
New technology and other changes are allowing parties to effectuate financial transactions that previously 
required the involvement of banks. For example, consumers can maintain funds in brokerage accounts or mutual funds 
that would have historically been held as bank deposits. Consumers can also complete transactions such as paying bills 
and transferring funds directly without the assistance of banks. The process of eliminating banks as intermediaries, known 
as “disintermediation,” could result in the loss of fee income, as well as the loss of client deposits and the related income 
generated from those deposits.  
Increased competition in our markets may result in reduced loans, deposits, and fee income, as well as reduced 
net interest margin and profitability. If we are unable to attract and retain banking clients and expand our loan and deposit 
growth, then we may be unable to continue to grow our business which could have a material adverse effect on our financial 
condition and results of operations. 
 
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Heritage Commerce Corp • 2024 Annual Report

 
We have a continuing competitive need for technological change, and we may not have the resources to effectively 
implement new technology or we may experience operational challenges when implementing new technology.  
The financial services industry is continually undergoing rapid technological change with frequent introductions 
of new, technology-driven products and services. The effective use of technology increases efficiency and enables financial 
institutions to better serve clients and to reduce costs. Our future success depends, in part, upon our ability to address the 
needs of our clients by using technology to provide products and services that will satisfy client demands, as well as to 
create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in 
technological improvements than we do. As a result, they may be able to offer additional or superior products to those that 
we will be able to offer, which would put us at a competitive disadvantage. We may not be able to effectively implement 
new, technology-driven products and services or be successful in marketing these products and services to our clients. In 
addition, the implementation of technological changes and upgrades to maintain current systems and integrate new ones 
may also cause service interruptions, transaction processing errors and system conversion delays and may cause us to fail 
to comply with applicable laws. Failure to successfully keep pace with technological change affecting the financial services 
industry and avoid interruptions, errors and delays could have a material adverse effect on our business, financial condition 
and results of operations. 
Risks Related to Our Common Stock 
An investment in our common stock is not an insured deposit.  
An investment in our common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, 
any other deposit insurance fund or by any other public or private entity. Investment in our common stock is inherently 
risky for the reasons described herein, and is subject to the same market forces that affect the price of common stock in 
any company. As a result, if you acquire our common stock, you could lose some or all of your investment.  
Issuing additional shares of our common stock to acquire other banks and bank holding companies or future equity 
raises may result in dilution for existing shareholders and may adversely affect the market price of our stock.  
In connection with our growth strategy, we have issued, and may issue in the future, shares of our common stock 
to acquire additional banks or bank holding companies that may complement our organizational structure or to raise capital. 
Sales and resales of substantial amounts of common stock in the public market and the potential of such sales could 
adversely affect the prevailing market price of our common stock and impair the market price of our stock and our ability 
to raise additional capital through the sale of equity securities. We sometimes must pay an acquisition premium above the 
fair market value of acquired assets for the acquisition of banks or bank holding companies. Paying this acquisition 
premium, in addition to the dilutive effect of issuing additional shares, may also adversely affect the prevailing market 
price of our common stock. 
The trading volume in our common stock is less than that of other larger financial services companies. 
Although our common stock is listed for trading on The Nasdaq Stock Market LLC (“Nasdaq”), its trading volume 
is less than that of other, larger financial services companies, and investors are not assured that a liquid market will exist 
at any given time for our common stock. A public trading market having the desired characteristics of depth, liquidity and 
orderliness depends on the presence in the marketplace at any given time of willing buyers and sellers of our common 
stock. This presence depends on the individual decisions of investors and general economic and market conditions over 
which we have no control. Given the lower trading volume of our common stock, significant sales of our common stock, 
or the expectation of these sales, could cause our stock price to fall. 
The price of our common stock may fluctuate significantly, and this may make it difficult for you to resell shares of 
common stock owned by you at times or at prices you find attractive. 
The stock market and, in particular, the market for financial institution stocks, has experienced significant 
volatility. In some cases, the markets have produced downward pressure on stock prices for certain issuers without regard 
to those issuers’ underlying financial strength. As a result, the trading volume in our common stock may fluctuate more 
than usual and cause significant price variations to occur. 
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Heritage Commerce Corp • 2024 Annual Report

 
The trading price of the shares of our common stock will depend on many factors, which may change from time 
to time and which may be beyond our control, including, without limitation, our financial condition, performance, 
creditworthiness and prospects, future sales or offerings of our equity or equity related securities, and other factors 
identified above under “Cautionary Note Regarding Forward Looking Statements” and “Risk Factors” contained in this 
report. These broad market fluctuations have adversely affected and may continue to adversely affect the market price of 
our common stock, some of which are out of our control. Among the factors that could affect our stock price are: 
• 
changes in business and economic condition; 
• 
actual or anticipated quarterly fluctuations in our operating results and financial condition; 
• 
actual occurrence of one or more of the risk factors outlined above; 
• 
recommendations by securities analysts or failure to meet, securities analysts’ estimates of our financial 
and operating performance, or lack of research reports by industry analysts or ceasing of coverage; 
• 
speculation in the press or investment community generally or relating to our reputation, our operations, 
our market area, our competitors or the financial services industry in general; 
• 
strategic actions by us or our competitors, such as acquisitions, restructurings, dispositions or financings; 
• 
actions by institutional investors;  
• 
fluctuations in the stock price and operating results of our competitors; 
• 
future sales of our equity, equity related or debt securities; 
• 
proposed or adopted regulatory changes or developments; 
• 
anticipated or pending investigations, proceedings, or litigation that involve or affect us; 
• 
the level and extent to which we do or are allowed to pay dividends; 
• 
trading activities in our common stock, including short selling; 
• 
deletion from well-known index or indices; 
• 
domestic and international economic factors unrelated to our performance; and 
• 
general market conditions and, in particular, developments related to market conditions for the financial 
services industry. 
Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions. 
Historically, our Board has declared quarterly dividends on our common stock. However, we have no obligation 
to continue doing so and may change our dividend policy at any time without notice to holders of our common stock. 
Holders of our common stock are only entitled to receive such cash dividends as our Board, in its discretion, may declare 
out of funds legally available for such payments. Furthermore, consistent with our strategic plans, growth initiatives, 
capital availability, projected liquidity needs, and other factors, we have made, and will continue to make, capital 
management decisions and policies that could adversely impact the amount of dividends paid to holders of our common 
stock. 
HCC is a separate and distinct legal entity from HBC. We receive substantially all of our revenue from dividends 
 
 
36
 
Heritage Commerce Corp • 2024 Annual Report

 
paid to us by HBC, which we use as the principal source of funds to pay our expenses and to pay dividends to our 
shareholders, if any. Various federal and/or state laws and regulations limit the amount of dividends that HBC may pay 
us. The Basel III capital rules also provide for risk-based capital, leverage and liquidity standards, including capital 
conservation buffers, that result in restrictions on HBC and the Company’s ability to make dividend payments, redemptions 
or other capital distributions. If the HBC does not receive regulatory approval or does not maintain a level of capital 
sufficient to permit it to make dividend payments to us while maintaining adequate capital levels, our ability to pay our 
expenses and our business, financial condition and results of operations could be materially adversely impacted. 
As a bank holding company, we are subject to regulation by the Fed. The Fed has indicated that bank holding 
companies should carefully review their dividend policy in relation to the organization’s overall asset quality, current and 
prospective earnings and level, composition and quality of capital. The guidance provides that we inform and consult with 
the Fed prior to declaring and paying a dividend that exceeds earnings for the period for which the dividend is being paid 
or that could result in an adverse change to our capital structure, including interest on our debt obligations. If required 
payments on our debt obligations are not made or are deferred, or dividends on any preferred stock we may issue are not 
paid, we will be prohibited from paying dividends on our common stock. 
We have limited the circumstances in which our directors will be liable for monetary damages. 
We have included in our articles of incorporation a provision to eliminate the liability of directors for monetary 
damages to the maximum extent permitted by California law. The effect of this provision will be to reduce the situations 
in which we or our shareholders will be able to seek monetary damages from our directors. 
Our bylaws also have a provision providing for indemnification of our directors and executive officers and 
advancement of litigation expenses to the fullest extent permitted or required by California law, including circumstances 
in which indemnification is otherwise discretionary. Also, we have entered into agreements with our officers and directors 
in which we similarly agreed to provide indemnification that is otherwise discretionary. Such indemnification may be 
available for liabilities arising in connection with future offerings. 
We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us 
or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock.  
Although there are currently no shares of our preferred stock issued and outstanding, our articles of incorporation 
authorize us to issue up to 10 million shares of one or more series of preferred stock. The board also has the power, without 
shareholder approval (subject to Nasdaq shareholder approval rules), to set the terms of any series of preferred stock that 
may be issued, including voting rights, dividend rights, preferences over our common stock with respect to dividends or 
in the event of a dissolution, liquidation or winding up and other terms. In the event that we issue preferred stock in the 
future that has preference over our common stock with respect to payment of dividends or upon our liquidation, dissolution 
or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock, the 
rights of the holders of our common stock or the market price of our common stock could be adversely affected. In addition, 
the ability of our Board to issue shares of preferred stock without any action on the part of our shareholders may impede 
a takeover of us and prevent a transaction perceived to be favorable to our shareholders.  
The holders of our debt obligations will have priority over our common stock with respect to payment in the event of 
liquidation, dissolution or winding up and with respect to the payment of interest and dividends. 
The holders of our debt obligations will have priority over our common stock with respect to payment in the event 
of liquidation, dissolution or winding up and with respect to the payment of interest and dividends. 
In any liquidation, dissolution or winding up of the Company, our common stock would rank below all claims of 
the holders of outstanding debt issued by the Company. As of December 31, 2024, we had $40.0 million principal amount 
of subordinated notes outstanding due May 15, 2032. In such event, holders of our common stock would not be entitled to 
receive any payment or other distribution of assets upon the liquidation, dissolution or winding up of the Company until 
after all of the Company’s obligations to the debt holders were satisfied and holders of the subordinated debt had received 
any payment or distribution due to them. In addition, we are required to pay interest on the subordinated notes and if we 
are in default in the payment of interest we would not be able to pay any dividends on our common stock. 
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Heritage Commerce Corp • 2024 Annual Report

 
Provisions in our charter documents and California law may have an anti-takeover effect, and there are substantial 
regulatory limitations on changes of control of bank holding companies.  
Our articles of incorporation and bylaws contain a number of provisions relating to corporate governance and 
rights of shareholders that might discourage future takeover attempts. As a result, shareholders who might desire to 
participate in such transactions may not have an opportunity to do so. In addition, these provisions will also render the 
removal of our Board or management more difficult. Such provisions include a requirement that shareholder approval for 
any action proposed by the Company must be obtained at a shareholders meeting and may not be obtained by written 
consent. Our bylaws provide that shareholders seeking to make nominations of candidates for election as directors, or to 
bring other business before an annual meeting of the shareholders, must provide timely notice of their intent in writing and 
follow specific procedural steps in order for nominees or shareholder proposals to be brought before an annual meeting. 
Provisions of our charter documents and the California General Corporation Law could make it more difficult for 
a third party to acquire us, even if doing so would be perceived to be beneficial by our shareholders. Furthermore, with 
certain limited exceptions, federal regulations prohibit a person or company or a group of persons deemed to be “acting in 
concert” from, directly or indirectly, acquiring more than 10% (5% if the acquirer is a bank holding company) of any class 
of our voting stock or obtaining the ability to control in any manner the election of a majority of our directors or otherwise 
direct the management or policies of our company without prior notice or application to and the approval of the Fed. Under 
the California Financial Code, no person may, directly or indirectly, acquire control of a California state bank or its holding 
company unless the DFPI has approved such acquisition of control. Moreover, the combination of these provisions 
effectively inhibits certain mergers or other business combinations, which, in turn, could adversely affect the market price 
of our common stock.  
ITEM 1B.  UNRESOLVED STAFF COMMENTS 
None. 
ITEM 1C.  CYBERSECURITY 
Risk Management and Strategy 
Our cybersecurity program provides what we believe is an effective level of protection of client information and 
of our operating systems while also promoting the timely detection of, and defense against, cyberattacks and other 
unauthorized access to our information technology (“IT”) systems. In order to accomplish these goals, we invest heavily 
in up-to-date information security and monitoring controls, which we believe provide the best mechanism to mitigate 
cybersecurity risks and threats. At the same time, cyberattacks are becoming increasingly common, sophisticated and 
destructive, and several highly sophisticated financial institutions have been successfully targeted in recent years, leading 
to significant losses of client data, denials and loss of online banking and other data services, and other critical functions 
that have become essential to modern banking. In order to mitigate these risks and the potential harm that may result, our 
Chief Information Security Officer, who reports directly to the Chief Operating Officer and who reports regularly to our 
Board’s Audit Committee, oversees certain policies and procedures that are intended to guard against, detect, and respond 
to potential breaches of our IT systems. We also maintain and periodically review our cybersecurity disclosure procedures 
to assure the timely compliance with the Company’s obligations under Item 1.05 of Form 8-K. 
Managing Material Risks & Integrated Overall Risk Management 
We have strategically integrated cybersecurity risk management into our broader risk management framework to 
promote a company-wide culture of cybersecurity risk management. Our Company’s Information Security Program 
encompasses the guiding policies over our cybersecurity risk management. Additionally, our IT team uses industry-leading 
tools to help protect stakeholders against cybercriminals. We leverage the latest encryption practices and cyber 
technologies on our systems, devices, and third-party connections and further review vendor encryption to ensure proper 
information security safeguards are maintained. Our Company team members are responsible for complying with our 
cybersecurity standards and complete training to understand the behaviors and technical requirements necessary to keep 
information secure. 
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Heritage Commerce Corp • 2024 Annual Report

 
Engaging Third Parties for Risk Management 
We recognize the complexity and evolving nature of cybersecurity threats, which is why we engage a range of 
external experts, including cybersecurity consultants, in evaluating and testing our risk management systems. Our IT 
security team partners with third-parties to perform annual penetration testing, vulnerability scanning, and monitoring of 
any potentially suspicious activity across the Company. 
Oversight of Third-party Risk 
The Company’s Third-Party Relationship Risk Management (“TPRM”) Policy governs of all aspects of third-
party risk management. The Board has ultimate responsibility for providing oversight for third-party risk management and 
holding management accountable. The Board provides clear guidance to the Audit Committee and management regarding 
the Company’s strategic goals and acceptable risk appetite with respect to third-party relationships. The Board reviews the 
TPRM Policy on at least an annual basis and ensures that appropriate implementation procedures and practices have been 
established by management. The Chief Risk Officer is responsible for development and implementation of third-party risk 
management policies, procedures, and practices, commensurate with the Company’s strategic goals, risk appetite and the 
level of risk and complexity of its third-party relationships. The Chief Risk Officer periodically provides reports to the 
Audit Committee on third-party risk management activities. The Company’s Internal Audit department determines the 
frequency and scope of independent third-party audits of the TPRM program and its effectiveness. 
The Company recognizes that not all third-party relationships present the same level of risk, and therefore not all 
third-party relationships require the same level, degree or type of oversight or risk management. As part of its risk 
management program, management analyzes the specific risks associated with each third-party relationship, including but 
not limited to, cybersecurity and information security related risks. 
Risks from Cybersecurity Threats 
We have not encountered cybersecurity risks or threats that have materially impaired our business strategy, results 
of operations, or financial condition.  
Governance 
The Board recognizes the importance of managing risks associated with cybersecurity threats. The Board has 
established robust oversight procedures to promote effective governance in managing cybersecurity risks because of the 
significance of these threats to our operational integrity and shareholder confidence. 
Board of Directors Oversight 
The Audit Committee is central to the Board’s oversight of cybersecurity risks. The Audit Committee currently 
oversees risks relating to cybersecurity, technology, and finance, and in support of this objective, receives regular reports 
from the Chief Information Security Officer and other third party advisors, to assure the Board maintains appropriate 
expertise to assure the appropriate management of cybersecurity risk. The Audit Committee reports periodically to the 
Board on the effectiveness of cybersecurity risk management processes and cybersecurity risk trends. The Board also 
receives specific reports from senior management with oversight responsibility for cybersecurity risks within the 
Company. These reports include cybersecurity and related risks and our exposure to those risks. The Audit Committee 
conducts an annual review of the company’s cybersecurity posture and the effectiveness of its risk management strategies. 
This review helps in identifying areas for improvement and ensuring the alignment of cybersecurity efforts with its overall 
risk management framework. 
Management’s Role in Managing Risk 
The Chief Information Security Officer plays a pivotal role in informing the Audit Committee on cybersecurity 
risks. He reports quarterly to the Audit Committee on a range of topics, including: 
• 
Current cybersecurity landscape and risks; 
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Heritage Commerce Corp • 2024 Annual Report

 
• 
Status of ongoing cybersecurity incidents, threats and strategies; 
• 
Cybersecurity incident reporting and post-incident reviews; and 
• 
Compliance with regulatory requirements and evolving industry trends. 
The Chief Information Security Officer reports to the Chief Operating Officer, has a dotted line to the Audit 
Committee and the Chief Information Officer, and maintains independence in reporting on the status and impact of any 
information security related developments and strategic initiatives to the Audit Committee, and depending on the severity 
of the situation, directly to the Board of Directors. In addition to regular meetings, the Audit Committee, Chief Information 
Security Officer, Chief Information Officer, Chief Risk Officer and Chief Executive Officer maintain an ongoing dialogue 
regarding emerging or potential cybersecurity risks that we face, particularly as a financial institution. The Company’s 
internal Risk Management Steering Committee also reports directly to the Audit Committee regarding our risk 
management initiatives. The Audit Committee also receives quarterly reports from the Risk Management Steering 
Committee, the Company’s Internal Audit department, and IT department in order to stay informed on all aspects of 
cybersecurity risk affecting the Company. 
Risk Management Personnel 
Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with our Chief 
Information Security Officer, who has more than 20 years of cybersecurity experience working with large financial 
institutions and actively maintains multiple information security certifications. Additionally, our Chief Information 
Security Officer oversees our cybersecurity incident disclosure and communications. Our Chief Risk Officer separately 
chairs our Risk Management Steering Committee. Our Chief Risk Officer has served in her position since 2014 and is an 
accomplished banking professional with more than 40 years of experience in compliance and risk management. 
Monitoring Cybersecurity Incidents 
The Company monitors cybersecurity events using multiple methods. The Company’s 24/7 Security Operations 
Center (“SOC”) has the ability to detect and respond to threats in real time and is authorized to shut threats down before 
they can harm the organization. Additionally, the SOC periodically performs pro-active “threat hunts,” searching for 
potential indicators of compromise and bad actors on our network. Endpoint and network detection tools alert IT staff of 
security events that warrant further analysis. The Chief Information Security Officer is kept abreast of all active 
investigations. If an incident is identified, we attempt to contain the threat immediately, such as if systems could be taken 
offline to stop the spread of an attack. Eradication of an attacker’s artifacts, such as user accounts and malicious code, 
would then be performed. The Company maintains Business Continuity and Disaster Recovery plans, processes, and 
technology to restore systems affected by a cybersecurity incident. The Chief Information Security Officer may determine 
that an incident has the potential to be materially relevant and would escalate that determination to the Cybersecurity 
Incident Disclosure Team comprised of the senior leaders, including the Chief Executive Officer, Chief Risk Officer, Chief 
Information Officer, Chief Financial Officer, outside counsel and other leaders and advisors to the Company. In addition, 
we maintain insurance that we believe is customary against certain insurable cybersecurity risks. However, certain aspects 
of cybersecurity risks are not insurable, and the availability, extent, and cost of coverage may limit our recourse to these 
sources of risk mitigation. 
Reporting to Board of Directors 
The Chief Information Security Officer, in his capacity as such, regularly reports to management and the Audit 
Committee on all aspects related to cybersecurity risks and incidents. This ensures that the highest levels of management 
are kept informed of our cybersecurity and the potential risks we face. In the event of certain cybersecurity matters which 
present increasing concern, our policies require escalating these cybersecurity and risk management decisions to the full 
Board. 
ITEM 2.  PROPERTIES  
The main and executive offices of Heritage Commerce Corp and Heritage Bank of Commerce are located at 224 
Airport Parkway in San Jose, California 95110, with branch offices located at 15575 Los Gatos Boulevard in Los Gatos, 
40
 
Heritage Commerce Corp • 2024 Annual Report

 
California 95032, at 3137 Stevenson Boulevard in Fremont, California 94538, at 387 Diablo Road in Danville, California 
94526, at 300 Main Street in Pleasanton, California 94566, at 1990 N. California Boulevard in Walnut Creek, California 
94596, at 1987 First Street in Livermore, California 94550, at 18625 Sutter Boulevard in Morgan Hill, California 95037, 
at 7598 Monterey Street in Gilroy, California 95020, at 351 Tres Pinos Road in Hollister, California 95023, at 419 S. San 
Antonio Road in Los Altos, California 94022, at 325 Lytton Avenue in Palo Alto, California 94301, at 400 S. El Camino 
Real in San Mateo, California, 94402, at 2400 Broadway in Redwood City, California 94063, at 120 Kearny Street in San 
Francisco, California 94108, at 999 5th Avenue in San Rafael, California 94901 and at 1111 Broadway in Oakland, 
California 94607. Bay View Funding’s administrative offices are located at 224 Airport Parkway, San Jose, California 
95110. 
Main Offices 
The main office of HBC, the San Jose branch office of HBC and the Bay View Funding administrative office are 
located at 224 Airport Parkway in San Jose, consisting of approximately 60,278 square feet in a six story Class A type 
office building, which are subject to a direct lease dated June 27, 2019, as amended, which expires on July 31, 2030. The 
current monthly rent payment is $250,794, subject to 3% annual increases. The Company has reserved the right to extend 
the term of the lease for one additional period of five years. 
Branch Offices  
In June of 2007, as part of the acquisition of Diablo Valley Bank, the Company took ownership of an 8,285 square 
foot one story commercial office building, including the land, located at 387 Diablo Road in Danville, California. 
In May of 2019, the Company amended its lease for approximately 4,096 square feet in a one story stand alone 
office building located at 300 Main Street in Pleasanton, California. The current monthly rent payment is $23,736, subject 
to 3% annual increases, until the lease expires on April 30, 2026. The Company has reserved the right to extend the term 
of the lease for two additional periods of five years. 
In October of 2019, as part of the acquisition of Presidio Bank, the Company assumed a lease for approximately 
7,029 square feet on the first floor in a multi-tenant office building located at 1990 N. California Boulevard in Walnut 
Creek, California. The current monthly rent payment is $31,560, subject to annual increases of 3%, until the lease expires 
December 31, 2027. The Company has reserved the right to extend the lease for one additional period of five years. 
In October of 2019, also as part of the acquisition of Presidio Bank, the Company assumed a lease for 
approximately 3,063 square feet on the first floor in a multi-tenant office building located at 400 S. Camino Real in San 
Mateo, California, with a lease expiration date of October 31,2024. In January 2020, The Company amended the lease 
expiration date to October 31, 2030, and executed a new lease for additional space on the tenth floor for approximately 
5,023 square feet. The current monthly rent payment for the combined space of approximately 8,086 square feet is $67,998, 
subject to annual increases of 3%, until the lease expires October 31, 2030. The Company has reserved the right to extend 
the lease for two additional period of five years. 
In January of 2021, the Company amended and extended its lease for approximately 6,233 square feet on the 
twenty third floor in a multi-tenant office building located at 120 Kearny Street in San Francisco, California. The current 
monthly rent payment is $48,244, subject to annual increases of 3%, until the lease expires on March 31, 2026. The 
Company has reserved the right to extend the term of the lease for one additional period of five years.  
In May of 2021, the Company extended its lease for approximately 4,716 square feet in a one-story multi tenant 
office building located at 18625 Sutter Boulevard in Morgan Hill, California. The current monthly rent payment is $6,256, 
subject to annual increases of 2%, until the lease expires on October 31, 2026. The Company has reserved the right to 
extend the term of the lease for one additional period of five years. 
In December of 2021, the Company entered into a new lease agreement for approximately 4,099 square feet on 
the sixteenth floor in a multi-tenant office building located at 1111 Broadway in Oakland, California. The current monthly 
rent payment is $25,005, subject to annual increases of 3%, until the lease expires on June 30, 2029. The Company has 
reserved the right to extend the term of the lease for one additional period of five years. 
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Heritage Commerce Corp • 2024 Annual Report

 
In August of 2022, the Company extended its lease for approximately 4,188 square feet on the first floor in a 
multi-tenant office building located at 999 5th Avenue in San Rafael, California. In May of 2023, the Company amended 
the lease to include an additional 916 square feet, for a total of 5,104 square feet. The current monthly rent payment for 
the combined space is $22,179, subject to annual increases of 3%, until the lease expires on December 31, 2027. The 
Company has reserved the right to extend the lease for one additional period of five years. 
In January of 2023, the Company extended its lease for approximately 5,213 square feet on the first floor in a 
two-story multi tenant office building located at 419 S. San Antonio Road in Los Altos, California. The current monthly 
rent payment is $33,915, subject to annual increases of 3% until the lease expires on April 30, 2030. The Company has 
reserved the right to extend the term of the lease for one additional period of five years. 
In September of 2023, the Company extended its lease for approximately 2,505 square feet on the first floor in a 
three-story multi tenant multi use building located at 7598 Monterey Street in Gilroy, California. The current monthly rent 
payment is $6,287 until the lease expires on September 30, 2025. The Company has reserved the right to extend the term 
of the lease for one additional period of two years. 
In October of 2023, the Company extended its lease for approximately 2,369 square feet on the first floor of a 
two-story multi-tenant multi-use building located at 2400 Broadway in Redwood City, California. The current monthly 
rent payment is $13,059, subject to annual increases of 3%, until the lease expires on October 31, 2028.  
In November of 2023, the Company extended its lease for approximately 1,920 square feet in a one-story stand 
alone building located in an office complex at 15575 Los Gatos Boulevard in Los Gatos, California. The current monthly 
rent payment is $7,020, subject to annual increases of 3%, until the lease expires on November 30, 2028. The Company 
has reserved the right to extend the term of the lease for one additional period of five years. 
In February 2024, the Company extended its lease for approximately 3,172 square feet in a one-story multi tenant 
multi use building located at 3137 Stevenson Boulevard in Fremont, California. The current monthly rent payment is 
$11,174, subject to annual increases of 3%, until the lease expires on February 28, 2027.  
In May of 2024, the Company extended its lease for an additional seven years for approximately 4,154 square 
feet on the first floor in a multi-tenant office building located at 325 Lytton Avenue in Palo Alto, California. The current 
monthly rent payment is $33,855, until the lease expires on January 31, 2032. The Company has reserved the right to 
extend the lease for one additional period of five years. 
In July of 2024, the Company extended its lease for an additional five years for approximately 3,391 square feet 
in a two-story multi tenant commercial center located at 351 Tres Pinos in Hollister, California. The current monthly rent 
payment is $5,730, until the lease expires on June 30, 2029. The Company has reserved the right to extend the term of the 
lease for one additional period of five years. 
In July of 2024, the Company extended its lease for approximately 3,772 square feet on the first and second floors 
in a two-story multi-tenant multi-use building located at 1987 First Street in Livermore, California. The current monthly 
rent payment is $9,456 until the lease expires on September 30, 2029. The Company has reserved the right to extend the 
term of the lease for one additional period of five years. 
Bay View Funding Office 
The Bay View Funding administrative office is located at 224 Airport Parkway in San Jose, California, consisting 
of approximately 7,849 square feet and is subject to a sublease with Heritage Bank of Commerce dated March 6, 2020. 
The current monthly rent payment is $31,793, which is included in the main office of HBC’s total rent of $250,794, and 
is subject to 3% annual increases, until the sublease expires July 31, 2030. 
For additional information on operating leases and rent expense, refer to Note 7 to the Consolidated Financial 
Statements following “Item 15 — Exhibits and Financial Statement Schedules.” 
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Heritage Commerce Corp • 2024 Annual Report

 
ITEM 3.  LEGAL PROCEEDINGS 
We evaluate all claims and lawsuits with respect to their potential merits, our potential defenses and 
counterclaims, settlement or litigation potential and the expected effect on us. The outcome of any claims or litigation, 
regardless of the merits, is inherently uncertain. Any claims and other lawsuits, and the disposition of such claims and 
lawsuits, whether through settlement or litigation, could be time-consuming and expensive to resolve, divert our attention 
from executing our business plan, result in efforts to enjoin our activities, and lead to attempts by third parties to seek 
similar claims. 
For more information regarding legal proceedings, see Note 15 “Commitments and Contingencies” to the 
consolidated financial statements. 
ITEM 4.  MINE SAFETY DISCLOSURES 
Not Applicable. 
PART II 
ITEM 5.  MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS 
AND ISSUER PURCHASES OF EQUITY SECURITIES 
Market Information 
The Company’s common stock is listed on the Nasdaq Global Select Market under the symbol “HTBK.” 
The closing price of our common stock on February 14, 2025 was $10.65 per share as reported by the Nasdaq 
Global Select Market. 
As of February 14, 2025, there were approximately 756 holders of record of common stock. There are no other 
classes of common equity outstanding. 
Dividend Policy 
The amount of future dividends will depend upon our earnings, financial condition, capital requirements and 
other factors, and will be determined by our Board on a quarterly basis. It is Federal Reserve policy that bank holding 
companies generally pay dividends on common stock only out of income available over the past year, and only if 
prospective earnings retention is consistent with the organization’s expected future needs and financial condition. It is also 
Federal Reserve policy that bank holding companies not maintain dividend levels that undermine the holding company’s 
ability to be a source of strength to its banking subsidiaries. Additionally, in consideration of the current financial and 
economic environment, the Federal Reserve has indicated that bank holding companies should carefully review their 
dividend policy and has discouraged payment ratios that are at maximum allowable levels unless both asset quality and 
capital are very strong. Under the federal Prompt Corrective Action regulations, the Federal Reserve or the FDIC may 
prohibit a bank holding company from paying any dividends if the holding company’s bank subsidiary is classified as 
undercapitalized. 
As a holding company, our ability to pay cash dividends is affected by the ability of our bank subsidiary, HBC, 
to pay cash dividends. The ability of HBC (and our ability) to pay cash dividends in the future and the amount of any such 
cash dividends is and could be in the future further influenced by bank regulatory requirements and approvals and capital 
guidelines. 
The decision whether to pay dividends will be made by our Board in light of conditions then existing, including 
factors such as our results of operations, financial condition, business conditions, regulatory capital requirements and 
covenants under any applicable contractual arrangements, including agreements with regulatory authorities. 
43
Heritage Commerce Corp • 2024 Annual Report

 
For information on the statutory and regulatory limitations on the ability of the Company to pay dividends and 
on HBC to pay dividends to HCC see “Item 1 — Business — Supervision and Regulation — Heritage Commerce Corp – 
Dividend Payments, Stock Redemptions, and Repurchases and – Heritage Bank of Commerce – Dividend Payments.” 
Performance Graph 
 
The following graph compares the stock performance of the Company from December 31, 2019 to December 31, 
2024, to the performance of several specific industry indices. The performance of the S&P 500 Index, NASDAQ 
Composite Index and KBW NASDAQ Bank Index were used as comparisons to the Company’s stock performance. 
Management believes that a performance comparison to these indices provides meaningful information and has therefore 
included those comparisons in the following graph. 
 
 
 
The following chart compares the stock performance of the Company from December 31, 2019 to December 31, 
2024, to the performance of several specific industry indices. The performance of the S&P 500 Index, NASDAQ 
Composite Index and KBW NASDAQ Bank Index were used as comparisons to the Company’s stock performance. 
 
 
 
Period Ending 
Index 
     12/31/19      12/31/20      12/31/21      12/31/22      12/31/23      12/31/24 
Heritage Commerce Corp * . . . . . . . . . . . . . . . .   
 100  
 74  
 104  
 118  
 96  
 96 
S&P 500 Index * . . . . . . . . . . . . . . . . . . . . . . . . .    
 100   
 118  
 152  
 125  
 158  
 197 
NASDAQ Composite Index* . . . . . . . . . . . . . . .    
 100   
 145  
 177  
 119  
 173  
 224 
KBW NASDAQ Bank Index* . . . . . . . . . . . . . .    
 100   
 90  
 124  
 98  
 97  
 133 
 
* 
Source: S&P Global Market Intelligence — (434) 977-1600 
 
 
ITEM 6.  [RESERVED]  
 
50
100
150
200
250
300
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
Index Value
Total Return Performance
Heritage Commerce Corp
S&P 500 Index
NASDAQ Composite Index
KBW NASDAQ Bank Index
44
 
Heritage Commerce Corp • 2024 Annual Report

 
ITEM 7. 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS  
 
The following discussion provides information about the consolidated results of operations, financial condition, 
liquidity, and capital resources of Heritage Commerce Corp (the “Company” or “HCC”), its wholly-owned subsidiary, 
Heritage Bank of Commerce (the “Bank” or “HBC”), and HBC’s wholly-owned subsidiary, CSNK Working Capital 
Finance Corp, a California Corporation, dba Bay View Funding. This information is intended to facilitate the 
understanding and assessment of significant changes and trends related to our financial condition and the results of 
operations. This discussion and analysis should be read in conjunction with our consolidated financial statements and the 
accompanying notes presented elsewhere in this report. Unless we state otherwise or the context indicates otherwise, 
references to the “Company,” “Heritage,” “we,” “us,” and “our,” in this Report on Form 10-K refer to Heritage Commerce 
Corp and its subsidiaries. 
Critical Accounting Policies and Estimates 
Financial results are presented in accordance with the accounting principles generally accepted in the United 
States of America (“GAAP”) and with reference to certain non-GAAP financial measures. The preparation of financial 
statements in accordance with GAAP requires management to make a number of judgments, estimates and assumptions 
that affect the reported amount of assets, liabilities, income and expense in the financial statements. Various elements of 
our accounting policies, by their nature, involve the application of highly sensitive and judgmental estimates and 
assumptions. Some of these policies and estimates relate to matters that are highly complex and contain inherent 
uncertainties. It is possible that, in some instances, different estimates and assumptions could reasonably have been made 
and used by management, instead of those we applied, which might have produced different results that could have had a 
material effect on the financial statements. 
Management believes that the presentation of certain non-GAAP financial measures provide useful supplemental 
information to investors as these financial measures are commonly used in the banking industry. A reconciliation of GAAP 
to non-GAAP financial measures are presented in the tables under “Reconciliation of Non-GAAP Financial Measures.” 
Our most significant accounting policies are described in Note 1 — Summary of Significant Accounting Policies 
in the consolidated financial statements included in this Form 10-K. Certain of these accounting policies require 
management to use significant judgment and estimates, which can have a material impact on reported income or loss and 
on the carrying value of certain assets and liabilities, and we consider these policies to be our critical accounting estimates. 
These judgments and assumptions are based upon historical experience, future forecasts, or other factors that management 
believes to be reasonable under the circumstances. Because of the nature of the judgments and assumptions, actual results 
could differ from management’s estimates, which could have a material effect on our financial condition and results of 
operations. The following accounting policies materially affect our reported earnings and financial condition and require 
significant judgments and estimates. Management has reviewed these critical accounting estimates and related disclosures 
with our Board of Director’s Audit Committee.  
 
Allowance for Credit Losses on Loans (“ACLL”) 
The allowance for credit losses, or ACLL, on loans represents management’s estimate of all expected credit losses 
over the expected contractual life of the loan portfolio, utilizing the current expected credit loss (“CECL”) model. The 
ACLL is a valuation amount that is deducted from the amortized cost basis of loans, and is adjusted each period by an 
expense or credit for credit losses, which is recognized in earnings, and reduced by loan charge-offs, net of recoveries. 
Determining the appropriateness of the ACLL is complex and requires judgement by management about inherently 
uncertain factors.  
 
 
 
45
Heritage Commerce Corp • 2024 Annual Report

 
Management utilizes a discounted cash flow methodology to estimate the ACLL. Expected cash flows are 
estimated for each loan and discounted using the contractual terms of the loan, calculated probabilities of default, loss 
given default, prepayment and curtailment estimates as well as qualitative factors. The probability-of-default estimates are 
generated using a regression model used to estimate the likelihood of a loan being charged-off within the life of the loan. 
The regression model uses combinations of variables to assess historical loss correlations to economic factors and these 
variables become model forecast inputs for economic factors that are updated in the model each period. Management uses 
an economic forecast provided by a third-party for these model inputs. These economic factors included variables such as 
California state gross product, California unemployment rate, California home price index, and a commercial real estate 
value index. Qualitative factors are also applied by management to reflect increased portfolio risks from such factors as 
collateral value risk, portfolio growth, or loan grade and performance trends that management has assessed as not being 
fully captured in the quantitative estimate. 
 
The ACLL represents management’s best estimate of potential loan losses, but significant changes in prevailing 
economic conditions could result in material changes in the allowance. Generally, an improving economic forecast 
generates a lower ACLL estimate than a weakening economic forecast. One of the most significant judgments used in 
estimating the ACLL is the reasonable and supportable macroeconomic forecast for the economic factors used in the 
model. Changes in the macroeconomic forecast, especially for California state gross product and the California 
unemployment rate, could significantly impact the calculated estimated credit loss. The economic forecast utilized for the 
ACLL model input is inherently uncertain and many external factors could impact these forecasts. Management reviews 
the forecast inputs to ensure they are reasonable and supportable, however, changes in local and national economic 
conditions will impact the allowance level and an increase in the California unemployment rate specifically would have 
the largest impact on the allowance level. While management utilizes its best judgement and current information available, 
the adequacy of the ACLL is significantly determined by certain factors outside the Company’s control, such as the 
performance of our loan portfolio, changes in the economic environment including economic uncertainty, changes in 
interest rates, and any regulatory changes. Additionally, the level of ACLL may fluctuate based on the balance and mix of 
the loan portfolio. 
 
Qualitative factors are evaluated each period and applied in instances when management assesses that additional 
risks not captured in the quantitative estimate should be factored into the overall ACLL estimate. These risks include loan 
performance trends, collateral value risk and portfolio growth characteristics. Changes in the assessment of these 
qualitative factors could significantly impact the calculated estimated credit loss.  
 
Other key assumptions used to calculate the ACLL include the forecast and reversion to mean time periods for 
the economic factor inputs, and prepayment and curtailment assumptions. The model calculation is less sensitive to these 
assumptions than to the macroeconomic forecast and the application of qualitative factors. 
 
Executive Summary 
The Company conducts a general commercial banking business through the Bank. Our primary operations are 
located in the general San Francisco Bay Area of California in the counties of Alameda, Contra Costa, Marin, San Benito, 
San Francisco, San Mateo, and Santa Clara. Our market includes the cities of Oakland, San Francisco, and San Jose, the 
headquarters of a number of technology based companies in the region known commonly as Silicon Valley. The Bank’s 
clients are primarily closely held businesses and professionals. We also have limited operations in other regions primarily 
by virtue of Bay View Funding, the Bank’s factoring subsidiary, which provides factoring and other alternative corporate 
financing services.  
Performance Overview 
2024 was a year of solid progress. We saw deposit balances grow by 10% year-over-year as our team deepened 
relationships with local businesses. Loan growth was steady at 4%, reinforcing our role as a trusted financial partner in the 
Bay Area. One of the most important things we did in 2024 was invest in the future by hiring top-tier bankers, upgrading 
our technology, and reinforcing our operational strength. Our capital position remains strong, our loan portfolio is high 
quality, and we have the liquidity and earnings power to continue strengthening our franchise. 
 
 
46
 
Heritage Commerce Corp • 2024 Annual Report

 
For the year ended December 31, 2024, net income was $40.5 million, or $0.66 per average diluted common 
share, compared to $64.4 million, or $1.05 per average diluted common share, for the year ended December 31, 2023, and 
$66.6 million, or $1.09 per average diluted common share for the year ended December 31, 2022. The Company’s 
annualized return on average tangible assets was 0.78% and annualized return on average tangible common equity was 
8.05% for the year ended December 31, 2024, compared to 1.26% and 13.57%, respectively, for the year ended 
December 31, 2023, and 1.27% and 15.57%, respectively, for the year ended December 31, 2022. The annualized return 
on average tangible assets and annualized return on average tangible common equity are non-GAAP financial measures. 
2024 Highlights 
Results of Operations: 
• 
For the year ended December 31, 2024, net interest income decreased (11%) to 163.6 million, compared to 
$183.2 million for the year ended December 31, 2023. The fully tax equivalent (“FTE”) net interest margin 
decreased (42) basis points to 3.28% for the year ended December 31, 2024, from 3.70% for the year ended 
December 31, 2023, primarily due to higher rates paid on client deposits, a decrease in the average balance 
of noninterest-bearing deposits, and a lower average yield on investment securities, partially offset by an 
increase in the average balances of loans and overnight funds. The FTE net interest margin is a non-GAAP 
financial measure.  
 
• 
The average yield on the total loan portfolio increased to 5.47% for the year ended December 31, 2024, 
compared to 5.45% for the year ended December 31, 2023. 
• 
In the aggregate, the remaining net purchase discount on total loans acquired was $2.1 million at 
December 31, 2024. 
• 
The average cost of total deposits increased to 1.70% for the year ended December 31, 2024, compared to 
1.06% for the year ended December 31, 2023. The average cost of funds increased to 1.74% for the year 
ended December 31, 2024, compared to 1.13% for the year ended December 31, 2023. 
• 
There was a provision for credit losses on loans of $2.1 million for the year ended December 31, 2024, 
compared to a $749,000 provision for credit losses on loans for the year ended December 31, 2023, primarily 
due to the increase in the balance of total loans, and an increase in specific reserves for individually analyzed 
loans. 
• 
For the year ended December 31, 2024, total noninterest income decreased (3%) to $8.7 million, compared 
to $9.0 million for the year ended December 31, 2023, primarily due to lower service charges and fees on 
deposit accounts, partially offset by higher income in various other noninterest income categories. 
• 
Total noninterest expense for the year ended December 31, 2024 increased to $113.6 million, compared to 
$101.1 million for the year ended December 31, 2023, primarily due to higher salaries and employee benefits, 
rent expense, professional fees, marketing related expenses, insurance expense, homeowner association 
third-party vendor payments, and Insured Cash Sweep (“ICS”)/Certificate of Deposit Account Registry 
Service (“CDARS”) fee expense.  
• 
The efficiency ratio increased to 65.88% for the year ended December 31, 2024, compared to 52.57% for the 
year ended December 31, 2023, primarily due to both higher noninterest expense and lower net revenue. The 
efficiency ratio is a non-GAAP financial measure. 
• 
Income tax expense for the year ended December 31, 2024 was $16.1 million, compared to $26.0 million for 
the year ended December 31, 2023. The effective tax rate for the year ended December 31, 2024 was 28.5%, 
compared to 28.7% for the year ended December 31, 2023.  
 
 
47
Heritage Commerce Corp • 2024 Annual Report

 
Current Financial Condition and Liquidity Position: 
• 
Our liquidity, including cash on hand, undrawn lines of credit, and other sources of liquidity, totaled $3.3 
billion, or 69% of the Company’s total deposits and approximately 155% of the Bank’s estimated uninsured 
deposits at December 31, 2024. The Bank’s uninsured deposits were approximately $2.2 billion, representing 
45% of total deposits, at December 31, 2024. The following table shows our liquidity, available lines of 
credit and the amounts outstanding at December 31, 2024: 
 
 
 
Total 
 
 
 
Remaining 
 
     
Available 
     Outstanding     
Available 
 
 
(Dollars in thousands) 
Excess funds at the Federal Reserve Bank (“FRB”) . . .   $  935,400  $ 
 —  $  935,400 
FRB discount window collateralized line of credit . . . .     1,383,149   
 —    1,383,149 
Federal Home Loan Bank (“FHLB”) 
collateralized borrowing capacity . . . . . . . . . . . . . . . .    
 815,760   
 —   
 815,760 
Unpledged investment securities (at fair value) . . . . . .    
 94,088   
 —   
 94,088 
Federal funds purchase arrangements . . . . . . . . . . . . . .    
 90,000   
 —   
 90,000 
Holding company line of credit . . . . . . . . . . . . . . . . . . .    
 25,000   
 —   
 25,000 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 3,343,397  $ 
 —  $ 3,343,397 
 
• 
Cash, interest bearing deposits in other financial institutions and securities available-for-sale, at fair value, 
increased 44% to $1.2 billion at December 31, 2024, from $850.8 million at December 31, 2023. 
• 
Securities held-to-maturity, at amortized cost, totaled $590.0 million at December 31, 2024, compared to 
$650.6 million at December 31, 2023.  
• 
The pre-tax unrealized (loss) on the securities available-for-sale portfolio was ($5.1) million, or ($3.7) 
million net of taxes, which equaled less than 1% of total shareholders’ equity at December 31, 2024. The 
pre-tax unrecognized loss on the securities held-to-maturity portfolio was ($93.0) million at December 31, 
2024, or ($65.5) million net of taxes, which equaled 9.5% of total shareholders’ equity at December 31, 2024. 
The fair value is expected to recover as the securities approach their maturity date and/or interest rates 
decline.  
 
• 
The weighted average life of the securities available-for-sale portfolio was 1.57 years, the weighted average 
life of the securities held-to-maturity portfolio was 6.35 years, and the average life of the total investment 
securities portfolio was 4.88 years at December 31, 2024.  
 
• 
During the fourth quarter of 2024, the Company purchased $20.5 million of agency mortgage-backed 
securities and $9.8 million of U.S. Treasury securities, for total purchases of $30.3 million in the available-
for-sale portfolio. Securities purchased had a book yield of 4.79% and an average life of 4.80 years. 
 
 
 
48
 
Heritage Commerce Corp • 2024 Annual Report

 
• 
The following are the projected cash flows from paydowns and maturities in the investment securities 
portfolio for the periods indicated based on the current interest rate environment: 
 
 
 
 
 
Agency 
 
 
 
 
 
 
Mortgage- 
 
 
 
 
U.S. 
 
backed and 
 
 
 
 
Treasury 
 
Municipal 
 
 
 
     (Par Value)      
Securities 
     
Total 
 
 
(Dollars in thousands) 
First quarter of 2025 . . . . . . . . . . . . . . . . . . . . . . .   $
 35,000  $ 
 20,986  $
 55,986 
Second quarter of 2025 . . . . . . . . . . . . . . . . . . . . .    
 118,000   
 19,666   
 137,666 
Third quarter of 2025 . . . . . . . . . . . . . . . . . . . . . .    
 25,500   
 20,822   
 46,322 
Fourth quarter of 2025 . . . . . . . . . . . . . . . . . . . . .    
 —   
 19,228   
 19,228 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $
 178,500  $ 
 80,702  $
 259,202 
 
• 
Loans, excluding loans held-for-sale, increased $141.6 million, or 4%, to $3.5 billion at December 31, 2024, 
compared to $3.4 billion at December 31, 2023. Loans, excluding residential mortgages, increased $166.8 
million, or 6%, to $3.0 billion at December, 2024, compared to $2.9 billion at December 31, 2023.  
 
• 
There were 9 borrowers included in nonperforming assets (“NPAs”) totaling $7.7 million, or 0.14% of total 
assets, at December 31, 2024, compared to 12 borrowers totaling $7.7 million, or 0.15% of total assets, at 
December 31, 2023.  
• 
Classified assets totaled $41.7 million, or 0.74% of total assets, at December 31, 2024, compared to $31.8 
million, or 0.61% of total assets, at December 31, 2023. The increase in classified assets at December 31, 
2024 was primarily the result of one downgraded owner occupied commercial real estate (“CRE”) credit, 
and a number of residential related loans. The loans are well-collateralized and we do not anticipate to incur 
losses as a result of the downgrades of these loans. 
• 
Net charge-offs totaled $1.1 million for the year ended December 31, 2024, compared to $303,000 for the 
year ended December 31, 2023.  
• 
The ACLL at December 31, 2024, was $49.0 million, or 1.40% of total loans, representing 638.49% of 
nonperforming loans. The ACLL at December 31, 2023, was $48.0 million, or 1.43% of total loans, 
representing 622.27% of nonperforming loans.  
• 
Total deposits increased $441.6 million or 10% to $4.8 billion at December 31, 2024, compared to $4.4 
billion at December 31, 2023.  
• 
Migration of client deposits into insured interest-bearing accounts resulted in an increase in ICS/ CDARS 
deposits to $1.1 billion at December 31, 2024, compared to $854.1 million at December 31, 2023. 
• 
Noninterest-bearing demand deposits decreased ($78.3) million, or (6%), to $1.2 billion at December 31, 
2024 from $1.3 billion at December 31, 2023.  
• 
The ratio of noncore funding (which consists of time deposits of $250,000 and over, brokered deposits, 
securities under agreement to repurchase, subordinated debt and short-term borrowings) to total assets was 
4.37% at December 31, 2024, compared to 4.46% at December 31, 2023. 
• 
The loan to deposit ratio was 72.45% at December 31, 2024, compared to 76.52% at December 31, 2023. 
 
 
49
Heritage Commerce Corp • 2024 Annual Report

 
Capital Adequacy: 
• 
The Company’s consolidated capital ratios exceeded regulatory guidelines and HBC’s capital ratios exceeded 
the prompt corrective action (“PCA”) regulatory guidelines for a well-capitalized financial institution, and 
the Basel III minimum regulatory requirements at December 31, 2024, as reflected in the following table: 
 
 Well-capitalized 
 
 
 
 
 
 
 
 
Heritage 
 
Heritage  
Financial Institution 
Basel III Minimum 
 
 
Commerce 
 
Bank of  
PCA Regulatory  
Regulatory 
 
Capital Ratios 
    
Corp 
     Commerce     
Guidelines 
     
Requirements (1)  
Total Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
15.6 % 
15.1%  
10.0%  
10.5%
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
13.4%  
13.9%  
8.0%  
8.5%
Common Equity Tier 1 Capital . . . . . . . . . . . . . .   
13.4%  
13.9%  
6.5%  
7.0%
Tier 1 Leverage . . . . . . . . . . . . . . . . . . . . . . . . . . .   
9.6%  
10.0%  
5.0%  
4.0%
Tangible common equity / tangible assets (2) . . . .   
9.4%  
9.8%  
N/A 
N/A 
 
(1) Basel III minimum regulatory requirements for both HCC and HBC include a 2.5% capital conservation buffer, except 
the Tier 1 Leverage ratio.  
(2) This is a non-GAAP financial measure that represents shareholders’ equity minus goodwill and other intangible assets 
divided by total assets minus goodwill and other intangible assets.  
 
 
RESULTS OF OPERATIONS 
The Company earns income from two primary sources. The first is net interest income, which is interest income 
generated by earning assets less interest expense on interest-bearing liabilities. The second is noninterest income, which 
primarily consists of gains on the sale of loans, loan servicing fees, client service charges and fees, and the increase in cash 
surrender value of life insurance. The majority of the Company’s noninterest expenses are operating costs that relate to 
providing banking services to our clients. 
Net Interest Income and Net Interest Margin 
The level of net interest income depends on several factors in combination, including growth in earning assets, 
yields on earning assets, the cost of interest-bearing liabilities, the relative volumes of earning assets and interest-bearing 
liabilities, and the mix of products that comprise the Company’s earning assets, deposits, and other interest-bearing 
liabilities. Net interest income can also be impacted by the reversal of interest on loans placed on nonaccrual status, and 
recovery of interest on loans that have been on nonaccrual and are either sold or returned to accrual status. To maintain its 
net interest margin, the Company must manage the relationship between interest earned and interest paid. 
The following Distribution, Rate and Yield table presents for each of the past three years, the average amounts 
outstanding for the major categories of the Company’s balance sheet, the average interest rates earned or paid thereon, and 
the resulting net interest margin on average interest earning assets for the periods indicated. Average balances are based 
on daily averages. 
 
 
50
 
Heritage Commerce Corp • 2024 Annual Report

 
Distribution, Rate and Yield 
 
 
     
Year Ended December 31, 
 
 
2024 
 
2023 
 
2022 
 
 
 
 
Interest 
 
Average 
 
 
 
Interest 
 Average  
 
 
Interest 
 Average  
 
 
Average 
 
Income / 
 
Yield / 
 
Average 
 
Income / 
 
Yield / 
 
Average 
 
Income / 
 
Yield / 
 
 
 
Balance      Expense      
Rate 
     Balance      Expense      
Rate 
     
Balance      Expense      
Rate 
 
 
 
(Dollars in thousands) 
Assets: 
 
 
  
 
  
 
  
 
  
 
  
  
 
  
 
  
  
Loans, gross (1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 3,345,662  
$ 182,983  
 
5.47 %  $ 3,262,194  
$ 177,628  
5.45 %   $ 3,119,006  
$ 153,010  
4.91 % 
Securities — taxable . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
905,418  
 
20,817  
 
2.30 %   1,124,190  
 
27,351  
2.43 %   
983,137  
 
20,666  
2.10 % 
Securities — exempt from Federal tax (3) . . . . . . . . . . . . .  
 
31,403  
 
1,127  
 
3.59 %   
33,806  
 
1,196  
3.54 %   
40,478  
 
1,372  
3.39 % 
Other investments, interest-bearing deposits  
in other financial institutions and Federal funds sold . . . .  
 
716,880  
 
38,009  
 
5.30 %   
534,828  
 
28,374  
5.31 %   
908,931  
 
14,068  
1.55 % 
Total interest earning assets (3) . . . . . . . . . . . . . . .  
 4,999,363  
 
242,936  
 
4.86 %   4,955,018  
 234,549  
4.73 %   5,051,552  
 189,116  
3.74 % 
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . .  
 
33,156  
 
  
 
  
 
35,955  
 
  
  
 
37,287  
 
  
  
Premises and equipment, net . . . . . . . . . . . . . . . . . . . . .  
 
10,252  
 
  
 
  
 
9,421  
 
  
  
 
9,574  
 
  
  
Goodwill and other intangible assets . . . . . . . . . . . . . . . .  
 
175,220  
 
  
 
  
 
177,536  
 
  
  
 
180,061  
 
  
  
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
120,714  
 
  
 
  
 
111,445  
 
  
  
 
122,746  
 
  
  
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 5,338,705  
 
  
 
  
$ 5,289,375  
 
  
  
$ 5,401,220  
 
  
  
Liabilities and shareholders’ equity: 
 
 
  
 
  
 
  
 
  
 
  
  
 
  
 
  
  
Deposits: 
 
 
  
 
  
 
  
 
  
 
  
  
 
  
 
  
  
Demand, noninterest-bearing . . . . . . . . . . . . . . . . .  
$ 1,174,854  
$ 1,393,949  
$ 1,863,928  
 
  
 
  
  
 
  
 
  
  
 
 
 
  
 
  
 
  
 
  
 
  
  
 
  
 
  
  
Demand, interest-bearing . . . . . . . . . . . . . . . . . . .  
 
916,466  
 
6,439  
 
0.70 %   1,074,523  
 
6,655  
0.62 %   1,224,676  
 
2,415  
0.20 % 
Savings and money market . . . . . . . . . . . . . . . . . .  
 1,175,391  
 
32,734  
 
2.78 %   1,144,032  
 
19,857  
1.74 %   1,394,283  
 
3,720  
0.27 % 
Time deposits — under $100 . . . . . . . . . . . . . . . . .  
 
11,112  
 
184  
 
1.66 %   
11,809  
 
97  
0.82 %   
12,587  
 
21  
0.17 % 
Time deposits — $100 and over . . . . . . . . . . . . . . .  
 
228,388  
 
8,968  
 
3.93 %   
218,131  
 
6,874  
3.15 %   
122,018  
 
609  
0.50 % 
ICS/CDARS — interest-bearing demand, money 
 
 
  
 
  
 
  
 
  
 
  
  
 
  
 
  
  
market and time deposits . . . . . . . . . . . . . . . . . . . .  
 1,007,563  
 
28,574  
 
2.84 %   
625,045  
 
14,074  
2.25 %   
29,708  
 
5  
0.02 % 
Total interest-bearing deposits . . . . . . . . . . . . . . .  
 3,338,920  
 
76,899  
 
2.30 %   3,073,540  
 
47,557  
1.55 %   2,783,272  
 
6,770  
0.24 % 
Total deposits . . . . . . . . . . . . . . . . . . . .  
 4,513,774  
 
76,899  
 
1.70 %   4,467,489  
 
47,557  
1.06 %   4,647,200  
 
6,770  
0.15 % 
 
 
 
  
 
  
 
  
 
  
 
  
  
 
  
 
  
  
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . .  
 
24  
 
—  
 
0.00 %   
27,145  
 
1,365  
5.03 %   
24  
 
—  
— % 
Subordinated debt, net of issuance costs . . . . . . . . . . . . .  
 
39,572  
 
2,152  
 
5.44 %   
39,420  
 
2,152  
5.46 %   
41,739  
 
2,178  
5.22 % 
Total interest-bearing liabilities . . . . . . . . . . . . . . . .  
 3,378,516  
 
79,051  
 
2.34 %   3,140,105  
 
51,074  
1.63 %   2,825,035  
 
8,948  
0.32 % 
Total interest-bearing liabilities and demand, 
 
 
  
 
  
 
  
 
  
 
  
  
 
  
 
  
  
noninterest-bearing / cost of funds . . . . . . . . . . . . . .  
 4,553,370  
 
79,051  
 
1.74 %   4,534,054  
 
51,074  
1.13 %   4,688,963  
 
8,948  
0.19 % 
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
106,792  
 
  
 
  
 
102,872  
 
  
  
 
104,654  
 
  
  
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .  
 4,660,162  
 
  
 
  
 4,636,926  
 
  
  
 4,793,617  
 
  
  
Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
678,543  
 
  
 
  
 
652,449  
 
  
  
 
607,603  
 
  
  
Total liabilities and shareholders’ equity . . . . . . . . . .  
$ 5,338,705  
 
  
 
  
$ 5,289,375  
 
  
  
$ 5,401,220  
 
  
  
 
 
 
  
 
  
 
  
 
  
 
  
  
 
  
 
  
  
Net interest income (3) / margin . . . . . . . . . . . . . . . . . . .  
 
  
 
163,885  
 
3.28 %   
  
 183,475  
3.70 %   
  
 180,168  
3.57 % 
Less tax equivalent adjustment (3) . . . . . . . . . . . . . . . . . .  
 
  
 
(237)  
 
(251)  
 
  
 
(288)  
  
 
  
 
  
  
Net interest income . . . . . . . . . . . . . . . . . . . . . . .  
 
  
$ 163,648  
 
3.27 %   
  
$ 183,224  
3.70 %   
  
$ 179,880  
3.56 % 
 
(1) 
Includes loans held-for-sale. Nonaccrual loans are included in average balance. 
(2) 
Yield amounts earned on loans include fees and costs. The accretion of net deferred loan fees into loan interest income was $628,000 for 
the year ended December 31, 2024, compared to $742,000 for the year ended December 31, 2023, and $3.4 million (of which $2.1 million 
was from Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans) for the year ended December 31, 2022. 
Prepayment fees totaled $117,000 for the year ended December 31, 2024, compared to $484,000 for the year ended December 31, 2023, 
and $1.3 million for the year ended December 31, 2022. 
(3) 
Reflects the non-GAAP FTE adjustment for Federal tax exempt income based on a 21% tax rate for the years ended December 31, 2024, 
2023 and 2022. 
 
 
 
51
Heritage Commerce Corp • 2024 Annual Report

 
Volume and Rate Variances 
 
The Volume and Rate Variances table below sets forth the dollar difference in interest earned and paid for each 
major category of interest-earning assets and interest-bearing liabilities for the noted periods, and the amount of such 
change attributable to changes in average balances (volume) or changes in average interest rates. Volume variances are 
equal to the increase or decrease in the average balance multiplied by prior period rates and rate variances are equal to the 
increase or decrease in the average rate multiplied by the prior period average balance. Variances attributable to both rate 
and volume changes are equal to the change in rate multiplied by the change in average balance and are included below in 
the average volume column. 
 
 
    
Year Ended December 31, 
    
Year Ended December 31, 
 
 
2024 vs. 2023 
 
2023 vs. 2022 
 
 
Increase (Decrease) 
 
Increase (Decrease) 
 
 
Due to Change in: 
 
Due to Change in: 
 
 
Average  Average  
Net 
 Average  Average  
Net 
 
    Volume     
Rate 
     Change     Volume      
Rate 
    Change 
 
 
(Dollars in thousands) 
Income from the interest earning assets: 
   
   
   
   
   
   
Loans, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 4,541  $ 
814  $ 5,355  $ 7,642  $ 16,976  $ 24,618 
Securities — taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
(5,039)  
(1,495)  
(6,534)  
3,461   
3,224   
6,685 
Securities — exempt from Federal tax (1) . . . . . . . . . . . . .    
(87)  
18   
(69)  
(237)  
61   
(176)
Other investments, interest-bearing deposits in other 
financial institutions and Federal funds sold . . . . . . . . .    
9,663   
(28)  
9,635   (19,890)  34,196   14,306 
Total interest income on interest-earning assets . . . . .    
9,078   
(691)  
8,387   
(9,024)  54,457   45,433 
 
   
   
   
   
   
   
Expense from the interest-bearing liabilities: 
   
   
   
   
   
   
Demand, interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . .    
(1,083)  
867   
(216)  
(938)  
5,178   
4,240 
Savings and money market . . . . . . . . . . . . . . . . . . . . . . . .    
930   11,947   12,877   
(4,404)  20,541   16,137 
Time deposits — under $100 . . . . . . . . . . . . . . . . . . . . . .    
(12)  
99   
87   
(6)  
82   
76 
Time deposits — $100 and over . . . . . . . . . . . . . . . . . . . .    
395   
1,699   
2,094   
3,030   
3,235   
6,265 
CDARS — interest-bearing demand, money market and 
time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    10,823   
3,677   14,500   13,406   
663   14,069 
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . .    
—   
(1,365)  
(1,365)  
1,364   
1   
1,365 
Subordinated debt, net of issuance costs . . . . . . . . . . . . .    
8   
(8)  
—   
(127)  
101   
(26)
Total interest expense on interest-bearing liabilities . . .    11,061   16,916   27,977   12,325   29,801   42,126 
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ (1,983) $ (17,607)  (19,590) $ (21,349) $ 24,656   
3,307 
Less tax equivalent adjustment . . . . . . . . . . . . . . . . . . . . .    
   
   
14   
   
  
37
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . .    
  
  $ (19,576)   
   
 $ 3,344
 
(1) 
Reflects the non-GAAP FTE adjustment for Federal tax exempt income based on a 21% tax rate for the years ended December 31, 
2024, 2023 and 2022. 
 
Net interest income decreased 11% to $163.6 million for the year ended December 31, 2024, compared to $183.2 
million for the year ended December 31, 2023. For the year ended December 31, 2024, the non-GAAP FTE net interest 
margin decreased (42) basis points to 3.28% for the year ended December 31, 2024, compared to 3.70% for the year ended 
December 31, 2023, primarily due to higher rates paid on client deposits, a decrease in the average balance of noninterest-
bearing deposits, and a lower average yield on investment securities, partially offset by an increase in the average balances 
of loans and overnight funds.   
 
Net interest income increased 2% to $183.2 million for the year ended December 31, 2023, compared to $179.9 
million for the year ended December 31, 2022. For the year ended December 31, 2023, the non-GAAP FTE net interest 
margin increased 13 basis points to 3.70%, compared to 3.57% for the year ended December 31, 2022, primarily due to 
increases in the prime rate and the rate on overnight funds, and a shift in the mix of earning assets as the Company invested 
its excess liquidity into higher yielding loans, partially offset by higher rates paid on client deposits, a decrease in the 
average balances of noninterest-bearing demand deposits, and an increase in the average balances of short-term 
borrowings. 
 
 
52
 
Heritage Commerce Corp • 2024 Annual Report

 
The following tables present the average balance of loans outstanding, interest income, and the average yield for 
the periods indicated: 
 
 
 
Year Ended December 31, 
 
 
 
2024 
 
2023 
 
2022 
 
 
 
Average  
Interest  Average  
Average 
 Interest  Average  
Average 
 Interest  Average  
 
    Balance     Income     Yield     
Balance     Income     Yield     
Balance     Income     Yield  
 
 
(Dollars in thousands) 
 
Loans, core bank . . . . . . . . . . . . . . . . . . . . . . . . .   $ 2,848,206  $ 155,690  
5.47%   $ 2,730,789  $ 147,028  
5.38%   $ 2,643,017  $ 123,779  
4.68 %
Prepayment fees . . . . . . . . . . . . . . . . . . . . . . . . .    
—   
117  
0.00%   
—   
484  
0.02%   
—   
1,278  
0.05 %
Bay View Funding factored receivables . . . . . . . . .    
55,717   10,980  
19.71%   
62,642   13,426  
21.43%   
64,099   12,819  
20.00 %
Purchased residential mortgages . . . . . . . . . . . . . .    
444,476   15,038  
3.38%   
472,582   15,309  
3.24%   
417,672   12,395  
2.97 %
Loan credit mark / accretion . . . . . . . . . . . . . . . . .    
(2,737)  
1,158  
0.04%   
(3,819)  
1,381  
0.05%   
(5,782)  
2,739  
0.11 %
Total loans (includes loans held-for-sale) . . . . . . .   $ 3,345,662  $ 182,983  
5.47%   $ 3,262,194  $ 177,628  
5.45%   $ 3,119,006  $ 153,010  
4.91 %
 
The average yield on the total loan portfolio increased to 5.47% for the year ended December 31, 2024, compared 
to 5.45% for the year ended December 31, 2023, primarily due to an increase in the yield on the core bank loan portfolio. 
The average yield on the total loan portfolio increased to 5.45% for the year ended December 31, 2023, compared to 4.91% 
for the year ended December 31, 2022, primarily due to increases in the prime rate, partially offset by a decrease in the 
accretion of the loan purchase discount into interest income from acquired loans, lower prepayment fees, and higher 
average balances of lower yielding purchased residential mortgages. In the aggregate, the remaining net purchase discount 
on total loans acquired was $2.1 million at December 31, 2024. 
 
The average cost of deposits was 1.70% for the year ended December 31, 2024, compared to 1.06% for the year 
ended December 31, 2023, and 0.15% for the year ended December 31, 2022. The increase in the average cost of total 
deposits and the average cost of funds for the year ended December 31, 2024 was primarily due to clients seeking higher 
yields and moving noninterest-bearing deposits to the Bank’s interest-bearing ICS/CDARS deposits and interest-bearing 
money market accounts and increases in market rates. 
 
Provision for Credit Losses on Loans 
  
Credit risk is inherent in the business of making loans. The Company establishes an allowance for credit losses 
on loans through charges to earnings, which are presented in the statements of income as the provision for credit losses on 
loans. Specifically identifiable and quantifiable known losses are promptly charged off against the allowance. The 
provision for credit losses on loans is determined by conducting a quarterly evaluation of the adequacy of the Company’s 
allowance for credit losses on loans and charging the shortfall or excess, if any, to the current quarter’s expense. This has 
the effect of creating variability in the amount and frequency of charges to the Company’s earnings. The provision for 
credit losses on loans and level of allowance for each period are dependent upon many factors, including loan growth, net 
charge-offs, changes in the composition of the loan portfolio, delinquencies, management’s assessment of the quality of 
the loan portfolio, the valuation of problem loans and the general economic conditions in the Company’s market area. The 
provision for credit losses on loans and level of allowance for each period are also dependent on forecast data for the state 
of California including GDP and unemployment rate projections. 
 
There was a $2.1 million provision for credit losses on loans for the year ended December 31, 2024, compared to 
a $749,000 provision for credit losses on loans for the year ended December 31, 2023, and $766,000 provision for credit 
losses on loans for the year ended December 31, 2022. Provisions for credit losses on loans are charged to operations to 
bring the allowance for credit losses on loans to a level deemed appropriate by management based on the factors discussed 
under “Credit Quality and Allowance for Credit Losses on Loans.” 
 
53
Heritage Commerce Corp • 2024 Annual Report

 
Noninterest Income 
The following table sets forth the various components of the Company’s noninterest income for the periods 
indicated: 
 
 
 
 
 
 
 
 
Increase 
 
 
Increase 
  
 
 
Year Ended  
 
(decrease) 
 
 
(Decrease) 
 
 
 
December 31,  
 
2024 versus 2023  
 
2023 versus 2022   
 
     2024      2023      
2022 
     Amount      Percent       Amount      Percent   
 
 
(Dollars in thousands) 
 
   
 
 
  
Service charges and fees on deposit accounts . . . . . . . . . . .   
$  3,561  
$  4,341  
$  4,640  
$  (780) 
 (18)%  $ 
 (299) 
 (6)% 
Increase in cash surrender value of life insurance . . . . . . . .   
  2,097  
  2,031  
 
 1,925  
 
 66  
 3 %   
 106  
 6 % 
Gain on sales of SBA loans . . . . . . . . . . . . . . . . . . . . . . . .   
  
 473  
  
 482  
  
 491  
  
 (9)  
 (2)%    
 (9)  
 (2)% 
Servicing income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 365  
 
 400  
 
 508  
 
 (35) 
 (9)%   
 (108) 
 (21)% 
Gain on proceeds from company-owned life insurance . . . .   
 
 219  
 
 125  
 
 27  
 
 94  
 75 %   
 98  
 363 % 
Termination fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 177  
 
 154  
 
 61  
 
 23  
 15 %   
 93  
 152 % 
Gain on warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 —  
 
 —  
 
 669  
 
 —  
N/A  
  
 (669) 
 (100)% 
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  1,856  
  1,465  
 
 1,790  
 
 391  
 27 %   
 (325) 
 (18)% 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$  8,748  
$  8,998  
$  10,111  
$  (250)  
 (3)%  $  (1,113) 
 (11)% 
 
For the year ended December 31, 2024, total noninterest income decreased (3%) to $8.7 million, compared to 
$9.0 million for the year ended December 31, 2023, primarily due to lower service charges and fees on deposit accounts, 
partially offset by higher income in various other noninterest income categories.   
  
For the year ended December 31, 2023, total noninterest income decreased (11%) to $9.0 million, compared to 
$10.1 million for the year ended December 31, 2022, primarily due to a $669,000 gain on warrants during the year ended 
December 31, 2022, and lower service charges and fees on deposit accounts, servicing income, and interchange fee income 
on credit cards, during the year ended December 31, 2023.   
 
A portion of the Company’s noninterest income is associated with its SBA lending activity, as gain on sales of 
loans sold in the secondary market and servicing income from loans sold with servicing rights retained. During 2024, SBA 
loan sales resulted in a $473,000 gain, compared to a $482,000 gain on sales of SBA loans in 2023, and an $491,000 gain 
on sales of SBA loans in 2022.  
 
The servicing assets that result from the sales of SBA loans with servicing retained are amortized over the 
expected term of the loans using a method approximating the interest method. Servicing income generally declines as the 
respective loans are repaid. 
 
 
54
 
Heritage Commerce Corp • 2024 Annual Report

 
Noninterest Expense 
The following table sets forth the various components of the Company’s noninterest expense for the periods 
indicated: 
 
 
 
 
Increase 
Increase 
  
 
 
Year Ended  
 
(Decrease) 
(Decrease) 
  
 
 
December 31,  
 
2024 versus 2023 
2023 versus 2022   
 
    
2024 
    
2023 
    
2022     Amount     Percent     Amount    Percent  
 
 
(Dollars in thousands) 
  
Salaries and employee benefits . . . . . . . . . . . . . . . . . . .  $  63,952  $  56,862  $ 55,331  $  7,090  
 12 % $  1,531  
 3 % 
Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . .    10,226   
 9,490    9,639   
 736  
8  %  
 (149) 
 (2)% 
Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 6,724   
 6,264    4,958   
 460  
 7 %   1,306  
 26 % 
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 5,416    
 4,350     5,015     1,066   
 25 %  
 (665) 
 (13)% 
Client services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 3,920    
 2,512     1,851     1,408   
 56 %  
 661  
 36 % 
Data processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 3,183   
 3,429    2,482   
 (246) 
 (7)%  
 947  
 38 % 
Software subscriptions . . . . . . . . . . . . . . . . . . . . . . . . .    
 3,046    
 2,599     1,958    
 447   
 17 %  
 641  
 33 % 
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     17,116     15,548     13,625     1,568   
 10 %   1,923  
 14 % 
Total noninterest expense . . . . . . . . . . . . . . . . . . . .  $ 113,583  $ 101,054  $ 94,859  $ 12,529  
 12 %  $  6,195  
 7 % 
 
The following table indicates the percentage of noninterest expense in each category for the periods indicated: 
 
 
Year Ended December 31,  
  
 
 
 
 
Percent   
 
 
Percent  
 
 
 
Percent   
 
     
2024 
      of Total     
2023 
      of Total     
2022      of Total   
 
 
(Dollars in thousands) 
  
Salaries and employee benefits . . . . . . . . . . . . . . . . . . .   
$  63,952  
 56 %  $  56,862  
 56 %  
$  55,331  
 58 % 
Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . . .   
 
 10,226  
 9 %   
 9,490  
 9 %  
 
 9,639  
 10 % 
Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 6,724  
 6 %   
 6,264  
 6 %  
 
 4,958  
 5 % 
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 5,416   
 5 %    
 4,350   
 4 %  
   5,015   
 5 % 
Client services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 3,920   
 3 %    
 2,512   
 3 %  
   1,851   
 2 % 
Data processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 3,183  
 3 %   
 3,429  
 4 %  
 
 2,482  
 3 % 
Software subscriptions . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 3,046  
 3 %   
 2,599  
 3 %  
 
 1,958  
 2 % 
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 17,116  
 15 %   
 15,548  
 15 %  
  13,625  
 15 % 
Total noninterest expense . . . . . . . . . . . . . . . . . . . . .   
$  113,583  
 100 %  $  101,054  
 100 %  
$  94,859  
 100 % 
 
Noninterest expense for the year ended December 31, 2024 increased 12% to $113.6 million, compared to $101.1 
million for the year ended December 31, 2023, primarily due to higher salaries and employee benefits, rent expense, 
professional fees, marketing related expenses, insurance expense, homeowner association third-party vendor payments, 
and ICS/CDARS fee expense.  
Noninterest expense for the year ended December 31, 2023 increased 7% to $101.1 million, compared to $94.9 
million for the year ended December 31, 2022, primarily due to higher salaries and employee benefits, higher insurance, 
regulatory assessments, improvements in information technology, and ICS/CDARS fee expenses included in other 
noninterest expense, partially offset by lower professional fees and occupancy and equipment expense during the year 
ended December 31, 2023. 
Full-time equivalent employees were 355 at December 31, 2024, and 349 at December 31, 2023, and 340 at 
December 31, 2022.  
 
 
55
Heritage Commerce Corp • 2024 Annual Report

 
Income Tax Expense 
The Company computes its provision for income taxes on a monthly basis. The effective tax rate is determined 
by applying the Company’s statutory income tax rates to pre-tax book income as adjusted for permanent differences 
between pre-tax book income and actual taxable income. These permanent differences include, but are not limited to 
increases in the cash surrender value of life insurance policies, interest on tax-exempt securities, certain expenses that are 
not allowed as tax deductions, and tax credits. 
The following table shows the effective tax rate at the dates indicated: 
 
 
Year Ended December 31,  
 
 
     
2024 
     
2023 
     
2022 
 
Effective income tax rate . . . . . . . . . . . . . . . . . . . . .    
28.5 % 
28.7 % 
29.5 % 
 
The Company’s Federal and state income tax expense in 2024 was $16.1 million, compared to $26.0 million in 
2023, and $27.8 million in 2022.   
Some items of income and expense are recognized in different years for tax purposes than when applying 
generally accepted accounting principles leading to timing differences between the Company’s actual tax liability, and the 
amount accrued for this liability based on book income. These temporary differences comprise the “deferred” portion of 
the Company’s tax expense or benefit, which is accumulated on the Company’s books as a deferred tax asset or deferred 
tax liability until such time as they reverse. 
Realization of the Company’s deferred tax assets is primarily dependent upon the Company generating sufficient 
future taxable income to obtain benefit from the reversal of net deductible temporary differences and the utilization of tax 
credit carryforwards and the net operating loss carryforwards for Federal and state income tax purposes. The amount of 
deferred tax assets considered realizable is subject to adjustment in future periods based on estimates of future taxable 
income. Under generally accepted accounting principles a valuation allowance is required to be recognized if it is “more 
likely than not” that the deferred tax assets will not be realized. The determination of the realizability of the deferred tax 
assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and 
negative evidence, including forecasts of future income, cumulative losses, applicable tax planning strategies, and 
assessments of current and future economic and business conditions. 
The Company had the net deferred tax assets of $27.8 million and $29.8 million at December 31, 2024, and 
December 31, 2023, respectively. After consideration of the matters in the preceding paragraph, management determined 
that it is more likely than not that the net deferred tax assets at December 31, 2024 and December 31, 2023 will be fully 
realized in future years. 
FINANCIAL CONDITION 
At December 31, 2024, total assets increased 9% to $5.6 billion, compared to $5.2 billion at December 31, 2023, 
primarily related to growth in client deposits.  
Securities available-for-sale, at fair value, were $256.3 million at December 31, 2024, a decrease of (42%) from 
$442.6 million at December 31, 2023, due to maturities and paydowns. Securities held-to-maturity, at amortized cost, were 
$590.0 million at December 31, 2024, a decrease of (9%) from $650.6 million at December 31, 2023.  
Loans, excluding loans held-for-sale, increased $141.6 million, or 4%, to $3.5 billion at December 31, 2024, 
compared to $3.4 billion at December 31, 2023. Loans, excluding residential mortgages, increased $166.8 million, or 6%, 
to $3.0 billion at December 31, 2024, compared to $2.9 billion at December 31, 2023. 
Total deposits increased $441.6 million, or 10% to $4.8 billion at December 31, 2024, compared to $4.4 billion 
at December 31, 2023.  
56
 
Heritage Commerce Corp • 2024 Annual Report

 
Securities Portfolio 
The following table reflects the balances for each category of securities at the dates indicated: 
 
 
December 31, 
 
     
2024 
     
2023 
 
 
(Dollars in thousands) 
Securities available-for-sale (at fair value): 
 
 
 
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 $  186,183  
$  382,369 
Agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . .  
 
 70,091  
 
 60,267 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 $  256,274  
$  442,636 
Securities held-to-maturity (at amortized cost): 
  
   
  
  
Agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . .  
 $  559,548  
$  618,374 
Municipals — exempt from Federal tax (1) . . . . . . . . . . . . . . . . .  
 
 30,480  
 
 32,203 
Total (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 $  590,028  
$  650,577 
 
(1) Gross of the allowance for credit losses of $12,000 at both December 31, 2024 and December 31, 2023. 
 
The table below summarizes the weighted average life and weighted average yields of securities at December 31, 
2024: 
 
 
Weighted Average Life 
  
 
 
 
 
 
 
After One and 
 
After Five and 
 
 
 
 
 
 
 
 
  
 
 
Within One 
 
Within Five 
 
Within Ten 
 
After Ten 
 
 
 
 
  
 
 
Year or Less 
 
Years 
 
Years 
 
Years 
 
Total 
  
 
   
Amount 
   
Yield    
Amount 
   
Yield    
Amount 
   
Yield    
Amount 
   
Yield    
Amount    Yield   
 
 
(Dollars in thousands) 
  
Securities available-for-sale (at fair value): 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . .   $ 
 176,405   
2.89 %   $ 
 9,778   
4.31 %   $ 
 —   
 — %   $ 
 —   
 — %   $  186,183   
2.96 % 
Agency mortgage-backed securities . . . . . . . .     
 85   
2.78 %     
 40,769   
2.52 %     
 29,237   
4.24 %     
 —   
 — %     
 70,091   
3.24 % 
Total . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 176,490   
2.89 %   $ 
 50,547   
2.86 %   $ 
 29,237   
4.24 %   $ 
 —   
 — %   $  256,274   
3.04 % 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities held-to-maturity (at amortized cost): 
   
    
   
  
    
 
  
    
 
  
    
   
  
    
   
Agency mortgage-backed securities . . . . . . . .   $ 
 1,083   
2.05 %   $ 
 98,445   
1.86 %   $ 
 378,920   
1.84 %   $ 
 81,100   
2.76 %   $  559,548   
1.98 % 
Municipals — exempt from Federal tax (1) (2) . .    
 3,350   
4.08 %    
 6,906   
3.28 %    
 20,224   
3.62 %    
 —   
0.00 %    
 30,480   
3.59 % 
Total (2) . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 4,433   
3.58 %   $ 
 105,351   
1.95 %   $ 
 399,144   
1.93 %   $ 
 81,100   
2.76 %   $  590,028   
2.06 % 
 
(1) 
Reflects the non-GAAP FTE adjustment for Federal tax exempt income based on a 21% tax rate.  
(2) 
Gross of the allowance for credit losses of ($12,000) at December 31, 2024. 
 
The securities portfolio serves the following purposes: (i) it provides a source of pledged assets for securing 
certain deposits and borrowed funds, as may be required by law or by specific agreement with a depositor or lender; (ii) it 
provides liquidity to even out cash flows from the loan and deposit activities of clients; (iii) it can be used as an interest 
rate risk management tool, since it provides a large base of assets, the maturity and interest rate characteristics of which 
can be changed more readily than the loan portfolio to better match changes in the deposit base and other funding sources 
of the Company; and (iv) it is an alternative interest-earning use of funds when loan demand is weak or when deposits 
grow more rapidly than loans. 
The Company’s portfolio may include: (i) U.S. Treasury securities and U.S. Government sponsored entities’ debt 
securities for liquidity and pledging; (ii) mortgage-backed securities, which in many instances can also be used for 
pledging, and which generally enhance the yield of the portfolio; (iii) municipal obligations, which provide tax free income 
and limited pledging potential; (iv) single entity issue trust preferred securities, which generally enhance the yield on the 
portfolio; (v) corporate bonds, which also enhance the yield on the portfolio; (vi) money market mutual funds; 
(vii) certificates of deposit; (viii) commercial paper; (ix) bankers acceptances; (x) repurchase agreements; 
(xi) collateralized mortgage obligations; and (xii) asset-backed securities. 
The Company classifies its securities as either available-for-sale or held-to-maturity at the time of purchase. 
Accounting guidance requires available-for-sale securities to be marked to fair value with an offset to accumulated other 
comprehensive income (loss), a component of shareholders’ equity. Monthly adjustments are made to reflect changes in 
the fair value of the Company’s available-for-sale securities. 
57
Heritage Commerce Corp • 2024 Annual Report

 
The following table shows the net pre-tax unrealized and unrecognized (loss) on securities available-for-sale and 
securities held-to-maturity and the allowance for credit losses at the dates indicated: 
 
 
 
December 31, 
 
     
2024 
     
2023 
 
 
(Dollars in thousands) 
Securities available-for-sale pre-tax unrealized (loss): 
 
 
 
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 (912) 
  
 (5,621)
Agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 $ 
 (4,148) 
$ 
 (4,313)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 $ 
 (5,060) 
$ 
 (9,934)
Securities held-to-maturity pre-tax unrecognized (loss): 
  
   
  
  
Agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 $ 
 (91,585) 
$ 
 (85,729)
Municipals — exempt from Federal tax . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 (1,431) 
 
 (721)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 $ 
 (93,016) 
$ 
 (86,450)
 
 
 
 
Allowance for credit losses on municipal securities . . . . . . . . . . . . . . . . . . . . .  
 
 (12) 
 
 (12)
 
The net pre-tax unrealized loss on the securities available-for-sale portfolio was ($5.1) million, or ($3.7) million 
net of taxes, which was less than 1% of total shareholders’ equity at December 31, 2024. The net pre-tax unrecognized 
loss on the securities held-to-maturity portfolio was ($93.0) million, or ($65.5) million net of taxes, which was 9.5% of 
total shareholders’ equity at December 31, 2024. The unrealized and unrecognized losses in both the available-for-sale 
and held-to-maturity portfolios were due to higher interest rates at December 31, 2024 compared to when the securities 
were purchased. The issuers are of high credit quality and all principal amounts are expected to be repaid when the 
securities mature. The fair value is expected to recover as the securities approach their maturity date and/or interest rates 
decline. 
 
Loans 
The Company’s loans represent the largest portion of earning assets, substantially greater than the securities 
portfolio or any other asset category, and the quality and diversification of the loan portfolio is an important consideration 
when reviewing the Company’s financial condition. Gross loans, excluding loans held-for-sale, represented 62% of total 
assets at December 31, 2024, compared to 65% at December 31, 2023. The loans to deposit ratio was 72.45% at 
December 31, 2024, compared to 76.52% at December 31, 2023. 
Loan Distribution 
The Loan Distribution table that follows sets forth the Company’s gross loans, excluding loans held-for-sale, 
outstanding and the percentage distribution in each category at the dates indicated: 
 
 
 
December 31, 2024 
 
December 31, 2023 
 
 
    
Balance      % to Total     
Balance       % to Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  531,350  
 15 %   $  463,778  
 14 %
Real estate: 
   
 
 
  
 
 
CRE - owner occupied . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 601,636  
 17 %   
 583,253  
 17 %
CRE - non-owner occupied . . . . . . . . . . . . . . . . . . . . . . . . .      1,341,266  
 38 %     1,256,590  
 37 %
Land and construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      127,848  
 4 %     140,513  
 4 %
Home equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      127,963  
 4 %     119,125  
 4 %
Multifamily . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      275,490  
 8 %     269,734  
 8 %
Residential mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 471,730  
 14 %   
 496,961  
 15 %
Consumer and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 14,837  
<1 %    
 20,919  
 1 %
Total Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      3,492,120   
 100 %     3,350,873   
 100 %
Deferred loan fees, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 (183)  
 —  
  
 (495)  
 —  
Loans, net of deferred fees  . . . . . . . . . . . . . . . . . . . . . . . .      3,491,937   
 100 %     3,350,378   
 100 %
Allowance for credit losses on loans . . . . . . . . . . . . . . . . . . . . .     
 (48,953)  
   
  
 (47,958)  
    
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 3,442,984   
   
$ 3,302,420   
   
 
The Company’s loan portfolio is concentrated in commercial loans (primarily manufacturing, wholesale, and 
services-oriented entities) and CRE, with the remaining balance in land development and construction, home equity, 
purchased residential mortgages, and consumer loans. The Company does not have any material concentrations by industry 
or group of industries in its loan portfolio; however, 85% of its gross loans were secured by real property at December 31, 
 
58
 
Heritage Commerce Corp • 2024 Annual Report

 
2024, and December 31, 2023. While no specific industry concentration is considered significant, the Company’s bank 
lending operations are substantially located in areas that are dependent on the technology and real estate industries and their 
supporting companies. 
The Company has established concentration limits in its loan portfolio for commercial real estate loans, 
commercial loans, construction loans and unsecured lending, among others. All loan types are within established limits. 
The Company uses underwriting guidelines to assess the borrowers’ historical cash flow to determine debt service, and 
we further stress test the debt service under higher interest rate scenarios. Financial and performance covenants are used 
in commercial lending to allow the Company to react to a borrower’s deteriorating financial condition, should that occur. 
Stress testing and debt service on commercial real estate loans are reviewed quarterly.  
The Company’s commercial loans are made for working capital, financing the purchase of equipment or for other 
business purposes. Commercial loans include loans with maturities ranging from thirty days to two years and “term loans” 
with maturities normally ranging from one to five years. Short-term business loans are generally intended to finance current 
transactions and typically provide for periodic principal payments, with interest payable monthly. Term loans normally 
provide for floating interest rates, with monthly payments of both principal and interest. 
The Company is an active participant in the SBA and U.S. Department of Agriculture guaranteed lending 
programs, and has been approved by the SBA as a lender under the Preferred Lender Program. The Company regularly 
makes such loans conditionally guaranteed by the SBA (collectively referred to as “SBA loans”). The guaranteed portion 
of these loans is typically sold in the secondary market depending on market conditions. When the guaranteed portion of 
an SBA loan is sold the Company retains the servicing rights for the sold portion. During 2024, loans were sold resulting 
in a gain on sales of SBA loans of $473,000, compared to a gain on sales of SBA loans of $482,000 for 2023, and $491,000 
for 2022. 
The Company’s factoring receivables are from the operations of Bay View Funding, whose primary business is 
purchasing and collecting factored receivables on a nation-wide basis. Factored receivables are receivables that have been 
transferred by the originating organization and typically have not been subject to previous collection efforts. These 
receivables are acquired from a variety of companies, including, but not limited to, service providers, transportation 
companies, manufacturers, distributors, wholesalers, apparel companies, advertisers, and temporary staffing companies. 
The portfolio of factored receivables is included in the Company’s commercial loan portfolio. The average life of the 
factored receivables was 34 days for the year ended December 31, 2024, and 37 days for the year ended December 31, 
2023, and 38 days for the year ended December 31, 2022. The following table shows the balance of factored receivables 
at period-end, average balances during the period, and full time equivalent employees of Bay View Funding at period-end: 
 
     December 31,      December 31,  
 
     
2024 
     
2023 
 
 
(Dollars in thousands) 
Total factored receivables at period-end . . . . . . . . . . . . . . . . . . . . . . .   $ 
 68,897  $ 
 57,458 
Average factored receivables: 
  
  
For the year ended  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 55,717   
 62,642 
Total full time equivalent employees at period-end . . . . . . . . . . . . . .     
 30    
 28 
 
The commercial loan portfolio increased $67.6 million, or 15%, to $531.4 million at December 31, 2024, from 
$463.8 million at December 31, 2023. Commercial and industrial line usage increased to 34% at December 31, 2024, 
compared to 29% at December 31, 2023.   
 
The Company’s CRE loans consist primarily of loans based on the borrower’s cash flow and are secured by deeds 
of trust on commercial property to provide a secondary source of repayment. The Company generally restricts real estate 
term loans to no more than 75% of the property’s appraised value or the purchase price of the property depending on the 
type of property and its utilization. For each category of CRE, the Company has set its requirements for loan to appraised 
value or purchase price to a level that is below supervisory limits. The Company offers both fixed and floating rate loans. 
Maturities for CRE loans are generally between five and ten years (with amortization ranging from fifteen to twenty-five 
years and a balloon payment due at maturity), however, SBA, and certain other real estate loans that can be sold in the 
secondary market, may be granted for longer maturities. 
59
Heritage Commerce Corp • 2024 Annual Report

 
The CRE owner occupied loan portfolio increased $18.3 million, or 3% to $601.6 million at December 31, 2024, 
from $583.3 million at December 31, 2023. CRE non-owner occupied loans increased $84.7 million, or 7% to $1.34 billion 
at December 31, 2024, from $1.26 billion at December 31, 2023. At December 31, 2024, 31% of the CRE loan portfolio 
was secured by owner occupied real estate, compared to 32% at December 31, 2023. 
 
During the fourth quarter of 2024, there were 39 new owner occupied and non-owner occupied CRE loans 
originated totaling $72 million with a weighted average loan-to-value (“LTV”) of 42%; the weighted average debt-service 
coverage ratio (“DSCR”) for the non-owner occupied portfolio was 2.58 times. The average loan size for all CRE loans 
was $1.6 million, and the average loan size for office CRE loans was $1.7 million. The Company has personal guarantees 
on 92% of its CRE portfolio. A substantial portion of the unguaranteed CRE loans were made to credit-worthy non-profit 
organizations.  
 
Total office exposure (excluding medical/dental offices) in the CRE portfolio was $413 million, including 34 
loans totaling approximately $74 million in San Jose, 18 loans totaling approximately $25 million in San Francisco, and 
eight loans totaling approximately $16 million in Oakland at December 31, 2024. Non-owner occupied CRE with office 
exposure totaled $322 million at December 31, 2024. At December 31, 2024, the weighted average LTV and DSCR for 
the entire non-owner occupied office portfolio were 41.5% and 2.16 times, respectively. Total medical/dental office 
exposure in the non-owner occupied CRE portfolio consisted of 15 loans totaling $12.3 million, with a weighted average 
LTV and DSCR ratio of 37.1% and 3.05 times, respectively, at December 31, 2024. 
 
The following table presents the weighted average LTV and DSCR by collateral type for CRE loans at 
December 31, 2024: 
 
 
 
CRE - Non-owner Occupied 
 
CRE - Owner Occupied  
Total CRE 
 
Collateral Type 
    Outstanding      
LTV 
     
DSCR 
    Outstanding     
LTV 
     Outstanding     
LTV 
 
Retail . . . . . . . . . . . . . . . . . .   
 26 %  
37.4 %  
2.18  
16 %  
46.1 %  
24 % 
38.9 % 
Industrial . . . . . . . . . . . . . . .    
18 % 
38.7 % 
2.98   
33 % 
42.9 % 
22 % 
40.3 % 
Mixed-Use, Special  
Purpose and Other . . . . . .    
19 % 
41.6 % 
1.99   
35 % 
40.6 % 
22 % 
41.2 % 
Office . . . . . . . . . . . . . . . . . .    
20 % 
41.5 % 
2.16   
16 % 
44.1 % 
19 % 
42.1 % 
Multifamily . . . . . . . . . . . . .    
17 % 
42.9 % 
1.91   
0 % 
0.0 % 
13 % 
42.9 % 
Hotel/Motel . . . . . . . . . . . . .   
< 1 % 
16.3 % 
1.32  
0 % 
0.0 % 
< 1 % 
16.3 % 
Total . . . . . . . . . . . . . . . . . .   
100 % 
40.0 % 
2.24  
100 % 
42.8 % 
100 % 
40.8 % 
 
 
 
60
 
Heritage Commerce Corp • 2024 Annual Report

 
The following table presents the weighted average LTV and DSCR by county for CRE loans at December 31, 
2024: 
 
 
 
CRE - Non-owner Occupied 
 
CRE - Owner Occupied 
 
Total CRE 
County 
    Outstanding     
LTV 
     
DSCR 
     Outstanding    
LTV 
     Outstanding    
LTV 
Alameda . . . . . . . . . . . . . . .   
 25 %     43.8 %    
 1.92  
  
 19 %    
 45.3 %    
 23 %     44.1 % 
Contra Costa . . . . . . . . . . .    
 7 %     41.6 %    
 1.77  
   
 8 %    
 46.9 %     
 7 %     43.1 % 
Marin . . . . . . . . . . . . . . . . .    
 6 %     45.9 %    
 2.02  
   
 1 %    
 51.7 %     
 5 %     46.3 % 
Monterey . . . . . . . . . . . . . .    
 2 %     42.8 %    
 1.82  
   
 2 %    
 40.8 %     
 2 %     42.1 % 
Napa . . . . . . . . . . . . . . . . . .    
 < 1 %     29.1 %    
 2.40  
   
 1 %    
 51.6 %     
 < 1 %     36.8 % 
Out of Area . . . . . . . . . . . .   
 9 %     42.3 %    
 2.04  
   
 9 %    
 48.9 %     
 9 %     44.0 % 
San Benito . . . . . . . . . . . . .   
 1 %     38.3 %    
 1.84  
   
 3 %    
 39.3 %     
 2 %     38.7 % 
San Francisco . . . . . . . . . . .   
 9 %     37.3 %    
 2.19  
   
 4 %    
 39.5 %     
 8 %     37.6 % 
San Mateo . . . . . . . . . . . . .   
 11 %     38.1 %    
 2.33  
   
 15 %    
 40.0 %     
 12 %     38.7 % 
Santa Clara . . . . . . . . . . . . .   
 24 %     36.9 %    
 2.80  
   
 34 %    
 40.7 %     
 27 %     38.3 % 
Santa Cruz . . . . . . . . . . . . .   
 2 %     32.2 %    
 1.75  
   
 1 %    
 49.6 %     
 2 %     35.5 % 
Solano . . . . . . . . . . . . . . . . .   
 1 %     32.5 %    
 2.91  
   
 1 %    
 37.5 %     
 1 %     33.9 % 
Sonoma . . . . . . . . . . . . . . .   
 3 %     38.7 %    
 2.58  
   
 2 %    
 42.8 %     
 2 %     39.6 %   
Total . . . . . . . . . . . . . . . . .    100 %     40.0 %    
 2.24  
   100 %    
 42.8 %     100 %     40.8 %   
 
The Company’s land and construction loans are primarily to finance the development/construction of commercial 
and single family residential properties. The Company utilizes underwriting guidelines to assess the likelihood of 
repayment from sources such as sale of the property or availability of permanent mortgage financing prior to making the 
construction loan. Construction loans are provided primarily in our market area, and we have extensive controls for the 
disbursement process. Land and construction loans decreased ($12.7) million, or (9%), to $127.8 million at December 31, 
2024, from $140.5 million at December 31, 2023. 
 
The Company makes home equity lines of credit available to its existing clients. Home equity lines of credit are 
underwritten initially with a maximum 75% loan to value ratio. Home equity lines of credit increased $8.8 million, or 7%, 
to $127.9 million at December 31, 2024, from $119.1 million at December 31, 2023. 
 
Multifamily loans increased $5.8 million, or 2%, to $275.5 million at December 31, 2024, compared to $269.7 
million at December 31, 2023. 
  
From time to time the Company has purchased single family residential mortgage loans. Purchases of residential 
loans have been an attractive alternative for replacing mortgage-backed security paydowns in the investment securities 
portfolio. Residential mortgage loans decreased ($25.3) million, or (5%), to $471.7 million at December 31, 2024, 
compared to $497.0 million at December 31, 2023. 
 
Additionally, the Company makes consumer loans for the purpose of financing automobiles, various types of 
consumer goods, and other personal purposes. Consumer loans generally provide for the monthly payment of principal 
and interest. Most of the Company’s consumer loans are secured by the personal property being purchased or, in the 
instances of home equity loans or lines of credit, real property. Consumer and other loans decreased ($6.1) million, or 
(29%), to $14.8 million at December 31, 2024, compared to $20.9 million at December 31, 2023. 
 
With certain exceptions, state chartered banks are permitted to make extensions of credit to any one borrowing 
entity up to 15% of the bank’s capital and reserves for unsecured loans and up to 25% of the bank’s capital and reserves 
for secured loans. For HBC, these lending limits were $113.7 million and $189.6 million at December 31, 2024, 
respectively.  
Loan Maturities 
The following table presents the maturity distribution of the Company’s loans (excluding loans held-for-sale), as 
of December 31, 2024. The table shows the distribution of such loans between those loans with predetermined (fixed) 
interest rates and those with variable (floating) interest rates. Floating rates generally fluctuate with changes in the prime 
61
Heritage Commerce Corp • 2024 Annual Report

 
rate and contractual repricing dates. At December 31, 2024, approximately 26% of the Company’s loan portfolio consisted 
of floating interest rate loans. 
 
  
 
 
Over One 
  
 
  
 
 
 
Due in 
 
Year But 
  
 
  
 
 
 
One Year 
 
Less than 
 
Over 
  
 
 
     
or Less 
     
Five Years 
     
Five Years 
     
Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 376,538  
$ 
 109,423  
$ 
 45,389  
$ 
 531,350 
Real estate: 
 
  
 
 
 
 
 
 
CRE - owner occupied . . . . . . . . . . . . . .   
  
 41,447  
 
 191,688  
 
 368,501  
 
 601,636 
CRE - non-owner occupied . . . . . . . . . .   
 
 56,605  
 
 513,626  
 
 771,035  
 
 1,341,266 
Land and construction . . . . . . . . . . . . . .   
  
 119,167  
 
 8,556  
 
 125  
 
 127,848 
Home equity . . . . . . . . . . . . . . . . . . . . . .   
  
 5,641  
 
 26,777  
 
 95,545  
 
 127,963 
Multifamily . . . . . . . . . . . . . . . . . . . . . . .   
 
 14,682  
 
 135,845  
 
 124,963  
 
 275,490 
Residential mortgages . . . . . . . . . . . . . .   
  
 6,764  
 
 16,709  
 
 448,257  
 
 471,730 
Consumer and other . . . . . . . . . . . . . . . . . .   
  
 12,533  
 
 2,128  
 
 176  
 
 14,837 
Loans . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 633,377  
$ 
 1,004,752  
$ 
 1,853,991  
$ 
 3,492,120 
 
 
 
 
 
 
 
 
 
Loans with variable interest rates . . . . . . . .   
$ 
 469,400  
$ 
 188,849  
$ 
 236,771  
$ 
 895,020 
Loans with fixed interest rates . . . . . . . . . .   
  
 163,977  
 
 815,903  
 
 1,617,220  
  
 2,597,100 
Loans . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 633,377  
$ 
 1,004,752  
$ 
 1,853,991  
$ 
 3,492,120 
 
Loan Servicing 
At December 31, 2024, 2023, and 2022, SBA loans that the Company serviced for others totaled $48.3 million, 
$55.8 million, and $64.8 million, respectively. Activity for loan servicing rights was as follows for the periods indicated: 
 
 
Year Ended  
 
 
December 31,  
 
     
2024 
     
2023 
     
2022 
 
 
(Dollars in thousands) 
Beginning of period balance . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 415  
$ 
 549  
$ 
 655 
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 110  
  
 126  
  
 124 
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 (181) 
  
 (260) 
  
 (230)
End of period balance . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 344  
$ 
 415  
$ 
 549 
 
Loan servicing rights are included in accrued interest receivable and other assets on the consolidated balance 
sheets and reported net of amortization. There was no valuation allowance at December 31, 2024 and 2023, as the fair  
value of the assets was greater than the carrying value.  
Activity for the interest-only (“I/O”) strip receivable was as follows for the periods indicated: 
 
 
Year Ended  
 
 
December 31,  
 
     
2024 
     
2023 
     
2022 
 
 
(Dollars in thousands) 
Beginning of period balance . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 117  
$ 
 152  
$ 
 221 
Unrealized holding loss . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 (35) 
  
 (35) 
  
 (69)
End of period balance . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 82  
$ 
 117  
$ 
 152 
Management reviews the key economic assumptions used to estimate the fair value of I/O strip receivables on a 
quarterly basis. The fair value of the I/O strip can be adversely impacted by a significant increase in either the prepayment 
speed of the portfolio or the discount rate. At December 31, 2024, key economic assumptions and the sensitivity of the 
62
 
Heritage Commerce Corp • 2024 Annual Report

 
fair value of the I/O strip receivables to immediate changes to the CPR assumption of 10% and 20%, and changes to the 
discount rate assumption of 1% and 2%, are as follows: 
 
     (Dollars in thousands) 
 
Carrying amount/fair value of Interest-Only (I/O) strip . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 82 
 
Prepayment speed assumption (annual rate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
19.1 % 
Impact on fair value of 10% adverse change in prepayment speed (CPR 21.0%) . . . . . . . . . . .   $ 
 (1)
Impact on fair value of 20% adverse change in prepayment speed (CPR 22.9%) . . . . . . . . . . .   $ 
 (2)
Residual cash flow discount rate assumption (annual) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
14.7 % 
Impact on fair value of 1% adverse change in discount rate (14.9% discount rate) . . . . . . . . . .   $ 
 (1)
Impact on fair value of 2% adverse change in discount rate (15.0% discount rate) . . . . . . . . . .   $ 
 (2)
 
Off-Balance Sheet Arrangements 
In the normal course of business, the Company makes commitments to extend credit to its clients as long as there 
are no violations of any conditions established in contractual arrangements. These commitments are obligations that 
represent a potential credit risk to the Company, yet are not reflected in any form within the Company’s consolidated 
balance sheets. Total unused commitments to extend credit were $1.0 billion and $1.2 billion at December 31, 2024 and 
December 31, 2023, respectively. Unused commitments represented 30% of outstanding gross loans at December 31, 2024 
and 34% at December 31, 2023. 
The effect on the Company’s revenues, expenses, cash flows and liquidity from the unused portion of the 
commitments to provide credit cannot be reasonably predicted, because there is no certainty that the lines of credit will 
ever be fully utilized. For more information regarding the Company’s off-balance sheet arrangements, see Note 15 to the 
consolidated financial statements located elsewhere herein. 
Credit Quality and Allowance for Credit Losses on Loans 
 
Like all financial institutions, HBC has exposure to credit quality risk, which generally arises because we could 
potentially receive less than a full return of principal and interest if a debtor becomes unable or unwilling to repay. Since 
loans are the Company’s most significant assets and generate the largest portion of its revenues, the Company’s 
management of credit quality risk is focused primarily on loan quality. Banks have generally suffered their most severe 
earnings declines as a result of clients’ inability to generate sufficient cash flow to service their debts and/or downturns in 
national and regional economies and declines in overall asset values, including real estate. In addition, certain debt 
securities that the Company may purchase have the potential of declining in value if the obligor’s financial capacity to 
repay deteriorates. 
 
The Company’s policies and procedures identify market segments, set goals for portfolio growth or contraction, 
and establish limits on industry and geographic credit concentrations. In addition, these policies establish the Company’s 
underwriting standards and the methods of monitoring ongoing credit quality. The Company’s internal credit risk controls 
are centered in underwriting practices, credit granting procedures, training, risk management techniques, and familiarity 
with loan clients as well as the relative diversity and geographic concentration of our loan portfolio. 
 
The Company’s credit risk also may be affected by external factors such as the level of interest rates, employment, 
general economic conditions, real estate values, and trends in particular industries or geographic markets. As an 
independent community bank serving a specific geographic area, the Company must contend with the unpredictable 
changes in the general California market and, particularly, primary local markets. The Company’s asset quality has 
suffered in the past from the impact of national and regional economic recessions, consumer bankruptcies, and depressed 
real estate values. 
 
Nonperforming assets are comprised of the following: loans for which the Company is no longer accruing interest; 
restructured loans which have been current under six months; loans 90 days or more past due and still accruing interest 
(although they are generally placed on nonaccrual when they become 90 days past due, unless they are both well-secured 
and in the process of collection); and foreclosed assets. The following tables present the aging of past due loans by class 
at the dates indicated: 
 
 
63
Heritage Commerce Corp • 2024 Annual Report

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     
December 31, 2024 
 
     30 - 59     
60 - 89     90 Days or    
 
      
 
      
 
 
 
Days 
 
Days 
 
Greater  
Total 
 
 
 
 
 
 
Past Due  
Past Due  
Past Due  
Past Due  
Current 
 
Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . . . .   $
 7,364  $  2,295  $  1,393  $  11,052  $  520,298  $  531,350 
Real estate: 
   
   
   
   
   
   
CRE - Owner Occupied . . . . . . . . . .     
 1,879   
 —   
 —   
 1,879     599,757     601,636 
CRE - Non-Owner Occupied . . . . . .    
 4,479   
 —   
 —   
 4,479    1,336,787    1,341,266 
Land and construction . . . . . . . . . . .     
 4,290   
 2,323   
 5,874     12,487     115,361     127,848 
Home equity . . . . . . . . . . . . . . . . . .     
 78   
 750   
 —    
 828     127,135     127,963 
Multifamily  . . . . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 275,490   
 275,490 
Residential mortgages . . . . . . . . . . .    
 850   
 —   
 —   
 850   
 470,880   
 471,730 
Consumer and other . . . . . . . . . . . . . . .     
 —   
 117   
 213    
 330    
 14,507    
 14,837 
Total . . . . . . . . . . . . . . . . . . . . . . . .   $  18,940  $  5,485  $  7,480  $  31,905  $ 3,460,215  $ 3,492,120 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     
December 31, 2023 
 
     30 - 59     
60 - 89     90 Days or     
 
      
 
      
 
 
 
Days 
 
Days 
 
Greater  
Total 
 
 
 
 
 
 
Past Due  
Past Due  
Past Due  
Past Due  
Current 
 
Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . . . .   $
 6,688  $  2,030  $  1,264  $  9,982  $  453,796  $  463,778 
Real estate: 
   
   
   
   
   
   
CRE - Owner Occupied . . . . . . . . . .     
 —   
 —   
 —   
 —   
 583,253   
 583,253 
CRE - Non-Owner Occupied . . . . . .    
 1,289   
 —   
 —   
 1,289    1,255,301    1,256,590 
Land and construction . . . . . . . . . . .     
 955   
 —   
 3,706   
 4,661   
 135,852   
 140,513 
Home equity . . . . . . . . . . . . . . . . . .     
 —   
 —   
 142   
 142   
 118,983   
 119,125 
Multifamily  . . . . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 269,734   
 269,734 
Residential mortgages . . . . . . . . . . .    
 3,794   
 510   
 779   
 5,083   
 491,878   
 496,961 
Consumer and other . . . . . . . . . . . . . . .     
 —   
 —   
 —   
 —   
 20,919   
 20,919 
Total . . . . . . . . . . . . . . . . . . . . . . . .   $  12,726  $  2,540  $  5,891  $  21,157  $ 3,329,716  $ 3,350,873 
 
The following table presents the past due loans on nonaccrual and current loans on nonaccrual at the dates 
indicated: 
 
 
 
 
 
 
 
 
 
 
December 31,   
December 31, 
 
     
2024 
 
2023 
 
 
(Dollars in thousands) 
Past due nonaccrual loans . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 7,068 
$ 
 6,100 
Current nonaccrual loans . . . . . . . . . . . . . . . . . . . . . . . . .    
 110 
 
 718 
Total nonaccrual loans . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 7,178 
$ 
 6,818 
 
Management’s classification of a loan as “nonaccrual” is an indication that there is reasonable doubt as to the full 
recovery of principal or interest on the loan. At that point, the Company stops accruing interest income, and reverses any 
uncollected interest that had been accrued as income. The Company resumes recognizing interest income only as cash 
interest payments are received and it has been determined the collection of all outstanding principal is not in doubt. The 
loans may or may not be collateralized, and collection efforts are pursued. Loans may be restructured by management 
when a borrower has experienced some change in financial status, causing an inability to meet the original repayment 
terms and where the Company believes the borrower will eventually overcome those circumstances and make full 
restitution. Foreclosed assets consist of properties and other assets acquired by foreclosure or similar means that 
management is offering or will offer for sale. 
 
There were no foreclosed assets on the balance sheet at December 31, 2024 or December 31, 2023.  There were 
no CRE loans in NPAs as of December 31, 2024 or December 31, 2023. There were no Shared National Credits or 
material purchased participations included in NPAs or total loans at December 31, 2024 or December 31, 2023. 
 
64
 
Heritage Commerce Corp • 2024 Annual Report

 
The following table summarizes the Company’s nonperforming assets at the dates indicated: 
 
 
December 31,  
 
 
 
2024 
     
2023 
 
 
 
(Dollars in thousands) 
Nonaccrual loans — held-for-investment . . . . . . . . . . . . . . . . . .   $ 
 7,178  
$ 
 6,818  
Loans 90 days past due and still accruing . . . . . . . . . . . . . . . . . .     
 489  
  
 889  
Total nonperforming loans . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 7,667  
  
 7,707  
Foreclosed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 —  
  
 —  
Total nonperforming assets . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 7,667  
$ 
 7,707  
 
  
 
 
 
Nonperforming assets as a percentage of loans 
  
 
 
 
    plus foreclosed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 0.22 %   
 0.23 % 
Nonperforming assets as a percentage of total assets . . . . . . . . .     
 0.14 %    
 0.15 % 
 
The following table presents the amortized cost basis of nonperforming loans and loans past due over 90 days 
and still accruing at the dates indicated: 
 
 
December 31, 2024 
 
 
Nonaccrual  
Nonaccrual 
 
Loans  
 
 
 
 
with no Special 
with Special  over 90 Days 
 
 
 
 
Allowance for  
Allowance for  
Past Due  
 
 
 
 
Credit 
 
Credit 
 
 and Still  
 
 
     
Losses 
     
Losses 
 
Accruing      
Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 313  $ 
 701 
 $ 
 489  $  1,503 
Real estate: 
   
   
 
   
 
CRE - Owner Occupied . . . . . . . . . . . . . . . .    
 —   
 — 
 
 —   
 — 
CRE - Non-Owner Occupied . . . . . . . . . . . .    
 —   
 — 
 
 —   
 — 
Land and construction . . . . . . . . . . . . . . . . . .    
 5,874   
 — 
 
 —   
 5,874 
Home equity . . . . . . . . . . . . . . . . . . . . . . . . .    
 77   
 — 
 
 —   
 77 
Consumer and other . . . . . . . . . . . . . . . . . . .    
 —   
 — 
 
 —   
 — 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 6,264  $ 
 914 
 $ 
 489  $  7,667 
 
 
 
December 31, 2023 
 
 
Nonaccrual  
Nonaccrual 
 
Loans  
 
 
 
 
with no Special 
with Special  over 90 Days 
 
 
 
 
Allowance for  
Allowance for  
Past Due  
 
 
 
 
Credit 
 
Credit 
 
 and Still  
 
 
     
Losses 
     
Losses 
 
Accruing      
Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 946  $ 
 290 
$ 
 889  $  2,125 
Real estate: 
   
   
 
   
CRE - Owner Occupied . . . . . . . . . . . . . . . .    
 —   
 — 
 
 —   
 — 
CRE - Non-Owner Occupied . . . . . . . . . . . .    
 —   
 — 
 
 —   
 — 
Land and construction . . . . . . . . . . . . . . . . . .    
 4,661   
 — 
 
 —   
 4,661 
Home equity . . . . . . . . . . . . . . . . . . . . . . . . .    
 142   
 — 
 
 —   
 142 
Residential mortgages . . . . . . . . . . . . . . . . . .    
 779   
 — 
 
 —   
 779 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 6,528  $ 
 290 
$ 
 889  $  7,707 
 
Loans with a well-defined weakness, which are characterized by the distinct possibility that the Company will 
sustain a loss if the deficiencies are not corrected, are categorized as “classified.” Classified loans include all loans 
considered as substandard, substandard-nonaccrual, and doubtful, and may result from problems specific to a borrower’s 
business or from economic downturns that affect the borrower’s ability to repay or that cause a decline in the value of the 
underlying collateral (particularly real estate). Loans held for sale are carried at the lower of cost or estimated fair value, 
and are not allocated an allowance for credit losses. 
 
 
65
Heritage Commerce Corp • 2024 Annual Report

 
The amortized cost basis of collateral-dependent commercial loans, collateralized by business assets, totaled 
$701,000 and $290,000 at December 31, 2024 and December 31, 2023, respectively. 
 
When management determines that foreclosures are probable, expected credit losses for collateral-dependent 
loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. For loans 
for which foreclosure is not probable, but for which repayment is expected to be provided substantially through the 
operation or sale of the collateral and the borrower is experiencing financial difficulty, management has elected the 
practical expedient under ASC 326 to estimate expected credit losses based on the fair value of collateral, adjusted for 
selling costs as appropriate. The class of loan represents the primary collateral type associated with the loan. Significant 
quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality 
indicators like appraisal value. 
 
Classified loans increased to $41.7 million, or 0.74% of total assets, at December 31, 2024, compared to 
$31.8 million, or 0.61% of total assets at December 31, 2023. The increase in classified assets at December 31, 2024 was 
primarily the result of one downgraded owner occupied CRE credit, and a number of residential related loans. The loans 
are well-collateralized and we do not anticipate to incur losses as a result of the downgrades of these loans. 
 
In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the 
probability that the borrower will be in payment default on any of its debt in the foreseeable future without the 
modification. This evaluation is performed in accordance with the Company’s underwriting policy. 
 
The ACLL is calculated by using the CECL methodology. The ACLL estimation process involves procedures to 
appropriately consider the unique characteristics of loan portfolio segments. These segments are further disaggregated into 
loan classes, the level at which credit risk is monitored. When computing the level of expected credit losses, credit loss 
assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status, and other 
credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the 
future. Determining the appropriateness of the allowance is complex and requires judgment by management about the 
effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio in light of the 
factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those 
future periods. 
 
The allowance level is influenced by loan volumes, loan risk rating migration or delinquency status, changes in 
historical loss experience, and other conditions influencing loss expectations, such as reasonable and supportable forecasts 
of economic conditions. The methodology for estimating the amount of expected credit losses reported in the allowance 
for credit losses has two basic components: first, an asset-specific component involving individual loans that do not share 
risk characteristics with other loans and the measurement of expected credit losses for such individual loans; and second, 
a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics. 
Descriptions of the Company’s loan portfolio segments are included in Note 1 “Summary of Significant Accounting 
Policies – Allowance for Credit Losses on Loans” in this Form 10-K. 
 
Loans are charged-off against the allowance when management believes the uncollectibility of a loan balance is 
confirmed. Subsequent recoveries, if any, are credited to the allowance for credit losses on loans.  
 
Allocation of Allowance for Credit Losses on Loans  
As a result of the matters mentioned above, changes in the financial condition of individual borrowers, economic 
conditions, historical loss experience and the condition of the various markets in which collateral may be sold may all 
affect the required level of the allowance for credit losses on loans and the associated provision for credit losses on loans. 
 
On an ongoing basis, we have engaged an outside firm to perform independent credit reviews of our loan portfolio 
on a sample basis, subject to review by the Federal Reserve Board and the California Department of Financial Protection 
and Innovation. Based on information currently available, management believes that the allowance for credit losses on 
loans is adequate. However, the loan portfolio can be adversely affected if economic conditions in general, and the real 
estate market in the San Francisco Bay Area market in particular, were to weaken further. Also, any weakness of a 
prolonged nature in the technology industry would have a negative impact on the local market. The effect of such events, 
although uncertain at this time, could result in an increase in the level of nonperforming loans and increased loan losses, 
which could adversely affect the Company’s future growth and profitability. No assurance of the ultimate level of credit 
66
 
Heritage Commerce Corp • 2024 Annual Report

 
losses can be given with any certainty.  
 
Changes in the allowance for credit losses on loans were as follows for the periods indicated: 
 
 
     
2024 
     
2023 
     
2022 
     
2021 
     
2020 
 
 
(Dollars in thousands) 
Beginning of year balance . . . . . . . . . . . . . . . . . . . . . .  
$  47,958  
$  47,512  
$  43,290  
$  44,400  
$  23,285 
Charge-offs: 
 
  
   
  
   
  
   
  
   
  
  
Commercial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
   (1,305) 
  
 (750) 
  
 (434) 
 
 (520) 
 
 (1,776)
Real estate: 
 
  
   
  
   
  
 
 
 
 
CRE - owner occupied . . . . . . . . . . . . . . . . . . . . . .  
  
 —  
  
 —  
  
 —  
 
 —  
 
 — 
CRE - non-owner occupied . . . . . . . . . . . . . . . . . .  
 
 —  
 
 —  
 
 —  
 
 —  
 
 — 
   Home equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 —  
  
 (246) 
  
 —  
 
 —  
 
 — 
Consumer and other . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 (299) 
  
 (15) 
  
 —  
 
 —  
 
 (104)
Total charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . .  
   (1,604) 
   (1,011) 
  
 (434) 
  
 (520) 
   (1,880)
 
 
 
 
 
 
 
 
 
 
 
Recoveries: 
 
  
   
  
   
  
   
  
   
  
  
Commercial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 336  
  
 346  
  
 427  
 
 1,354  
 
 998 
Real estate: 
 
  
   
  
   
  
 
 
 
 
CRE - owner occupied . . . . . . . . . . . . . . . . . . . . . .  
 
 27  
 
 11  
 
 15  
 
 16  
 
 1 
CRE - non-owner occupied . . . . . . . . . . . . . . . . . .  
  
 —  
  
 —  
  
 —  
 
 —  
 
 — 
   Land and construction . . . . . . . . . . . . . . . . . . . . . .  
  
 —  
 
 —  
 
 —  
 
 884  
 
 70 
   Home equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 97  
 
 351  
 
 105  
 
 93  
 
 93 
Consumer and other . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 —  
 
 —  
 
 3,343  
 
 197  
 
 30 
Total recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 460  
  
 708  
  
 3,890  
  
 2,544  
  
 1,192 
Net (charge-offs) recoveries . . . . . . . . . . . . . . . .  
   (1,144) 
 (303) 
 
 3,456  
  
 2,024  
 
 (688)
Impact of adopting Topic 326 . . . . . . . . . . . . . . . . . . .  
 
 —  
 —  
 
 —  
 
 —  
 8,570 
Provision for (recapture of) credit losses on loans . . .  
  
 2,139  
  
 749  
  
 766  
   (3,134) 
   13,233 
End of year balance . . . . . . . . . . . . . . . . . . . . . . . . .  
$  48,953  
$  47,958  
$  47,512  
$  43,290  
$  44,400 
 
 
 
Year Ended December 31, 2024 
 
 
 
 
 
CRE 
 
CRE 
  
 
  
 
  
 
  
 
  
 
  
 
 
   
 
Owner  Non-owner 
Land & 
 
Home  
Multi-  Residential Consumer   
 
    Commercial    Occupied 
Occupied     Construction 
Equity  
Family  Mortgages  and Other 
Total 
 
 
(Dollars in thousands) 
Beginning of period balance . . . . . . .   $ 
5,853  
$ 5,121  $ 
25,323  
$ 
2,352  $ 
644  $ 5,053  $ 
3,425  $ 
187  $ 
47,958  
Charge-offs . . . . . . . . . . . . . . . . . . .  
 
(1,305)  
 —   
 —   
 —   
 —   
 —   
 —   
 (299)
 
(1,604)
Recoveries . . . . . . . . . . . . . . . . . . .  
 
336  
 
27   
 — 
 
 — 
97  
 —   
 — 
 —   
460  
Net (charge-offs) recoveries  . . . . . .  
(969) 
27  
 —  
 —  
97  
 —   
 —  
 (299) 
(1,144)
Provision for (recapture of) 
credit losses on loans . . . . . . . . . .    
1,176  
 
77   
1,456  
 
(952)  
57   
(318)  
193   
450   
2,139  
End of period balance . . . . . . . .  
$ 
6,060  
$ 5,225  $ 
26,779  
$ 
1,400  $ 
798  $ 4,735  $ 
3,618  $ 
338  $ 
48,953  
Percent of ACLL to Total ACLL  
at end of period . . . . . . . . . . . . . .    
12%   
11%   
55%   
3%   
1%   
10%   
7%   
1%   
100% 
 
 
67
Heritage Commerce Corp • 2024 Annual Report

 
 
 
Year Ended December 31, 2023 
 
 
 
 
 
CRE 
 
CRE 
  
 
   
   
   
   
   
 
   
 
Owner  Non-owner  
Land & 
 
Home  
Multi-  Residential Consumer   
 
    Commercial    Occupied Occupied     Construction 
Equity  
Family  Mortgages  and Other 
Total 
 
 
(Dollars in thousands) 
Beginning of period balance . . . . . . .   $ 
6,617  
$ 5,751  $ 
22,135  
$ 
2,941  $ 
666  $ 3,366  $ 
5,907  $ 
129  $ 
47,512  
Charge-offs . . . . . . . . . . . . . . . . . . .    
(750)  
 —   
 —   
 —   
 (246)  
 —   
 —   
 (15)
 
(1,011)
Recoveries . . . . . . . . . . . . . . . . . . .    
346  
 
11  
 — 
 — 
 
351   
 —   
 — 
 
0   
708  
Net (charge-offs) recoveries  . . . . . .  
(404) 
11  
 —  
 —  
105  
 —   
 —  
(15) 
(303)
Provision for (recapture of) 
credit losses on loans . . . . . . . . . .    
(360)  
(641)  
3,188  
 
(589)  
(127)  
1,687   
(2,482)  
73   
749  
End of period balance . . . . . . . .  
$ 
5,853  
$ 5,121  $ 
25,323  
$ 
2,352  $ 
644  $ 5,053  $ 
3,425  $ 
187  $ 
47,958  
Percent of ACLL to Total ACLL  
at end of period . . . . . . . . . . . . . .    
12%   
11%   
53%   
5%   
1%   
11%   
7%   
0%   
100% 
 
The increase in the allowance for credit losses on loans of $995,000 for the year ended December 31, 2024, was 
primarily attributed to a net increase of $632,000 in specific reserves for individually evaluated loans and net increase 
of $363,000 in the reserve for pooled loans compared to December 31, 2023. The increase in specific reserves was the 
result of reserve additions to nonaccrual loans that were undercollateralized and the increase in the pooled loan reserve 
was primarily driven by an increase in the loan portfolio. 
The following table provides a summary of the allocation of the allowance for credit losses on loans by class at 
the dates indicated. The allocation presented should not be interpreted as an indication that charges to the allowance for 
credit losses on loans will be incurred in these amounts or proportions, or that the portion of the allowance allocated to 
each category represents the total amount available for charge-offs that may occur within these classes. 
 
 
December 31,  
 
 
 
2024 
 
2023 
 
2022 
 
2021 
 
2020 
 
 
 
 
 
Percent  
 
 
Percent  
 
 
Percent  
 
 Percent  
 
 Percent   
 
 
 
 of Loans  
 
 of Loans  
 
 of Loans  
 
 of Loans 
 
 of Loans  
 
 
 
 
in each  
 
 
in each  
 
 
in each  
 
 in each  
 
 in each   
 
 
 
 category  
 
 category  
 
 category  
 
 category 
 
 category  
 
 
 
 
to total  
 
 
to total  
 
 
to total  
 
 to total  
 
 to total   
 
   Allowance    
loans 
   
Allowance    
loans 
   
Allowance    
loans 
   Allowance   loans    Allowance   loans   
 
 
(Dollars in thousands) 
  
Commercial . . . . . . . . . . . . . . .   $ 
 6,060   
 15 %   $
 5,853   
 14 %   $
 6,617   
 16 %   $  8,414   
 22 %   $  11,587   
 32 % 
Real estate: 
   
  
 
  
  
 
   
  
 
  
  
 
  
  
 
CRE - owner occupied . . . . .     
 5,225   
 17 %     
 5,121   
 17 %     
 5,751   
 19 %    
 7,954   
 19 %    
 8,560  
 21 % 
CRE - non-owner occupied . .     
 26,779   
 38 %     
 25,323   
 37 %     
 22,135   
 32 %      17,125   
 29 %      16,416   
 27 % 
Land and construction . . . . .     
 1,400   
 4 %     
 2,352   
 4 %     
 2,941   
 5 %     
 1,831   
 5 %     
 2,509   
 6 % 
Home equity . . . . . . . . . . . .    
 798  
 4 %    
 644  
 4 %    
 666  
 4 %    
 864  
 4 %    
 1,297  
 4 % 
Multifamily  . . . . . . . . . . . .     
 4,735   
 8 %     
 5,053   
 8 %     
 3,366   
 7 %     
 2,796   
 7 %     
 2,804   
 6 % 
Residential mortgages . . . . .    
 3,618  
 14 %    
 3,425  
 15 %    
 5,907  
 16 %    
 4,132  
 13 %    
 943  
 3 % 
Consumer and other . . . . . . . . . .     
 338   
<1 %     
 187   
 1 %     
 129   
 1 %     
 174   
 1 %     
 284   
 1 % 
Total . . . . . . . . . . . . . . . . .   $ 
 48,953   
 100 %   $ 
 47,958   
 100 %   $ 
 47,512   
 100 %   $  43,290   
 100 %   $  44,400   
 100 % 
 
The ACLL totaled $49.0 million, or 1.40% of total loans, at December 31, 2024, compared to $48.0 million, or 
1.43% of total loans at December 31, 2023. The allowance for credit losses on loans to total nonperforming loans was 
638.49% at December 31, 2024, compared to 622.27% at December 31, 2023. The Company had net charge-offs of $1.1 
million, or 0.03% of average loans, for the year ended December 31, 2024, compared to 303,000, or 0.01% of average 
loans, for the year ended December 31, 2023,  and net recoveries of ($3.5) million, or (0.11)% of average loans, for the 
year ended December 31, 2022.  
 
 
68
 
Heritage Commerce Corp • 2024 Annual Report

 
The following table shows the drivers of change in ACLL for the year ended December 31, 2024: 
 
 
     (Dollars in thousands) 
ACLL at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 47,958 
Portfolio changes during the first quarter of 2024 . . . . . . . . . . . . . . . . . . . .    
 (234)
Qualitative and quantitative changes during the first  
quarter of 2024 including changes in economic forecasts . . . . . . . . . . . .    
 164 
ACLL at March 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 47,888 
Portfolio changes during the second quarter of 2024 . . . . . . . . . . . . . . . . .    
 616 
Qualitative and quantitative changes during the second  
quarter of 2024 including changes in economic forecasts . . . . . . . . . . . .    
 (550)
ACLL at June 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 47,954 
Portfolio changes during the third quarter of 2024 . . . . . . . . . . . . . . . . . . .    
 599 
Qualitative and quantitative changes during the third  
quarter of 2024 including changes in economic forecasts . . . . . . . . . . . .    
 (734)
ACLL at September 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 47,819 
Portfolio changes during the fourth quarter of 2024 . . . . . . . . . . . . . . . . . .    
 1,912 
Qualitative and quantitative changes during the fourth  
quarter of 2024 including changes in economic forecasts . . . . . . . . . . . .    
 (778)
ACLL at December 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 48,953 
 
Leases 
The Company recognizes the following for all leases, at the commencement date: (1) a lease liability, which is a 
lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use 
(“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the 
lease term. The Company’s lease agreements include options to renew at the Company’s discretion. The extensions are 
not reasonably certain to be exercised, therefore it was not considered in the calculation of the ROU asset and lease liability. 
Total assets and total liabilities included $30.6 million and $31.7 million at December 31, 2024 and December 31, 2023, 
respectively, as a result of recognizing right-of-use assets, which are included in other assets, and lease liabilities, included 
in other liabilities, related to non-cancelable operating lease agreements for office space. See Note 7 to the consolidated 
financial statements. 
Deposits 
The composition and cost of the Company’s deposit base are important components in analyzing the Company’s 
net interest margin and balance sheet liquidity characteristics, both of which are discussed in greater detail in other sections 
herein. The Company’s liquidity is impacted by the volatility of deposits from the propensity of that money to leave the 
institution for rate-related or other reasons. Deposits can be adversely affected if economic conditions weaken in 
California, and the Company’s market area in particular. Potentially, the most volatile deposits in a financial institution 
are jumbo certificates of deposit, meaning time deposits with balances that equal or exceed $250,000, as clients with 
balances of that magnitude are typically more rate-sensitive than clients with smaller balances. 
The following table summarizes the distribution of deposits and the percentage of distribution in each category 
of deposits at the dates indicated: 
 
 
December 31, 2024 
 
December 31, 2023 
 
 
     
Balance 
     % to Total    
Balance 
     % to Total    
 
 
(Dollars in thousands) 
Demand, noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 1,214,192   
 25 %  $ 
 1,292,486   
 30 %  
Demand, interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 936,587   
 19 %    
 914,066   
 21 %  
Savings and money market . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 1,325,923   
 28 %    
 1,087,518   
 25 %  
Time deposits — under $250 . . . . . . . . . . . . . . . . . . . . . . .   
  
 38,988   
 1 %    
 38,055   
 1 %  
Time deposits — $250 and over . . . . . . . . . . . . . . . . . . . . .   
  
 206,755   
 4 %    
 192,228   
 4 %  
ICS/CDARS — interest-bearing demand,  
 
 
 
 
 
 
 
   money market and time deposits . . . . . . . . . . . . . . . . . . . .   
  
 1,097,586   
 23 %    
 854,105   
 19 %  
   Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 4,820,031   
 100 %  $ 
 4,378,458   
 100 %  
 
The Company obtains deposits from a cross-section of the communities it serves. The Company’s business is not 
generally seasonal in nature. Public funds were less than 1% of deposits at December 31, 2024 and December 31, 2023. 
69
Heritage Commerce Corp • 2024 Annual Report

 
Total deposits increased $441.6 million, or 10% to $4.8 billion at December 31, 2024, compared to $4.4 billion 
at December 31, 2023. Migration of client deposits into insured interest-bearing accounts resulted in an increase in ICS/ 
CDARS deposits to $1.1 billion at December 31, 2024, compared to $854.1 million at December 31, 2023. Noninterest-
bearing demand deposits decreased ($78.3) million, or (6%), to $1.2 billion at December 31, 2024 from $1.3 billion at 
December 31, 2023.  
 
The Company had 25,427 deposit accounts at December 31, 2024, with an average balance of $190,000, 
compared to 24,737 deposit accounts, with an average balance of $177,000 at December 31, 2023. 
 
Deposits from the Bank’s top 100 client relationships, representing 22% of the total number of accounts, totaled 
$2.2 billion, representing 47% of total deposits, with an average account size of $400,000 at December 31, 2024. At 
December 31, 2023, deposits from the Bank’s top 100 client relationships, representing 22% of the total number of 
accounts, totaled $2.0 billion, representing 45% of total deposits, with an average account size of $368,000.  
 
The Bank’s uninsured deposits were approximately $2.2 billion, or 45% of total deposits, at December 31, 2024, 
compared to $2.0 billion, or 46% of total deposits, at December 31, 2023.  
 
At December 31, 2024, the $1.10 billion ICS/CDARS deposits were comprised of $433.4 million of interest-
bearing demand deposits, $345.5 million of money market accounts and $318.7 million of time deposits. At December 31, 
2023, the $854.1 million ICS/CDARS deposits were comprised of $425.0 million of interest-bearing demand deposits, 
$189.9 million of money market accounts and $239.2 million of time deposits. 
The following table indicates the contractual maturity schedule of the Company’s uninsured time deposits in 
excess of $250,000 at December 31, 2024: 
 
     
Balance 
     % of Total   
 
 
(Dollars in thousands) 
  
Three months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 50,918   
 34 % 
Over three months through six months . . . . . . . . . . . . . . . . . . . . .     
 38,286   
 26 % 
Over six months through twelve months . . . . . . . . . . . . . . . . . . . .     
 33,761   
 23 % 
Over twelve months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 24,540   
 17 % 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 147,505   
 100 % 
 
The Company focuses primarily on providing and servicing business deposit accounts that are frequently over 
$250,000 in average balance per account. As a result, certain types of business clients that the Company serves typically 
carry average deposits in excess of $250,000. The account activity for some account types and client types necessitates 
appropriate liquidity management practices by the Company to ensure its ability to fund deposit withdrawals. 
The contractual maturity of total deposits at December 31, 2024, are as follows: 
 
 
Less Than  
One to 
 
Three to  
After 
  
 
 
     
One Year 
    Three Years    Five Years     Five Years     
Total 
 
 
(Dollars in thousands) 
Deposits (1) . . . . . . . . . . . . . . . .   $ 4,762,847  $  56,880  $ 
 22  $ 
 282  $ 4,820,031 
 
(1) 
Deposits with indeterminate maturities, such as demand, savings and money market accounts, are reflected 
as obligations due in less than one year. 
 
 
 
70
 
Heritage Commerce Corp • 2024 Annual Report

 
Return on Equity and Assets 
The following table indicates the ratios for return on average assets and average equity, and average equity to 
average assets for the periods indicated: 
 
 
Year Ended  
 
 
 
December 31,  
 
 
     
2024 
     
2023 
  
2022 
  
Return on average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 0.76 % 
 1.22 % 
 1.23 %
Return on average tangible assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 0.78 % 
 1.26 % 
 1.27 %
Return on average equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 5.97 % 
 9.88 % 
 10.95 %
Return on average tangible common equity (1) . . . . . . . . . . . . . . . . . . . . . . . .    
 8.05 % 
 13.57 % 
 15.57 %
Average equity to average assets ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 12.71 % 
 12.62 % 
 11.25 %
 
(1) This is a non-GAAP financial measure. 
 
Liquidity, Asset/Liability Management and Available Lines of Credit 
The Company’s liquidity position supports its ability to maintain cash flows sufficient to fund operations, meet 
all of its financial obligations and commitments, and accommodate unexpected sudden changes in balances of loans and 
demand for deposits in a timely manner. At various times the Company requires funds to meet short term cash requirements 
brought about by loan growth or deposit outflows, the purchase of assets, or repayment of liabilities. An integral part of 
the Company’s ability to manage its liquidity position appropriately is derived from its large base of core deposits which 
are generated by offering traditional banking services in its service area and which have historically been a stable source 
of funds.  
 
The Company manages liquidity to be able to meet unexpected sudden changes in levels of its assets or deposit 
liabilities without maintaining excessive amounts of balance sheet liquidity. In order to meet short term liquidity needs the 
Company utilizes overnight Federal funds purchase arrangements and other borrowing arrangements with correspondent 
banks, solicits brokered deposits if cost effective deposits are not available from local sources, and maintains collateralized 
lines of credit with the FHLB and FRB.  
 
The Company monitors its liquidity position and funding strategies on a daily basis, but recognizes that 
unexpected events, economic or market conditions, earnings issues or situations beyond its control could cause either a 
short or long term liquidity crisis. The Company has a detailed Contingency Funding Plan that will be used in the event of 
a “Liquidity Event” defined as a reduction in liquidity such that a normal deposit and liquidity environment cannot meet 
funding needs. In addition to other tools used to monitor liquidity and funding, the Company prepares liquidity stress 
scenarios that include lower-probability, higher impact scenarios, with various levels of severity. The liquidity stress 
scenarios incorporate the impact of moderate risk and higher risk situations, at least on a quarterly basis, or more often as 
circumstances require. The liquidity stress scenarios include a dashboard showing key liquidity ratios compared to 
established target limits and estimated cash flows for the next several quarters.  
 
One of the measures of liquidity is the loan to deposit ratio. The loan to deposit ratio was 72.45% at December 31, 
2024, compared to 76.52% at December 31, 2023. 
The Company’s total liquidity and borrowing capacity at December 31, 2024 was $3.3 billion, all of which 
remained available. The available liquidity and borrowing capacity was 69% of the Company’s total deposits and 
approximately 155% of the Bank’s estimated uninsured deposits at December 31, 2024.  
HBC has off-balance sheet liquidity in the form of Federal funds purchase arrangements with correspondent 
banks, and lines of credit from the FHLB and FRB. HBC maintains a collateralized line of credit with the FHLB of San 
Francisco. Under this line, HBC can borrow from the FHLB on a short-term (typically overnight) or long-term (over one 
year) basis. HBC can also borrow from the FRB discount window. In addition, the Company has a line of credit with a 
correspondent bank. The following table shows the collateral value of loans and securities pledged for the lines of credit 
71
Heritage Commerce Corp • 2024 Annual Report

 
(if collateralized), total available lines of credit, the amounts outstanding, and the remaining available at the dates 
indicated:  
 
 
December 31, 2024 
 
     
Collateral 
     
Total 
 
 
 
Remaining 
 
 
Value 
 
Available 
 
Outstanding 
 
Available 
 
 
(Dollars in thousands) 
FHLB collateralized borrowing capacity . . . . . . . . . . . . .  $  1,233,768  $ 
 815,760  $ 
 — 
$ 
 815,760 
FRB discount window collateralized line of credit . . . . .   
 1,755,347   
 1,383,149   
 — 
 
 1,383,149 
Federal funds purchase arrangements . . . . . . . . . . . . . . .   
N/A   
 90,000   
 — 
 
 90,000 
Holding company line of credit . . . . . . . . . . . . . . . . . . . .    
N/A    
 25,000   
 — 
  
 25,000 
 
 $  2,989,115  $  2,313,909  $ 
 — 
$  2,313,909 
 
 
 
December 31, 2023 
 
     
Collateral 
     
Total 
 
 
 
Remaining 
 
 
Value 
 
Available 
 
Outstanding 
 
Available 
 
 
(Dollars in thousands) 
FHLB collateralized borrowing capacity . . . . . . . . . . . . .  $  1,600,371  $  1,100,931  $ 
 —  $  1,100,931 
FRB discount window collateralized line of credit . . . . .   
 1,658,642   
 1,235,573   
 —   
 1,235,573 
Federal funds purchase arrangements . . . . . . . . . . . . . . .   
N/A   
 90,000   
 — 
 
 90,000 
Holding company line of credit . . . . . . . . . . . . . . . . . . . .    
N/A    
 20,000   
 — 
  
 20,000 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  3,259,013  $  2,446,504  $ 
 — 
$  2,446,504 
 
HBC may also utilize securities sold under repurchase agreements to manage our liquidity position. There were 
no securities sold under agreements to repurchase at December 31, 2024 and 20223  
Capital Resources 
The Company uses a variety of measures to evaluate capital adequacy. Management reviews various capital 
measurements on a regular basis and takes appropriate action to ensure that such measurements are within established 
internal and external guidelines. The external guidelines, which are issued by the Federal Reserve and the FDIC, establish 
a risk-adjusted ratio relating capital to different categories of assets and off-balance sheet exposures.  
On July 25, 2024, the Company announced that its Board of Directors adopted a share repurchase program (the 
“Repurchase Program”) under which the Company is authorized to repurchase up to $15.0 million of the Company’s 
shares of its issued and outstanding common stock. Unless otherwise suspended or terminated, the Repurchase Program 
expires on July 31, 2025. The Company did not repurchase any of its common stock during the year ended December 31, 
2024. 
On May 11, 2022, the Company completed a private placement offering of $40.0 million aggregate principal 
amount of its 5.00% fixed-to-floating rate subordinated notes due May 15, 2032 (“Sub Debt due 2032”). The Company 
used the net proceeds of the Sub Debt due 2032 for general corporate purposes, including the repayment on June 1, 2022 
of the Company’s $40.0 million aggregate principal amount of 5.25% fixed-to-floating rate subordinated notes due June 1, 
2027. The Sub Debt due 2032, net of unamortized issuance costs of $347,000, totaled $39.7 million at December 31, 2024, 
and qualifies as Tier 2 capital for the Company under the guidelines established by the Federal Reserve Bank. 
 
 
72
 
Heritage Commerce Corp • 2024 Annual Report

 
The following table summarizes risk based capital, risk weighted assets, and risk based capital ratios of the 
consolidated Company under the Basel III requirements at the dates indicated: 
 
 December 31,  
December 31,  December 31,  
 
    
2024 
     
2023 
 
2022 
 
 
 
(Dollars in thousands) 
Capital components: 
  
 
  
 
 
 
Common Equity Tier 1 capital . . . . . . . . . . . . . . . .   $ 
 524,204  
$ 
 511,799 
$ 
 475,609  
Additional Tier 1 capital . . . . . . . . . . . . . . . . . . . .    
 —  
 
 — 
 
 —  
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 524,204  
 
 511,799 
 
 475,609  
Tier 2 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 86,439  
 
 82,572 
 
 79,201  
Total Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 610,643  
$ 
 594,371 
$ 
 554,810  
 
  
 
 
 
 
Risk-weighted assets . . . . . . . . . . . . . . . . . . . . . . . . . .   $  3,917,931  
$  3,838,667 
$  3,747,246  
Average assets for capital purposes . . . . . . . . . . . . . . .   $  5,436,274  
$  5,100,600 
$  5,196,294  
 
  
 
 
 
 
 
Capital ratios: 
  
   
 
   
 
   
Total Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 15.6 %   
 15.5 %   
 14.8 %
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 13.4 %   
 13.3 %   
 12.7 %
Common equity Tier 1 Capital . . . . . . . . . . . . . . . .    
 13.4 %   
 13.3 %   
 12.7 %
Tier 1 Leverage (1) . . . . . . . . . . . . . . . . . . . . . . . . . .    
 9.6 %   
 10.0 %   
 9.2 %
 
(1) Tier 1 capital divided by quarterly average assets (excluding intangible assets and disallowed deferred tax assets). 
 
The following table summarizes risk-based capital, risk-weighted assets, and risk-based capital ratios of HBC 
under the Basel III requirements at the dates indicated: 
 
 December 31,  
December 31,  
December 31,  
 
     
2024 
     
2023 
     
2022 
  
 
 
(Dollars in thousands) 
 
Capital components: 
 
 
 
 
 
 
 
Common Equity Tier 1 capital . . . . . . . . . . . . . . . .   
$ 
 543,872  
$ 
 529,836  
$ 
 492,725  
Additional Tier 1 capital . . . . . . . . . . . . . . . . . . . .   
 
 —  
 
 —  
 
 —  
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 543,872  
 
 529,836  
 
 492,725  
Tier 2 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 46,786  
 
 43,071  
 
 39,851  
Total Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 590,658  
$ 
 572,907  
$ 
 532,576  
 
 
 
 
 
 
 
 
Risk-weighted assets . . . . . . . . . . . . . . . . . . . . . . . . . .   
$  3,914,648  
$  3,835,419  
$  3,745,725  
Average assets for capital purposes . . . . . . . . . . . . . . .   
$  5,432,806  
$  5,097,382  
$  5,194,802  
 
 
 
 
 
 
 
 
Capital ratios: 
 
 
 
 
 
 
 
Total Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 15.1 %   
 14.9 %   
 14.2 %
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 13.9 %   
 13.8 %   
 13.2 %
Common Equity Tier 1 Capital . . . . . . . . . . . . . . . .   
 
 13.9 %   
 13.8 %   
 13.2 %
Tier 1 Leverage (1) . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 10.0 %   
 10.4 %   
 9.5 %
 
(1) Tier 1 capital divided by quarterly average assets (excluding intangible assets and disallowed deferred tax assets). 
 
 
 
73
Heritage Commerce Corp • 2024 Annual Report

 
The following table presents the applicable well-capitalized regulatory guidelines and the standards for minimum 
capital adequacy requirements under Basel III and the regulatory guidelines for a “well-capitalized” financial institution 
under PCA: 
 
 
 
 
Well-capitalized  
 
 
Basel III 
 
Financial 
 
 
 
Minimum 
 
Institution PCA 
 
 
 
Regulatory 
 
Regulatory 
 
 
     Requirements (1)      
Guidelines 
 
Capital ratios: 
 
 
 
Total Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 10.5 %   
 10.0 % 
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 8.5 %   
 8.0 % 
Common equity Tier 1 Capital . . . . . . . . . . . . . . . . .   
 7.0 %   
 6.5 % 
Tier 1 Leverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 4.0 %   
 5.0 % 
 
(1) Includes 2.5% capital conservation buffer, except the leverage ratio.  
 
The Basel III capital rules introduced a “capital conservation buffer,” for banking organizations to maintain a 
common equity Tier 1 ratio more than 2.5% above these minimum risk-weighted asset ratios. The capital conservation 
buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity 
Tier 1 to risk-weighted assets above the minimum but below the capital conservation buffer will face constraints on 
dividends, equity repurchases and compensation based on the amount of the shortfall.  
 
At December 31, 2024, the Company’s consolidated capital ratio exceeded regulatory guidelines and HBC’s 
capital ratios exceed the highest regulatory capital requirement of “well-capitalized” under Basel III prompt corrective 
action provisions. Quantitative measures established by regulation to help ensure capital adequacy require the Company 
and HBC to maintain minimum amounts and ratios of total risk-based capital, Tier 1 capital, and common equity Tier 1 
(as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to average assets (as defined). 
Management believes that, as of December 31, 2024, December 31, 2023, and December 31, 2022, the Company and HBC 
met all capital adequacy guidelines to which they were subject. There are no conditions or events since December 31, 
2024, that management believes have changed the categorization of the Company or HBC as well-capitalized. 
At December 31, 2024, the Company had total shareholders’ equity of $689.7 million, compared to $672.9 
million at December 31, 2023. At December 31, 2024, total shareholders’ equity included $510.1 million in common 
stock, $187.7 million in retained earnings, and ($8.1) million of accumulated other comprehensive loss. The book value 
per share was $11.24 at December 31, 2024, compared to $11.00 at December 31, 2023. Tangible common equity was 
$515.7 million at December 31, 2024, compared to $496.6 million at December 31, 2023. The tangible book value per 
share was $8.41 at December 31, 2024, compared to $8.12 at December 31, 2023. Tangible common equity and tangible 
book value per share are non-GAAP financial measures. 
The following table reflects the components of accumulated other comprehensive loss, net of taxes, at the dates 
indicated: 
 
     
December 31,  
Accumulated Other Comprehensive Loss 
 
2024 
 
2023 
 
 
(Dollars in thousands) 
Unrealized loss on securities available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 (3,656)
$ 
 (7,116)
Split dollar insurance contracts liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 (2,339)
  
 (2,809)
Supplemental executive retirement plan liability . . . . . . . . . . . . . . . . . . . . . . . .     
 (2,173)
  
 (2,892)
Unrealized gain on interest-only strip from SBA loans . . . . . . . . . . . . . . . . . . .     
 63 
  
 87 
Total accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 (8,105)
$  (12,730)
 
Market Risk 
Market risk is the risk of loss of future earnings, fair values, or future cash flows that may result from changes in 
the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, 
foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive 
74
 
Heritage Commerce Corp • 2024 Annual Report

 
instruments. Market risk is attributed to all market risk sensitive financial instruments, including securities, loans, deposits 
and borrowings, as well as the Company’s role as a financial intermediary in client-related transactions. The objective of 
market risk management is to avoid excessive exposure of the Company’s earnings and equity to loss and to reduce the 
volatility inherent in certain financial instruments. 
Interest Rate Management 
The Company’s market risk exposure is primarily that of interest rate risk. Interest rate risk arises when the 
maturity or re-pricing periods and interest rated indices of the interest-earning assets and interest-bearing liabilities are 
different. It is the risk that changes in the level of market interest rates will result in disproportionate changes in the value 
of, and the net earnings generated from, the Company’s interest-earning assets and interest-bearing liabilities. Management 
has established policies and procedures to monitor and limit earnings and balance sheet exposure to changes in interest 
rates. The Company does not engage in the trading of financial instruments, nor does the Company have exposure to 
currency exchange rates. 
 
The principal objective of interest rate risk management (often referred to as “asset/liability management”) is to 
manage the financial components of the Company in a manner that will optimize the risk/reward equation for earnings and 
capital in relation to changing interest rates. Interest rate risk is the potential of economic losses due to future interest rate 
changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair market 
values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent 
risk while at the same time maximizing income. Management realizes certain risks are inherent, and that the goal is to 
identify and manage the risks. Management uses two methodologies to manage interest rate risk: (i) a standard GAP 
analysis; and (ii) an interest rate shock simulation model. 
 
The planning of asset and liability maturities is an integral part of the management of an institution’s net interest 
margin. To the extent maturities of assets and liabilities do not match in a changing interest rate environment, the net 
interest margin may change over time. Even with perfectly matched repricing of assets and liabilities, risks remain in the 
form of prepayment of loans or securities or in the form of delays in the adjustment of rates of interest applying to either 
earning assets with floating rates or to interest-bearing liabilities.  
 
Interest rate changes do not affect all categories of assets and liabilities equally or at the same time. Varying 
interest rate environments can create unexpected changes in prepayment levels of assets and liabilities, which may have a 
significant effect on the net interest margin and are not reflected in the interest sensitivity analysis table. Because of these 
factors, an interest sensitivity GAP report may not provide a complete assessment of the exposure to changes in interest 
rates. 
 
The Company uses modeling software for asset/liability management in order to simulate the effects of potential 
interest rate changes on the Company’s net interest margin, and to calculate the estimated fair values of the Company’s 
financial instruments under different interest rate scenarios. The program imports current balances, interest rates, maturity 
dates and repricing information for individual financial instruments, and incorporates assumptions on the characteristics 
of embedded options along with pricing and duration for new volumes to project the effects of a given interest rate change 
on the Company’s interest income and interest expense. Rate scenarios consisting of key rate and yield curve projections 
are run against the Company’s investment, loan, deposit and borrowed funds’ portfolios. These rate projections can be 
shocked (an immediate and parallel change in all base rates, up or down) and ramped (an incremental increase or decrease 
in rates over a specified time period), based on current trends and econometric models or stable economic conditions 
(unchanged from current actual levels). Critical assumptions in the Company’s interest rate risk model, like deposit betas, 
deposit rate change lags and decay rate assumptions, are reviewed and updated regularly to reflect current market 
conditions.  
 
 
 
75
Heritage Commerce Corp • 2024 Annual Report

 
The following tables set forth the estimated changes in the Company’s annual net interest income and economic 
value of equity (a non-GAAP financial measure) that would result from the designated instantaneous parallel shift in 
interest rates noted, and assuming a flat balance sheet with consistent product mix, as of December 31, 2024: 
 
 
 
Increase/(Decrease) in 
  
 
 
Estimated Net 
  
 
 
Interest Income (1) 
  
Change in Interest Rates 
     
Amount 
  
Percent 
  
(basis points) 
 
(Dollars in thousands) 
  
+400 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 27,272  
 14.0 % 
+300 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 20,340  
 10.5 % 
+200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 13,451  
 6.9 % 
+100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 6,590  
 3.4 % 
     0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
—   
—  
−100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
(8,368) 
 (4.3)% 
−200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
(19,659) 
 (10.1)% 
−300 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
(33,576) 
 (17.3)% 
−400 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
(54,794) 
 (28.2)% 
 
 
 
Increase/(Decrease) in 
  
 
 
Estimated Economic 
  
 
 
Value of Equity (1) 
  
Change in Interest Rates 
     
Amount 
  
Percent 
  
(basis points) 
 
(Dollars in thousands) 
  
+400 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 124,156   
 9.0 % 
+300 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 104,693   
 7.6 % 
+200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 78,580   
 5.7 % 
+100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 44,383   
 3.2 % 
     0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
—   
—  
−100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 (71,172)  
 (5.2)% 
−200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 (177,928)  
 (13.0)% 
−300 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 (314,451)  
 (22.9)% 
−400 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 (492,841)  
 (35.9)% 
 
(1) Computations of prospective effects of hypothetical interest rate changes are for illustrative purposes only, 
are based on numerous assumptions including relative levels of market interest rates, loan prepayments and 
deposit decay, and should not be relied upon as indicative of actual results. These projections are forward-
looking and should be considered in light of the “Cautionary Note Regarding Forward-Looking Statements” 
on page 3. Actual rates paid on deposits may differ from the hypothetical interest rates modeled due to 
competitive or market factors, which could affect any actual impact on net interest income. 
 
As with any method of gauging interest rate risk, there are certain shortcomings inherent to the methodology 
noted above. The model assumes interest rate changes are instantaneous parallel shifts in the yield curve. In reality, rate 
changes are rarely instantaneous. The use of the simplifying assumption that short-term and long-term rates change by the 
same degree may also misstate historic rate patterns, which rarely show parallel yield curve shifts. Further, the model 
assumes that certain assets and liabilities of similar maturity or period to repricing will react in the same way to changes 
in rates. In reality, certain types of financial instruments may react in advance of changes in market rates, while the reaction 
of other types of financial instruments may lag behind the change in general market rates. Additionally, the methodology 
noted above does not reflect the full impact of annual and lifetime restrictions on changes in rates for certain assets, such 
as adjustable rate loans. When interest rates change, actual loan prepayments and actual early withdrawals from certificates 
may deviate significantly from the assumptions used in the model. Finally, this methodology does not measure or reflect 
the impact that higher rates may have on adjustable-rate loan clients’ ability to service their debt. All of these factors are 
considered in monitoring the Company’s exposure to interest rate risk. 
76
 
Heritage Commerce Corp • 2024 Annual Report

 
Selected Financial Data 
The following table presents a summary of selected financial information that should be read in conjunction with 
the Company’s Consolidated Financial Statements and notes thereto following Item 15 — Exhibits and Financial 
Statement Schedules. 
SELECTED FINANCIAL DATA 
 
 
AT OR FOR THE YEAR ENDED DECEMBER 31, 
  
 
     
2024 
     
2023 
     
2022 
     
2021 
     
2020 
  
 
 
(Dollars in thousands, except per share data) 
  
INCOME STATEMENT DATA: 
 
 
   
 
   
 
   
 
   
 
   
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 242,699  
$ 
 234,298  
$ 
 188,828  
$ 
 153,256  
$ 
 150,471  
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 79,051  
  
 51,074  
  
 8,948  
  
 7,131  
  
 8,581  
Net interest income before provision for credit losses on loans . . . . . .   
  
 163,648  
  
 183,224  
  
 179,880  
  
 146,125  
  
 141,890  
Provision for (recapture of) credit losses on loans . . . . . . . . . . . . . . .   
  
 2,139  
  
 749  
  
 766  
  
 (3,134) 
  
 13,233  
Net interest income after provision for credit losses on loans . . . . . . .   
  
 161,509  
  
 182,475  
  
 179,114  
  
 149,259  
  
 128,657  
Noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 8,748  
  
 8,998  
  
 10,111  
  
 9,688  
  
 9,922  
Noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 113,583  
  
 101,054  
  
 94,859  
  
 93,077  
  
 89,511  
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 56,674  
  
 90,419  
  
 94,366  
  
 65,870  
  
 49,068  
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 16,146  
  
 25,976  
  
 27,811  
  
 18,170  
  
 13,769  
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 40,528  
$ 
 64,443  
$ 
 66,555  
$ 
 47,700  
$ 
 35,299  
 
 
 
 
 
 
 
 
 
 
 
 
PER COMMON SHARE DATA: 
 
  
   
  
   
  
   
  
   
  
   
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 0.66  
$ 
 1.06  
$ 
 1.10  
$ 
 0.79  
$ 
 0.59  
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 0.66  
$ 
 1.05  
$ 
 1.09  
$ 
 0.79  
$ 
 0.59  
Book value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 11.24  
$ 
 11.00  
$ 
 10.39  
$ 
 9.91  
$ 
 9.64  
Tangible book value per share (1) . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 8.41  
$ 
 8.12  
$ 
 7.46  
$ 
 6.91  
$ 
 6.57  
Dividend payout ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 78.61 %     
 49.25 %     
 47.32 %     
 65.56 %     
 88.04 %   
Weighted average number of shares outstanding — basic . . . . . . . . . .   
  
 61,270,730  
  
 61,038,857  
  
 60,602,962  
  
 60,133,821  
  
 59,478,343  
Weighted average number of shares outstanding — diluted . . . . . . . . .   
  
 61,527,372  
  
 61,311,318  
  
 61,090,290  
  
 60,689,062  
  
 60,169,139  
Common shares outstanding at period-end . . . . . . . . . . . . . . . . . . . .   
  
 61,348,095  
  
 61,146,835  
  
 60,852,723  
  
 60,339,837  
  
 59,917,457  
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE SHEET DATA: 
 
  
   
  
   
  
   
  
   
  
   
Securities (available-for sale and held-to-maturity) . . . . . . . . . . . . . .   
$ 
 846,290  
$ 
 1,093,201  
$ 
 1,204,586  
$ 
 760,649  
$ 
 533,163  
Total loans, net of deferred fees . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 3,491,937  
$ 
 3,350,378  
$ 
 3,298,550  
$ 
 3,087,326  
$ 
 2,619,261  
Allowance for credit losses on loans . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 (48,953) 
$ 
 (47,958) 
$ 
 (47,512) 
$ 
 (43,290) 
$ 
 (44,400) 
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 3,442,984  
$ 
 3,302,420  
$ 
 3,251,038  
$ 
 3,044,036  
$ 
 2,574,861  
Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 174,070  
$ 
 176,258  
$ 
 178,664  
$ 
 181,299  
$ 
 184,295  
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 5,645,006  
$ 
 5,194,095  
$ 
 5,157,580  
$ 
 5,499,409  
$ 
 4,634,114  
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 4,820,031  
$ 
 4,378,458  
$ 
 4,389,604  
$ 
 4,759,412  
$ 
 3,914,486  
Subordinated debt, net of issuance costs . . . . . . . . . . . . . . . . . . . . .   
$ 
 39,653  
$ 
 39,502  
$ 
 39,350  
$ 
 39,925  
$ 
 39,740  
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 689,727  
$ 
 672,901  
$ 
 632,456  
$ 
 598,028  
$ 
 577,889  
Tangible common equity (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 515,657  
$ 
 496,643  
$ 
 453,792  
$ 
 416,729  
$ 
 393,594  
 
 
 
 
 
 
 
 
 
 
 
 
SELECTED PERFORMANCE RATIOS: (2) 
 
  
   
  
   
  
   
  
   
  
   
Return on average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 0.76 %     
 1.21 %     
 1.23 %     
 0.92 %     
 0.80 %   
Return on average tangible assets (1) . . . . . . . . . . . . . . . . . . . . . . . .   
  
 0.78 %     
 1.26 %     
 1.27 %     
 0.96 %     
 0.83 %   
Return on average equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 5.97 %     
 9.88 %     
 10.95 %     
 8.15 %     
 6.12 %   
Return on average tangible common equity (1) . . . . . . . . . . . . . . . . .   
  
 8.05 %     
 13.57 %     
 15.57 %     
 11.86 %     
 9.04 %   
Net interest margin (FTE) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 3.28 %     
 3.70 %     
 3.57 %     
 3.05 %     
 3.50 %   
Efficiency ratio (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 65.88 %     
 52.57 %     
 49.93 %     
 59.74 %     
 58.96 %   
Average net loans as a percentage of average deposits (3) . . . . . . . . . . .   
  
 73.01 %     
 71.89 %     
 66.10 %     
 61.39 %     
 69.58 %   
Average total shareholders’ equity as a percentage 
 
 
 
 
 
 
 
 
 
 
 
   of average total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 12.71 %     
 12.29 %     
 11.25 %     
 11.33 %     
 13.00 %   
 
 
 
 
 
 
 
 
 
 
 
 
SELECTED CREDIT QUALITY DATA: (4) 
 
  
   
  
   
  
   
  
   
  
   
Net charge-offs (recoveries) to average loans . . . . . . . . . . . . . . . . . .   
  
 0.03 %     
 0.01 %     
 (0.11)%     
 (0.07)%     
 0.03 %   
Allowance for credit losses on loans to total loans . . . . . . . . . . . . . . .   
  
 1.40 %     
 1.43 %     
 1.44 %     
 1.40 %     
 1.70 %   
Nonperforming loans to total loans . . . . . . . . . . . . . . . . . . . . . . . .   
  
 0.22 %     
 0.23 %     
 0.07 %     
 0.12 %     
 0.30 %   
Nonperforming assets to total assets . . . . . . . . . . . . . . . . . . . . . . . .   
  
 0.14 %     
 0.15 %     
 0.05 %     
 0.07 %     
 0.17 %   
Nonperforming assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 7,667  
$ 
 7,707  
$ 
 2,425  
$ 
 3,738  
$ 
 7,869  
Classified assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 41,661  
$ 
 31,763  
$ 
 14,544  
$ 
 33,846  
$ 
 34,028  
 
 
 
 
 
 
 
 
 
 
 
 
HERITAGE COMMERCE CORP CAPITAL RATIOS: 
 
  
   
  
   
  
   
  
   
  
   
Tangible common equity to tangible assets (1) . . . . . . . . . . . . . . . . . .   
  
 9.43 %     
 9.90 %     
 9.11 %     
 7.84 %     
 8.85 %   
Total capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 15.6 %     
 15.5 %     
 14.8 %     
 14.4 %     
 16.5 %   
Tier 1 capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 13.4 %     
 13.3 %     
 12.7 %     
 12.3 %     
 14.0 %   
Common equity Tier 1 capital ratio . . . . . . . . . . . . . . . . . . . . . . . .   
  
 13.4 %     
 13.3 %     
 12.7 %     
 12.3 %     
 14.0 %   
Tier 1 leverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 9.6 %     
 10.0 %     
 9.2 %     
 7.9 %     
 9.1 %   
 
Notes: 
(1) 
This is a non-GAAP financial measure.  See “Reconciliation of Non-GAAP Financial Measures” below. 
(2) 
Average balances used in this table are based on daily averages. 
(3) 
Average loans net of the average allowance for credit losses on loans and exclude loans held-for-sale. 
(4) 
Average loans and total loans exclude loans held-for-sale. 
 
 
 
77
Heritage Commerce Corp • 2024 Annual Report

 
Quarterly Financial Data (Unaudited) 
The following table discloses the Company’s selected unaudited quarterly financial data for the periods indicated: 
 
 
Quarter Ended 
 
     12/31/2024      9/30/2024      6/30/2024      3/31/2024 
 
 
(Dollars in thousands, except per share amounts) 
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  64,633  $  61,438  $  59,077  $  57,551 
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      20,448     21,523     19,622     17,458 
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      44,185     39,915     39,455     40,093 
Provision for credit losses on loans . . . . . . . . . . . . . . . . . . . . . . . . . .     
 1,331    
 153    
 471    
 184 
Net interest income after provision for credit losses on loans . . . .      42,854     39,762     38,984     39,909 
Noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 2,185     2,240     2,276     2,047 
Noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      30,304     27,555     28,188     27,536 
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .      14,735     14,447     13,072     14,420 
Income tax expense  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 4,114     3,940     3,838     4,254 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  10,621  $  10,507  $  9,234  $  10,166 
Earnings per common share 
  
  
  
  
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 0.17  $ 
 0.17  $ 
 0.15  $ 
 0.17 
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 0.17  $ 
 0.17  $ 
 0.15  $ 
 0.17 
   
 
 
Quarter Ended  
 
     12/31/2023      9/30/2023      6/30/2023      3/31/2023 
 
 
(Dollars in thousands, except per share amounts) 
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  58,892  $  60,791  $  58,341  $  56,274 
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      16,591     15,419     12,048     7,016 
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      42,301     45,372     46,293     49,258 
Provision for (recapture of) credit losses on loans . . . . . . . . . . . . . . .     
 289    
 168    
 260    
 32 
Net interest income after provision for credit losses on loans . . . .      42,012     45,204     46,033     49,226 
Noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 1,942     2,216     2,074     2,766 
Noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      25,491     25,171     24,991     25,401 
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .      18,463     22,249     23,116     26,591 
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 5,135     6,454     6,713     7,674 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  13,328  $  15,795  $  16,403  $  18,917 
Earnings per common share 
  
  
  
  
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 0.22  $ 
 0.26  $ 
 0.27  $ 
 0.31 
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 0.22  $ 
 0.26  $ 
 0.27  $ 
 0.31 
 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 
The accounting and reporting policies of the Company conform to GAAP in the United States and prevailing 
practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management 
to evaluate and measure the Company’s performance. The Company believes these non-GAAP financial measures are 
common in the banking industry, and may enhance comparability for peer comparison purposes. These non-GAAP 
financial measures should be supplemental to primary GAAP financial measures and should not be read in isolation or 
relied upon as a substitute for primary GAAP financial measures.  
Management reviews yields on certain asset categories and the net interest margin of the Company on a FTE 
basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent 
before-tax basis using tax rates effective as of the end of the period. This measure ensures comparability of net interest 
income arising from both taxable and tax-exempt sources.  
 
 
78
 
Heritage Commerce Corp • 2024 Annual Report

 
The following table summarizes components of FTE net interest income of the Company for the periods 
indicated: 
 
 
December 31, 
 
 
    
2024 
 
2023 
 
2022 
 
2021 
 
2020 
 
 
 
(Dollars in thousands) 
 
Net interest income before provision for  
credit losses on loans (GAAP) . . . . . . . . . . . . . . . .  $  163,648 
$  183,224  
$  179,880  
$  146,125  
$  141,890  
Tax-equivalent adjustment on securities -  
exempt from Federal tax . . . . . . . . . . . . . . . . . . . . .    
 237 
 
 251  
 
 288  
 
 419  
 
 507  
Net interest income, FTE (non-GAAP) . . . . . . . .  $  163,885 
$  183,475  
$  180,168  
$  146,544  
 
 142,397  
 
   
 
  
 
  
 
  
 
  
 
Average balance of total interest earning assets . . . .  $ 4,999,363 
$ 4,955,018  
$ 5,051,552  
$ 4,805,630  
  4,071,805  
 
  
 
 
 
 
 
 
 
 
 
Net interest margin (annualized net interest  
income divided by the average balance  
of total interest earnings assets) (GAAP) . . . . . . . .   
 3.27 %   
 3.70 %   
 3.56 %   
 3.04 %   
 3.48 %
 
  
 
 
 
 
 
 
 
 
 
Net interest margin, FTE (annualized net interest  
income, FTE, divided by the average balance  
of total interest earnings assets) (non-GAAP) . . . .   
 3.28 %   
 3.70 %   
 3.57 %   
 3.05 %   
 3.50 %
 
The efficiency ratio is a non-GAAP financial measure, which is calculated by dividing noninterest expense by 
total revenue (net interest income plus noninterest income), and measures how much it costs to produce one dollar of 
revenue. The following table summarizes components of the efficiency ratio of the Company for the periods indicated: 
 
 
 
December 31, 
 
 
     
2024 
 
2023 
 
2022 
 
2021 
 
2020 
 
 
 
(Dollars in thousands) 
 
Noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 113,583 
$ 101,054 
$ 94,859 
 
$ 93,077 
 
$ 89,511 
 
 
 
  
 
  
 
  
 
  
 
  
 
Net interest income before provision 
 
  
 
  
 
  
 
  
 
  
 
for credit losses on loans . . . . . . . . . . . . . . . . . . .   
$  163,648 
$  183,224 
$  179,880  
  146,125  
  141,890  
Noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 8,748 
 
 8,998 
 
 10,111  
 
 9,688  
 
 9,922  
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 172,396 
$ 192,222 
$ 189,991  
$ 155,813  
$ 151,812  
 
 
  
 
  
 
  
 
  
 
  
 
Efficiency ratio (noninterest expense divided 
 
  
 
  
 
  
 
  
 
  
 
by total revenue) (non-GAAP) . . . . . . . . . . . . . . .   
 
 65.88 %    
 52.57 %    
 49.93 %    
 59.74 %    
 58.96 %   
 
 
 
79
Heritage Commerce Corp • 2024 Annual Report

 
Management considers the tangible common equity ratio and tangible book value per common share as useful 
measurements of the Company’s equity. The Company references the return on average tangible common equity as a 
measurement of profitability.   
The following table summarizes components of the annualized return on average tangible assets and the 
annualized return on average tangible common equity for the periods indicated: 
 
 
December 31, 
 
 
     
2024 
 
2023 
 
2022 
 
2021 
 
2020 
 
 
 
(Dollars in thousands) 
 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$
 40,528 
$
 64,443  
$
 66,555 
 $
 47,700 
$
 35,299  
 
 
 
 
  
 
 
 
 
  
 
  
 
 
Average tangible assets components: 
  
  
 
  
 
  
 
  
 
Average Assets (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 5,338,705 
$ 5,289,375  
$ 5,401,220 
 $ 5,166,294 
$ 4,434,329  
Less: Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  (167,631)
  (167,631) 
  (167,631)
  (167,631)
  (167,631) 
Less: Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 (7,589)
 
 (9,905) 
 
 (12,430)
 
 (15,256)
 
 (18,608) 
    Total Average Tangible Assets (non-GAAP) . . . . . . . . . . . .  
$ 5,163,485 
$ 5,111,839  
$ 5,221,159 
 $ 4,983,407 
$ 4,248,090  
 
  
 
 
 
 
 
 
Annualized return on average tangible assets (non-GAAP) . . . . .  
 
 0.78 %   
 1.26 %   
 1.27 %   
 0.96 %   
 0.83 %
 
 
 
 
  
 
  
 
  
 
  
 
 
Average tangible common equity components: 
  
  
  
  
  
 
Average Equity (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$  678,543 
$  652,449 
$  607,603 
 $  585,156 
$  576,675  
Less: Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  (167,631)
  (167,631)
  (167,631)
  (167,631)
  (167,631) 
Less: Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 (7,589)
 
 (9,905)
 
 (12,430)
 
 (15,256)
 
 (18,608) 
    Total Average Tangible Common Equity (non-GAAP) . . . .  
$  503,323 
$  474,913 
$  427,542 
 $  402,269 
$  390,436  
 
  
 
 
 
 
Annualized return on average tangible common  
equity (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 8.05 %   
 13.57 %   
 15.57 %   
 11.86 %   
 9.04 %
 
The following table summarizes components of the tangible common equity to tangible assets ratio of the 
Company at the dates indicated: 
 
 
December 31,  
 
 
    
2024 
     
2023 
 
2022 
 
2021 
 
2020 
 
 
 
(Dollars in thousands) 
Capital components: 
  
 
  
 
 
 
 
Total Equity (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $
689,727  
$  672,901 
$  632,456 
$  598,028 
 $  577,889  
Less: Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . .    
—  
 
 — 
 
 — 
 
 — 
 
 —  
  Total Common Equity . . . . . . . . . . . . . . . . . . . . . . . . . .    
689,727  
 
 672,901 
 
 632,456 
 
 598,028 
 
 577,889  
    Less: Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
(167,631) 
  (167,631)
  (167,631)
  (167,631)
  (167,631) 
    Less: Other Intangible Assets . . . . . . . . . . . . . . . . . . .    
(6,439) 
 
 (8,627)
 
 (11,033)
 
 (13,668)
 
 (16,664) 
       Total Tangible Common Equity (non-GAAP) . . . . . .   $
515,657  
$  496,643 
$  453,792 
$  416,729 
 $  393,594  
 
  
 
 
 
 
 
 
Asset components: 
  
 
 
 
 
 
 
 
Total Assets (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $
5,645,006  
$ 5,194,095 
$ 5,157,580 
$ 5,499,409 
 $ 4,634,114  
Less: Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
(167,631) 
  (167,631)
  (167,631)
  (167,631)
  (167,631) 
Less: Other Intangible Assets . . . . . . . . . . . . . . . . . . . . .    
(6,439) 
 
 (8,627)
 
 (11,033)
 
 (13,668)
 
 (16,664) 
     Total Tangible Assets (non-GAAP) . . . . . . . . . . . . . .   $
5,470,936  
$ 5,017,837 
$ 4,978,916 
$ 5,318,110 
 $ 4,449,819  
 
  
 
 
 
 
 
Tangible common equity to tangible assets (non-GAAP) . . .    
9.43 %   
 9.90 %   
 9.11 %  
 7.84 %   
 8.85 %
 
 
 
80
 
Heritage Commerce Corp • 2024 Annual Report

 
The following table summarizes components of the tangible common equity to tangible assets ratio of HBC at 
the dates indicated: 
 
 
 
December 31,  
 
 
     
2024 
     
2023 
     
2022 
     
2021 
      
2020 
 
 
 
(Dollars in thousands) 
Capital components: 
 
 
 
  
 
 
 
Total Equity (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 709,379  
$  690,918 
$  649,545 
$  616,108 
$ 
 595,681  
Less: Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 —  
 
 — 
 
 — 
 
 — 
 
 —  
   Total Common Equity . . . . . . . . . . . . . . . . . . . . . . . .   
 
 709,379  
 
 690,918 
 
 649,545 
 
 616,108 
 
 595,681  
      Less: Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 (167,631) 
 
 (167,631)
 
 (167,631)
 
 (167,631)
 
 (167,631) 
      Less: Other Intangible Assets . . . . . . . . . . . . . . . . .   
 
 (6,439) 
 
 (8,627)
 
 (11,033)
 
 (13,668)
 
 (16,664) 
         Total Tangible Common Equity (non-GAAP) . . . .   
$ 
 535,309  
$  514,660 
$  470,881 
$  434,809 
$ 
 411,386  
 
 
 
 
 
 
 
 
 
Asset components: 
 
 
 
 
 
 
 
 
 
Total Assets (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$  5,641,646  
$  5,190,829 
$  5,157,093 
$  5,496,724 
$  4,632,230  
Less: Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 (167,631) 
 
 (167,631)
 
 (167,631)
 
 (167,631)
 
 (167,631) 
Less: Other Intangible Assets . . . . . . . . . . . . . . . . . . . .   
 
 (6,439) 
 
 (8,627)
 
 (11,033)
 
 (13,668)
 
 (16,664) 
   Total Tangible Assets (non-GAAP) . . . . . . . . . . . . . .   
$  5,467,576  
$  5,014,571 
$  4,978,429 
$  5,315,425 
$  4,447,935  
 
 
 
 
 
 
 
 
Tangible common equity to tangible assets (non-GAAP) . .   
 
 9.79 %   
 10.26 %   
 9.46 %   
 8.18 %   
 9.25 %  
 
The following table summarizes components of the tangible book value per share at the dates indicated: 
 
 
 
December 31, 
 
     
2024 
    
2023 
     
2022 
    
2021 
     
2020 
 
 
(Dollars in thousands, except per share amounts) 
Capital components: 
  
  
   
   
Total Equity (GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $
 689,727 
$
 672,901 
 $
 632,456  $
 598,028 
 $
 577,889 
Less: Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . .    
 — 
 
 — 
 
 —   
 —   
 — 
   Total Common Equity . . . . . . . . . . . . . . . . . . . . . . . .    
 689,727 
 
 672,901 
 
 632,456   
 598,028   
 577,889 
      Less: Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 (167,631)
 
 (167,631)
 
 (167,631)  
 (167,631)  
 (167,631)
      Less: Other Intangible Assets . . . . . . . . . . . . . . . . .    
 (6,439)
 
 (8,627)
 
 (11,033)  
 (13,668)  
 (16,664)
         Total Tangible Common Equity (non-GAAP) . . . .   $
 515,657 
$
 496,643 
 $
 453,792  $
 416,729  $
 393,594 
 
  
 
 
  
  
Common shares outstanding at period-end . . . . . . . . . . . .     61,348,095 
  61,146,835 
  60,852,723    60,339,837    59,917,457 
 
  
 
 
  
  
Tangible book value per share (non-GAAP) . . . . . . . . . . . .   $
 8.41 
$
 8.12  $
 7.46  $
 6.91  $
 6.57 
 
 
 
81
Heritage Commerce Corp • 2024 Annual Report

 
 
 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 
As a financial institution, the Company’s primary component of market risk is interest rate volatility. Fluctuations 
in interest rates will ultimately impact both the level of income and expense recorded on most of the Company’s assets 
and liabilities and the market value of all interest-earning assets, other than those which have a short term to maturity. 
Based upon the nature of the Company’s operations, the Company is not subject to foreign exchange or commodity price 
risk. The Company has no market risk sensitive instruments held for trading purposes. At December 31, 2024, the 
Company did not use interest rate derivatives to hedge its interest rate risk. 
The information concerning quantitative and qualitative disclosure or market risk called for by Item 305 of 
Regulation S-K is included as part of Item 7 of this report. 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 
The financial statements and report of the Independent Registered Public Accounting Firm are set forth on 
pages 89 through 143. 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 
DISCLOSURES 
None. 
ITEM 9A.  CONTROLS AND PROCEDURES 
Disclosure Control and Procedures 
The Company has carried out an evaluation, under the supervision and with the participation of the Company’s 
management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and 
operation of the Company’s disclosure controls and procedures at December 31, 2024. As defined in Rule 13a-15(e) under 
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), disclosure controls and procedures are controls 
and procedures designed to reasonably assure that information required to be disclosed in our reports filed or submitted 
under the Exchange Act are recorded, processed, summarized and reported on a timely basis. Disclosure controls are also 
designed to reasonably assure that such information is accumulated and communicated to our management, including the 
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required 
disclosure. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the 
Company’s disclosure controls were effective as of December 31, 2024, the period covered by this report. 
Management’s Annual Report on Internal Control over Financial Reporting 
Management of the Company is responsible for establishing and maintaining adequate internal control over 
financial reporting. As defined in Rule 13a-15(f) under the Exchange Act, internal control over financial reporting is a 
process designed by, or under the supervision of, a company’s principal executive and principal financial officers and 
effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding 
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with 
generally accepted accounting principles. It includes those policies and procedures that: 
• 
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions 
and dispositions of the assets of a company; 
• 
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial 
statements in accordance with generally accepted accounting principles, and that receipts and expenditures 
of a company are being made only in accordance with authorizations of management and the board of 
directors of the company; and 
82
 
Heritage Commerce Corp • 2024 Annual Report

 
• 
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or 
disposition of a company’s assets that could have a material effect on its financial statements. 
Because of the inherent limitations, internal control over financial reporting may not prevent or detect 
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls 
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures 
may deteriorate. 
The Company’s management has used the criteria established in the 2013 Internal Control — Integrated 
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) to evaluate 
the effectiveness of the Company’s internal control over financial reporting. Management has selected the COSO 
framework for its evaluation as it is a control framework recognized by the SEC and the Public Company Accounting 
Oversight Board, that is free from bias, permits reasonably consistent qualitative and quantitative measurement of the 
Company’s internal controls, is sufficiently complete so that relevant controls are not omitted and is relevant to an 
evaluation of internal controls over financial reporting. 
Based on our assessment, management has concluded that our internal control over financial reporting, based on 
criteria established in the 2013 Internal Control — Integrated Framework issued by COSO was effective at December 31, 
2024. 
The independent registered public accounting firm of Crowe LLP, as auditors of our consolidated financial 
statements, has issued an audit report on the effectiveness of the Company’s internal control over financial reporting based 
on criteria established in the 2013 “Internal Control — Integrated Framework,” issued by COSO. 
Inherent Limitations on Effectiveness of Controls 
The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect 
that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and fraud. A 
control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the 
control system’s objectives will be met. The design of a control system must reflect the fact that there are resource 
constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent 
limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error 
or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. 
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can 
occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by 
collusion of two or more people, or by management override of the controls. The design of any system of controls is based 
in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will 
succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls 
effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in 
conditions or deterioration in the degree of compliance with policies or procedures. 
Changes in Internal Control over Financial Reporting 
There was no change in our internal control over financial reporting that occurred during the year ended 
December 31, 2024 that has materially affected or is reasonably likely to materially affect our internal control over 
financial reporting. 
ITEM 9B.  OTHER INFORMATION 
None. 
ITEM 9C.  DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 
Not applicable. 
83
Heritage Commerce Corp • 2024 Annual Report

 
PART III 
ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 
Information required by this item will be contained in our Definitive Proxy Statement for our 2025 Annual 
Meeting of Shareholders to be filed pursuant to Regulation 14A with the Securities and Exchange Commission within 
120 days of December 31, 2024. Such information is incorporated herein by reference. 
We have adopted a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, and to our 
other principal financial officers, and other senior management personnel, as designated. The code of ethics is available at 
the Governance Documents section of our website at www.heritagecommercecorp.com. We intend to disclose future 
amendments to, or waivers from, certain provisions of our code of ethics on the above website. 
We have adopted an Insider Trading Policy governing the purchase, sale, and/or other dispositions of our 
securities, as well as the securities of publicly traded companies with whom we have a business relationship, by directors, 
officers and employees, and consultants. Our Insider Trading Policy is designed to promote compliance with all applicable 
insider trading laws, listing standards, rules and regulations. A copy of our insider trading policy is incorporated by 
reference as Exhibit 19.1 to this Annual Report on Form 10-K.  
ITEM 11.  EXECUTIVE COMPENSATION 
Information required by this item will be contained in our Definitive Proxy Statement for our 2025 Annual 
Meeting of Shareholders to be filed pursuant to Regulation 14A with the Securities and Exchange Commission within 
120 days of December 31, 2024. Such information is incorporated herein by reference. 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND 
RELATED STOCKHOLDER MATTERS 
(a) Securities Authorized for Issuance Under Equity Compensation Plans 
The following table provides information as of December 31, 2024 regarding equity compensation plans under 
which equity securities of the Company were authorized for issuance: 
 
 
 
 
 
 
 
 
Number of securities 
 
 
 
 
 
 
 
 
remaining available for  
 
 
Number of securities to  
Weighted average  
future issuance under  
 
 be issued upon exercise of 
exercise price of  equity compensation plans 
 
 
outstanding options, 
 
outstanding options, 
(excluding securities 
 
 
 
warrants and rights 
 
warrants and rights  
reflected in column (a))   
 
    
(a) 
     
(b) 
    
(c) 
  
Equity compensation plans approved by  
security holders . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 2,222,496  (1)  $ 
 10.73   
 900,292 (2)
Equity compensation plans not approved by  
security holders . . . . . . . . . . . . . . . . . . . . . . . . . . .    
N/A  
  
N/A   
N/A  
 
(1) 
Consists of 1,976,873 options to acquire shares under the Company’s 2013 Equity Incentive Plan 20,000 options 
to acquire shares under the Company’s 2023 Equity Incentive Plan, and the aggregate amount of 225,623 stock 
options assumed from the Presidio stock option and equity incentive plans. 
(2) 
Available under the Company’s 2023 Equity Incentive Plan. 
 
(b) Information required by this item will be contained in our Definitive Proxy Statement for our 2025 Annual 
Meeting of Shareholders to be filed pursuant to Regulation 14A with the Securities and Exchange Commission within 120 
days of December 31, 2024. Such information is incorporated herein by reference. 
84
 
Heritage Commerce Corp • 2024 Annual Report

 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE 
Information required by this item will be contained in our Definitive Proxy Statement for our 2025 Annual 
Meeting of Shareholders to be filed pursuant to Regulation 14A with the Securities and Exchange Commission within 120 
days of December 31, 2024. Such information is incorporated herein by reference. 
ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES 
Information required by this item will be contained in our Definitive Proxy Statement for our 2025 Annual 
Meeting of Shareholders to be filed pursuant to Regulation 14A with the Securities and Exchange Commission within 120 
days of December 31, 2024. Such information is incorporated herein by reference. 
PART IV 
ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 
(1) FINANCIAL STATEMENTS 
The Financial Statements of the Company and the Report of Independent Registered Public Accounting Firm are 
set forth on pages 89 through 143. 
(2) FINANCIAL STATEMENT SCHEDULES 
All schedules to the Financial Statements are omitted because of the absence of the conditions under which they 
are required or because the required information is included in the Financial Statements or accompanying notes. 
(3) EXHIBITS  
The exhibits listed below are filed or incorporated by reference as part of this Annual Report on Form 10-K. 
Exhibit 
Number 
     Description 
3.1 
Heritage Commerce Corp Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1
to the Registrant’s Annual Report on Form 10-K filed on March 16, 2009).
3.2 
Certificate of Amendment of Articles of Incorporation of Heritage Commerce Corp, as filed with the
California Secretary of State on June 1, 2010 (incorporated by reference to Exhibit 3.2 to the
Registration Statement on Form S-1 filed July 23, 2010). 
3.3 
Certificate of Amendment of Articles of Incorporation of Heritage Commerce Corp, as filed with the
California Secretary of State on August 29, 2019 (incorporated by reference to Exhibit 3.3 to the
Registrant’s Quarterly Report on Form 10-Q filed November 11, 2019). 
3.4 
Heritage Commerce Corp Bylaws, as amended (incorporated by reference to Exhibit 3.1 to the
Registrant’s Current Report on Form 8-K filed on June 28, 2013). 
4.1 
Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934
(incorporated herein by reference to the Registrant’s Annual Report on Form 10-K filed on March 11, 
2020). 
*10.1 
Heritage Commerce Corp Management Cash Incentive Bonus Plan (incorporated herein by reference
to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed January 28, 2022).
*10.2 
Non-qualified Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.11 to the
Registrant’s Annual Report on Form 10-K filed March 31, 2005). 
*10.3 
Amended and Restated Employment Agreement with Lawrence McGovern, dated July 21, 2011 
(incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed 
July 21, 2011). 
*10.4 
Employment Agreement with Robertson Clay Jones, dated September 15, 2022 (incorporated by 
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed September 19, 2022). 
*10.5 
Employment Agreement with Chris Edmonds-Waters, dated April 30, 2024 (incorporated by reference
to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 6, 2024). 
85
Heritage Commerce Corp • 2024 Annual Report

 
Exhibit 
Number 
     Description 
*10.6 
Employment Agreement with Deborah K. Reuter, dated March 23, 2023 (incorporated by reference to
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed March 27, 2023). 
*10.7† 
Amended and Restated Employment Agreement with Glen Shu, dated February 1, 2024 (incorporated 
by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K filed March 11, 2024). 
*10.8† 
Employment Agreement with Thomas A. Sa, dated September 26, 2024 (incorporated by reference to
Exhibit 10.01 to the Registrant’s Current Report on Form 8-K filed on October 2, 2024). 
*10.9† 
Amended and Restated Employment Agreement with Susan Just, dated February 1, 2024 
(incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K filed 
March 11, 2024).
*10.10† 
Employment Agreement with Dustin Warford, dated February 1, 2024 (incorporated by reference to 
Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K filed March 11, 2024). 
  *10.11 
Employment Agreement with Janisha Sabnani, dated February 3, 2025 (incorporated by reference to 
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed February 3, 2025). 
*10.12 
Heritage Commerce Corp 2013 Equity Incentive Plan (incorporated by reference to Exhibit 4.4 to the
Registrant’s Registration Statement on Form S-8 filed July 15, 2013).
*10.13 
Amendment No. 1 to Heritage Commerce Corp 2013 Equity Incentive Plan, dated May 25, 2017 
(incorporated by reference to Exhibit A to the Registrant’s Proxy Statement, filed April 19, 2017). 
*10.14 
Amendment No. 2 to Heritage Commerce Corp 2013 Equity Incentive Plan, dated May 21, 2020 
(incorporated by reference to Appendix A to the Registrant’s Proxy Statement, filed April 15, 2020). 
*10.15 
Form of Restricted Stock Agreement for 2013 Equity Incentive Plan (incorporated by reference to
Exhibit 10.1 to the Registrant’s Registration Statement on Form S-8 filed July 15, 2013). 
*10.16 
Form of Stock Option Agreement for 2013 Equity Incentive Plan (incorporated by reference to Exhibit
4.4 to the Registrant’s Registration Statement on Form S-8 filed July 15, 2013). 
*10.17 
Form of Restricted Stock Unit Agreement (serviced-based) for 2013 Equity Incentive Plan
(incorporated by reference to Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K filed 
March 9, 2023). 
*10.18 
Form of Restricted Stock Unit Agreement (performance-based) for 2013 Equity Incentive Plan
(incorporated by reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K filed 
March 9, 2023). 
*10.19 
Heritage Commerce Corp 2023 Equity Incentive Plan (incorporated by reference to Appendix A to the
Registrant’s Proxy Statement filed April 13, 2023).
*10.20 
2005 Amended and Restated Heritage Commerce Corp Supplemental Retirement Plan (incorporated
herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed September 30, 
2008). 
*10.21 
Form of Endorsement Method Split Dollar Plan Agreement for Executive Officers (incorporated
herein by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K filed March 17, 
2008). 
*10.22 
Form of Endorsement Method Split Dollar Plan Agreement for Directors (incorporated herein by
reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K filed March 17, 2008). 
*10.23 
First Amended and Restated Director Compensation Benefits Agreement dated December 29, 2008 
between Jack Conner and the Company (incorporated herein by reference to Exhibit 10.8 to the
Registrant’s Current Report on Form 8-K filed January 2, 2009). 
*10.24
Form of Indemnification Agreement between the Registrant and its directors and executive officers
(incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed 
December 23, 2009). 
*10.25 
Presidio Bank Amended and Restated 2006 Stock Options Plan (incorporated by reference to
Exhibit 99.1 to the Registrant’s Statement on Form S-8 filed October 15, 2019). 
*10.26 
Presidio Bank 2016 Equity Incentive Plan (incorporated by reference to Exhibit 99.2 to the Registrant’s 
Statement on Form S-8 filed October 15, 2019).  
19.1 
Heritage Commerce Corp Insider Trading Policy, filed herewith. 
21.1 
Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Registrant’s Annual 
Report on Form 10-K, as filed March 3, 2017). 
23.1 
Consent of Crowe LLP, filed herewith. 
31.1 
Certification of Registrant’s Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley 
Act of 2002, filed herewith.
86
 
Heritage Commerce Corp • 2024 Annual Report

 
Exhibit 
Number 
     Description 
31.2 
Certification of Registrant’s Interim Chief Financial Officer Pursuant to Section 302 of the Sarbanes 
Oxley Act of 2002, filed herewith.
**32.1 
Certification of Registrant’s Chief Executive Officer Pursuant to 18 U.S.C. Section 1350. 
**32.2 
Certification of Registrant’s Interim Chief Financial Officer Pursuant to 18 U.S.C. Section 1350. 
97.1 
Heritage Commerce Corp Incentive Compensation Recovery Policy (incorporated by reference to
Exhibit 97.1 to the Registrant’s Annual Report on Form 10-K filed March 11, 2024).
101.INS 
Inline XBRL Instance Document, filed herewith. 
101.SCH 
Inline XBRL Taxonomy Extension Schema Document, filed herewith. 
101.CAL 
Inline XBRL Taxonomy Extension Calculation Linkbase Document, filed herewith. 
101.DEF 
Inline XBRL Taxonomy Extension Definition Linkbase Document, filed herewith. 
101.LAB 
Inline XBRL Taxonomy Extension Label Linkbase Document, filed herewith. 
101.PRE 
Inline XBRL Taxonomy Extension Presentation Linkbase Document, filed herewith. 
104 
Cover Page Interactive Data (formatted as inline XBRL and contained in Exhibits 101). 
 
 
*   Management contract or compensatory plan or arrangement. 
** Furnished and not filed. 
†   Certain identified information has been excluded from the exhibit pursuant to Regulation S-K Item 
601(b)(10)(iv) because it is both (i) not material and (ii) is the type that the Company customarily treats as private or 
confidential. 
 
 
ITEM 16.  FORM 10-K SUMMARY  
None. 
 
87
Heritage Commerce Corp • 2024 Annual Report

 
SIGNATURE 
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has 
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 
 
 
HERITAGE COMMERCE CORP 
 
 
 
 
 
 
 
BY: 
/s/ ROBERTSON CLAY JONES 
 
 
Robertson Clay Jones 
DATE: March 7, 2025 
 
Chief Executive Officer 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the 
following persons on behalf of the registrant and in the capacities and on the date indicated. 
Signature 
    
Title 
    
Date 
 
  
 
 
/s/ JULIANNE M. BIAGINI-KOMAS 
 Director and Vice Chair of the Board 
 
March 7, 2025 
Julianne M. Biagini-Komas 
 
 
 
 
  
 
 
/s/ BRUCE H. CABRAL 
 Director 
 
 
Bruce H. Cabral 
 
 
March 7, 2025 
 
  
 
 
/s/ JACK W. CONNER 
 Director and Chairman of the Board 
 
March 7, 2025 
Jack W. Conner 
 
 
 
 
  
 
 
/s/ JASON DINAPOLI 
 Director 
 
March 7, 2025 
Jason DiNapoli 
 
 
 
 
  
 
 
/s/ STEPHEN G. HEITEL 
 Director 
 
March 7, 2025 
Stephen G. Heitel 
 
 
 
 
  
 
 
/s/ KAMRAN F. HUSAIN 
 Director 
 
March 7, 2025 
Kamran F. Husain 
 
 
 
 
  
 
 
/s/ ROBERTSON CLAY JONES 
 Director and Chief Executive Officer 
 
 
Robertson Clay Jones 
 (Principal Executive Officer) 
 
March 7, 2025 
 
  
 
 
/s/ MARINA H. PARK SUTTON 
 Director 
 
March 7, 2025 
Marina H. Park Sutton 
 
 
 
 
  
 
 
/s/ LAURA RODEN 
 Director 
 
March 7, 2025 
Laura Roden 
 
 
 
 
  
 
 
/s/ THOMAS A. SA 
 Executive Vice President and Chief Operating 
Officer and Interim Chief Financial Officer 
 
March 7, 2025 
Thomas A. Sa 
 (Principal Financial and Accounting Officer)  
 
 
 
 
 
88
 
Heritage Commerce Corp • 2024 Annual Report

 
HERITAGE COMMERCE CORP 
INDEX TO FINANCIAL STATEMENTS 
DECEMBER 31, 2024 
 
Page 
Report of Independent Registered Public Accounting Firm, Crowe LLP (PCAOB ID 173) . . . . . . . . . . . . . . . . . .  
90
Consolidated Balance Sheets as of December 31, 2024 and 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
93
Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022 . . . . . . . . . . . . . . . . .  
94
Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022 . . .  
95
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2024, 2023 
and 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
96
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 . . . . . . . . . . . . .  
97
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
98
 
 
 
89
Heritage Commerce Corp • 2024 Annual Report

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
 
Shareholders and the Board of Directors  
of Heritage Commerce Corp 
San Jose, California 
 
Opinions on the Financial Statements and Internal Control over Financial Reporting 
 
We have audited the accompanying consolidated balance sheets of Heritage Commerce Corp (the “Company”) as of 
December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in 
shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the 
related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control 
over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: 
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of 
the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years 
in the three-year period ended December 31, 2024 in conformity with accounting principles generally accepted in the 
United States of America.  Also in our opinion, the Company maintained, in all material respects, effective internal control 
over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: 
(2013) issued by COSO. 
 
Basis for Opinions 
 
The Company’s management is responsible for these financial statements, for maintaining effective internal control over 
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the 
accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express 
an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial 
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight 
Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the 
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the 
PCAOB.  
 
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and 
perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, 
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material 
respects.  
 
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the 
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures 
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits 
also included evaluating the accounting principles used and significant estimates made by management, as well as 
evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting 
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness 
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our 
audits also included performing such other procedures as we considered necessary in the circumstances. We believe that 
our audits provide a reasonable basis for our opinions. 
 
Definition and Limitations of Internal Control Over Financial Reporting 
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the 
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with 
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies 
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the 
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded 
 
90
 
Heritage Commerce Corp • 2024 Annual Report

 
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, 
and that receipts and expenditures of the company are being made only in accordance with authorizations of management 
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of 
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial 
statements. 
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate 
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  
 
Critical Audit Matter 
 
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements 
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or 
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex 
judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, 
taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the 
critical audit matter or on the accounts or disclosures to which it relates. 
 
Allowance for Credit Losses on Loans – Qualitative Factors 
 
As described in Notes 1 and 4 to the consolidated financial statements, the Allowance for Credit Losses on Loans 
(“ACLL”) represents the Company’s estimate of amounts that are not expected to be collected over the contractual life of 
the Company’s held for investment loan portfolio. The estimate of the ACLL is based on historical experience, current 
conditions, and reasonable and supportable forecasts. As of December 31, 2024, the Company’s ACLL was $48,953,000, 
and the provision for credit losses on loans was $2,139,000 for the year then ended. 
 
The Company measures expected credit losses by using a discounted cash flow methodology that includes loan level cash 
flow estimates for each loan segment to estimate the quantitative component of the allowance for credit losses for loans. 
Management qualitatively adjusts the quantitative model results for risk factors that are not considered within the modeling 
process but are relevant in assessing the expected credit losses. These qualitative factors are based upon management 
judgment and current assessment as to the impact of risks related to collateral values, concentrations of credit risk, trends 
in delinquencies, the level of criticized loans and other internal and external factors. 
 
We have identified auditing the qualitative factors as a critical audit matter as management’s determination of the 
qualitative factors is subjective and involves significant management judgments; and our audit procedures related to certain 
of the qualitative factors involved a high degree of auditor judgment and required significant audit effort, including the 
need to involve more experienced audit personnel. 
 
The primary audit procedures we performed to address this critical audit matter included the following: 
 
• 
Tested the operating effectiveness of the Company’s controls over the:  
o 
Review of the reasonableness of assumptions and judgments made for the qualitative factors. 
o 
Review over the appropriateness of the framework for the qualitative factors. 
o 
Completeness and accuracy of internal data used in the qualitative factors. 
o 
Review over the relevance and reliability of external data used in the qualitative factors. 
o 
Mathematical accuracy of the qualitative factors. 
• 
Substantive tests included: 
o 
Testing the completeness and accuracy of internal data and relevance and reliability of external data 
used in the qualitative factors 
o 
Assessing the appropriateness and reasonableness of the framework developed for the qualitative factors 
including evaluating management’s judgments as to which factors impacted the qualitative analysis for 
each loan segment. 
o 
Performing testing over the accuracy of inputs utilized in the calculation of qualitative factors for each 
loan segment.  
 
 
91
Heritage Commerce Corp • 2024 Annual Report

 
o 
Testing the mathematical accuracy of the calculation of the qualitative factors. 
 
 
/s/ CROWE LLP 
 
Crowe LLP 
 
We have served as the Company’s auditor since 2005. 
 
Oakbrook Terrace, Illinois 
March 7, 2025 
 
 
 
92
 
Heritage Commerce Corp • 2024 Annual Report

 
HERITAGE COMMERCE CORP 
CONSOLIDATED BALANCE SHEETS 
 
 
December 31,  
 
December 31,  
 
     
2024 
     
2023 
 
 
(Dollars in thousands) 
Assets 
 
 
 
 
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 29,864  
$ 
 41,592 
Other investments and interest-bearing deposits in other financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 938,259  
  
 366,537 
Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 968,123  
  
 408,129 
Securities available-for-sale, at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 256,274  
  
 442,636 
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $12, (fair value  
of $497,012 and $564,127, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 590,016  
  
 650,565 
Loans held-for-sale - SBA, at lower of cost or fair value, including deferred costs . . . . . . . . . . . . . . . . . . . . . . .   
  
 2,375  
  
 2,205 
Loans, net of deferred fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 3,491,937  
  
 3,350,378 
Allowance for credit losses on loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 (48,953) 
  
 (47,958)
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 3,442,984  
  
 3,302,420 
Federal Home Loan Bank (“FHLB”), Federal Reserve Bank (“FRB”) stock and other investments, at cost . . . .   
  
 32,556  
  
 32,540 
Company-owned life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 81,211  
  
 79,489 
Premises and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 10,140  
  
 9,857 
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 167,631  
 
 167,631 
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 6,439  
  
 8,627 
Accrued interest receivable and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 87,257  
  
 89,996 
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 5,645,006  
$ 
 5,194,095 
 
 
 
 
 
Liabilities and Shareholders’ Equity 
 
 
 
 
Liabilities: 
 
 
 
 
Deposits: 
 
 
 
 
Demand, noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 1,214,192  
$ 
 1,292,486 
Demand, interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 936,587  
  
 914,066 
Savings and money market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 1,325,923  
  
 1,087,518 
Time deposits - under $250 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 38,988  
  
 38,055 
Time deposits - $250 and over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 206,755  
  
 192,228 
Insured Cash Sweep (“ICS”)/Certificates of Deposit Account Registry Service (“CDARS”) -  
 
 
 
 
    interest-bearing demand, money market and time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 1,097,586  
  
 854,105 
    Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 4,820,031  
  
 4,378,458 
Subordinated debt, net of issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 39,653  
 
 39,502 
Accrued interest payable and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 95,595  
  
 103,234 
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 4,955,279  
  
 4,521,194 
 
 
 
 
 
Shareholders’ equity: 
 
 
 
 
Preferred stock, no par value; 10,000,000 shares authorized; none issued and outstanding  
at December 31, 2024 and December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 —  
 
 — 
Common stock, no par value; 100,000,000 shares authorized; 
61,348,095 and 61,146,835 shares issued and outstanding, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 510,070  
  
 506,539 
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 187,762  
  
 179,092 
Accumulated other comprehensive loss  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 (8,105) 
  
 (12,730)
     Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 689,727  
  
 672,901 
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 5,645,006  
$ 
 5,194,095 
 
 
 
 
 
 
See notes to consolidated financial statements 
 
 
93
Heritage Commerce Corp • 2024 Annual Report

 
HERITAGE COMMERCE CORP 
CONSOLIDATED STATEMENTS OF INCOME 
 
Year Ended December 31,  
 
2024 
     
2023 
     
2022 
 
(Dollars in thousands, except per share data) 
Interest income: 
  
 
  
 
  
Loans, including fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  182,983  
$  177,628  
$  153,010 
Securities, taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 20,817  
  
 27,351  
  
 20,666 
Securities, exempt from Federal tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 890  
  
 945  
  
 1,084 
Other investments, interest-bearing deposits 
 
 
 
 
 
  in other financial institutions and Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 38,009  
  
 28,374  
  
 14,068 
  Total interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     242,699  
   234,298  
   188,828 
 
 
 
 
 
 
Interest expense: 
  
 
  
 
  
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 76,899  
  
 47,557  
  
 6,770 
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 —  
 
 1,365  
 
 — 
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 2,152  
  
 2,152  
  
 2,178 
  Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 79,051  
  
 51,074  
  
 8,948 
 
 
 
 
 
 
Net interest income before provision for credit losses on loans . . . . . . . . . . . . . . . . . . . . .     163,648  
   183,224  
   179,880 
Provision for credit losses on loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 2,139  
  
 749  
  
 766 
Net interest income after provision for credit losses on loans. . . . . . . . . . . . . . . . . . . . . . . . . .     161,509  
   182,475  
   179,114 
 
 
 
 
 
 
Noninterest income: 
  
 
  
 
  
Service charges and fees on deposit accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 3,561  
  
 4,341  
  
 4,640 
Increase in cash surrender value of life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 2,097  
  
 2,031  
  
 1,925 
Gain on sales of SBA loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 473  
 
 482  
 
 491 
Servicing income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 365  
  
 400  
  
 508 
Gain on proceeds from company owned life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 219  
 
 125  
 
 27 
Termination fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 177  
 
 154  
 
 61 
Gain on warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 —  
 
 —  
 
 669 
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 1,856  
  
 1,465  
  
 1,790 
  Total noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 8,748  
  
 8,998  
  
 10,111 
 
 
 
 
 
 
Noninterest expense: 
  
 
  
 
  
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 63,952  
  
 56,862  
  
 55,331 
Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 10,226  
  
 9,490  
  
 9,639 
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 5,416  
  
 4,350  
  
 5,015 
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 33,989  
  
 30,352  
  
 24,874 
Total noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     113,583  
   101,054  
  
 94,859 
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 56,674  
  
 90,419  
  
 94,366 
Income tax expense  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 16,146  
 
 25,976  
 
 27,811 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
 40,528  
$ 
 64,443  
$ 
 66,555 
 
 
 
 
 
 
Earnings per common share: 
  
 
  
 
  
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
 0.66  
$ 
 1.06  
$ 
 1.10 
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
 0.66  
$ 
 1.05  
$ 
 1.09 
 
See notes to consolidated financial statements 
 
 
94
 
Heritage Commerce Corp • 2024 Annual Report

 
HERITAGE COMMERCE CORP 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
 
 
December 31,  
 
 
  
2024 
     
2023 
     
2022 
  
 
 
(Dollars in thousands) 
  
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$  40,528  
$  64,443  
$  66,555  
Other comprehensive income (loss): 
 
  
 
  
 
  
 
Change in net unrealized holding gains (losses) on  
available-for-sale securities and I/O strips  . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 4,839  
  
 6,148  
   (19,079) 
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 (1,403) 
  
 (1,783) 
  
 5,532  
Change in unrealized gains (losses) on securities and I/O strips, net of  
net of deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 3,436  
  
 4,365  
   (13,547) 
Change in net pension and other benefit plan liability adjustment . . . . . . . . . .   
  
 1,491  
  
 (458) 
  
 9,909  
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 (302) 
  
 219  
  
 (2,222) 
Change in pension and other benefit plan liability, net of  
deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 1,189  
  
 (239) 
  
 7,687  
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 4,625  
  
 4,126  
  
 (5,860) 
Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$  45,153  
$  68,569  
$  60,695  
 
See notes to consolidated financial statements 
 
 
 
 
 
95
Heritage Commerce Corp • 2024 Annual Report

 
HERITAGE COMMERCE CORP 
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY 
 
 
Years Ended December 31, 2024, 2023 and 2022 
 
 
 
 
 
 
 
 
 
 
Accumulated  
 
 
 
 
 
 
 
 
 
 
 
 
Other 
 
 
 
 
     
 
  
 
  
 
 
Comprehensive 
Total 
 
 
Common Stock 
 
Retained  
Income 
 
Shareholders’ 
 
  
Shares 
     
Amount 
     
Earnings      
(Loss) 
     
Equity 
 
 
(Dollars in thousands, except per share data) 
Balance, January 1, 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . .    60,339,837  $  497,695  $  111,329  $ 
 (10,996) $  598,028 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 —    
 —   
 66,555   
 —   
 66,555 
Other comprehensive loss, net of taxes . . . . . . . . . . . . . . . . . .   
 —    
 —    
 —    
 (5,860)   
 (5,860)
Issuance of restricted stock awards, net . . . . . . . . . . . . . . . . . .   
 207,006    
 —    
 —    
 —    
 — 
Amortization of restricted stock awards,  
  
  
  
  
  
    net of forfeitures and taxes  . . . . . . . . . . . . . . . . . . . . . . . . .  
 —    
 2,583    
 —    
 —    
 2,583 
Cash dividend declared $0.52 per share . . . . . . . . . . . . . . . . .  
 —    
 —     (31,495)   
 —     (31,495)
Stock option expense, net of forfeitures and taxes  . . . . . . . . .  
 —    
 595    
 —    
 —    
 595 
Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 305,880    
 2,050    
 —    
 —    
 2,050 
Balance, December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . .    60,852,723  
 502,923  
 146,389  
 (16,856) 
 632,456 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 —    
 —   
 64,443   
 —   
 64,443 
Other comprehensive income, net of taxes . . . . . . . . . . . . . . .  
 —    
 —    
 —    
 4,126    
 4,126 
Issuance of restricted stock awards, net  . . . . . . . . . . . . . . . . .  
 73,446    
 —    
 —    
 —    
 — 
Amortization of restricted stock awards,  
 
  
  
  
  
    net of forfeitures and taxes . . . . . . . . . . . . . . . . . . . . . . . . .  
 —    
 1,404    
 —    
 —    
 1,404 
Cash dividend declared $0.52 per share . . . . . . . . . . . . . . . . .  
 —    
 —     (31,740)   
 —     (31,740)
Restricted stock units (“RSUs”) and performance-based 
 
  
  
  
  
    restricted stock units (“PRSUs”) expense, net of taxes . . . .  
 —   
 392   
 —   
 —   
 392 
Stock option expense, net of forfeitures and taxes . . . . . . . . . .  
 —    
 600    
 —    
 —    
 600 
Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 220,666    
 1,220    
 —    
 —    
 1,220 
Balance, December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . .    61,146,835  
 506,539  
 179,092  
 (12,730) 
 672,901 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 —    
 —      40,528   
 —   
 40,528 
Other comprehensive income, net of taxes . . . . . . . . . . . . . . .   
 —    
 —    
 —    
 4,625    
 4,625 
Issuance of restricted stock awards, net . . . . . . . . . . . . . . . . . .   
 25,908    
 —    
 —    
 —    
 — 
Amortization of restricted stock awards,  
 
  
  
  
  
    net of forfeitures and taxes . . . . . . . . . . . . . . . . . . . . . . . . .  
 —    
 916    
 —    
 —    
 916 
Cash dividend declared $0.52 per share . . . . . . . . . . . . . . . . .   
 —    
 —     (31,858)   
 —     (31,858)
RSUs and PRSUs expense, net of taxes . . . . . . . . . . . . . . . . . .  
 —   
 1,409   
 —   
 —   
 1,409 
RSUs vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 35,837   
 —    
 —    
 —    
 — 
Stock option expense, net of forfeitures and taxes . . . . . . . . . .   
 —    
 516    
 —    
 —    
 516 
Stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 139,515    
 690    
 —    
 —    
 690 
Balance, December 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . .    61,348,095  $  510,070  $  187,762  $ 
 (8,105) $  689,727 
 
 
  
  
  
  
See notes to consolidated financial statements 
 
 
 
 
96
 
Heritage Commerce Corp • 2024 Annual Report

 
HERITAGE COMMERCE CORP  
CONSOLIDATED STATEMENTS OF CASH FLOWS 
 
 
Year Ended December 31,  
 
  
2024 
     
2023 
     
2022 
 
 
(Dollars in thousands) 
CASH FLOWS FROM OPERATING ACTIVITIES: 
 
 
 
 
 
 
 
 
 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
 40,528  
$ 
 64,443  
$ 
 66,555 
Adjustments to reconcile net income to net cash provided by operating activities: 
   
 
  
 
  
Amortization of premiums and accretion of discounts on securities . . . . . . . . . . . . . . . . . . . . . .  
  
 (2,582) 
 
 (4,822) 
 
 (953)
Gain on sale of SBA loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 (473) 
 
 (482) 
 
 (491)
Proceeds from sale of SBA loans originated for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 6,469  
 
 8,035  
 
 7,689 
SBA loans originated for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 (6,166) 
 
 (7,302) 
 
 (7,767)
Provision for credit losses on loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 2,139  
 
 749  
 
 766 
Increase in cash surrender value of life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 (2,097) 
 
 (2,031) 
 
 (1,925)
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 1,341  
 
 1,115  
 
 1,121 
Amortization of other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 2,188  
 
 2,406  
 
 2,635 
Stock option expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 516  
 
 600  
 
 595 
RSUs and PRSUs expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 1,409  
 
 392  
 
 — 
Amortization of restricted stock awards, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 916  
 
 1,404  
 
 2,583 
Amortization of subordinated debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 151  
 
 152  
 
 172 
Gain on proceeds from company-owned life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 (219) 
 
 (125) 
 
 (27)
Effect of changes in: 
  
 
 
 
  
Accrued interest receivable and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 4,044  
 
 2,411  
 
 978 
Accrued interest payable and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 (9,193) 
 
 6,065  
 
 (2,078)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 38,971  
  
 73,010  
  
 69,853 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES: 
   
 
  
 
  
Purchase of securities available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 (30,263) 
 
 —  
 
 (425,721)
Purchase of securities held-to-maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 —  
 
 —  
 
 (146,548)
Maturities/paydowns/calls of securities available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 225,064  
 
 59,014  
 
 21,881 
Maturities/paydowns/calls of securities held-to-maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 59,566  
 
 63,376  
 
 88,394 
Purchase of mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 —  
 
 —  
 
 (185,426)
Net change in loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 (142,703) 
 
 (52,131) 
 
 (21,862)
Changes in FHLB stock and other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 (16) 
 
 (18) 
 
 (18)
Proceeds from redemption of company-owned life insurance . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 594  
 
 1,612  
 
 596 
Purchase of premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 (1,624) 
 
 (1,671) 
 
 (783)
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 110,618  
  
 70,182  
  
 (669,487)
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES: 
   
 
  
 
  
Net change in deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 441,573  
 
 (11,146) 
 
 (369,808)
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 690  
 
 1,220  
 
 2,050 
Payment of cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 (31,858) 
 
 (31,740) 
 
 (31,495)
Redemption of subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 —  
 
 —  
 
 (40,000)
Issuance of subordinated debt, net of issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 —  
 
 —  
 
 39,274 
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 410,405  
  
 (41,666) 
  
 (399,979)
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 559,994  
  
 101,526  
  
 (999,613)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 408,129  
 
 306,603  
 
 1,306,216 
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
 968,123  
$ 
 408,129  
$ 
 306,603 
 
 
 
 
 
 
Supplemental disclosures of cash flow information: 
   
 
  
 
  
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
 77,237  
$ 
 46,834  
$ 
 8,654 
Income taxes paid, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 13,219  
 
 28,340  
 
 25,175 
 
   
 
  
 
  
Supplemental schedule of non-cash activity: 
   
 
  
 
 
Recording of right of use assets in exchange for lease obligations . . . . . . . . . . . . . . . . . . . .  
 
 3,045  
 
 541  
 
 2,736 
Transfer of loans held-for-sale to loan portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 —  
 
 —  
 
 480 
 
See notes to consolidated financial statements 
 
97
Heritage Commerce Corp • 2024 Annual Report

 
HERITAGE COMMERCE CORP 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
1) Summary of Significant Accounting Policies 
Description of Business and Basis of Presentation 
Heritage Commerce Corp (“HCC”) operates as a registered bank holding company for its wholly-owned 
subsidiary Heritage Bank of Commerce (“HBC” or the “Bank”), collectively referred to as the “Company”. HBC was 
incorporated on November 23, 1993 and commenced operations on June 8, 1994. HBC is a California state chartered bank 
which offers a full range of commercial and personal banking services to residents and the business/professional 
community in Alameda, Contra Costa, Marin, San Benito, San Francisco, San Mateo, and Santa Clara counties of 
California.  
CSNK Working Capital Finance Corp. a California corporation, dba Bay View Funding (“Bay View Funding”) 
is a wholly owned subsidiary of HBC. Bay View Funding’s primary business operation is purchasing and collecting 
factored receivables. Factored receivables are receivables that have been transferred by the originating organization and 
typically have not been subject to previous collection efforts. In a factoring transaction Bay View Funding directly 
purchases the receivables generated by its clients at a discount to their face value. The transactions are structured to provide 
the clients with immediate working capital when there is a mismatch between payments to the client for a good and service 
and the payment of operating costs incurred to provide such good or service. 
The consolidated financial statements are prepared in accordance with accounting policies generally accepted in 
the United States of America and general practices in the banking industry. The financial statements include the accounts 
of the Company. All inter-company accounts and transactions have been eliminated in consolidation. 
Use of Estimates 
The preparation of financial statements in conformity with accounting principles generally accepted in the United 
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and 
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts 
of revenues and expenses during the reporting period. Actual results could differ from those estimates.  
Cash and Cash Equivalents 
Cash and cash equivalents include cash on hand, amounts due from banks, amounts held at the Federal Reserve 
Bank, and Federal funds sold.  Federal funds are generally sold and purchased for one-day periods. 
Cash Flows 
Net cash flows are reported for client loan and deposit transactions, notes payable, repurchase agreements and 
other short-term borrowings. 
Securities 
The Company classifies its securities as either available-for-sale or held-to-maturity at the time of purchase. Debt 
securities are classified as held-to-maturity and carried at amortized cost when management has the positive intent and 
ability to hold them to maturity. Debt securities not classified as held-to-maturity are classified as available-for-sale. 
Securities available-for-sale are carried at fair value, with unrealized holding gains and losses reported in other 
comprehensive income, net of taxes. 
Interest income includes amortization of purchase premiums or discounts. Premiums and discounts are amortized, 
or accreted, over the life of the related security, or the earliest call date for callable securities purchased at a premium, as 
an adjustment to income using a method that approximates the interest method. Realized gains and losses are recorded on 
the trade date and determined using the specific identification method for the cost of securities sold. 
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Heritage Commerce Corp • 2024 Annual Report

 
Allowance for Credit Losses – Available-for-sale Securities 
 For available-for-sale debt securities in an unrealized loss position, the Company assesses whether it intends to 
sell, or if it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If 
either of the criteria regarding the intent or requirement to sell is met, the security’s amortized cost basis is written down 
to fair value through income. For debt securities available-for-sale that do not meet the aforementioned criteria, the 
Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this 
assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of 
the security by rating agency, and adverse conditions specifically related to the security. If the present value of cash flows 
expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is 
recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment 
that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. 
Changes in the allowance for credit losses are recorded as a provision (or reversal of) credit loss expense. Losses 
are charged against the allowance when management believes the uncollectibility of an available-for-sale security is 
confirmed or when either of the criteria regarding intent or requirement to sell is met.   
Allowance for Credit Losses – Held-to-Maturity Securities 
Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major 
security type and bond rating. The estimate of expected credit losses considers historical loss information that is adjusted 
for current conditions and reasonable and supportable forecasts.  
Management classifies the held-to-maturity portfolio in the following major security types: Agency mortgage-
backed and municipal securities. 
All the mortgage-backed securities held by the Company are issued by U.S. government entities and agencies. 
These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating 
agencies, and have a long history of no credit losses. 
Other securities are comprised primarily of tax exempt municipal securities. At December 31, 2024, all of these 
securities are rated A-Aaa (defined as investment grade). The issuers in these securities are primarily municipal entities 
and school districts.   
Loan Sales and Servicing 
The Company holds for sale the conditionally guaranteed portion of certain loans guaranteed by the Small 
Business Administration or the U.S. Department of Agriculture (collectively referred to as “SBA loans”). These loans are 
carried at the lower of aggregate cost or fair value. Net unrealized losses, if any, are recorded as a valuation allowance and 
charged to earnings. 
Gains or losses on SBA loans held-for-sale are recognized upon completion of the sale, based on the difference 
between the selling price and the carrying value of the related loan sold. 
SBA loans are sold with servicing retained. Servicing assets recognized separately upon the sale of SBA loans 
consist of servicing rights and, for loans sold prior to 2009, interest-only strip receivables (“I/O strips”). The Company 
accounts for the sale and servicing of SBA loans based on the financial and servicing assets it controls and liabilities it has 
incurred, reversing recognition of financial assets when control has been surrendered, and reversing recognition of 
liabilities when extinguished. Servicing rights are initially recorded at fair value with the income statement effect recorded 
in gains on sale of loans. Servicing rights are amortized in proportion to and over the period of net servicing income and 
are assessed for impairment on an ongoing basis. Impairment is determined by stratifying the servicing rights based on 
interest rates and terms. Any servicing assets in excess of the contractually specified servicing fees are reclassified at fair 
value as an I/O strip receivable and treated like an available for sale security. Fair value is determined using prices for 
similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based 
assumptions. Impairment is recognized through a valuation allowance. The servicing rights, net of any required valuation 
allowance, and I/O strip receivable are included in other assets on the consolidated balance sheets. 
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Heritage Commerce Corp • 2024 Annual Report

Servicing income, net of amortization of servicing rights, is recognized as noninterest income. The initial fair 
value of I/O strip receivables is amortized against interest income on loans. 
Loans 
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are 
stated at the principal amount outstanding, net of deferred loan origination fees and costs on originated loans, or 
unamortized premiums or discounts on purchased or acquired loans, and an allowance for credit losses on loans. Accrued 
interest receivable is excluded from the estimate of credit losses. Interest on loans is accrued on the unpaid principal 
balance and is credited to income using the effective yield interest method. Interest on purchased or acquired loans and the 
accretion (amortization) of the related purchase discount (premium) is also credited to income using the effective yield 
interest method. 
A loan portfolio segment is defined as the level at which the Company uses a systematic methodology to 
determine the allowance for credit losses on loans. A loan portfolio class is defined as a group of loans having similar risk 
characteristics and methods for monitoring and assessing risk. 
For all loan classes, when a loan is classified as nonaccrual, the accrual of interest is discontinued, any accrued 
and unpaid interest is reversed, and the amortization of deferred loan fees and costs is discontinued. For all loan classes, 
loans are classified as nonaccrual when the payment of principal or interest is 90 days past due, unless the loan is well 
secured and in the process of collection. Nonaccrual loans and loans past due 90 days still on accrual include both smaller 
balance homogeneous loans that are collectively evaluated for credit loss and individually evaluated loans. In certain 
circumstances, loans that are under 90 days past due may also be classified as nonaccrual. Any interest or principal 
payments received on nonaccrual loans are applied toward reduction of principal. Nonaccrual loans generally are not 
returned to performing status until the obligation is brought current, the loan has performed in accordance with the contract 
terms for a reasonable period of time, and the ultimate collectability of the contractual principal and interest is no longer 
in doubt. 
Non-refundable loan fees and direct origination costs are deferred and recognized over the expected lives of the 
related loans using the effective yield interest method. 
Allowance for Credit Losses on Loans  
Loans are charged-off against the allowance when management determines that a loan balance has become 
uncollectible. Subsequent recoveries, if any, are credited to the allowance for credit losses on loans. 
Management’s methodology for estimating the allowance balance consists of several key elements, which include 
pooling loans with similar characteristics into segments and using a discounted cash flow calculation to estimate losses. 
The discounted cash flow model inputs include loan level cash flow estimates for each loan segment based on peer and 
bank historic loss correlations with certain economic factors. Management uses a four quarter forecast of each economic 
factor that is used for each loan segment and the economic factors are assumed to revert to the historic mean over an eight 
quarter period after the forecast period. The economic factors management has selected include the California 
unemployment rate, California gross domestic product, California home price index, and a national CRE value index. 
These factors are evaluated and updated as economic conditions change. Additionally, management uses qualitative 
adjustments to the discounted cash flow quantitative loss estimates in certain cases when management has determined an 
adjustment is necessary. These qualitative adjustments are applied by pooled loan segment and have been added for 
increased risk due to loan quality trends, collateral risk, or other risks management determines are not adequately captured 
in the discounted cash flow loss estimation. Specific allowances on individually evaluated loans are combined to the 
allowance on pools of loans with similar risk characteristics to derive the total allowance for credit losses on loans. 
Management has also considered other qualitative risks such as collateral values, concentrations of credit risk 
(geographic, large borrower, and industry), economic conditions, changes in underwriting standards, experience and depth 
of lending staff, trends in delinquencies, and the level of criticized loans to address asset-specific risks and current 
conditions that were not fully considered by the macroeconomic variables driving the quantitative estimate. 
 
 
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Heritage Commerce Corp • 2024 Annual Report

 
The allowance for credit losses on loans was calculated by pooling loans of similar credit risk characteristics and 
credit monitoring procedures. The loan portfolio is classified into eight segments of loans - commercial, commercial real 
estate – owner occupied, commercial real estate – non-owner occupied, land and construction, home equity, multifamily, 
residential mortgages and consumer and other.” 
The allowance for credit losses is an estimate of expected losses inherent with the Company’s loans held-for-
investment portfolio. In accordance with Accounting Standards Codification (“ASC”) 326 the Company measures the 
allowance for credit losses on loans by segmenting these assets into pools with similar risk characteristics. The 
segmentation of these loans is generally based on various risk characteristics reflecting the level at which the Company 
monitors credit quality and portfolio trends. 
In accordance with ASC 326, the Company elected to not measure an allowance for credit losses on accrued 
interest. As such accrued interest is written off in a timely manner when deemed uncollectible. Any such write-off of 
accrued interest will reverse previously recognized interest income. In addition, the Company elected to not include 
accrued interest within presentation and disclosures of the carrying amount of financial assets held at amortized cost. This 
election is applicable to the various disclosures included within the Company’s financial statements. Accrued interest 
related to financial assets held at amortized cost is included within accrued interest receivable and other assets within the 
Company’s Consolidated Balance Sheets and totaled $14,940,000 at December 31, 2024 and $14,959,000 at December 31, 
2023. 
The loan portfolio is classified into eight segments of loans – commercial, commercial real estate – owner 
occupied, commercial real estate – non-owner occupied, land and construction, home equity, multifamily, residential 
mortgages and consumer and other.  
The risk characteristics of each loan portfolio segment are as follows: 
Commercial 
Commercial loans primarily rely on the identified cash flows of the borrower for repayment and secondarily on 
the underlying collateral provided by the borrower. However, the cash flows of the borrowers may not be as expected and 
the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed 
or other business assets such as accounts receivable, inventory or equipment and may incorporate a personal guarantee; 
however, some loans may be unsecured. Included in commercial loans are $68,897,000 of Bay View Funding factored 
receivables at December 31, 2024, compared to $57,458,000 at December 31, 2023. 
Commercial Real Estate (“CRE”) 
CRE loans rely primarily on the cash flows of the properties securing the loan and secondarily on the value of the 
property that is securing the loan. CRE loans comprise two segments differentiated by owner occupied CRE and non-
owner occupied CRE. Owner occupied CRE loans are secured by commercial properties that are at least 50% occupied by 
the borrower or borrower affiliate. Although CRE loans often incorporate a personal guarantee, the commercial property 
collateral is typically sufficient and reliance on personal guarantees is minimal. Non-owner occupied CRE loans are 
secured by commercial properties that are less than 50% occupied by the borrower or borrower affiliate. CRE loans may 
be adversely affected by conditions in the real estate markets or in the general economy. 
Land and Construction 
Land and construction loans are generally based on estimates of costs and value associated with the completed 
project. Construction loans usually involve the disbursement of funds with repayment substantially dependent on the 
success of the completion of the project. Sources of repayment for these loans may be permanent loans from HBC or other 
lenders, or proceeds from the sales of the completed project. These loans are monitored by on-site inspections and are 
considered to have higher risk than other real estate loans due to the final repayment dependent on numerous factors 
including general economic conditions. 
 
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Heritage Commerce Corp • 2024 Annual Report

 
Home Equity 
Home equity loans are secured by 1-4 family residences that are generally owner occupied. Repayment of these 
loans depends primarily on the personal income of the borrower and secondarily on the value of the property securing the 
loan which can be impacted by changes in economic conditions such as the unemployment rate and property values. These 
loans are generally revolving lines of credit. 
Multifamily 
Multifamily loans are loans on residential properties with five or more units. These loans rely primarily on the 
cash flows of the properties securing the loan for repayment and secondarily on the value of the properties securing the 
loan. The cash flows of these borrowers can fluctuate along with the values of the underlying property depending on 
general economic conditions. 
Residential Mortgages 
Residential mortgage loans are secured by 1-4 family residences which are generally owner-occupied. Repayment 
of these loans depends primarily on the personal income of the borrower and secondarily on the value of the property 
securing the loan which can be impacted by changes in economic conditions such as the unemployment rate and property 
values. These are term loans and are acquired. 
Consumer and Other 
Consumer and other loans are secured by personal property or are unsecured and rely primarily on the income of 
the borrower for repayment and secondarily on the collateral value for secured loans. Borrower income and collateral 
values can vary depending on economic conditions.  
Loan Commitments and Related Financial Instruments 
Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and 
commercial letters of credit, issued to meet client financing needs. The face amount for these items represents the exposure 
to loss, before considering client collateral or ability to repay. Such financial instruments are recorded when they are 
funded. The notional amount of these commitments is not reflected in the consolidated financial statement until they are 
funded. The Company maintains an allowance for credit losses on unfunded commercial lending commitments and letters 
of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology 
similar to that used to determine the allowance for credit losses for loans, modified to take into account the probability of 
a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability 
account on the balance sheet and is adjusted as a provision for credit loss expense included in other noninterest expense. 
Federal Home Loan Bank and Federal Reserve Bank Stock 
As a member of the Federal Home Loan Bank (“FHLB”) system, the Bank is required to own common stock in 
the FHLB based on the Bank’s level of borrowings and outstanding FHLB advances. FHLB stock is carried at cost and 
classified as a restricted security. Both cash and stock dividends from the FHLB are reported as income. 
As a member of the Federal Reserve Bank (“FRB”) of San Francisco, the Bank is required to own stock in the 
FRB of San Francisco based on a specified ratio relative to our capital. FRB stock is carried at cost and may be sold back 
to the FRB at its carrying value. Cash dividends received from the FRB are reported as income. 
Company-Owned Life Insurance and Split-Dollar Life Insurance Benefit Plan 
The Company has purchased life insurance policies on certain directors and officers. Company-owned life 
insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the 
cash surrender value adjusted for charges or other amounts due that are probable at settlement. The purchased insurance 
is subject to split-dollar insurance agreements with the insured participants, which continues after the participant’s 
employment and retirement. 
 
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Heritage Commerce Corp • 2024 Annual Report

 
Accounting guidance requires that a liability be recorded primarily over the participant’s service period when a 
split-dollar life insurance agreement continues after a participant’s employment or retirement. The required accrued 
liability is based on either the post-employment benefit cost for the continuing life insurance or the future death benefit 
depending on the contractual terms of the underlying agreement. 
Premises and Equipment 
Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation 
and amortization are computed on the straight-line basis over the lesser of the respective lease terms or estimated useful 
lives. The Company owns one building which is being depreciated over 40 years. Furniture, equipment, and leasehold 
improvements are depreciated over estimated useful lives generally ranging from three to fifteen years. The Company 
evaluates the recoverability of long-lived assets on an ongoing basis. 
Operating Lease Right of Use Assets and Liabilities 
The Company determines if a lease is present at the inception of an agreement. Operating leases are capitalized 
at commencement and are discounted using the Company’s FHLB borrowing rate for a similar term borrowing unless the 
lease defines an implicit rate within the contract. 
The operating lease right of use assets represent the Company’s right to use an underlying asset for the lease term, 
and the operating lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease 
right of use assets and operating lease liabilities are recognized on the lease commencement date based on the present 
value of lease payments over the lease term. No significant judgments or assumptions were involved in developing the 
estimated operating lease liabilities as the Company’s operating lease liabilities largely represent future rental expenses 
associated with operating leases and the borrowing rates are based on publicly available interest rates. 
Business Combinations 
The Company accounts for acquisitions of businesses using the acquisition method of accounting. Under the 
acquisition method, assets acquired and liabilities assumed are recorded at their estimated fair values at the date of 
acquisition. Management utilizes various valuation techniques including discounted cash flow analyses to determine these 
fair values. Any excess of the purchase price over amounts allocated to the acquired assets, including identifiable intangible 
assets, and liabilities assumed is recorded as goodwill. 
Goodwill and Other Intangible Assets 
Goodwill represents the excess of the cost of a business acquisition over the fair value of net assets acquired. On 
a quarterly basis, management assesses whether it is necessary to perform a quantitative impairment test of goodwill. In 
accordance with accounting standards, goodwill is not amortized, but rather is tested for impairment on an annual basis or 
more frequently when events warrant, using a qualitative or quantitative approach.  
Other intangible assets which have finite lives are amortized over their estimated useful lives and also are subject 
to impairment testing. Other intangible assets consist of a core deposit intangible, a below market lease, an above market 
lease liability, a customer relationship and brokered relationship intangible assets. The core deposits intangible assets from 
the acquisitions are being amortized on an accelerated method over ten years. The below market value lease intangible 
assets are being amortized on the straight line method over three years. The above market lease adjustment is being 
amortized on the straight line method over five years. The customer relationship and brokered relationship intangible assets 
are being amortized over ten years.  
Foreclosed Assets 
Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when 
acquired, establishing a new cost basis. If fair value declines subsequent to foreclosure, a valuation allowance is recorded 
through operations. Operating costs after acquisition are expensed. Gains and losses on disposition are included in 
noninterest expense. There were no foreclosed assets at December 31, 2024 and 2023. 
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Heritage Commerce Corp • 2024 Annual Report

 
Retirement Plans 
Expenses for the Company’s non-qualified, unfunded defined benefits plan consists of service and interest cost 
and amortization of gains and losses not immediately recognized. Employee 401(k) and profit sharing plan expense is the 
amount of matching contributions. Deferred compensation and supplemental retirement plan expense allocates the benefits 
over years of service. 
Loss Contingencies 
Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as 
liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. The 
Company’s accounting policy for legal costs related to loss contingencies is to accrue for the probable fees that can be 
reasonably estimated. The Company’s accounting policy for uncertain recoveries is to recognize the anticipated recovery 
when realization is deemed probable. 
Income Taxes 
The Company files consolidated Federal and combined and separate state income tax returns. Income tax expense 
is the total of the current year income tax payable or refunded, the change in deferred tax assets and liabilities, and low 
income housing investment losses, net of tax benefits received. Some items of income and expense are recognized in 
different years for tax purposes when applying generally accepted accounting principles, leading to timing differences 
between the Company’s actual tax liability and the amount accrued for this liability based on book income. These 
temporary differences comprise the “deferred” portion of the Company’s tax expense or benefit, which is accumulated on 
the Company’s books as a deferred tax asset or deferred tax liability until such time as they reverse. 
Realization of the Company’s deferred tax assets is primarily dependent upon the Company generating sufficient 
taxable income to obtain benefit from the reversal of net deductible temporary differences and utilization of tax credit 
carryforwards for Federal and California state income tax purposes. The amount of deferred tax assets considered 
realizable is subject to adjustment in future periods based on estimates of future taxable income. Under generally accepted 
accounting principles, a valuation allowance is required to be recognized if it is “more likely than not” that a deferred tax 
asset will not be realized. The determination of the realizability of the deferred tax assets is highly subjective and dependent 
upon judgment concerning management’s evaluation of both positive and negative evidence, including forecasts of future 
income, cumulative losses, applicable tax planning strategies, and assessments of current and future economic and business 
conditions. 
A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained 
in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax 
benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely 
than not” test, no tax benefit is recorded. The Company recognizes interest and penalties related to uncertain tax positions 
as income tax expense. 
Stock-Based Compensation 
Compensation cost is recognized for stock options and restricted stock awards issued to team members and 
directors, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the 
fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted 
stock awards, RSUs and PRSUs. Compensation cost is recognized over the required service period, generally defined as 
the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the 
requisite service period for the entire award. Compensation cost recognized reflects estimated forfeitures, adjusted as 
necessary for actual forfeitures. 
Comprehensive Income (Loss) 
Total comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other 
comprehensive income (loss) refers to gains and losses that are included in comprehensive income (loss) but are excluded 
from net income (loss) because they have been recorded directly in equity, net of tax, under the provisions of certain 
 
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Heritage Commerce Corp • 2024 Annual Report

 
accounting guidance. The Company’s sources of other comprehensive income (loss) are unrealized gains and losses on 
securities available-for-sale, and I/O strips, which are treated like available-for-sale securities, and the liabilities related to 
the Company’s defined benefit pension plan and the split-dollar life insurance benefit plan. Reclassification adjustments 
result from gains or losses that were realized and included in net income (loss) of the current period that also had been 
included in other comprehensive income as unrealized holding gains and losses. 
Segment Reporting 
HBC is a commercial bank serving clients located in Alameda, Contra Costa, Marin, San Benito, San Francisco, 
San Mateo, and Santa Clara counties of California. Bay View Funding provides business essential working capital 
factoring financing to various industries throughout the United States. No client accounts for more than 10 percent of 
revenue for HBC or the Company. With the previous acquisition of Bay View Funding, the Company has two reportable 
segments consisting of Banking and Factoring.  
Reclassifications 
Certain items in the consolidated financial statements for the years ended December 31, 2023 and 2022 were 
reclassified to conform to the 2024 presentation. These reclassifications did not affect previously reported net income or 
shareholders’ equity. 
Adoption of New Accounting Standards  
Accounting Standards Update (“ASU”) No. 2023-07 “Segment Reporting (Topic 280): Improvements to 
Reportable Segment Disclosures” (“ASU 2023-07”) requires filers to disclose significant segment expenses, an amount 
and description for other segment items, the title and position of the entity’s chief operating decision maker and an 
explanation of how the chief operating decision maker uses the reported measures of profit or loss to assess segment 
performance, and, on an interim basis, certain segment related disclosures that previously were required only on an annual 
basis. ASU 2023-07 is effective for the Company for fiscal years beginning after December 15, 2023 and interim periods 
within fiscal years beginning after December 15, 2024. The Company adopted this guidance and the updated disclosures 
are included in “Note 20 – Business Segment Information.”  
Issued But Not Yet Effective Accounting Standards 
In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-06 - Disclosure 
Improvements - Codification Amendments in Response to the Securities and Exchange Commission’s (“SEC”) Disclosure 
Update and Simplification Initiative. ASU 2023-06 amends the disclosure or presentation requirements related to various 
subtopics in the FASB ASC. ASU 2023-06 was issued in response to the SEC’s August 2018 final rule that updated and 
simplified disclosure requirements. In the final rule, the SEC identified 27 disclosure requirements that were incremental 
to those in the ASC and referred them to the FASB for potential incorporation into the generally accepted accounting 
principles. To avoid duplication, the SEC intended to eliminate those disclosure requirements from existing SEC 
regulations if the FASB incorporated them into the relevant ASC subtopics. The disclosure requirements are currently 
included in either SEC Regulation S-X or SEC Regulation S-K. ASU 2023-06 adds 14 of the 27 identified disclosure or 
presentation requirements to the ASC.  
For entities like HCC that are subject to the SEC’s existing disclosure requirements, the effective date for each 
amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S- K 
becomes effective, with early adoption prohibited. The amendments are to be applied prospectively and, if by June 30, 
2027 the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content 
of the related amendment will be removed from the ASC and will not become effective for any entity. Management intends 
to adopt the provisions of ASU 2023-06 on their respective effective dates. The adoption of the provisions of ASU 2023-06 
is not expected to have a material impact on HCC’s consolidated financial statements. 
In December 2023, FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax 
Disclosures. The updated accounting guidance requires expanded income tax disclosures, including the disaggregation of 
existing disclosures related to the tax rate reconciliation and income taxes paid. The guidance is effective for annual periods 
beginning after December 15, 2024. Prospective application is required, with retrospective application permitted. The 
105
Heritage Commerce Corp • 2024 Annual Report

 
Company will update the related disclosures upon adoption. 
In November 2024, FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense 
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 was issued 
in order to improve the disclosures about a public business entity’s expenses and address requests from investors for more 
detailed information about the types of expenses in commonly presented expense captions. The amendments in 
ASU 2024-03 require disclosure, in the notes to the financial statements, of specified information about certain costs and 
expenses in interim and year-end reporting periods. The amendments in this ASU apply to all public business entities and 
are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning 
after December 15, 2027. Early adoption is permitted. The amendments are to be applied either (1) prospectively to 
financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods 
presented in the financial statements. The Company will update the related disclosures upon adoption.  
 
2) Accumulated Other Comprehensive Income (“AOCI”) 
The following table reflects the changes in AOCI by component for the periods indicated: 
  
 
Year Ended December 31, 2024 and 2023 
 
 
Unrealized 
 
 
 
 
 
 
Gains/(Losses) on  
 
 
 
 
 
Available- 
 
Defined 
 
 
 
 
for-Sale 
 
Benefit 
 
 
 
 
Securities 
 
Pension 
 
 
 
 
and I/O 
 
Plan 
 
 
 
     
Strips 
     
Items (1) 
     
Total 
 
 
(Dollars in thousands) 
Beginning balance January 1, 2024, net of taxes . . . . . . . . . . . . . . . . . .   
$ 
 (7,029) 
$ 
 (5,701) 
$  (12,730)
Other comprehensive income before reclassification,  
net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 3,436  
 
 1,263  
 
 4,699 
Amounts reclassified from other comprehensive loss, 
net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 —  
 
 (74) 
 
 (74)
Net current period other comprehensive income,  
net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 3,436  
  
 1,189  
  
 4,625 
 
 
 
 
 
 
 
Ending balance December 31, 2024, net of taxes . . . . . . . . . . . . . . . . . .   
$ 
 (3,593) 
$ 
 (4,512) 
$ 
 (8,105)
 
 
 
 
 
 
 
Beginning balance January 1, 2023, net of taxes . . . . . . . . . . . . . . . . . .   
$ 
 (11,394) 
$ 
 (5,462) 
$  (16,856)
Other comprehensive income (loss) before reclassification,  
net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 4,365  
  
 (141) 
  
 4,224 
Amounts reclassified from other comprehensive loss,  
net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 —  
  
 (98) 
  
 (98)
Net current period other comprehensive income (loss),  
net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 4,365  
  
 (239) 
  
 4,126 
 
 
 
 
 
 
 
Ending balance December 31, 2023, net of taxes . . . . . . . . . . . . . . . . . .   
$ 
 (7,029) 
$ 
 (5,701) 
$  (12,730)
 
(1) 
This AOCI component is included in the computation of net periodic benefit cost (see Note 13—Benefit Plans) and includes split-
dollar life insurance benefit plan. 
 
 
106
 
Heritage Commerce Corp • 2024 Annual Report

 
 
 
Amounts Reclassified from 
  
 
 
AOCI  
 
 
 
 
Year Ended  
 
 
 
 
December 31,  
 
Affected Line Item Where 
Details About AOCI Components 
     
2024 
     
2023 
     
2022 
     
Net Income is Presented 
 
 
(Dollars in thousands) 
 
 
Amortization of defined benefit pension plan items (1) 
  
 
 
 
 
 
 
Prior transition obligation and actuarial losses (2) . . . . . . . . .  $ 
 209  
$ 
 191  
$ 
 41  
 
Prior service cost and actuarial losses (3) . . . . . . . . . . . . . . . .    
 (104) 
  
 (53) 
  
 (455) 
 
 
   
 105  
  
 138  
  
 (414)  Other noninterest expense 
 
   
 (31) 
  
 (40) 
  
 122   Income tax (expense) benefit 
 
   
 74  
  
 98  
  
 (292)  Net of tax 
Total reclassification from AOCI for the period . . . . . . . . . . .  $ 
 74  
$ 
 98  
$  (292) 
 
 
(1) 
This AOCI component is included in the computation of net periodic benefit cost (see Note 13 — Benefit Plans). 
(2) 
This is related to the split dollar life insurance benefit plan. 
(3) 
This is related to the supplemental executive retirement plan. 
 
 
3) Securities 
The amortized cost and estimated fair value of securities at year-end were as follows: 
 
 
 
 
Gross 
 
Gross 
 
Allowance 
 
Estimated 
 
 
Amortized  
Unrealized  
Unrealized 
 
for Credit 
 
Fair 
December 31, 2024 
     
Cost 
     
Gains 
     
(Losses) 
 
Losses 
     
Value 
 
 
(Dollars in thousands) 
Securities available-for-sale: 
 
 
 
 
 
 
 
 
 
U.S. Treasury . . . . . . . . . . . . . . . . . . . . .   
$ 
 187,095  
$ 
 —  
$ 
 (912)
$ 
 —  
$ 
 186,183 
Agency mortgage-backed securities . . . . .   
 
 74,239  
 
 —  
 
 (4,148)
 
 —  
 
 70,091 
            Total . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 261,334  
$ 
 —  
$ 
 (5,060)
$ 
 —  
$ 
 256,274 
 
 
 
 
 
Gross 
 
Gross 
 
Estimated 
 
Allowance 
 
 
Amortized  
Unrecognized 
Unrecognized 
 
Fair 
 
for Credit 
December 31, 2024 
     
Cost 
     
Gains 
     
(Losses) 
 
Value 
     
Losses 
 
 
(Dollars in thousands) 
Securities held-to-maturity: 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed securities . . . . .   
$ 
 559,548  
$ 
 —  
$ 
 (91,585)
$ 
 467,963  
$ 
 — 
Municipals - exempt from Federal tax . . .   
 
 30,480  
 
 —  
 
 (1,431)
 
 29,049  
 
 (12)
            Total . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 590,028  
$ 
 —  
$ 
 (93,016)
$ 
 497,012  
$ 
 (12)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross 
 
Gross 
 
Allowance 
 
Estimated 
 
 
Amortized  
Unrealized  
Unrealized 
 
for Credit 
 
Fair 
December 31, 2023 
     
Cost 
     
Gains 
     
(Losses) 
 
Losses 
     
Value 
 
 
(Dollars in thousands) 
 
  
Securities available-for-sale: 
 
 
 
 
 
 
 
 
 
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . .  
$ 
 387,990  
$ 
 —  
$ 
 (5,621)
$ 
 —  
$ 
 382,369 
Agency mortgage-backed securities . . . . . .  
 
 64,580  
 
 —  
 
 (4,313)
 
 —  
 
 60,267 
            Total . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
 452,570  
$ 
 —  
$ 
 (9,934)
$ 
 —  
$ 
 442,636 
 
 
 
 
 
Gross 
 
Gross 
 
Estimated 
 
Allowance 
 
 
Amortized  
Unrecognized 
Unrecognized 
 
Fair 
 
for Credit 
December 31, 2023 
     
Cost 
     
Gains 
     
(Losses) 
 
Value 
     
Losses 
 
 
(Dollars in thousands) 
 
  
Securities held-to-maturity: 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed securities . . . . . .  
$ 
 618,374  
$ 
 282  
$ 
 (86,011)
$ 
 532,645  
$ 
 — 
Municipals - exempt from Federal tax . . . .  
 
 32,203  
 
 3  
 
 (724)
 
 31,482  
 
 (12)
            Total . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
 650,577  
$ 
 285  
$ 
 (86,735)
$ 
 564,127  
$ 
 (12)
  
107
Heritage Commerce Corp • 2024 Annual Report

 
Securities with unrealized losses at year end, for which an allowance for credit losses has not been recorded, 
aggregated by investment category and length of time that individual securities have been in an unrealized loss position 
are as follows: 
 
 
Less Than 12 Months  
12 Months or More 
 
Total 
 
 
Fair 
 Unrealized 
Fair 
 
Unrealized  
Fair 
 
Unrealized 
December 31, 2024 
     
Value 
    (Losses)     
Value 
    
(Losses)     
Value 
    
(Losses) 
 
 
(Dollars in thousands) 
Securities available-for-sale: 
    
   
   
   
   
   
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . .   $  9,778  $ 
 (4) $ 176,405  $
 (908) $ 186,183  $ 
 (912)
Agency mortgage-backed securities . . . . . . .     20,383   
 (100)   49,708    (4,048)   70,091    (4,148)
            Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 30,161  $  (104) $ 226,113  $  (4,956) $ 256,274  $  (5,060)
 
  
  
  
  
  
  
Securities held-to-maturity: 
   
   
   
   
   
   
Agency mortgage-backed securities . . . . . . .   $ 10,280  $ 
 (53) $ 456,906  $ (91,532) $ 467,186  $ (91,585)
Municipals — exempt from Federal tax . . . .     4,076   
 (65)   23,733    (1,366)   27,809    (1,431)
            Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 14,356  $  (118) $ 480,639  $ (92,898) $ 494,995  $ (93,016)
 
 
 
 
Less Than 12 Months  
12 Months or More 
 
Total 
 
 
Fair 
 Unrealized 
Fair 
 
Unrealized  
Fair 
 
Unrealized 
December 31, 2023 
    
Value      (Losses)     
Value 
    
(Losses)     
Value 
    
(Losses) 
 
 
(Dollars in thousands) 
Securities available-for-sale: 
   
   
   
   
   
   
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . .   $  4,926  $ 
 (40) $ 377,443  $  (5,581) $ 382,369  $  (5,621)
Agency mortgage-backed securities . . . . . . .    
 —   
 —    60,267    (4,313)   60,267    (4,313)
            Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  4,926  $ 
 (40) $ 437,710  $  (9,894) $ 442,636  $  (9,934)
 
  
  
  
  
  
  
Securities held-to-maturity: 
   
   
   
   
   
   
Agency mortgage-backed securities . . . . . . .   $ 
 —  $ 
 —  $ 520,615  $ (86,011) $ 520,615  $ (86,011)
Municipals — exempt from Federal tax . . . .     9,790   
 (176)   13,151   
 (548)   22,941   
 (724)
            Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  9,790  $  (176) $ 533,766  $ (86,559) $ 543,556  $ (86,735)
 
There were no holdings of securities of any one issuer, other than the U.S. Government and its sponsored entities, 
in an amount greater than 10% of shareholders’ equity. At December 31, 2024, the Company held 393 securities 
(129 available-for-sale and 264 held-to-maturity), of which 387 had fair values below amortized cost. The unrealized 
losses were due to higher interest rates at period end compared to when the securities were purchased. The issuers are of 
high credit quality and all principal amounts are expected to be paid when securities mature. The fair value is expected to 
recover as the securities approach their maturity date and/or market rates decline. The Company does not believe that it is 
more likely than not that the Company will be required to sell a security in an unrealized loss position prior to recovery in 
value.  
 
 
 
108
 
Heritage Commerce Corp • 2024 Annual Report

 
The amortized cost and fair value of debt securities as of December 31, 2024, by contractual maturity, are shown 
below. The expected maturities will differ from contractual maturities if borrowers have the right to call or prepay 
obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. 
 
 
 
 
 
 
 
 
 
Available-for-sale 
 
     
Amortized 
     
Estimated 
 
 
Cost 
 
Fair Value 
 
 
(Dollars in thousands) 
Due three months or less . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 34,927 
 $ 
 34,808 
Due after three months through one year . . . . . . . . . . .    
 142,385  
 
 141,597 
Due after one through five years . . . . . . . . . . . . . . . . . .    
 9,783  
 
 9,778 
Agency mortgage-backed securities . . . . . . . . . . . . . . .    
 74,239  
 
 70,091 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 261,334  
$ 
 256,274 
 
 
 
Held-to-maturity 
 
     
Amortized 
     
Estimated 
 
 
Cost (1) 
 
Fair Value 
 
 
(Dollars in thousands) 
Due after three months through one year . . . . . . . . . . .   $ 
 2,365  
$ 
 2,356 
Due after one through five years . . . . . . . . . . . . . . . . . .    
 7,611  
 
 7,328 
Due after five through ten years . . . . . . . . . . . . . . . . . . .    
 20,504  
 
 19,365 
Agency mortgage-backed securities . . . . . . . . . . . . . . .     
 559,548  
  
 467,963 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 590,028  
$ 
 497,012 
 
(1) Gross of the allowance for credit losses of ($12,000) at December 31, 2024. 
 
 
Securities with amortized cost of $753,369,000 and $1,041,608,000 as of December 31, 2024 and 2023, 
respectively, were pledged to secure public deposits and for other purposes as required or permitted by law or contract. 
 
The allowance for credit losses on the Company’s held-to-maturity debt securities is presented as a reduction to 
the amortized cost basis of held-to-maturity securities on the Company’s Consolidated Balance Sheet. The table below 
presents a roll-forward by major security type for the year ended December 31, 2024 of the allowance for credit losses on 
debt securities held-to-maturity held at period end: 
 
 
 
 
 
 
 
Municipals 
 
 
(Dollars in thousands) 
Beginning balance January 1, 2024. . . . . . . . .   $ 
 12 
Provision for credit losses . . . . . . . . . . . . . . . .    
— 
Ending balance December 31, 2024 . . . . . . . .   $ 
 12 
 
There was an immaterial change in the allowance for credit losses on the Company’s held-to-maturity debt 
securities due to stable balances and bond ratings for the Company’s municipal investment securities at December 31, 
2024 compared to December 31, 2023. 
 
109
Heritage Commerce Corp • 2024 Annual Report

 
4) Loans and Allowance for Credit Losses on Loans 
 
The allowance for credit losses on loans was calculated by pooling loans of similar credit risk characteristics and 
credit monitoring procedures. The loan portfolio is classified into eight segments of loans - commercial, commercial real 
estate – owner occupied, commercial real estate – non-owner occupied, land and construction, home equity, multifamily, 
residential mortgage and consumer and other. See Note 1 – Summary of Significant Accounting Polices - Allowance for 
Credit Losses on Loans for the summary of risk characteristics of each loan segment.  
 
Loan Distribution 
 
Loans by portfolio segment and the allowance for credit losses on loans were as follows at the dates indicated: 
 
 
     
December 31,  
     
December 31,  
 
 
2024 
     
2023 
 
 
(Dollars in thousands) 
Loans held-for-investment: 
 
  
 
  
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 531,350  
$ 
 463,778 
Real estate: 
 
 
 
 
CRE - owner occupied . . . . . . . . . . . . . . . .   
 
 601,636  
 
 583,253 
CRE - non-owner occupied . . . . . . . . . . . . .   
  
 1,341,266  
  
 1,256,590 
Land and construction . . . . . . . . . . . . . . . . .   
  
 127,848  
  
 140,513 
Home equity . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 127,963  
  
 119,125 
Multifamily . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 275,490  
 
 269,734 
Residential mortgages . . . . . . . . . . . . . . . . .   
 
 471,730  
 
 496,961 
Consumer and other . . . . . . . . . . . . . . . . . . . .   
  
 14,837  
  
 20,919 
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 3,492,120  
  
 3,350,873 
Deferred loan fees, net . . . . . . . . . . . . . . . . . . . .   
  
 (183) 
  
 (495)
Loans, net of deferred fees . . . . . . . . . . . . . .   
  
 3,491,937  
  
 3,350,378 
Allowance for credit losses on loans . . . . . . . . .   
  
 (48,953) 
  
 (47,958)
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 3,442,984  
$ 
 3,302,420 
 
 
 
 
110
 
Heritage Commerce Corp • 2024 Annual Report

 
Changes in the allowance for credit losses on loans were as follows for the periods indicated: 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2024 
 
 
  
 
CRE 
 
CRE 
 
  
 
  
 
  
 
  
 
  
 
  
 
 
 
 
 
Owner  
 Non-owner  
Land & 
 
Home 
 
Multi- 
 Residential  Consumer  
 
 
 
     Commercial     Occupied  
Occupied      Construction  
Equity  
Family 
 Mortgages  and Other      
Total 
 
 
(Dollars in thousands) 
Beginning of period balance . . . . . . . . . . . . . . . . . . .   
$ 
 5,853  
$  5,121  
$  25,323  
$ 
 2,352  
$ 
 644  
$  5,053  
$ 
 3,425  
$ 
 187  
$ 
 47,958 
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 (1,305) 
  
 —  
  
 —  
 
 —  
 
 
 
 —  
 
 —  
 
 (299) 
  
 (1,604)
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 336  
  
 27  
  
 —  
 
 —  
 
 97  
 
 —  
 
 —  
  
 —  
  
 460 
Net (charge-offs) recoveries  . . . . . . . . . . . . . . .   
  
 (969) 
  
 27  
  
 —  
 
 —  
 
 97  
 
 —  
 
 —  
  
 (299) 
  
 (1,144)
Provision for (recapture of) credit losses on loans . . . . .   
 
 1,176  
 
 77  
 
 1,456  
 
 (952) 
 
 57  
 
 (318) 
 
 193  
 
 450  
 
 2,139 
End of period balance . . . . . . . . . . . . . . . . . . . .   
$ 
 6,060  
$  5,225  
$  26,779  
$ 
 1,400  
$ 
 798  
$  4,735  
$ 
 3,618  
$ 
 338  
$ 
 48,953 
 
 
 
Year Ended December 31, 2023 
 
 
  
 
CRE 
 
CRE 
 
  
 
  
 
  
 
  
 
  
 
  
 
 
 
 
 
Owner  
 Non-owner  
Land & 
 
Home 
 
Multi- 
 Residential  Consumer  
 
 
 
 
Commercial 
Occupied  
Occupied      Construction  
Equity  
Family 
 Mortgages  and Other      
Total 
 
 
(Dollars in thousands) 
Beginning of period balance . . . . . . . . . . . . . . . . . . .   
$ 
 6,617  
$  5,751  
$  22,135  
$ 
 2,941  
$ 
 666  
$  3,366  
$ 
 5,907  
$ 
 129  
$ 
 47,512 
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 (750) 
  
 —  
  
 —  
 
 —  
 
 (246) 
 
 —  
 
 —  
 
 (15) 
  
 (1,011)
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 346  
  
 11  
  
 —  
 
 —  
 
 351  
 
 —  
 
 —  
  
 —  
  
 708 
Net (charge-offs) recoveries  . . . . . . . . . . . . . . .   
  
 (404) 
  
 11  
  
 —  
 
 —  
 
 105  
 
 —  
 
 —  
  
 (15) 
  
 (303)
Provision for (recapture of) credit losses on loans . . . . .   
 
 (360) 
 
 (641) 
 
 3,188  
 
 (589) 
 
 (127) 
 
 1,687  
 
 (2,482) 
 
 73  
 
 749 
End of period balance . . . . . . . . . . . . . . . . . . . .   
$ 
 5,853  
$  5,121  
$  25,323  
$ 
 2,352  
$ 
 644  
$  5,053  
$ 
 3,425  
$ 
 187  
$ 
 47,958 
 
 
 
Year Ended December 31, 2022 
 
 
  
 
CRE 
 
CRE 
 
  
 
  
 
  
 
  
 
  
 
  
 
 
 
 
 
Owner  
 Non-owner  
Land & 
 
Home 
 
Multi- 
 Residential  Consumer  
 
 
 
 
Commercial 
Occupied  
Occupied      Construction  
Equity  
Family 
 Mortgages  and Other      
Total 
 
 
(Dollars in thousands) 
Beginning of period balance . . . . . . . . . . . . . . . . . . .   
$ 
 8,414  
$  7,954  
$  17,125  
$ 
 1,831  
$ 
 864  
$  2,796  
$ 
 4,132  
$ 
 174  
$ 
 43,290 
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 (434) 
  
 —  
  
 —  
 
 —  
 
 —  
 
 —  
 
 —  
 
 —  
  
 (434)
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 427  
  
 15  
  
 —  
 
 —  
 
 105  
 
 —  
 
 —  
  
 3,343  
  
 3,890 
Net (charge-offs) recoveries  . . . . . . . . . . . . . . .   
  
 (7) 
  
 15  
  
 —  
 
 —  
 
 105  
 
 —  
 
 —  
  
 3,343  
  
 3,456 
Provision for (recapture of) credit losses on loans . . . . .   
 
 (1,790) 
 
 (2,218) 
 
 5,010  
 
 1,110  
 
 (303) 
 
 570  
 
 1,775  
 
 (3,388) 
 
 766 
End of period balance . . . . . . . . . . . . . . . . . . . .   
$ 
 6,617  
$  5,751  
$  22,135  
$ 
 2,941  
$ 
 666  
$  3,366  
$ 
 5,907  
$ 
 129  
$ 
 47,512 
 
The following table presents the amortized cost basis of nonaccrual loans and loans past due over 90 days and 
still accruing at the dates indicated: 
 
 
 
December 31, 2024 
 
 
Nonaccrual  
Nonaccrual  
Loans  
 
 
 
 with no Specific 
with Specific  
over 90 Days  
 
 
 
 
Allowance for  Allowance for 
Past Due 
 
 
 
 
 
Credit 
 
Credit 
 
 and Still 
 
 
 
     
Losses 
    
Losses 
   
Accruing 
    
Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 313  $ 
 701  $ 
 489  $ 1,503 
Real estate: 
   
   
   
   
CRE - Owner Occupied . . . . . . . . . . . . .     
 —   
 —   
 —    
 — 
CRE - Non-Owner Occupied . . . . . . . .    
 —   
 —   
 —    
 — 
Land and construction . . . . . . . . . . . . . .     
 5,874   
 —   
 —     5,874 
Home equity . . . . . . . . . . . . . . . . . . . . . .     
 77   
 —   
 —    
 77 
Consumer and other . . . . . . . . . . . . . . . . . .    
 —   
 213   
 —   
 213 
     Total . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 6,264  $ 
 914  $ 
 489  $ 7,667 
 
 
 
111
Heritage Commerce Corp • 2024 Annual Report

 
 
 
 
December 31, 2023 
 
 
Nonaccrual  
Nonaccrual   
Loans  
 
 
 
 with no Specific with Specific   over 90 Days 
 
 
 
 
Allowance for  Allowance for   
Past Due  
 
 
 
 
Credit 
 
Credit 
  
 and Still  
 
 
 
Losses 
 
Losses 
     Accruing  
Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 946  $ 
 290   $ 
 889  $  2,125 
Real estate: 
   
   
    
   
CRE - Owner Occupied . . . . . . . . . . . . .    
 — 
 — 
 —   
 — 
CRE - Non-Owner Occupied . . . . . . . .     
 — 
 — 
 —    
 — 
Land and construction . . . . . . . . . . . . . .    
 4,661 
 — 
 —    4,661 
Home equity . . . . . . . . . . . . . . . . . . . . . .   
 142 
 — 
 — 
 
 142 
Residential mortgages . . . . . . . . . . . . . .   
 779 
 — 
 — 
 
 779 
     Total . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 6,528  $ 
 290  $ 
 889  $  7,707 
 
The following tables presents the aging of past due loans by class at the dates indicated: 
 
 
     
December 31, 2024 
 
     
30 - 59 
     
60 - 89 
     90 Days or      
 
      
 
      
 
 
 
Days 
 
Days 
 
Greater  
Total 
 
 
 
 
 
 
Past Due  
Past Due  
Past Due  
Past Due  
Current 
 
Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 7,364  $ 
 2,295  $ 
 1,393  $  11,052  $ 
 520,298  $ 
 531,350 
Real estate: 
   
   
   
   
   
   
CRE - Owner Occupied . . . . . . . . . . . . .     
 1,879   
 —   
 —   
 1,879    
 599,757    
 601,636 
CRE - Non-Owner Occupied . . . . . . . . .    
 4,479   
 —   
 —   
 4,479   
 1,336,787    1,341,266 
Land and construction . . . . . . . . . . . . . .     
 4,290   
 2,323   
 5,874     12,487    
 115,361    
 127,848 
Home equity . . . . . . . . . . . . . . . . . . . . . .     
 78   
 750   
 —    
 828    
 127,135    
 127,963 
Multifamily  . . . . . . . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 275,490   
 275,490 
Residential mortgages . . . . . . . . . . . . . .    
 850   
 —   
 —   
 850   
 470,880   
 471,730 
Consumer and other . . . . . . . . . . . . . . . . . . .     
 —   
 117   
 213    
 330    
 14,507    
 14,837 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  18,940  $ 
 5,485  $ 
 7,480  $  31,905  $  3,460,215  $  3,492,120 
 
 
    
December 31, 2023 
 
    
30 - 59 
     
60 - 89 
     90 Days or       
 
      
 
      
 
 
 
Days 
 
Days 
 
Greater 
 
Total 
 
 
 
 
 
 
Past Due  
Past Due  
Past Due  
Past Due  
Current 
 
Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . .   $
 6,688  $
 2,030  $
 1,264  $
 9,982  $  453,796  $  463,778 
Real estate: 
   
   
   
   
   
   
CRE - Owner Occupied . . . . . . . . . . . . . .     
 —   
 —   
 —   
 —     583,253     583,253 
CRE - Non-Owner Occupied . . . . . . . . . .    
 1,289   
 —   
 —   
 1,289    1,255,301    1,256,590 
Land and construction . . . . . . . . . . . . . . .     
 955   
 —   
 3,706    
 4,661     135,852     140,513 
Home equity . . . . . . . . . . . . . . . . . . . . . . .     
 —   
 —   
 142    
 142     118,983     119,125 
Multifamily  . . . . . . . . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 269,734   
 269,734 
Residential mortgages . . . . . . . . . . . . . . .    
 3,794   
 510   
 779   
 5,083   
 491,878   
 496,961 
Consumer and other . . . . . . . . . . . . . . . . . . . .     
 —   
 —   
 —    
 —    
 20,919    
 20,919 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $
 12,726  $
 2,540  $
 5,891  $
 21,157  $ 3,329,716  $ 3,350,873 
 
 
 
 
112
 
Heritage Commerce Corp • 2024 Annual Report

 
The following table presents the past due loans on nonaccrual and current loans on nonaccrual at the dates 
indicated: 
 
 
December 31,  
 
December 31, 
 
     
2024 
     
2023 
 
 
(Dollars in thousands) 
Past due nonaccrual loans . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 7,068 
$ 
 6,100 
Current nonaccrual loans . . . . . . . . . . . . . . . . . . . . . . . . .    
 110 
 
 718 
Total nonaccrual loans . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 7,178 
$ 
 6,818 
 
Management’s classification of a loan as “nonaccrual” is an indication that there is reasonable doubt as to the full 
recovery of principal or interest on the loan. At that point, the Company stops accruing interest income, and reverses any 
uncollected interest that had been accrued as income. The Company resumes recognizing interest income only as cash 
interest payments are received and it has been determined the collection of all outstanding principal is not in doubt. 
Credit Quality Indicators 
Concentrations of credit risk arise when a number of clients are engaged in similar business activities, or activities 
in the same geographic region, or have similar features that would cause their ability to meet contractual obligations to be 
similarly affected by changes in economic conditions. The Company’s loan portfolio is concentrated in commercial 
(primarily manufacturing, wholesale, and service) and real estate lending, with the remaining balance in consumer loans. 
While no specific industry concentration is considered significant, the Company’s lending operations are located in the 
Company’s market areas that are dependent on the technology and real estate industries and their supporting companies. 
Thus, the Company’s borrowers and their guarantors could be adversely impacted by a downturn in these sectors of the 
economy which could reduce the demand for loans and adversely impact the borrowers’ ability to repay their loans. 
 
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers 
to service their debt such as: current financial information, historical payment experience, credit documentation, public 
information, and current economic trends, and other factors. The Company analyzes loans individually by classifying the 
loans as to credit risk. This analysis is performed on a quarterly basis. Nonclassified loans generally include those loans 
that are expected to be repaid in accordance with their contractual loan terms. Loans categorized as special mention have 
potential weaknesses that may, if not checked or corrected, weaken the credit or inadequately protect the Company’s 
position at some future date. These loans pose elevated risk, but their weaknesses do not yet justify a substandard 
classification. Classified loans are those loans that are assigned a substandard, substandard-nonaccrual, or doubtful risk 
rating using the following definitions: 
 
Special Mention. A Special Mention asset has potential weaknesses that deserve management’s close attention. 
If left uncorrected, these potential weaknesses may result in a deterioration of the repayment prospects for the asset or in 
the credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution 
to sufficient risk to warrant adverse classification.  
 
Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying 
capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses 
that will jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will 
sustain some loss if the deficiencies are not corrected. 
 
Substandard-Nonaccrual.  Loans classified as substandard-nonaccrual are inadequately protected by the current 
net worth and paying capacity of the obligor or of the collateral pledged, if any, and it is probable that the Company will 
not receive payment of the full contractual principal and interest. Loans so classified have a well-defined weakness or 
weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution 
will sustain some loss if the deficiencies are not corrected. In addition, the Company no longer accrues interest on the loan 
because of the underlying weaknesses. 
 
 
113
Heritage Commerce Corp • 2024 Annual Report

 
Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with 
the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, 
conditions, and values, highly questionable and improbable. 
 
Loss.  Loans classified as loss are considered uncollectable or of so little value that their continuance as assets is 
not warranted. This classification does not necessarily mean that a loan has no recovery or salvage value; but rather, there 
is much doubt about whether, how much, or when the recovery would occur. Loans classified as loss are immediately 
charged off against the allowance for credit losses on loans. Therefore, there is no balance to report as of December 31, 
2024 and December 31, 2023. 
 
Loans may be reviewed at any time throughout a loan’s duration. If new information is provided, a new risk 
assessment may be performed if warranted. 
 
The following tables present term loans amortized cost by vintage and loan grade classification, and revolving 
loans amortized cost by loan grade classification at December 31, 2024 and December 31, 2023. The loan grade 
classifications are based on the Bank’s internal loan grading methodology. Loan grade categories for doubtful and loss 
rated loans are not included on the tables below as there are no loans with those grades at December 31, 2024 and 
December 31, 2023. The vintage year represents the period the loan was originated or in the case of renewed loans, the 
period last renewed. The amortized balance is the loan balance less any purchase discounts, plus any loan purchase 
premiums. The loan categories are based on the loan segmentation in the Company’s CECL reserve methodology based 
on loan purpose and type.  
 
 
114
 
Heritage Commerce Corp • 2024 Annual Report

 
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Revolving 
  
 
 
  
 
 
Loans 
  
 
 
 
Term Loans Amortized Cost Basis by Originated Period as of December 31, 2024 
 
Amortized  
  
 
 
 
2024 
 
2023 
 
2022 
 
2021 
 
2020 
 Prior Periods  
Cost Basis 
 
Total 
 
 
(Dollars in thousands) 
Commercial:  
   
   
   
   
   
  
 
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .   $  133,643  $ 
 27,101  $ 
 17,114  $ 
 16,312  $ 
 10,444  $ 
 28,671  $ 
 289,147  $ 
 522,432 
   Special Mention . . . . . . . . . . . . .    
 1,927   
 —   
 327   
 86   
 —   
 358   
 423   
 3,121 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 146   
 —   
 32   
 —   
 4,405   
 200   
 4,783 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 591   
 209   
 —   
 214   
 —   
 1,014 
       Total . . . . . . . . . . . . . . . . . . .    
 135,570   
 27,247   
 18,032   
 16,639   
 10,444   
 33,648   
 289,770   
 531,350 
 
   
   
   
   
   
  
 
   
   
CRE - Owner Occupied: 
   
   
   
   
   
  
 
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 57,988   
 31,688   
 81,133   
 95,939   
 65,152   
 244,430   
 6,899   
 583,229 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 —   
 7,132   
 443   
 1,342   
 —   
 8,917 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 6,333   
 3,157   
 —   
 —   
 9,490 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
       Total . . . . . . . . . . . . . . . . . . .    
 57,988   
 31,688   
 81,133   
 109,404   
 68,752   
 245,772   
 6,899   
 601,636 
 
   
   
   
   
   
  
 
   
   
CRE - Non-Owner Occupied: 
   
   
   
   
   
  
 
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 137,935   
 222,142   
 229,993   
 250,266   
 27,031   
 442,105   
 5,356   
 1,314,828 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 4,810   
 4,890   
 —   
 —   
 —   
 9,700 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 4,480   
 —   
 11,658   
 600   
 16,738 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
       Total . . . . . . . . . . . . . . . . . . .    
 137,935   
 222,142   
 234,803   
 259,636   
 27,031   
 453,763   
 5,956   
 1,341,266 
 
   
   
   
   
   
  
 
   
   
Land and construction: 
   
   
   
   
   
  
 
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 32,691   
 45,250   
 31,599   
 9,899   
 212   
 —   
 —   
 119,651 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 2,323   
 —   
 2,323 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 3,815   
 978   
 1,081   
 —   
 5,874 
       Total . . . . . . . . . . . . . . . . . . .    
 32,691   
 45,250   
 31,599   
 13,714   
 1,190   
 3,404   
 —   
 127,848 
 
   
   
   
   
   
  
 
   
   
Home equity: 
   
   
   
   
   
  
 
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 2,378   
 122,207   
 124,585 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 750   
 —   
 2,551   
 3,301 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 77   
 —   
 77 
       Total . . . . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 750   
 2,455   
 124,758   
 127,963 
 
   
   
   
   
   
  
 
   
   
Multifamily: 
   
   
   
   
   
  
 
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 20,218   
 46,304   
 39,609   
 53,488   
 5,249   
 109,930   
 692   
 275,490 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
       Total . . . . . . . . . . . . . . . . . . .    
 20,218   
 46,304   
 39,609   
 53,488   
 5,249   
 109,930   
 692   
 275,490 
 
   
   
   
   
   
  
 
   
   
Residential mortgage: 
   
   
   
   
   
  
 
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 3,757   
 1,659   
 180,979   
 251,167   
 1,006   
 32,384   
 —   
 470,952 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 —   
 607   
 —   
 —   
 —   
 607 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 171   
 —   
 171 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
       Total . . . . . . . . . . . . . . . . . . .    
 3,757   
 1,659   
 180,979   
 251,774   
 1,006   
 32,555   
 —   
 471,730 
 
   
   
   
   
   
  
 
   
   
Consumer and other: 
   
   
   
   
   
  
 
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 405   
 237   
 1,338   
 43   
 —   
 2,027   
 10,574   
 14,624 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 213   
 213 
       Total . . . . . . . . . . . . . . . . . . .    
 405   
 237   
 1,338   
 43   
 —   
 2,027   
 10,787   
 14,837 
 
   
   
   
   
   
  
 
   
   
          Total loans . . . . . . . . . . . . . .   $  388,564  $ 
 374,527  $  587,493  $ 
 704,698  $  114,422  $ 
 883,554  $ 
 438,862  $ 
 3,492,120 
 
   
   
   
   
   
  
 
   
   
Risk Grades: 
   
   
   
   
   
  
 
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .   $  386,637  $ 
 374,381  $  581,765  $ 
 677,114  $  109,094  $ 
 861,925  $ 
 434,875  $ 
 3,425,791 
   Special Mention . . . . . . . . . . . . .    
 1,927   
 —   
 5,137   
 12,715   
 443   
 4,023   
 423   
 24,668 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 146   
 —   
 10,845   
 3,907   
 16,234   
 3,351   
 34,483 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 591   
 4,024   
 978   
 1,372   
 213   
 7,178 
          Grand Total  . . . . . . . . . . . .   $  388,564  $ 
 374,527  $  587,493  $ 
 704,698  $  114,422  $ 
 883,554  $ 
 438,862  $ 
 3,492,120 
 
 
 
115
Heritage Commerce Corp • 2024 Annual Report

 
 
  
 
  
 
  
 
  
 
  
 
  
 
 
Revolving 
  
 
 
  
 
 
Loans 
  
 
 
 
Term Loans Amortized Cost Basis by Originated Period as of December 31, 2023 
 
Amortized  
  
 
 
    
2023 
 
2022 
 
2021 
 
2020 
 
2019 
 Prior Periods  
Cost Basis 
 
Total 
 
 
(Dollars in thousands) 
Commercial:  
   
   
   
   
   
   
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .   $ 
 99,387  $ 
 25,250  $ 
 19,732  $ 
 14,929  $ 
 11,893  $ 
 22,134  $ 
 258,461  $ 
 451,786 
   Special Mention . . . . . . . . . . . . .    
 2,107   
 1,092   
 41   
 —   
 133   
 1,134   
 467   
 4,974 
   Substandard . . . . . . . . . . . . . . . .    
 4   
 1,516   
 —   
 100   
 185   
 3,835   
 142   
 5,782 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 349   
 —   
 116   
 771   
 —   
 1,236 
       Total . . . . . . . . . . . . . . . . . . .    
 101,498   
 27,858   
 20,122   
 15,029   
 12,327   
 27,874   
 259,070   
 463,778 
 
   
   
   
   
   
   
   
   
CRE - Owner Occupied: 
   
   
   
   
   
   
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 32,993   
 86,688   
 110,613   
 68,184   
 52,885   
 214,729   
 10,302   
 576,394 
   Special Mention . . . . . . . . . . . . .    
 —   
 250   
 3,241   
 462   
 —   
 1,802   
 —   
 5,755 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 1,100   
 4   
 —   
 1,104 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
       Total . . . . . . . . . . . . . . . . . . .    
 32,993   
 86,938   
 113,854   
 68,646   
 53,985   
 216,535   
 10,302   
 583,253 
 
   
   
   
   
   
   
   
   
CRE - Non-Owner Occupied: 
   
   
   
   
   
   
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 225,505   
 243,080   
 267,870   
 28,315   
 92,648   
 370,552   
 3,199   
 1,231,169 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 7,493   
 10,040   
 —   
 17,533 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 7,614   
 274   
 7,888 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
       Total . . . . . . . . . . . . . . . . . . .    
 225,505   
 243,080   
 267,870   
 28,315   
 100,141   
 388,206   
 3,473   
 1,256,590 
 
   
   
   
   
   
   
   
   
Land and construction: 
   
   
   
   
   
   
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 40,142   
 52,862   
 27,419   
 9,273   
 1,864   
 —   
 —   
 131,560 
   Special Mention . . . . . . . . . . . . .    
 2,163   
 —   
 —   
 —   
 —   
 —   
 —   
 2,163 
   Substandard . . . . . . . . . . . . . . . .    
 2,129   
 —   
 —   
 —   
 —   
 —   
 —   
 2,129 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 3,706   
 955   
 —   
 —   
 —   
 4,661 
       Total . . . . . . . . . . . . . . . . . . .    
 44,434   
 52,862   
 31,125   
 10,228   
 1,864   
 —   
 —   
 140,513 
 
   
   
   
   
   
   
   
   
Home equity: 
   
   
   
   
   
   
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 1,463   
 111,250   
 112,713 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 2,110   
 2,110 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 4,160   
 4,160 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 142   
 142 
       Total . . . . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 1,463   
 117,662   
 119,125 
 
   
   
   
   
   
   
   
   
Multifamily: 
   
   
   
   
   
   
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 47,089   
 41,112   
 55,557   
 5,394   
 42,129   
 75,890   
 355   
 267,526 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 2,208   
 —   
 2,208 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
       Total . . . . . . . . . . . . . . . . . . .    
 47,089   
 41,112   
 55,557   
 5,394   
 42,129   
 78,098   
 355   
 269,734 
 
   
   
   
   
   
   
   
   
Residential mortgage: 
   
   
   
   
   
   
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 1,684   
 187,417   
 268,617   
 1,037   
 6,861   
 28,892   
 —   
 494,508 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 973   
 —   
 —   
 —   
 701   
 —   
 1,674 
   Substandard-Nonaccrual . . . . . . .    
 —   
 779   
 —   
 —   
 —   
 —   
 —   
 779 
       Total . . . . . . . . . . . . . . . . . . .    
 1,684   
 189,169   
 268,617   
 1,037   
 6,861   
 29,593   
 —   
 496,961 
 
   
   
   
   
   
   
   
   
Consumer and other: 
   
   
   
   
   
   
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .    
 2,332   
 1,376   
 3   
 —   
 —   
 2,089   
 14,961   
 20,761 
   Special Mention . . . . . . . . . . . . .    
 —   
 —   
 62   
 —   
 —   
 96   
 —   
 158 
   Substandard . . . . . . . . . . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
   Substandard-Nonaccrual . . . . . . .    
 —   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
       Total . . . . . . . . . . . . . . . . . . .    
 2,332   
 1,376   
 65   
 —   
 —   
 2,185   
 14,961   
 20,919 
 
   
   
   
   
   
   
   
   
          Total loans . . . . . . . . . . . . . .   $ 
 455,535  $  642,395  $ 
 757,210  $ 
 128,649  $ 
 217,307  $ 
 743,954  $ 
 405,823  $ 
 3,350,873 
 
   
   
   
   
   
   
   
   
Risk Grades: 
   
   
   
   
   
   
   
   
   Pass  . . . . . . . . . . . . . . . . . . . . .   $ 
 449,132  $  637,785  $ 
 749,811  $ 
 127,132  $ 
 208,280  $ 
 715,749  $ 
 398,528  $ 
 3,286,417 
   Special Mention . . . . . . . . . . . . .    
 4,270   
 1,342   
 3,344   
 462   
 7,626   
 13,072   
 2,577   
 32,693 
   Substandard . . . . . . . . . . . . . . . .    
 2,133   
 2,489   
 —   
 100   
 1,285   
 14,362   
 4,576   
 24,945 
   Substandard-Nonaccrual . . . . . . .    
 —   
 779   
 4,055   
 955   
 116   
 771   
 142   
 6,818 
          Grand Total  . . . . . . . . . . . .   $ 
 455,535  $  642,395  $ 
 757,210  $ 
 128,649  $ 
 217,307  $ 
 743,954  $ 
 405,823  $ 
 3,350,873 
 
 
 
 
116
 
Heritage Commerce Corp • 2024 Annual Report

 
The following table presents the gross charge-offs by class of loans and year of origination for the year ended 
December 31, 2024:  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Charge-offs by Originated Period for the Year Ended December 31, 2024 
 Revolving   
 
 
    
2024 
    
2023 
     
2022 
     
2021 
    
2020 
   Prior Periods   
Loans 
   
Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . . .   $ 
57  $ 
 424  $ 
 —  $ 
 —  $ 
 $ 
 675  $ 
 149  $ 
 1,305 
Real estate: 
  
   
   
   
   
   
   
   
CRE - Owner Occupied . . . . . . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
CRE - Non-Owner Occupied . . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
Land and construction . . . . . . . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
Home equity . . . . . . . . . . . . . . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
  
 — 
Multifamily . . . . . . . . . . . . . . . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
Residential mortgages . . . . . . . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
Consumer and other. . . . . . . . . . . . . . . .    
—   
 —   
 —   
 —   
  
 —   
 299   
 299 
Total . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
57  $ 
 424  $ 
 —  $ 
 —  $ 
 —  $ 
 675  $ 
 448  $ 
 1,604 
 
   
   
   
   
   
   
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 
  
 
 
 
Gross Charge-offs by Originated Period for the Year Ended December 31, 2023 
 Revolving   
 
 
    
2023 
     
2022 
     
2021 
     
2020 
    
2019 
    Prior Periods   
Loans    
Total 
 
 
(Dollars in thousands) 
Commercial . . . . . . . . . . . . . . . . . . . .   $ 
35  $ 
 95  $ 
 —  $ 
 —  $ 
 339  $ 
 281  $ 
 —  $ 
 750 
Real estate: 
  
   
   
   
   
   
   
   
CRE - Owner Occupied . . . . . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
CRE - Non-Owner Occupied . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
Land and construction . . . . . . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
Home equity . . . . . . . . . . . . . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
 246   
 246 
Multifamily . . . . . . . . . . . . . . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
Residential mortgages . . . . . . . . . . .    
—   
 —   
 —   
 —   
 —   
 —   
 —   
 — 
Consumer and other. . . . . . . . . . . . . . .    
—   
 —   
 —   
 —   
 15   
 —   
 —   
 15 
Total . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
35  $ 
 95  $ 
 —  $ 
 —  $ 
 354  $ 
 281  $ 
 246  $ 
 1,011 
 
The amortized cost basis of collateral-dependent loans at December 31, 2024 and December 31, 2023 was 
$701,000 and $290,000, respectively, and were secured by business assets. 
 
When management determines that foreclosures are probable, expected credit losses for collateral-dependent 
loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. For loans 
which foreclosure is not probable, but for which repayment is expected to be provided substantially through the operation 
or sale of the collateral and the borrower is experiencing financial difficulty, management has elected the practical 
expedient under ASC 326 to estimate expected credit losses based on the fair value of collateral, adjusted for selling costs 
as appropriate. The class of loan represents the primary collateral type associated with the loan. Significant quarter over 
quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators 
like appraisal value. 
Loan Modifications 
 
Occasionally, the Company modifies loans to borrowers experiencing financial difficulty by providing principal 
forgiveness, term extension, payment delay, or interest reduction. When principal forgiveness is provided, the amount of 
forgiveness is charged-off against the allowance for credit losses.  
 
In some cases, the Company provides multiple types of concessions on one loan. Typically, one type of 
concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, 
another concession, such as principal forgiveness, may be granted.  
 
During the year ended December 31, 2024, there were commercial loan modifications with a term extension 
totaling $12,000, representing 0.00% of the total class of financing receivables, and included a weighted average term 
extension of 12 months. During the year ended December 31, 2023, there were commercial loan modifications with a 
payment delay totaling $63,000, a combination term extension and interest rate reduction totaling $3,000, representing 
0.01% of the total class of financing receivables, and included principal forgiveness totaling $7,000, a weighted average 
interest rate reduction of 0.25%, and a weighted average term extension of 14 months.  
 
 
117
Heritage Commerce Corp • 2024 Annual Report

 
The Company has not committed to lend any additional amounts to these borrowers. There were no payment 
defaults for loans modified for the years ended December 31, 2024 and December 31, 2023. 
 
5) Loan Servicing 
At December 31, 2024, 2023, and 2022, the Company serviced SBA loans sold to the secondary market of 
approximately $48,286,000, $55,845,000, and $64,819,000, respectively. 
Servicing assets represent the servicing spread generated from the sold guaranteed portions of SBA loans. The 
weighted average servicing rate for all loans serviced was 1.08%, 1.09%, and 1.10% at December 31, 2024, 2023, and 
2022, respectively. 
Servicing rights are included in “accrued interest receivable and other assets” on the consolidated balance sheets. 
Activity for loan servicing rights follows: 
 
   
  
2024 
     
2023 
    
2022 
 
 
 
(Dollars in thousands) 
 
Beginning of year balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  415  $  549  $
 655  
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     110     126     124  
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (181)    (260)    (230) 
End of year balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  344  $  415  $
 549  
 
There was no valuation allowance for servicing rights at December 31, 2024, 2023, and 2022, because the 
estimated fair value of the servicing rights was greater than the carrying value. The estimated fair value of loan servicing 
rights was $612,000, $710,000, and $813,000, at December 31, 2024, 2023 and 2022, respectively. The fair value of 
servicing rights at December 31, 2024, was estimated using a weighted average constant prepayment rate (“CPR”) 
assumption of 19.09%, and a weighted average discount rate assumption of 14.75%. The fair value of servicing rights at 
December 31, 2023, was estimated using a weighted average CPR assumption of 17.18%, and a weighted average discount 
rate assumption of 16.59%. The fair value of servicing rights at December 31, 2022, was estimated using a weighted 
average CPR assumption of 15.12%, and a weighted average discount rate assumption of 20.75%. 
The weighted average discount rate and CPR assumptions used to estimate the fair value of the I/O strip 
receivables are the same as for the servicing rights. Management reviews the key economic assumptions used to estimate 
the fair value of I/O strip receivables on a quarterly basis. The fair value of the I/O strip can be adversely impacted by a 
significant increase in either the prepayment speed of the portfolio or the discount rate. 
I/O strip receivables are included in “accrued interest receivable and other assets” on the consolidated balance 
sheets. Activity for I/O strip receivables follows: 
 
 
 
 
 
 
 
 
 
 
 
 
    
2024 
     
2023 
    
2022 
 
 
 
(Dollars in thousands) 
 
Beginning of year balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  117  $  152  $  221  
Unrealized loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 (35)   
 (35)   
 (69) 
End of year balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $
 82  $  117  $  152  
 
 
 
 
 
 
 
118
 
Heritage Commerce Corp • 2024 Annual Report

 
6) Premises and Equipment 
Premises and equipment at year-end were as follows: 
 
     
2024 
     
2023 
 
 
(Dollars in thousands) 
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
 3,638  $ 
 3,637 
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 2,900    
 2,900 
Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 15,768    
 14,347 
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 7,142    
 6,767 
 
   
 29,448    
 27,651 
Accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . .     (19,308)    (17,794)
Premises and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
 10,140  $ 
 9,857 
 
Depreciation and amortization expense was $1,341,000, $1,115,000, and $1,121,000, in 2024, 2023, and 2022, 
respectively. 
 
7) Leases 
The Company recognizes the following for all leases, at the commencement date: (1) a lease liability, which is a 
lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use 
(“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use, of a specified asset for the 
lease term. The Company is impacted as a lessee of the offices and real estate used for operations. The Company’s lease 
agreements include options to renew at the Company’s option. No lease extensions are reasonably certain to be exercised, 
therefore it was not considered in the calculation of the ROU asset and lease liability. As of December 31, 2024 and 
December 31, 2023, operating lease ROU assets, included in other assets and lease liabilities, included in other liabilities, 
totaled $30,566,000 and $31,674,000, respectively.   
 
The following table presents the quantitative information for the Company’s leases: 
 
 
    
Year Ended 
  
 
 
December 31, 
 
 
 
2024 
     
2023 
 
 
  
 
 
Operating Lease Cost (Cost resulting from lease payments) . . . .   $
6,853  
$ 
6,763  
Operating Lease - Operating Cash Flows (Fixed Payments) . . . .   $
6,943  
$ 
6,701  
Operating Lease - ROU assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $
30,566  
$ 
31,674  
Operating Lease - Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $
30,566  
$ 
31,674  
Weighted Average Lease Term - Operating Leases . . . . . . . . . . .    
5.08 years 
 5.88 years 
Weighted Average Discount Rate - Operating Leases . . . . . . . . .    
5.57 %   
4.98% 
 
 
 
119
Heritage Commerce Corp • 2024 Annual Report

 
The following maturity analysis shows the undiscounted cash flows due on the Company’s operating lease 
liabilities as of December 31, 2024: 
 
 
     
(Dollars in thousands) 
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 7,145 
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 6,603 
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 6,380 
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 5,779 
2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 5,503 
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 3,954 
     Total undiscounted cash flows . . . . . . . . . . . . . . . . . . . . . . . . . .    
 35,364 
Discount on cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 (4,798)
     Total lease liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 30,566 
 
8) Goodwill and Other Intangible Assets 
Goodwill 
 
At December 31, 2024, the carrying value of goodwill was $167,631,000, which included $13,044,000 of 
goodwill related to its acquisition of Bay View Funding, $32,619,000 from its acquisition of Focus Business Bank, 
$13,819,000 from its acquisition of Tri-Valley Bank, $24,271,000 from its acquisition of United American Bank and 
$83,878,000 from its acquisition of Presidio Bank. 
 
ASC 350-20 outlines the methodology used to determine if goodwill has been impaired and to measure any loss 
resulting from an impairment. The Company assesses goodwill for impairment annually as of November 30 or more 
frequently if events or changes in circumstances indicate that impairment may exist, in accordance with ASC 350-20. The 
Company first performs a qualitative assessment (“Step Zero”) to determine whether it is more likely than not that the fair 
value of a reporting unit is less than its carrying value. If the qualitative assessment indicates it is more likely than not that 
the fair value of equity of a reporting unit is less than book value, then a quantitative impairment test is required. The 
quantitative assessment identifies if a reporting unit’s fair value is less than its carrying value. If it is, then the Company 
will recognize goodwill impairment equal to the difference between the carrying amount of the reporting unit and its fair 
value, not to exceed the carrying amount of goodwill.  
 
On a quarterly basis, management assesses whether it is necessary to perform a quantitative impairment test of 
goodwill. In addition, the Company hires a third party vendor to perform a qualitative assessment annually as of 
November 30, or on an interim basis if an event triggering impairment assessment may have occurred. Potential 
impairment indicators considered include the condition of the economy and banking industry; government intervention 
and regulatory updates; the impact of recent events to financial performance and cost factors of the reporting units; 
performance of the Company’s stock and other relevant events. The Company completed its annual goodwill impairment 
assessment as of November 30, 2024 with the assistance of a third party vendor. The goodwill related to the acquisition of 
Bay View Funding was evaluated separately for impairment under this analysis. The qualitative assessment indicated that 
it was more likely than not that the fair value of the reporting units exceeded the carrying value. No events or circumstances 
since the November 30, 2024 annual impairment test were noted that would indicate it was more likely than not a goodwill 
impairment exists. 
 
The following table summarizes the carrying amount of goodwill by segment for the periods indicated: 
 
 
 
December 31,   
December 31,  
 
     
2024 
     
2023 
 
 
(Dollars in thousands) 
Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 154,587  
$ 
 154,587 
Factoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 13,044  
 
 13,044 
   Total Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 167,631  
$ 
 167,631 
 
 
 
 
120
 
Heritage Commerce Corp • 2024 Annual Report

 
Other Intangible Assets 
The Company’s intangible assets are summarized as follows for the periods indicated: 
 
 
 
December 31, 2024 
 
 
Gross 
 
 
 
 
 
 
Carrying   
Accumulated   
 
 
    
Amount    Amortization     
Total 
 
 
(Dollars in thousands) 
Core deposit intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  25,023   
 (18,670) $  6,353 
Customer relationship and brokered relationship intangibles . . . . . . . . . . . . .    
 1,900   
 (1,900)  
 — 
Below market leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 110   
 (24)  
 86 
   Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  27,033  $  (20,594) $  6,439 
 
 
 
December 31, 2023 
 
 
Gross 
 
 
 
 
 
 
Carrying   
Accumulated  
 
    
    
Amount    Amortization    
Total 
 
 
(Dollars in thousands) 
Core deposit intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  25,023   
 (16,646) $  8,377 
Customer relationship and brokered relationship intangibles . . . . . . . . . . . . . .    
 1,900   
 (1,741)  
 159 
Below market leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 110   
 (19)  
 91 
   Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  27,033  $  (18,406) $  8,627 
 
As of December 31, 2024, the estimated amortization expense for future periods is as follows: 
 
 
 
 
 
Below/ 
 
 
 
 
Core 
 
(Above) 
 
Total 
 
 
Deposit 
 
Market 
 
Amortization 
Year 
     
Intangible 
 
Lease 
     
Expense 
 
 
 
(Dollars in thousands) 
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
 1,795  
 
 18  
 
 1,813 
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 1,512  
 
 18  
 
 1,530 
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 1,438  
 
 18  
 
 1,456 
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 999  
 
 18  
 
 1,017 
2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 
 609  
 
 14  
 
 623 
 
 
$ 
 6,353  
$ 
 86 
$ 
 6,439 
 
Impairment testing of the intangible assets is performed at the individual asset level. Impairment exists if the 
carrying amount of the asset is not recoverable and exceeds its fair value at the date of the impairment test. For intangible 
assets, estimates of expected future cash flows (cash inflows less cash outflows) that are directly associated with an 
intangible asset are used to determine the fair value of that asset. Management makes certain estimates and assumptions 
in determining the expected future cash flows from core deposit and customer relationship intangibles including account 
attrition, expected lives, discount rates, interest rates, servicing costs and other factors. Significant changes in these 
estimates and assumptions could adversely impact the valuation of these intangible assets. If an impairment loss exists, 
the carrying amount of the intangible asset is adjusted to a new cost basis. The new cost basis is then amortized over the 
remaining useful life of the asset. Based on its assessment, management concluded that there was no impairment of 
intangible assets at December 31, 2024 and December 31, 2023. 
 
121
Heritage Commerce Corp • 2024 Annual Report

 
9) Deposits 
The following table presents the scheduled maturities of all time deposits for the periods indicated:  
 
     (Dollars in thousands) 
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 507,263 
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 38,868 
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 18,013 
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 — 
2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 22 
2030 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 282 
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 564,447 
 
Time deposits of $250,000 and over were $206,755,000 and $192,228,000 at December 31, 2024 and 2023, 
respectively. ICS/CDARS time deposits totaled $318,704,000 and $239,189,000 at December 31, 2024 and 2023, 
respectively, and are included in the table above.  ICS/CDARS interest-bearing demand deposits and money market 
deposits have no scheduled maturity date, and therefore, are excluded from the table above. ICS/CDARS were comprised 
of the following at the dates indicated: 
 
 December 31,  December 31,  
 
 
2024 
 
2023 
 
 
(Dollars in thousands) 
Interest-bearing demand deposits . . . . . . . . . . . . . . . . . . . . . . .   $ 
 433,355  $ 
 424,991 
Money market deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 345,527   
 189,925 
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 318,704   
 239,189 
   Total ICS/CDARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  1,097,586  $ 
 854,105 
 
The ICS/CDARS program allows clients with deposits in excess of FDIC-insured limits to obtain full  coverage 
on time deposits through a network of banks within the ICS/CDARS program. Deposits gathered through these programs 
are not considered brokered deposits under current regulatory reporting guidelines. 
The Bank’s uninsured deposits were approximately $2.2 billion, or 45% of total deposits, at December 31, 2024, 
compared to $2.01 billion, or 46% of total deposits, at December 31, 2023. There were no brokered deposits at both 
December 31, 2024 and 2023. Deposits from executive officers, directors, and their affiliates were $833,000 and $468,000 
at December 31, 2024 and 2023, respectively. 
10) Borrowing Arrangements 
Federal Home Loan Bank Borrowings, Federal Reserve Bank Borrowings, and Available Lines of Credit 
HBC has off-balance sheet liquidity in the form of Federal funds purchase arrangements with correspondent 
banks, and lines of credit from the FHLB and FRB. HBC maintains a collateralized line of credit with the FHLB of San 
Francisco. Under this line, HBC can borrow from the FHLB on a short-term (typically overnight) or long-term (over one 
year) basis. HBC can also borrow from the FRB discount window. In addition, the Company has a line of credit with a 
correspondent bank. The following table shows the collateral value of loans and securities pledged for the lines of credit 
(if collateralized), total available lines of credit, the amounts outstanding, and the remaining available at the dates 
indicated: 
 
 
 
122
 
Heritage Commerce Corp • 2024 Annual Report

 
 
 
December 31, 2024 
 
     
Collateral 
     
Total 
 
 
  
Remaining 
 
 
Value 
 
Available 
 
Outstanding 
  
Available 
 
 
(Dollars in thousands) 
FHLB collateralized borrowing capacity . . . . . . . . . . . . . .  $  1,233,768  $ 
 815,760  $ 
 — 
$ 
 815,760 
FRB discount window collateralized line of credit . . . . . .    1,755,347    1,383,149   
 — 
  1,383,149 
Federal funds purchase arrangements . . . . . . . . . . . . . . . .   
N/A   
 90,000   
 — 
 
 90,000 
Holding company line of credit . . . . . . . . . . . . . . . . . . . . .    
N/A    
 25,000   
 — 
  
 25,000 
 
 $  2,989,115  $  2,313,909  $ 
 — 
$  2,313,909 
 
 
 
December 31, 2023 
 
     
Collateral 
     
Total 
 
 
 
 
Remaining 
 
 
Value 
 
Available 
 
Outstanding 
 
 
Available 
 
 
(Dollars in thousands) 
FHLB collateralized borrowing capacity . . . . . . . . . . . . . .  $  1,600,371  $  1,100,931  $ 
 —  $  1,100,931 
FRB discount window collateralized line of credit . . . . . .    1,658,642    1,235,573   
 —    1,235,573 
Federal funds purchase arrangements . . . . . . . . . . . . . . . .   
N/A   
 90,000   
 — 
 
 90,000 
Holding company line of credit . . . . . . . . . . . . . . . . . . . . .    
N/A    
 20,000   
 — 
  
 20,000 
   Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  3,259,013  $  2,446,504  $ 
 — 
$  2,446,504 
 
HBC may also utilize securities sold under repurchase agreements to manage our liquidity position. There were 
no securities sold under agreements to repurchase at December 31, 2024, and 2023. 
Subordinated Debt 
On May 11, 2022, the Company completed a private placement offering of $40,000,000 aggregate principal 
amount of its 5.00% fixed-to-floating rate subordinated notes due May 15, 2032 (“Sub Debt due 2032”). The Company 
used the net proceeds of the Sub Debt due 2032 for general corporate purposes, including the repayment on June 1, 2022 
of the Company’s $40,000,000 aggregate principal amount of 5.25% fixed-to-floating rate subordinated notes due June 1, 
2027. The Sub Debt due 2032, net of unamortized issuance costs of $347,000, totaled $39,653,000 at December 31, 2024, 
and qualifies as Tier 2 capital for the Company under the guidelines established by the Federal Reserve Bank. The debt 
issuance costs are amortized on a straight line basis through the maturity date of the subordinated notes. 
11) Income Taxes 
Income tax expense consisted of the following for the year ended December 31, as follows: 
 
     
2024 
     
2023 
     
2022 
  
 
 
(Dollars in thousands) 
  
Currently payable tax: 
 
  
 
  
 
  
 
Federal . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 9,639  
$ 
 15,888  
$ 
 18,994  
State . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 6,029  
  
 9,241  
  
 8,798  
Total currently payable . . . . . . . . .   
  
 15,668  
  
 25,129  
  
 27,792  
Deferred tax expense (benefit):  
 
  
 
  
 
  
 
Federal . . . . . . . . . . . . . . . . . . . . . . .   
  
 582  
  
 616  
  
 (1,237) 
State . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 (104) 
  
 231  
  
 1,256  
Total deferred tax  . . . . . . . . . . . . .   
  
 478  
  
 847  
  
 19  
Income tax expense . . . . . . . . . . .   
$ 
 16,146  
$ 
 25,976  
$ 
 27,811  
 
123
Heritage Commerce Corp • 2024 Annual Report

 
The effective tax rate differs from the Federal statutory rate for the years ended December 31, as follows: 
 
 
 
 
 
 
 
 
 
     
2024      
2023      
2022   
Statutory Federal income tax rate . . . . . . . . . . . . . . . . . . . .    
21.0  %   
 21.0 %   
 21.0 % 
State income taxes, net of federal tax benefit . . . . . . . . . . .    
8.3  %   
 8.3 %   
 8.4 % 
Stock option/restricted stock windfall tax benefit . . . . . . . .   
(0.2)% 
 0.1 % 
 (0.1)% 
Increase in cash surrender value of life insurance . . . . . . .    
(0.8)%   
 (0.5)%   
 (0.4)% 
Non-taxable interest income . . . . . . . . . . . . . . . . . . . . . . . . .    
(0.3)%   
 (0.2)%   
 (0.2)% 
Low income housing credits, net of investment losses . . . .    
(0.2)%   
 (0.2)%   
 (0.2)% 
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
0.7  %   
 0.2 %   
 1.0 % 
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
28.5  %   
28.7  %   
29.5  % 
 
Deferred tax assets and liabilities that result from the tax effects of temporary differences between the carrying 
amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes at 
December 31, are as follows: 
 
 
 
 
 
 
 
 
 
     
2024 
     
2023 
 
 
 
(Dollars in thousands) 
 
Deferred tax assets: 
   
   
 
Allowance for credit losses on loans . . . . . . . . . . . . . . . . . . . . . . .   $  14,380  $  14,087  
Lease accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 8,979   
 9,304  
Defined postretirement benefit obligation . . . . . . . . . . . . . . . . . . .    
 7,451   
 7,778  
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 3,241    
 3,150  
Stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 1,647    
 1,501  
Securities available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 1,483   
 2,897  
Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 1,267    
 1,375  
State income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 1,266   
 1,874  
Federal net operating loss carryforwards . . . . . . . . . . . . . . . . . . . .     
 1,148    
 1,403  
California net operating loss carryforwards . . . . . . . . . . . . . . . . . .    
 986   
 986  
Nonaccrual interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 97   
 135  
Split-dollar life insurance benefit plan . . . . . . . . . . . . . . . . . . . . . .     
 75    
 71  
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 296    
 323  
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 42,316    
 44,884  
 
  
  
 
Deferred tax liabilities: 
   
   
 
Lease accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 (8,979)  
 (9,304) 
Loan fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 (2,265)  
 (2,315) 
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 (1,531)  
 (1,473) 
Intangible liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 (1,337)  
 (1,639) 
FHLB stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 (156)   
 (156) 
I/O strips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 (19)  
 (30) 
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 (212)   
 (202) 
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (14,499)    (15,119) 
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  27,817  $  29,765  
 
At December 31, 2024, the Company’s federal net operating loss (“NOL”) carryforwards were $5,469,000 and 
the Company’s California net operating loss carryforwards were $11,498,000. These amounts are attributable to the prior 
merger transactions. The realization of these NOL carryforwards for Federal and State tax purposes are limited on the 
amount of net operating losses that can be utilized annually under the current tax law. The above NOL carryforwards are 
presented net of the losses that will expire unutilized under current tax law. Since the NOL carryforwards are already 
presented net of the amounts that will expire by operation of current tax law, there is no need for a valuation allowance as 
the Company fully expects to utilize the amounts disclosed. 
 
Under generally accepted accounting principles, a valuation allowance is required if it is “more likely than not” 
that a deferred tax asset will not be realized. The determination of the realizability of the deferred tax assets is highly 
subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, 
 
124
 
Heritage Commerce Corp • 2024 Annual Report

 
including forecasts of future income, cumulative losses, applicable tax planning strategies, and assessments of current and 
future economic and business conditions. At December 31, 2024 and 2023 the Company’s recorded amount of uncertain 
tax positions was not considered significant for financial reporting and the Company does not expect this amount to 
significantly increase or decrease in the next twelve months. 
At December 31, 2024 and December 31, 2023 the Company had net deferred tax assets of $27,817,000 and 
$29,765,000, respectively. At December 31, 2024 and December 31, 2023, management determined that a valuation 
allowance for deferred tax assets was not necessary. 
The Company and its subsidiaries are subject to U.S. Federal income tax as well as income tax of the State of 
California. The Company is no longer subject to examination by Federal and state taxing authorities for years before 2021, 
and by the State of California taxing authority for years before 2020. 
The following table reflects the carrying amounts of the low income housing investments included in accrued 
interest receivable and other assets, and the future commitments included in accrued interest payable and other liabilities 
for the periods indicated: 
 
     
December 31,   
December 31,  
 
 
2024 
     
2023 
 
 
(Dollars in thousands) 
Low income housing investments . . . . . . . . . . . . . . . . . . . . .   
$ 
 2,201  
$ 
 2,794 
Future commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 475  
$ 
 494 
 
The Company expects $4,000 of the future commitments to be paid in 2025, and $471,000 in 2026 through 2027. 
For tax purposes, the Company recognized low income housing tax credits of $563,000 and $720,000 for the 
years ended December 31, 2024 and December 31, 2023, respectively, and low income housing investment expense of 
$594,000 and $743,000, respectively.  The Company recognizes low income housing investment expenses as a component 
of income tax expense. 
 
12) Equity Plan 
The Company maintained an Amended and Restated 2004 Equity Plan (the “2004 Plan”) for directors, officers, 
and key team members. The 2004 Plan was terminated on May 23, 2013. On May 23, 2013, the Company’s shareholders 
approved the 2013 Equity Incentive Plan (the “2013 Plan”). On May 21, 2020, the shareholders approved an amendment 
to the 2013 Equity Incentive Plan to increase the number of shares available from 3,000,000 to 5,000,000 shares. The 2013 
Plan was terminated on May 25, 2023. The shareholders approved the 2023 Equity Incentive Plan (the “2023 Plan”) on 
May 25, 2023, which reserved for issuance 600,000 shares, plus the number of shares available for issuance under the 
2013 Plan that had not been made subject to outstanding awards as of the effective date of the 2023 Plan. These plans are 
collectively referred to as “Equity Plans.” The Equity Plans provide for the grant of incentive and nonqualified stock 
options, restricted stock, RSUs and PRSUs. The Equity Plans provide that the option price for both incentive and 
nonqualified stock options will be determined by the Board of Directors at no less than the fair value at the date of grant. 
Each RSU granted to non-executive team members generally vests ratably over three years. For the year ended 
December 31, 2024, the Company granted 314,730 RSUs. Options granted vest on a schedule determined by the Board of 
Directors at the time of grant. Generally, options vest over four years. All options expire no later than ten years from the 
date of grant. There were 900,292 shares available for the issuance of equity awards under the 2023 Plan as of 
December 31, 2024. 
 
The executive officers that participate in the Company’s Long Term Incentive Equity Program receive 50% of 
their award value in RSUs and 50% of their award value in PRSUs contingent on return on average tangible common 
equity (“ROATCE”) performance compared to a peer group at the end of a three year performance period.  PRSUs are 
subject to cliff vesting after a three year performance period commencing in the initial year of grant. The earned PRSUs, 
if any, shall vest on the date on which the Board of Directors certifies whether and to what extent the performance goal 
has been achieved following the end of the performance period. For the year ended December 31, 2024, the Company 
granted 149,923 shares of PRSUs.  
 
125
Heritage Commerce Corp • 2024 Annual Report

 
Restricted stock is subject to time vesting. Restricted stock granted to the Board of Directors generally vests in 
one year. For the year ended December 31, 2024, the Company granted 57,213 shares of restricted stock. 
Stock option activity under the equity plans is as follows: 
 
     
 
     
 
     
Weighted      
 
 
 
 
 
Weighted 
 
Average 
 
 
 
 
 
 
Average 
 
Remaining  
Aggregate 
 
 
Number 
 
Exercise 
 
Contractual  
Intrinsic 
Total Stock Options 
 
of Shares 
 
Price 
 
Life (Years)  
Value 
Outstanding at January 1, 2024 . . . . . . . . . . . . . . . .   
 2,637,356  
$ 
 10.40  
 
 
  
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 (139,515) 
$ 
 4.95  
 
 
  
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . .   
 (275,345) 
$ 
 10.50  
 
 
  
Outstanding at December 31, 2024 . . . . . . . . . . .   
 2,222,496  
$ 
 10.73   
 5.02  
$ 
 1,333,193 
Vested or expected to vest . . . . . . . . . . . . . . . . . . . .   
 2,089,146  
  
  
 5.02  
$ 
 1,253,201 
Exercisable at December 31, 2024 . . . . . . . . . . . . . .   
 1,859,168  
  
  
 4.45  
$ 
 917,207 
 
Information related to the equity plans for each of the last three years: 
 
 
December 31,  
 
    
2024 
   
2023 
   
2022 
Intrinsic value of options exercised . . . . . . . . . . . . . . . .   $ 
 647,984 
$ 
 805,334 
$  1,674,072 
Cash received from option exercise . . . . . . . . . . . . . . . .   $ 
 690,679 
$  1,219,286 
$  2,049,587 
Tax (expense) benefit realized from option exercises . .   $ 
 (14,828) $ 
 20,527 
$ 
 180,414 
Weighted average fair value of options granted . . . . . . .   $ 
N/A 
$ 
 1.34 
$ 
 2.22 
 
As of December 31, 2024, there was $600,227 of total unrecognized compensation cost related to nonvested stock 
options granted under the equity plans. That cost is expected to be recognized over a weighted-average period of 
approximately 1.78 years. 
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model 
that uses the assumptions noted in the following table, including the weighted average assumptions for the option grants 
in each year. 
 
 
December 31,  
 
 
 
2024      
2023  
2022 
 
Expected life in months (1) . . . . . . . . . . . . . . . . . . . . . . . . . . .    
N/A  
 72  
 72 
Volatility (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
N/A  
 35 %   
 31 %   
Weighted average risk-free interest rate (2) . . . . . . . . . . . . . . .    
N/A  
 3.52 %   
 2.89 %   
Expected dividends (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
N/A  
 6.98 %   
 4.68 %   
 
(1) 
The expected life of employee stock options represents the weighted average period the stock options are expected to remain 
outstanding based on historical experience. Volatility is based on the historical volatility of the stock price over the same period of 
the expected life of the option. 
(2) 
Based on the U.S. Treasury constant maturity interest rate with a term consistent with the expected life of the option granted. 
(3) 
Each grant’s dividend yield is calculated by annualizing the most recent quarterly cash dividend and dividing that amount by the 
market price of the Company’s common stock as of the grant date 
 
The Company estimates the impact of forfeitures based on historical experience. Should the Company’s current 
estimate change, additional expense could be recognized or reversed in future periods. The Company issues authorized 
shares of common stock to satisfy stock option exercises. 
 
126
 
Heritage Commerce Corp • 2024 Annual Report

 
Restricted stock activity under the equity plans is as follows: 
 
 
 
 
Weighted 
  
 
 
 
 
Average Grant   
 
 
Number 
 
Date Fair 
  
Total Restricted Stock Award 
     
of Shares 
     
Value 
  
Nonvested shares at January 1, 2024 . . . . . . . . . . . . . . . . . . . . . .    
 185,413  
$ 
 9.86  
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 57,123  
$ 
 8.49  
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 (123,260) 
$ 
 9.12  
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 (31,215) 
$ 
 11.43  
Nonvested shares at December 31, 2024 . . . . . . . . . . . . . . . .    
 88,061  
$ 
 9.45  
 
As of December 31, 2024, there was $281,000 of total unrecognized compensation cost related to nonvested 
restricted stock awards granted under the 2013 Plan and 2023 Plan. The cost is expected to be recognized over a weighted-
average period of approximately 0.58 years.  
 
Total compensation cost for the 2004 Plan, 2013 Plan and 2023 Plan charged against income was $2,841,000, 
$2,396,000, $3,178,000, for 2024, 2023, and 2022, respectively. The total income tax (benefit) expense was $280,000, 
$54,000, and ($94,000) for the years ended December 31, 2024, 2023, and 2022, respectively. 
 
RSU activity under the Equity Plans is as follows: 
 
 
 
 
 
Weighted 
 
 
 
 
Average Grant 
 
 
Number 
 
Date Fair 
Total RSUs  
     
of Shares      
Value 
Nonvested shares at January 1, 2024 . . . . . . . . . . . . . . . . . . . . . . . .   
 119,362  
$ 
 7.41 
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 314,730  
$ 
 8.75 
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 (35,837) 
$ 
 7.46 
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 (40,589) 
$ 
 7.84 
Nonvested shares at December 31, 2024 . . . . . . . . . . . . . . . . . .   
 357,666  
$ 
 8.53 
 
As of December 31, 2024, there were $2,314,000 of total unrecognized compensation cost related to unvested 
RSUs granted under the Equity Plans. The cost is expected to be recognized over a weighted average period of 2.22 years. 
 
PRSU activity under the Equity Plans is as follows: 
 
 
 
 
 
Weighted 
 
 
 
 
Average Grant 
 
 
Number 
 
Date Fair 
Total PRSUs 
     
of Shares      
Value 
Nonvested shares at January 1, 2024 . . . . . . . . . . . . . . . . . . . . . . . .   
 119,358  
$ 
 7.41 
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 149,923  
$ 
 8.49 
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
 (39,862) 
$ 
 7.75 
Nonvested shares at December 31, 2024 . . . . . . . . . . . . . . . . . .   
 229,419  
$ 
 8.06 
 
As of December 31, 2024, there were $1,151,000 of total unrecognized compensation cost related to unvested 
PRSUs granted under the Equity Plans. The cost is expected to be recognized over a weighted average period of 1.96 years. 
 
13) Benefit Plans 
401(k) Savings Plan 
The Company offers a 401(k) savings plan that allows team members to contribute up to a maximum percentage 
of their compensation, as established by the Internal Revenue Code. The Company made a discretionary matching 
 
 
127
Heritage Commerce Corp • 2024 Annual Report

 
contribution of up to $3,000 for each team member’s contributions in 2024 and 2023. Contribution expense was $965,000, 
$949,000, and $942,000 in 2024, 2023 and 2022, respectively. 
Employee Stock Ownership Plan 
The Company sponsors a non-contributory employee stock ownership plan (“ESOP”). To participate in this plan, 
a team member must have worked at least 1,000 hours during the year and must be employed by the Company at year-end. 
Employer contributions to the ESOP are discretionary. Contributions to the ESOP have been suspended since 2010 and 
ESOP was “frozen” as of January 1, 2019. At December 31, 2024, the ESOP owned 83,319 shares of the Company’s 
common stock.  
Deferred Compensation Plan 
The Company has a nonqualified deferred compensation plan for some of its team members. Under the deferred 
compensation plan, a team member may defer up to 100% of their bonus and 50% of their regular salary into a deferred 
account. Amounts deferred are invested in a portfolio of approved investment choices as directed by the team member. 
Amounts deferred by team members to the deferred compensation plan will be distributed at a future date that they have 
selected or upon termination of employment. There were seven and eight team members who elected to participate in the 
deferred compensation plan during 2024 and 2023, respectively.  
Nonqualified Defined Benefit Pension Plan 
The Company has a supplemental retirement plan (“SERP”) covering some current and some former key 
executives and directors. While the SERP remains active for those participants, the Company has not approved any new 
participation in the SERP since 2011. The SERP is a nonqualified defined benefit plan. Benefits are unsecured as there are 
no SERP assets. The SERP is an unfunded, nonqualified defined benefit plan. The combined number of active and 
retired/terminated participants in the SERP was 49 at December 31, 2024. The defined benefit represents a stated amount 
for key executives and directors that generally vests over nine years and is reduced for early retirement. The projected 
benefit obligation is included in “Accrued interest payable and other liabilities” on the consolidated balance sheets. The 
measurement date of the SERP is December 31. 
The following table sets forth the SERP’s status at December 31: 
 
 
 
 
 
 
 
 
 
     
2024 
     
2023 
  
 
 
(Dollars in thousands) 
  
Change in projected benefit obligation: 
   
   
 
Projected benefit obligation at beginning of year . . . . . . . . . . . . . . .   $  26,452  $  25,800  
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 205    
 192  
Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 (917)   
 793  
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 1,272    
 1,296  
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (1,701)    (1,629) 
Projected benefit obligation at end of year . . . . . . . . . . . . . . . . . . .   $  25,311  $  26,452  
Amounts recognized in accumulated other comprehensive loss: 
   
   
 
Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $
 2,173  $
 2,892  
 
 
 
 
128
 
Heritage Commerce Corp • 2024 Annual Report

 
Weighted-average assumptions used to determine the benefit obligation at year-end: 
 
     
2024 
     
2023 
  
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 5.50 %   
 4.95 % 
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . .   
N/A  
N/A  
Estimated benefit payments over the next ten years, which reflect anticipated future events, service and other 
assumptions, are as follows: 
 
     
Estimated 
  
 
 
Benefit 
  
Year 
 
Payments 
  
 
 
(Dollars in thousands) 
  
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 1,880  
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 2,211  
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 2,336  
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 2,396  
2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 2,422  
2030 to 2034 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
 
 12,549  
 
The following table presents the amount of periodic cost recognized for the periods indicated: 
 
 
 
 
 
 
 
 
 
 
Year Ended  
 
 
December 31,  
 
     
2024 
     
2023 
 
 
(Dollars in thousands) 
Components of net periodic benefit cost: 
 
 
 
 
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
 205  
$ 
 192 
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 1,272  
  
 1,296 
Amortization of net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . .  
  
 104  
  
 52 
   Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
 1,581  
$ 
 1,540 
 
 
 
 
Amount recognized in other comprehensive income (loss) . . . . . .  
$ 
 719  
$ 
 (521)
 
The components of net periodic benefit cost other than the service cost component are included in the line item 
“other noninterest expense” in the Consolidated Statements of Income. The estimated net actuarial loss and prior service 
cost for the SERP that will be amortized from Accumulated Other Comprehensive Loss into net periodic benefit cost over 
the next fiscal year are $48,000 as of December 31, 2024.  
Net periodic benefit cost for the years ended December 31, 2024 and 2023 were determined using the following 
assumption: 
 
 
 
 
 
 
 
     
2024 
     
2023 
  
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 4.95 %  
 5.17 %
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
N/A  
N/A  
 
Split-Dollar Life Insurance Benefit Plan 
The Company maintains life insurance policies for some current and some former directors and officers that are 
subject to split-dollar life insurance agreements, some of which continues after the participant’s employment and 
retirement. The policies acquired from Focus and Presidio do not include a post-retirement benefit. All participants are 
fully vested in their split-dollar life insurance benefits. The accrued benefit liability for the split-dollar insurance 
agreements represents either the present value of the future death benefits payable to the participants’ beneficiaries or the 
 
 
 
129
Heritage Commerce Corp • 2024 Annual Report

 
present value of the estimated cost to maintain term life insurance, depending on the contractual terms of the participant’s 
underlying agreement. 
The split-dollar life insurance projected benefit obligation is included in “Accrued interest payable and other 
liabilities” on the consolidated balance sheets. The measurement date of the split-dollar life insurance benefit plan is 
December 31. 
The following table sets forth the funded status of the split-dollar life insurance benefits for the periods indicated: 
 
 
 
 
 
 
 
 
     December 31,      December 31,  
 
 
2024 
     
2023 
 
 
(Dollars in thousands) 
Change in projected benefit obligation: 
   
   
Projected benefit obligation at beginning of year . . . . . . . . . . . . .   $ 
 6,951  $ 
 7,060 
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 344    
 365 
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 (679)   
 (474)
Projected benefit obligation at end of period . . . . . . . . . . . . . . . .   $ 
 6,616  $ 
 6,951 
 
Amounts recognized in accumulated other comprehensive loss at periods indicated consist of: 
 
 
 
 
 
 
 
 
     December 31,      December 31, 
 
 
2024 
     
2023 
 
 
(Dollars in thousands) 
Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 1,728  $ 
 2,108 
Prior transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 611    
 701 
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . .   $ 
 2,339  $ 
 2,809 
 
Weighted-average assumption used to determine the benefit obligation at year-end follow: 
 
 
 
 
 
 
 
     
2024 
     
2023 
  
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 5.50 %   
 4.95 % 
 
Components of net periodic benefit cost during the periods indicated are: 
 
 
 
 
 
 
 
 
 
Year Ended  
 
 
December 31,  
 
     
2024 
     
2023 
 
 
(Dollars in thousands) 
Amortization of prior transition obligation  
 
 
 
  
 
and actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
 (209) 
$ 
 (191)
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 344  
  
 365 
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
 135  
$ 
 174 
 
 
 
 
Amount recognized in other comprehensive income . . . . . . . . . . . . .  
$ 
 470  
$ 
 283 
 
The estimated net actuarial loss and prior transition obligation for the split-dollar life insurance benefit plan that 
will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are 
($258,000) and ($209,000) as of December 31, 2024 and 2023, respectively.  
Weighted-average assumption used to determine the net periodic benefit cost: 
 
 
 
 
 
 
 
     
2024 
     
2023 
  
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 4.95 %   
 5.17 % 
 
130
 
Heritage Commerce Corp • 2024 Annual Report

 
14) Fair Value 
Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable 
inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of 
inputs that may be used to measure fair value: 
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability 
to access as of the measurement date. 
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or 
liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; or other inputs 
that are observable or can be corroborated by observable market data (for example, interest rates and yield curves 
observable at commonly quoted intervals, prepayment speeds, credit risks, and default rates). 
Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions 
that market participants would use in pricing an asset or liability. 
Financial Assets and Liabilities Measured on a Recurring Basis 
The fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized 
securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to 
value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the 
securities’ relationship to other benchmark quoted securities (Level 2 inputs). The Company uses matrix pricing 
(Level 2 inputs) to establish the fair value of its securities available-for-sale. 
The fair value of interest-only (“I/O”) strip receivable assets is based on a valuation model used by a third party. 
The Company is able to compare the valuation model inputs and results to widely available published industry data for 
reasonableness (Level 2 inputs). 
 
 
 
 
Fair Value Measurements Using 
  
 
    
 
     
    Significant     
 
  
 
 
 
 
Quoted Prices in  
Other 
 
Significant   
 
 
 
 Active Markets for 
Observable  
Unobservable   
 
 
 
 
Identical Assets  
Inputs 
 
Inputs 
  
 
 
Balance 
 
(Level 1) 
 
(Level 2) 
 
(Level 3) 
  
 
 
(Dollars in thousands) 
  
Assets at December 31, 2024 
  
  
  
  
 
Available-for-sale securities: 
  
  
  
  
 
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  186,183  $ 
 186,183  $ 
 —  $ 
 —  
Agency mortgage-backed securities . . . . . . . . . . . . . . . .    
 70,091   
 —   
 70,091   
 —  
I/O strip receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 82   
 —   
 82   
 —  
 
  
  
  
  
 
Assets at December 31, 2023 
  
  
  
  
 
Available-for-sale securities: 
  
  
  
  
 
U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  382,369  $ 
 382,369  $ 
 —  $ 
 —  
Agency mortgage-backed securities . . . . . . . . . . . . . . . .    
 60,267   
 —   
 60,267   
 —  
I/O strip receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 117   
 —   
 117   
 —  
 
Assets and Liabilities Measured on a Non-Recurring Basis 
The fair value of collateral dependent loans individually evaluated with specific allocations of the allowance for 
credit losses on loans is generally based on recent real estate appraisals. The appraisals may utilize a single valuation 
approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely 
made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data 
available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for 
determining fair value. Collateral dependent loans carried at fair value on a non-recurring basis are immaterial.  
 
 
131
Heritage Commerce Corp • 2024 Annual Report

 
Foreclosed assets are valued at the time the loan is foreclosed upon and the asset is transferred to foreclosed 
assets. The fair value is based primarily on third party appraisals, less costs to sell. The appraisals may utilize a single 
valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are 
routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income 
data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining 
fair value. At December 31, 2024 and December 31, 2023, there were no foreclosed assets on the balance sheet.   
 
Fair Value of Financial Instruments 
 
The carrying amounts and estimated fair values of financial instruments at December 31, 2024 are as follows: 
 
 
 
 
 
 
 Estimated Fair Value 
 
     
 
     
 
     Significant      
 
     
 
 
 
 
 
Quoted Prices in  
Other 
 
Significant  
 
 
 
 
 Active Markets for 
Observable  
Unobservable  
 
 
 
Carrying 
 
Identical Assets  
Inputs 
 
Inputs 
 
 
 
 
Amounts 
 
(Level 1) 
 
(Level 2) 
 
(Level 3) 
 
Total 
 
 
(Dollars in thousands) 
Assets: 
   
   
   
   
   
Cash and cash equivalents . . . . . . . . . . . .   $  968,123  $ 
 968,123  $
 —  $
 —  $  968,123 
Securities available-for-sale . . . . . . . . . .      256,274    
 186,183    
 70,091    
 —     256,274 
Securities held-to-maturity . . . . . . . . . . .      590,016    
 —     497,012    
 —     497,012 
Loans (including loans held-for-sale) . . .      3,494,312 (1)   
 —    
 2,375     3,304,196     3,306,571 
FHLB stock, FRB stock, and other 
  
  
  
   
  
    investments . . . . . . . . . . . . . . . . . . . . . .     
 32,556    
 —    
 —    
 —    
N/A 
Accrued interest receivable . . . . . . . . . . .     
 14,940    
 506   
 2,141   
 12,293    
 14,940 
I/O strips receivables . . . . . . . . . . . . . . . .     
 82    
 —    
 82    
 —    
 82 
Liabilities: 
  
  
  
  
   
Time deposits . . . . . . . . . . . . . . . . . . . . . .   $  564,447  $ 
 —  $  566,695  $
 —  $  566,695 
Other deposits . . . . . . . . . . . . . . . . . . . . . .      4,255,584    
 —     4,255,584    
 —     4,255,584 
Subordinated debt . . . . . . . . . . . . . . . . . . .    
 39,653   
 —   
 34,853   
 —   
 34,853 
Accrued interest payable . . . . . . . . . . . . .     
 6,350    
 —    
 6,350    
 —    
 6,350 
 
(1) Before allowance for credit losses on loans of $48,953,000. 
 
 
 
 
 
132
 
Heritage Commerce Corp • 2024 Annual Report

 
The carrying amounts and estimated fair values of financial instruments at December 31, 2023 are as follows: 
 
 
 
 
 
 
Estimated Fair Value 
 
     
 
    
 
    
Significant     
 
    
 
 
 
 
 
Quoted Prices in  
Other 
 
Significant  
 
 
 
 
 Active Markets for 
Observable  
Unobservable  
 
 
 
Carrying 
 
Identical Assets  
Inputs 
 
Inputs 
 
 
 
 
Amounts 
 
(Level 1) 
 
(Level 2) 
 
(Level 3) 
 
Total 
 
 
(Dollars in thousands) 
Assets: 
   
   
   
   
   
Cash and cash equivalents . . . . . . . . . . .   $  408,129  $ 
 408,129  $ 
 —  $ 
 —  $  408,129 
Securities available-for-sale . . . . . . . . .      442,636    
 382,369    
 60,267    
 —     442,636 
Securities held-to-maturity . . . . . . . . . .      650,565    
 —     564,127    
 —     564,127 
Loans (including loans held-for-sale) . .      3,352,583 (1)   
 —    
 2,205     3,172,512     3,174,717 
FHLB stock, FRB stock, and other 
  
  
  
  
  
    investments . . . . . . . . . . . . . . . . . . . . .     
 32,540    
 —    
 —    
 —    
N/A 
Accrued interest receivable . . . . . . . . . .     
 14,959    
 1,255   
 1,764   
 11,940    
 14,959 
I/O strips receivables . . . . . . . . . . . . . . .     
 117    
 —    
 117    
 —    
 117 
Liabilities: 
  
  
  
  
   
Time deposits . . . . . . . . . . . . . . . . . . . . .   $  469,472  $ 
 —  $  471,693  $ 
 —  $  471,693 
Other deposits . . . . . . . . . . . . . . . . . . . . .      3,908,986    
 —     3,908,986    
 —     3,908,986 
Subordinated debt . . . . . . . . . . . . . . . . . .    
 39,502 
 
 — 
 
 31,902 
 
 — 
 31,902 
Accrued interest payable . . . . . . . . . . . .     
 4,688    
 —    
 4,688    
 —    
 4,688 
 
(1) Before allowance for credit losses on loans of $47,958,000. 
 
 
 
15) Commitments and Contingencies 
Loss Contingencies  
 
Within the ordinary course of our business, we are from time to time subject to private lawsuits, government 
audits and examinations, administrative proceedings and other claims. Under certain circumstances, we also may be 
subjected to increased risk associated with the acts or omissions of our clients (such as clients who, unbeknownst to the 
Bank or the Company, may engage in or become associated with fraudulent or unlawful transactions, Ponzi schemes, 
money laundering, and similar unlawful acts). A number of these claims may exist at any given time, and some of the 
claims may be pled as class actions. We could be affected by adverse publicity and litigation costs resulting from such 
allegations, regardless of whether they are valid or whether we are ultimately determined to be liable.  
At December 31, 2024, the Company was a defendant in a lawsuit pending in Alameda County Superior Court 
that alleges that the Company and the Bank violated certain wage-and-hour and related laws and regulations during the 
period between November 2020 and October 2021. The claim seeks recovery on behalf of a representative plaintiff and 
other employees and seeks unspecified damages, penalties and attorney fees under the California Labor Code, the 
California Business and Professions Code, and the California Private Attorneys General Act (“PAGA”). The Company 
contends that the claims are without merit and intends to defend them vigorously.  
 
The Company makes a provision for a liability relating to legal matters when it is both probable that a liability 
has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly 
and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other 
information and events pertaining to a particular matter. The outcomes of legal proceedings and other contingencies are, 
however, inherently unpredictable and subject to significant uncertainties. As a result, the Company cannot always 
reasonably estimate the amount or range of possible losses, including losses that could arise as a result of application of 
non-monetary remedies, with respect to the contingencies it faces, and the Company’s estimates, once made, may prove 
inaccurate. 
 
At this time, we believe that the amount of reasonably possible losses resulting from final disposition of pending 
or threatened lawsuits, audits, proceedings and claims will not have a material adverse effect individually or in the 
aggregate on our financial position, results of operations or liquidity. It is possible, however, that our future results of 
133
Heritage Commerce Corp • 2024 Annual Report

 
operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, 
proceedings or claims, and that, associated with the defense of such claims, we may incur elevated levels of attorney fees 
and other litigation costs. Likewise, factors that affect the insurance coverage for these matters may affect our estimates 
of the relevant contingent liabilities, and we generally adjust our estimates based on known factors that affect that coverage 
as those factors come to light. Legal costs related to such claims are expensed as incurred. 
Off-Balance Sheet Arrangements 
 
In the normal course of business the Company makes commitments to extend credit to its clients as long as there 
are no violations of any conditions established in the contractual arrangements. These commitments are obligations that 
represent a potential credit risk to the Company, but are not reflected on the Company’s consolidated balance sheets. Total 
unused commitments to extend credit were $1,033,982,000 at December 31, 2024, compared to $1,149,056,000 at 
December 31, 2023. Unused commitments represented 30% outstanding gross loans at December 31, 2024 and 34% at 
December 31, 2023. 
 
The effect on the Company’s revenues, expenses, cash flows and liquidity from the unused portion of the 
commitments to provide credit cannot be reasonably predicted because there is no certainty that lines of credit and letters 
of credit will ever be fully utilized. The following table presents the Company’s commitments to extend credit for the 
periods indicated: 
 
 
 
December 31, 2024 
 
December 31, 2023 
 
     
Fixed 
    Variable   
 
 
Fixed 
 
Variable 
 
 
 
 
Rate 
 
Rate 
   
Total 
   
Rate 
    
Rate 
    
Total 
 
 
(Dollars in thousands) 
Unused lines of credit and commitments to make loans . . . . . .   
$  78,818  $  939,992 
$ 1,018,810 
$  96,166  $ 1,041,608  $ 1,137,774 
Standby letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
  
 5,136   
 10,036 
  
 15,172 
  
 4,283    
 6,999  
 11,282 
 
 
$  83,954  $  950,028 
$ 1,033,982 
$  100,449  $ 1,048,607  $ 1,149,056 
 
For the year ended December 31, 2024, there was a decrease of ($107,000) to the allowance for credit losses on 
loans for the Company’s off-balance sheet credit exposures, compared to the year ended December 31, 2023. The decrease 
in the allowance for credit losses for off-balance sheet credit exposures for the year ended December 31, 2024 was driven 
by lower loss factors for off-balance sheet exposures. The allowance for losses for the Company’s off-balance sheet credit 
exposures was $660,000 and $767,000 at December 31, 2024 and December 31, 2023 respectively.  
 
16) Shareholders’ Equity and Earnings Per Share 
Share Repurchase Program – On July 25, 2024, the Company announced that its Board of Directors adopted a 
share repurchase program (the “Repurchase Program”) under which the Company is authorized to repurchase up to 
$15,000,000 of the Company’s shares of its issued and outstanding common stock. Unless otherwise suspended or 
terminated, the Repurchase Program expires on July 31, 2025. The Company did not repurchase any of its common stock 
during the year ended December 31, 2024. 
 
134
 
Heritage Commerce Corp • 2024 Annual Report

 
Basic earnings per common share is computed by dividing net income, less dividends and discount accretion on 
preferred stock, by the weighted average common shares outstanding. Diluted earnings per share reflect potential dilution 
from outstanding stock options using the treasury stock method. There were 1,571,756 weighted average stock options for 
the year ended December 31, 2024, considered to be antidilutive and excluded from the computation of diluted earnings 
per share. There were 5,823 weighted average RSUs outstanding for the year ended December 31, 2024 considered to be 
antidilutive and excluded from the computation of diluted earnings per shares. There were 1,655,654 weighted average 
stock options for the year ended December 31, 2023, considered to be antidilutive and excluded from the computation of 
diluted earnings per share. There were 79,793 weighted average RSUs outstanding for the year ended December 31, 2023, 
considered to be antidilutive and excluded from the computation of diluted earnings per share. There were 1,230,319 
weighted average stock options for the year ended December 31, 2022, considered to be antidilutive and excluded from 
the computation of diluted earnings per share. A reconciliation of these factors used in computing basic and diluted 
earnings per common share is as follows: 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,  
 
 
     
2024 
     
2023 
     
2022 
 
 
 
(Dollars in thousands, except per share amounts) 
  
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
 40,528  
$ 
 64,443  
$ 
 66,555  
 
 
 
 
 
  
 
Weighted average common shares outstanding 
 
 
 
 
 
 
    for basic earnings per common share . . . . . . . . . . . . . . . . . . . . . . .  
  
 61,270,730  
  
 61,038,857  
  
 60,602,962  
Dilutive potential common shares . . . . . . . . . . . . . . . . . . . . . . . . . . .  
  
 256,642  
  
 272,461  
  
 487,328  
     Shares used in computing diluted earnings per common share . . .  
 
 61,527,372  
 
 61,311,318  
  
 61,090,290  
 
 
 
 
 
 
 
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
0.66   
$ 
1.06   
$ 
 1.10  
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
$ 
0.66   
$ 
1.05   
$ 
 1.09  
 
 
 
 
 
17) Capital Requirements 
The Company and its subsidiary bank are subject to various regulatory capital requirements administered by the 
banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional 
discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial 
statements and operations. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, 
the Company and HBC must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and 
certain off balance sheet items as calculated under regulatory accounting practices. Capital amounts and classifications are 
also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  
 
The Company’s consolidated capital ratios and the HBC’s capital ratios exceeded the regulatory guidelines for a 
well-capitalized financial institution under the Basel III regulatory requirements at December 31, 2024. There are no 
conditions or events since December 31, 2024, that management believes have changed the categorization of the Company 
or HBC as “well-capitalized.”   
 
Quantitative measures established by regulation to help ensure capital adequacy require the Company and HBC 
to maintain minimum amounts and ratios (set forth in the tables below) of total, Tier 1 capital, and common equity 
Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital to average assets (as 
defined). Management believes that, as of December 31, 2024 and December 31, 2023, the Company and HBC met all 
capital adequacy guidelines to which they were subject. 
 
 
135
Heritage Commerce Corp • 2024 Annual Report

 
The Company’s consolidated capital amounts and ratios are presented in the following table, together with capital 
adequacy requirements, under the Basel III regulatory requirements as of December 31, 2024, and December 31, 2023. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Required For 
  
 
 
 
 
 
  
Capital 
  
 
 
 
 
 
 
  
Adequacy 
 
 
 
 
 
 
  
Purposes 
  
 
 
Actual 
  
Under Basel III 
  
 
     
Amount 
     
Ratio 
  
Amount 
     
Ratio (1) 
  
 
 
(Dollars in thousands) 
  
As of December 31, 2024 
 
 
 
   
 
 
Total Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 610,643   
 15.6 % $ 
 411,383   
 10.5 % 
(to risk-weighted assets) 
 
 
 
   
 
 
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 524,204   
 13.4 % $ 
 333,024   
 8.5 % 
(to risk-weighted assets) 
 
 
 
   
 
 
Common Equity Tier 1 Capital . . . . . . . . . . . . . . . . . . . . .   
$ 
 524,204  
 13.4 % $ 
 274,255  
 7.0 % 
(to risk-weighted assets) 
 
 
 
   
 
 
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 524,204   
 9.6 % $ 
 217,451   
 4.0 % 
(to average assets) 
 
  
 
 
    
 
 
 
 
(1) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Required For 
 
 
 
 
 
 
  
Capital 
 
 
 
 
 
 
 
  
Adequacy 
 
 
 
 
 
 
  
Purposes 
 
 
 
Actual 
  
Under Basel III 
 
 
     
Amount 
     
Ratio 
  
Amount 
     
Ratio (1) 
  
 
 
 
(Dollars in thousands) 
As of December 31, 2023 
 
 
 
   
 
 
Total Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 594,371   
 15.5 % $ 
 403,060   
 10.5 % 
(to risk-weighted assets) 
 
 
 
   
 
 
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 511,799   
 13.3 % $ 
 326,287   
 8.5 % 
(to risk-weighted assets) 
 
 
 
   
 
 
Common Equity Tier 1 Capital . . . . . . . . . . . . . . . . . . . . .   
$ 
 511,799  
 13.3 % $ 
 268,707  
 7.0 % 
(to risk-weighted assets) 
 
 
 
   
 
 
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
$ 
 511,799   
 10.0 % $ 
 204,024   
 4.0 % 
(to average assets) 
 
 
 
   
 
 
 
(1) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. 
 
 
 
 
 
136
 
Heritage Commerce Corp • 2024 Annual Report

 
HBC’s actual capital amounts and ratios are presented in the following table, together with capital adequacy 
requirements, under the Basel III regulatory requirements as of December 31, 2024, and December 31, 2023. 
 
 
 
 
 
 
 
 
 
 
 
Required For 
  
 
 
 
 
 
 
 
 
 
 
Capital 
  
 
 
 
 
 
 
 
To Be Well-Capitalized 
 
 
Adequacy 
  
 
 
 
 
 
 
 Under Basel III PCA Regulatory 
 
Purposes 
  
 
 
Actual 
 
 
Requirements 
 
 
Under Basel III 
  
 
    
Amount     Ratio       
Amount 
     
Ratio 
      
Amount     Ratio (1)  
 
 
(Dollars in thousands) 
  
As of December 31, 2024 
  
 
 
  
 
 
  
 
 
Total Capital . . . . . . . . . . . . . . . . . . . . . . .   $ 590,658    15.1 %   $ 
 391,459   
 10.0 %   $ 411,038    10.5 % 
(to risk-weighted assets) 
  
 
 
  
 
 
  
 
 
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . .   $ 543,872    13.9 %   $ 
 313,167   
 8.0 %   $ 332,745   
 8.5 % 
(to risk-weighted assets) 
  
 
 
  
 
 
  
 
 
Common Equity Tier 1 Capital . . . . . . . .   $ 543,872   13.9 %   $ 
 254,448  
 6.5 %   $ 274,025  
 7.0 % 
(to risk-weighted assets) 
  
 
 
  
 
 
  
 
 
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . .   $ 543,872    10.0 %   $ 
 271,640   
 5.0 %   $ 217,312   
 4.0 % 
(to average assets) 
  
 
 
  
 
 
  
  
 
 
(1) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
Required For 
 
 
  
 
 
 
 
 
 
 
 
Capital 
 
 
  
 
 
 
 
 
To Be Well-Capitalized 
 
 
Adequacy 
 
 
  
 
 
 
 
 Under Basel III PCA Regulatory 
 
Purposes 
 
 
 
Actual 
 
 
Requirements 
 
 
Under Basel III 
 
 
    
Amount     Ratio       
Amount 
     
Ratio 
      
Amount     Ratio (1)  
 
  
(Dollars in thousands) 
As of December 31, 2023 
  
  
   
  
   
  
 
Total Capital . . . . . . . . . . . . . . . . . . . . . . .   $ 572,907    14.9 %   $ 
 383,542   
 10.0 %   $ 402,719    10.5 % 
(to risk-weighted assets) 
  
 
 
  
 
 
  
 
 
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . .   $ 529,836    13.8 %   $ 
 306,834   
 8.0 %   $ 326,011   
 8.5 % 
(to risk-weighted assets) 
  
 
 
  
 
 
  
 
 
Common Equity Tier 1 Capital . . . . . . . .   $ 529,836   13.8 %   $ 
 249,302  
 6.5 %   $ 268,479  
 7.0 % 
(to risk-weighted assets) 
  
 
 
  
 
 
  
 
 
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . .   $ 529,836    10.4 %   $ 
 254,869   
 5.0 %   $ 203,895   
 4.0 % 
(to average assets) 
  
  
 
  
 
 
  
 
 
 
(1) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets. 
 
 
The Subordinated Debt, net of unamortized issuance costs, totaled $39,653,000 at December 31, 2024, and 
qualifies as Tier 2 capital for the Company under the guidelines established by the Federal Reserve Bank.   
 
Under California General Corporation Law, the holders of common stock are entitled to receive dividends when 
and as declared by the Board of Directors, out of funds legally available. The California Financial Code provides that a 
state licensed bank may not make a cash distribution to its shareholders in excess of the lesser of the following: (i) the 
bank’s retained earnings; or (ii) the bank’s net income for its last three fiscal years, less the amount of any distributions 
made by the bank to its shareholders during such period. However, a bank, with the prior approval of the Commissioner 
of the California Department of Financial Protection and Innovation (“DFPI”) may make a distribution to its shareholders 
of an amount not to exceed the greater of (i) a bank’s retained earnings; (ii) its net income for its last fiscal year; or (iii) its 
net income for the current fiscal year. Also with the prior approval of the Commissioner of the DFPI and the shareholders 
of the bank, the bank may make a distribution to its shareholders, as a reduction in capital of the bank. In the event that 
the Commissioner determines that the shareholders’ equity of a bank is inadequate or that the making of a distribution by 
a bank would be unsafe or unsound, the Commissioner may order a bank to refrain from making such a proposed 
 
 
137
Heritage Commerce Corp • 2024 Annual Report

 
distribution. As of December 31, 2024, HBC would not be required to obtain regulatory approval, and the amount available 
for cash dividends is $63,477,000. Similar restrictions applied to the amount and sum of loan advances and other transfers 
of funds from HBC to the parent company. HBC distributed to HCC dividends of $32,000,000 for both years ended 
December 31, 2024 and 2023. 
 
18) Revenue Recognition 
 
The majority of our revenue-generating transactions are not subject to ASC 606 “Revenue from Contracts with 
Customers”, including revenue generated from financial instruments, including revenue from loans and securities, certain 
noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, gain on sale of 
securities, bank-owned life insurance, gain on sales of SBA loans, and certain credit card fees, as these activities are subject 
to other GAAP discussed elsewhere within our disclosures. Substantially all of the Company’s revenue is generated from 
contracts with clients. Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are 
presented in our income statements as components of noninterest income are as follows: 
 
Service charges and fees on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed 
business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. We 
sometimes charge clients fees that are not specifically related to the client accessing its funds, such as account maintenance 
or dormancy fees. The amount of deposit fees assessed varies based on a number of factors, such as the type of client and 
account, the quantity of transactions, and the size of the deposit balance. We charge, and in some circumstances do not 
charge, fees to earn additional revenue and influence certain client behavior. An example would be where we do not charge 
a monthly service fee, or do not charge for certain transactions, for clients that have a high deposit balance. Deposit fees 
are considered either transactional in nature (such as wire transfers, nonsufficient fund fees, and stop payment orders) or 
non-transactional (such as account maintenance and dormancy fees). These fees are recognized as earned or as transactions 
occur and services are provided. Check orders and other deposit account related fees are largely transactional based and, 
therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment 
for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge 
to clients’ accounts. 
 
The Company currently accounts for sales of foreclosed assets in accordance with Topic 360-20. In most cases 
the Company will seek to engage a real estate agent for the sale of foreclosed assets immediately upon foreclosure. 
However, in some cases, where there is clear demand for the property in question, the Company may elect to allow for a 
marketing period on no more than six months to attempt a direct sale of the property. We generally recognize the sale, and 
any associated gain or loss, of a real estate property when control of the property transfers. Any gains or losses from the 
sale are recorded to noninterest income/expense. 
 
The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of 
Topic 606, for the periods indicated:  
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended  
 
 
December 31,  
 
     
2024 
     
2023 
     
2022 
 
 
(Dollars in thousands) 
Noninterest Income In-scope of Topic 606: 
 
 
 
  
 
  
 
Service charges and fees on deposit accounts . . . . . . .   
$  3,561  
$  4,341  
$ 
 4,640 
    Total noninterest income in-scope of Topic 606 . . .   
 
 3,561  
 
 4,341  
 
 4,640 
Noninterest Income Out-of-scope of Topic 606 . . . . . . .   
 
 5,187  
 
 4,657  
 
 5,471 
Total noninterest income  . . . . . . . . . . . . . . . . . . . . . . . .   
$  8,748  
$  8,998  
$  10,111 
 
 
 
 
138
 
Heritage Commerce Corp • 2024 Annual Report

 
 
19) Noninterest Expense 
The following table indicates the various components of the Company’s noninterest expense in each category for 
the periods indicated: 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended  
 
 
December 31,  
 
  
2024 
     
2023 
     
2022 
 
 
(Dollars in thousands) 
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . . . .   $ 
 63,952  
$ 
 56,862  
$  55,331 
Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 10,226  
 
 9,490  
 
 9,639 
Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 6,724  
 
 6,264  
 
 4,958 
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 5,416  
 
 4,350  
 
 5,015 
Client services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 3,920  
 
 2,512  
 
 1,851 
Data processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 3,183  
 
 3,429  
 
 2,482 
Software subscriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 3,046  
 
 2,599  
 
 1,958 
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 17,116  
 
 15,548  
 
 13,625 
Total noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . .   $  113,583  
$ 
 101,054  
$  94,859 
 
20) Business Segment Information 
The Company’s reportable segments are determined by the Chief Executive Officer, who is the designated chief 
operating decision maker, based upon information provided about the Company’s products and services offered, primarily 
distinguished between Banking and Factoring. They are also distinguished by the level of information provided to the 
chief operating decision maker, who uses such information to review performance of various components of the business, 
which are then aggregated if operating performance, products and services, and clients are similar. The chief operating 
decision maker analyzes the financial performance of the Company’s segments, allocates resources and assesses 
compensation of certain employees by evaluating revenue streams, significant expenses and budget to actual results. The 
performance of the Banking segment is assessed by monitoring the margin between interest income and interest expense 
related to loans, investments, deposits and other borrowings. Pretax profit and loss is used to assess the performance of 
the Factoring segment. Interest expense, provisions for credit losses and Salaries and employee benefits provide significant 
expenses in the Banking segment, while Salaries and employee benefits provide the significant expenses in the Factoring 
segment.  
The Banking segment provides a diversified mix of business loans encompassing the following loan products: 
commercial and industrial loans; commercial real estate loans; construction loans; and SBA loans. From time to time the 
Banking segment has purchased single family residential mortgage loans. The Banking segment also offers home equity 
lines of credit, to accommodate the needs of business owners and individual clients, as well as consumer loans (both 
secured and unsecured). The Banking segment focuses deposit generation on relationship accounts, encompassing non-
interest bearing demand, interest bearing demand, and money market accounts. In order to facilitate the generation of non-
interest bearing demand deposits, the Banking segment requires, depending on the circumstances and the type of 
relationship, its borrowers to maintain deposit balances with it as a typical condition of granting loans. The Banking 
segment also offers certificates of deposit and savings accounts. 
The Factoring segment consists of the factored receivables portfolio originated by Bay View Funding. Factored 
receivables are receivables that have been acquired from the originating company and typically have not been subject to 
previous collection efforts. These receivables are acquired from a variety of companies, including but not limited to service 
providers, transportation companies, manufacturers, distributors, wholesalers, apparel companies, advertisers, and 
temporary staffing companies. The average life of the factored receivables was 34 days for the year ended December 31, 
2024.  
Reported segments and the financial information of the reported segments are not necessarily comparable with 
similar information reported by other financial institutions. Additionally, because of the interrelationships of the various 
segments, the information presented is not indicative of how the segments would perform if they operated as independent 
entities. Changes in management structure or allocation methodologies and procedures may result in future changes to 
139
Heritage Commerce Corp • 2024 Annual Report

 
previously reported segment financial data. The accounting policies of the segments are substantially the same as those 
described in “Note 1 – Summary of Significant Accounting Policies.”   
Transactions between segments consist primarily of borrowed funds. Intersegment interest expense is allocated 
to the Factoring segment based on the Banking segment’s prime rate and funding costs. The provision for credit losses on 
loans is allocated based on the segment’s allowance for credit losses on loans determination which considers the effects 
of charge-offs. Noninterest income and expense directly attributable to a segment are assigned to it. Taxes are paid on a 
consolidated basis and allocated for segment purposes.  
 
The following tables present the Company’s operating segments for the periods indicated: 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2024 
 
     Banking (1)      Factoring      Consolidated 
 
 
(Dollars in thousands) 
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  231,719  $  10,980  $  242,699 
Intersegment interest allocations . . . . . . . . . . . . . . . . . . .    
 1,827   
 (1,827)  
 — 
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 79,051   
 —   
 79,051 
    Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 154,495   
 9,153   
 163,648 
Provision for (recapture of) credit losses on loans . . . . .    
 1,679   
 460   
 2,139 
    Net interest income after provision . . . . . . . . . . . . . . .    
 152,816   
 8,693   
 161,509 
Noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 8,026   
 722   
 8,748 
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . .    
 58,922   
 5,030   
 63,952 
Other segment items (2) . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 48,055   
 1,576   
 49,631 
Intersegment expense allocations . . . . . . . . . . . . . . . . . . .    
 520   
 (520)  
 — 
    Income before income taxes  . . . . . . . . . . . . . . . . . . . .    
 54,385   
 2,289   
 56,674 
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 15,469   
 677   
 16,146 
    Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $
 38,916  $
 1,612  $ 
 40,528 
 
   
   
   
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 5,558,556  $  86,450  $ 5,645,006 
Loans, net of deferred fees  . . . . . . . . . . . . . . . . . . . . . . . .   $ 3,423,040  $  68,897  $ 3,491,937 
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  154,587  $  13,044  $  167,631 
 
(1) Includes the holding company’s results of operations.  
(2) Other segment items for the Banking segment includes expenses for occupancy and equipment, professional fees, 
insurance, information technology, client services, marketing and other miscellaneous expenses.  Other segment items 
for the Factoring segment includes expenses for occupancy and equipment, professional fees, information technology, 
marketing, credit reports, broker fees, and other miscellaneous expenses. 
 
 
 
 
140
 
Heritage Commerce Corp • 2024 Annual Report

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2023 
 
     Banking (1)      Factoring      Consolidated 
 
 
(Dollars in thousands) 
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  220,871  $  13,427  $  234,298 
Intersegment interest allocations . . . . . . . . . . . . . . . .    
 2,038   
 (2,038)  
 — 
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . .    
 51,074   
 —   
 51,074 
    Net interest income . . . . . . . . . . . . . . . . . . . . . . . . .    
 171,835   
 11,389   
 183,224 
Provision (recapture) for credit losses on loans . . . .    
 1,005   
 (256)  
 749 
    Net interest income after provision . . . . . . . . . . . .    
 170,830   
 11,645   
 182,475 
Noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 8,582   
 416   
 8,998 
Salaries and employee benefits . . . . . . . . . . . . . . . . .    
 52,236   
 4,626   
 56,862 
Other segment items (2) . . . . . . . . . . . . . . . . . . . . . . . .    
 42,215   
 1,977   
 44,192 
Intersegment expense allocations . . . . . . . . . . . . . . . .    
 547   
 (547)  
 — 
    Income before income taxes  . . . . . . . . . . . . . . . . .    
 85,508   
 4,911   
 90,419 
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . .    
 24,524   
 1,452   
 25,976 
    Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $
 60,984  $
 3,459  $ 
 64,443 
 
   
   
   
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 5,111,367  $  82,728  $  5,194,095 
Loans, net of deferred fees  . . . . . . . . . . . . . . . . . . . .   $ 3,292,920  $  57,458  $  3,350,378 
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  154,587  $  13,044  $  167,631 
 
(1) Includes the holding company’s results of operations. 
(2) Other segment items for the Banking segment includes expenses for occupancy and equipment, professional fees, 
insurance, information technology, client services, marketing and other miscellaneous expenses.  Other segment items 
for the Factoring segment includes expenses for occupancy and equipment, professional fees, information technology, 
marketing, credit reports, broker fees, and other miscellaneous expenses. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2022 
 
 
Banking (1) 
     
Factoring      Consolidated 
 
 
(Dollars in thousands) 
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  176,010  $  12,818  $ 
 188,828 
Intersegment interest allocations . . . . . . . . . . . . . .   
 1,441   
 (1,441)  
 — 
Total interest expense . . . . . . . . . . . . . . . . . . . . . . .   
 8,948   
 —   
 8,948 
    Net interest income . . . . . . . . . . . . . . . . . . . . . . .   
 168,503   
 11,377   
 179,880 
Provision for credit losses on loans . . . . . . . . . . . .   
 526   
 240   
 766 
    Net interest income after provision . . . . . . . . . .   
 167,977   
 11,137   
 179,114 
Noninterest income . . . . . . . . . . . . . . . . . . . . . . . . .   
 9,722   
 389   
 10,111 
Salaries and employee benefits . . . . . . . . . . . . . . .   
 50,919   
 4,412   
 55,331 
Other segment items (2) . . . . . . . . . . . . . . . . . . . . . .   
 37,612   
 1,916   
 39,528 
Intersegment expense allocations . . . . . . . . . . . . . .   
 524   
 (524)  
 — 
    Income before income taxes  . . . . . . . . . . . . . . .   
 89,692   
 4,674   
 94,366 
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . .   
 26,429   
 1,382   
 27,811 
    Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
 63,263  $ 
 3,292  $ 
 66,555 
 
   
   
   
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  5,062,943  $  94,637  $  5,157,580 
Loans, net of deferred fees . . . . . . . . . . . . . . . . . . .  $  3,219,287  $  79,263  $  3,298,550 
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  154,587  $  13,044  $ 
 167,631 
 
(1) Includes the holding company’s results of operations.  
(2) Other segment items for the Banking segment includes expenses for occupancy and equipment, professional fees, 
insurance, information technology, client services, marketing and other miscellaneous expenses.  Other segment 
items for the Factoring segment includes expenses for occupancy and equipment, professional fees, information 
technology, marketing, credit reports, broker fees, and other miscellaneous expenses. 
 
141
Heritage Commerce Corp • 2024 Annual Report

 
21) Parent Company only Condensed Financial Information 
The condensed financial statements of Heritage Commerce Corp (parent company only) are as follows: 
Condensed Balance Sheets 
 
 
December 31,  
 
     
2024 
     
2023 
 
 
(Dollars in thousands) 
Assets 
   
   
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  16,903  $  18,479 
Investment in subsidiary bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      709,379     690,918 
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 3,360    
 3,266 
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  729,642  $  712,663 
Liabilities and Shareholders’ Equity 
   
   
Subordinated debt, net of issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  39,653  $  39,502 
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 262    
 260 
Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      689,727     672,901 
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  729,642  $  712,663 
 
Condensed Statements of Income 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,  
 
     
2024 
     
2023 
     
2022 
 
 
(Dollars in thousands) 
Dividend from subsidiary bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 32,000  $ 32,000  $ 32,000 
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (2,152)    (2,152)    (2,179)
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (4,608)    (3,771)    (3,675)
Income before income taxes and equity in net income of subsidiary bank . . . . . . .      25,240     26,077     26,146 
Equity in undistributed net income of subsidiary bank . . . . . . . . . . . . . . . . . . . . . . . . .      13,320     36,648     38,702 
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,968     1,718     1,707 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $ 40,528  $ 64,443  $ 66,555 
 
Condensed Statements of Cash Flows 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,  
 
     
2024 
    
2023 
    
2022 
 
 
(Dollars in thousands) 
Cash flows from operating activities: 
   
   
   
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  40,528  $  64,443  $  66,555 
Adjustments to reconcile net income to net cash provided by operations: 
  
   
   
Amortization of restricted stock awards, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 916    
 1,404    
 2,583 
Equity in undistributed net income of subsidiary bank . . . . . . . . . . . . . . . . . . . . . .      (13,320)    (36,648)    (38,702)
Net change in other assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 1,468     (1,174)   
 1,222 
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      29,592     28,025     31,658 
Cash flows from financing activities: 
  
   
   
Repayment of subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 —    
 —     (40,000)
Net change in purchased funds and other short-term borrowings . . . . . . . . . . . . . .    
 —   
 —    39,274 
Payment of cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (31,858)    (31,740)    (31,495)
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     
 690    
 1,220    
 2,050 
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (31,168)    (30,520)    (30,171)
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .      (1,576)    (2,495)   
 1,487 
Cash and cash equivalents, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      18,479     20,974     19,487 
Cash and cash equivalents, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  16,903  $  18,479  $  20,974 
 
 
 
 
142
 
Heritage Commerce Corp • 2024 Annual Report

 
22) Subsequent Events 
On January 23, 2025, the Company announced that the Board of Directors declared a $0.13 per share quarterly 
cash dividend to holders of common stock. The dividend was payable on February 20, 2025 to shareholders of record on 
February 6, 2025.  
143
Heritage Commerce Corp • 2024 Annual Report

 
Exhibit 31.1 
CERTIFICATIONS UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 
REGARDING THE ANNUAL REPORT ON FORM 10-K 
FOR THE YEAR ENDED DECEMBER 31, 2024 
I, Robertson Clay Jones, certify that: 
1. 
I have reviewed this Annual Report on Form 10-K for the Year Ended December 31, 2024 of Heritage Commerce Corp; 
2. 
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact 
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect 
to the period covered by this report; 
3. 
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in 
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this 
report; 
4. 
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and 
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange 
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 
(a) 
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be 
designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, 
is made known to us by others within those entities, particularly during the period in which this report is being prepared; 
(b) 
Designed such internal control over financial reporting, or caused such internal control over financial reporting 
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the 
preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 
(c) 
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report 
based on such evaluation; and 
(d) 
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during 
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially 
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 
5. 
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control 
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the 
equivalent functions): 
(a) 
All significant deficiencies and material weaknesses in the design or operation of internal control over financial 
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial 
information; and 
(b) 
Any fraud, whether or not material, that involves management or other employees who have a significant role in 
the registrant’s internal control over financial reporting. 
 
/s/ ROBERTSON CLAY JONES 
 
Robertson Clay Jones  
 
President and Chief Executive Officer 
Date: March 7, 2025 
Heritage Commerce Corp 
 
 
144
 
Heritage Commerce Corp • 2024 Annual Report

 
Exhibit 31.2 
CERTIFICATIONS UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 
REGARDING THE ANNUAL REPORT ON FORM 10-K 
FOR THE YEAR ENDED DECEMBER 31, 2024 
I, Thomas A. Sa, certify that: 
1. 
I have reviewed this Annual Report on Form 10-K for the Year Ended December 31, 2024 of Heritage Commerce Corp; 
2. 
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact 
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect 
to the period covered by this report; 
3. 
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in 
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this 
report; 
4. 
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and 
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange 
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 
(a) 
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be 
designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, 
is made known to us by others within those entities, particularly during the period in which this report is being prepared; 
(b) 
Designed such internal control over financial reporting, or caused such internal control over financial reporting 
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the 
preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 
(c) 
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report 
based on such evaluation; and 
(d) 
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during 
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially 
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 
5. 
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control 
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the 
equivalent functions): 
(a) 
All significant deficiencies and material weaknesses in the design or operation of internal control over financial 
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial 
information; and 
(b) 
Any fraud, whether or not material, that involves management or other employees who have a significant role in 
the registrant’s internal control over financial reporting. 
 
/S/ THOMAS A. SA 
 
Thomas A. Sa 
 
Executive Vice President and Chief Operating Officer and Interim 
Chief Financial Officer 
Date: March 7, 2025 
Heritage Commerce Corp 
 
145
Heritage Commerce Corp • 2024 Annual Report

 
Exhibit 32.1 
CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 
REGARDING THE ANNUAL REPORT ON FORM 10-K 
FOR THE YEAR ENDED DECEMBER 31, 2024 
In connection with the Annual Report of Heritage Commerce Corp (the “Company”) on Form 10-K for the year 
ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, 
Robertson Clay Jones, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted 
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: 
(1) 
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange 
Act of 1934; and 
(2) 
The information contained in the Report fairly presents, in all material respects, the financial condition 
and results of operations of the Company. 
 
/S/ ROBERTSON CLAY JONES 
 
Robertson Clay Jones 
 
President and Chief Executive Officer 
March 7, 2025 
Heritage Commerce Corp 
 
 
146
 
Heritage Commerce Corp • 2024 Annual Report

 
Exhibit 32.2 
CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 
REGARDING THE ANNUAL REPORT ON FORM 10-K 
FOR THE YEAR ENDED DECEMBER 31, 2024 
In connection with the Annual Report of Heritage Commerce Corp (the “Company”) on Form 10-K for the year 
ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, 
Thomas A. Sa, Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted 
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: 
(1) 
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange 
Act of 1934; and 
(2) 
The information contained in the Report fairly presents, in all material respects, the financial condition 
and results of operations of the Company. 
 
/S/ THOMAS A. SA 
 
Thomas A. Sa 
 
Executive Vice President and Chief Operating Officer and 
Interim Chief Financial Officer 
March 7, 2025 
Heritage Commerce Corp 
 
147
Heritage Commerce Corp • 2024 Annual Report

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Board of Directors
Jack W. Conner, Chair
Julianne M. Biagini-Komas, Vice Chair
Bruce H. Cabral
Jason DiNapoli
Stephen G. Heitel
Kamran F. Husain
Robertson Clay Jones
Marina H. Park Sutton
Laura Roden*
Executive Leadership
Robertson Clay Jones
President and Chief Executive Officer
Thomas A. Sa
Executive Vice President
Chief Operating Officer and 
Interim Chief Financial Officer
Christopher Edmonds-Waters
Executive Vice President
Chief People and Culture Officer
Susan S. Just
Executive Vice President
Chief Credit Officer
Deborah K. Reuter
Executive Vice President
Chief Risk Officer and 
Corporate Secretary
Janisha Sabnani
Executive Vice President 
General Counsel
Glen E. Shu 
Executive Vice President
President of Specialty Finance Group
Sachin M. Vaidya
Executive Vice President
Chief Information Officer
Dustin M. Warford
Executive Vice President
Chief Banking Officer
Karol Watson
Executive Vice President
Operations Executive 
May K. Y. Wong
Executive Vice President
Controller
Subsidiary Bank Offices
Heritage Bank of Commerce
San Jose Main 
224 Airport Parkway, Suite 100
San Jose, CA 95110
408.947.6900 
Danville
387 Diablo Road 
Danville, CA 94526
925.314.2851
Fremont
3137 Stevenson Boulevard
Fremont, CA 94538
510.445.0400
Gilroy
7598 Monterey Street, Suite 110
Gilroy, CA 95020
408.842.8310
Hollister
351 Tres Pinos Road, Suite 102A
Hollister, CA 95023
831.637.2152
Livermore
1987 First Street
Livermore, CA 94550
925.791.4360
Los Altos
419 S. San Antonio Road
Los Altos, CA 94022
650.941.9300
Los Gatos
15575 Los Gatos Boulevard,
Suite B
Los Gatos, CA 95032
408.356.6190
Morgan Hill
18625 Sutter Boulevard, Suite 100
Morgan Hill, CA 95037
408.778.2320 
Oakland
1111 Broadway, Suite 1650
Oakland, CA 94607
510.869.7000
Palo Alto
325 Lytton Avenue, Suite 100
Palo Alto, CA 94301 
650.321.0500
Member FDIC
Bay View Funding
Administrative Office
224 Airport Parkway, Suite 200
San Jose, CA 95110
650.294.6600
Heritage Commerce Corp
Investor Relations Contact
Deborah K. Reuter
Executive Vice President
Chief Risk Officer & 
Corporate Secretary
408.947.6900
Transfer Agent
Equiniti Trust Company, LLC
EQ Shareowner Services
1110 Centre Pointe Curve, 
Suite 101
Mendota Heights, MN 55120 
800.468.9716
Independent Auditors
Crowe LLP
One Mid America Plaza, Suite 600
Oakbrook Terrace, IL 60181
630.574.7878
Corporate Counsel
Buchalter
A Professional Corporation
1000 Wilshire Boulevard, 
Suite 1500
Los Angeles, CA 90017
213.891.0700
San Francisco
San Rafael
Walnut Creek
Danville
Pleasanton
Livermore
Fremont
San Mateo
Redwood City
Palo Alto
San Jose
Oakland
Los Altos
Los Gatos
Morgan Hill
Gilroy
Hollister
17 Branch Locations
Corporate Information
To get further information on Heritage Commerce Corp, or to 
receive regular financial updates, please visit our website at 
HeritageCommerceCorp.com and click on“Information Request.”
*Not standing for election at the Annual Meeting of Shareholders.
Pleasanton
300 Main Street
Pleasanton, CA 94566
925.314.2876
Redwood City
2400 Broadway, Suite 100
Redwood City, CA 94063
650.298.7000
San Francisco 
120 Kearny Street, Suite 2300
San Francisco, CA 94108
415.229.8400
San Mateo
400 S. El Camino Real, Suite 150
San Mateo, CA 94402
650.645.6480
San Rafael
999 Fifth Avenue, Suite 100
San Rafael, CA 94901
415.456.6000
Walnut Creek
1990 N. California Boulevard
Suite 100
Walnut Creek, CA 94596
925.287.4818

HeritageCommerceCorp.com 
224 Airport Parkway, San Jose, CA 95110 
408.947.6900