Exhibit 99.1

Heritage Commerce Corp Reports Earnings Increase of 65% in 1Q06

San Jose, CA - May 4, 2006 — Heritage Commerce Corp (Nasdaq: HTBK), parent company of Heritage Bank of Commerce, today reported consolidated operating results for the three months ended March 31, 2006. Net income increased 65% to $4,376,000, or $0.36 per diluted share, compared to $2,653,000, or $0.22 per diluted share, for the three months ended March 31, 2005. Annualized returns on average assets and average equity for the three months ended March 31, 2006 were 1.59% and 15.53%, respectively, compared with returns of 0.96% and 10.66%, respectively, for the three months ended March 31, 2005.

Financial Highlights:

·   Net interest margin increased to 4.90%, up 50 basis points from 1Q05 and up 8 basis points from 4Q05.

·   Diluted earnings per share of $0.36 were up 64% from 1Q05 and 3% from 4Q05.

·   Annualized return on average assets was 1.59%, up 66% from 1Q05 and 9% from 4Q05.

·   Asset quality improved with nonperforming assets to total assets at 0.23% compared to 0.32% in 1Q05 and 4Q05.

“Credit quality is solid and continues to improve with nonperforming loans dropping 32%,” noted Mr. Walter Kaczmarek, President and Chief Executive Officer. “The first quarter also reflected continued control of operating expenses. We were able to expand our margins during the first quarter, although the sale of the Capital Group loan portfolio on January 31, 2006 is having a negative effect. I am also happy to report that the Danville branch office reopened on April 26, following an early morning fire that damaged the facility on April 13. Our team worked very quickly to provide services to our customers while the branch was undergoing repairs. Fortunately, there were no injuries from the accidental fire. No client records or property were damaged. Because of the great response by our staff, landlord, contractors, and the city staff and inspectors, we were able to return to normal operations in a very short time,” added Mr. Kaczmarek.

Operating Results

Net interest income increased $988,000, or 9%, to $12,191,000 for the three months ended March 31, 2006 from $11,203,000 for the three months ended March 31, 2005. The improvement in net interest income was primarily the result of increases in key market interest rates. The net interest margin was 4.90% for the three months ended March 31, 2006, compared with 4.40% for the three months ended March 31, 2005.

For the three months ended March 31, 2006, noninterest income was $2,894,000, an increase of $537,000, or 23%, compared to $2,357,000 for the three months ended March 31, 2005. Noninterest income was primarily comprised of the gain on sale of Small Business Administration (“SBA”) and other guaranteed loans, SBA loan-servicing income, and the gain on sale of the Capital Group loan portfolio. Gain on sales of SBA loans contributed $826,000 during the first quarter of 2006, compared to $760,000 for the three months ended March 31, 2005. The Company has an ongoing program of originating SBA loans and selling the government guaranteed portion in the secondary market, while retaining the servicing of the whole loans. The Company sold its Capital Group loan portfolio, which consisted primarily of “factoring” type loans, during the first quarter of 2006, resulting in a gain on sale of $671,000. The sale of the Capital Group loan portfolio will negatively impact the Bank’s net interest margin going forward.

For the three months ended March 31, 2006, noninterest expense was $8,761,000, a decrease of $549,000, or 6%, compared to $9,310,000 for the three months ended March 31, 2005, reflecting continued cost controls. In the first quarter of 2006, noninterest expense included a pre-tax charge of $175,000 for stock option compensation costs from the implementation of SFAS 123R. In 2005, that cost was not included in expenses, but rather footnoted in the financial statements and equal to $101,000 in the first quarter of 2005. The efficiency ratio improved to 58.08% in the first quarter of 2006, compared to 68.66% in the first quarter of 2005.

Balance Sheet, Capital Management and Credit Quality

At March 31, 2006, total assets were $1.12 billion, compared to $1.16 billion at March 31, 2005. Total deposits were $935 million at March 31, 2006, compared to $963 million at March 31, 2005.

Total loans decreased 5% to $696 million at March 31, 2006, compared to $730 million at March 31, 2005. The decrease was primarily due to the Company selling its Capital Group loan portfolio in the first quarter of 2006 of approximately $30 million, which consisted primarily of “factoring” type loans.

Nonperforming assets totaled $2.5 million, or 0.23% of total assets, at March 31, 2006, compared to $3.7 million, or 0.32% of total assets, at March 31, 2005, and $3.7 million, or 0.32% of total assets, at December 31, 2005. In addition, the Company was paid off on several performing loans that were classified, but not included in non-performing assets. Because the Company had previously set aside reserves for these loans, a reverse provision for loan losses of $489,000 was booked in the first quarter of 2006, following no provision for loan losses in the fourth quarter of 2005 and $413,000 in the first quarter of 2005.

Net recoveries in the first quarter of 2006 were $13,000, or 0.01% of average loans, compared to net charge-offs of $1,661,000 and $176,000, respectively, or 0.93% and 0.10%, of average loans in the first and fourth quarter of 2005. The allowance for loan losses at March 31, 2006, was $9.7 million, or 1.40% of total loans, and represented 385% of nonperforming loans. The allowance for loan losses at March 31, 2005, was $11.2 million, or 1.54% of total loans, and represented 301% of nonperforming loans. The allowance for loan losses at December 31, 2005, was $10.2 million, or 1.48% of total loans, and represented 278% of nonperforming loans.

Shareholders’ equity increased 13% to $115 million, or $9.73 book value per share, at March 31, 2006, compared to $102 million, or $8.60 book value per share, a year earlier, and $112 million, or $9.45 book value per share at December 31, 2005. Capital ratios continue to be above the well-capitalized guidelines established by regulatory agencies. The Company’s leverage ratio at March 31, 2006, was 12.49%, compared to 11.18% at March 31, 2005 and 11.55% at December 31, 2005.

During the first quarter of 2006, the Company repurchased 32,000 shares of its common stock at an average price of $23.09 under the Company’s $10 million common stock repurchase program, which was approved by the Company’s Board of Directors in February, 2006. Shares were purchased on the open market using available cash. The repurchase program, which is financed by available cash, may be modified, suspended or terminated by the Board of Directors at any time without notice. The repurchase program expires on June 30, 2007. The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations.

Heritage Commerce Corp, a bank holding company established in February 1998, is the parent company of Heritage Bank of Commerce, established in 1994 and headquartered in San Jose with offices in Los Gatos, Fremont, Danville, Morgan Hill, Gilroy, Mountain View, and Los Altos. Heritage Bank of Commerce is also an SBA Preferred Lender, operating from offices in San Jose, Fresno, Santa Cruz, Elk Grove, Watsonville and Pittsburg, California.

Forward Looking Statement Disclaimer

This release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include, but are not necessarily limited to, fluctuations in interest rates and monetary policy established by the Federal Reserve, inflation, government regulations, general economic conditions, competition within the business areas in which the Company is conducting its operations, including the real estate market in California, the ability to recognize identified cost savings, and other factors beyond the Company's control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. For a discussion of factors which could cause results to differ, please see the Company's reports on Forms 10-K and 10-Q as filed with the Securities and Exchange Commission and the Company's press releases. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

     Member FDIC

	At and For the Three Months Ended:									Percent Change From:
CONSOLIDATED INCOME STATEMENTS	March 31,			December 31,			March 31,			December 31,			March 31,
(in $000's, unaudited)	2006			2005			2005			2005			2005
Interest Income	$	17,260		$	17,588		$	14,400			-2	%		20	%
Interest Expense		5,069			4,773			3,197			6	%		59	%
Net Interest Income		12,191			12,815			11,203			-5	%		9	%
Provision for Loan Losses		(489	)		0			413			N	/A		-218	%
Net Interest income after Provision for Loan Losses		12,680			12,815			10,790			-1	%		18	%
Noninterest Income:
Gain on Sale of Loans		1,497			711			760			111	%		97	%
Servicing Income		468			470			392			0	%		19	%
Increase in Cash Surrender Value of Life Insurance		347			349			266			-1	%		30	%
Service Charges and Other Fees on Deposit Accounts		327			348			393			-6	%		-17	%
Equipment Leasing		0			0			79			N	/A		-100	%
Other		255			326			467			-22	%		-45	%
Total Noninterest Income		2,894			2,204			2,357			31	%		23	%
Noninterest Expense:
Salaries & Employee Benefits		5,109			4,932			5,171			4	%		-1	%
Occupancy & Equipment		886			933			1,050			-5	%		-16	%
Other		2,766			2,702			3,089			2	%		-10	%
Total Noninterest Expense		8,761			8,567			9,310			2	%		-6	%
Income Before Income Taxes		6,813			6,452			3,837			6	%		78	%
Provision for Income Taxes		2,437			2,194			1,184			11	%		106	%
Net Income	$	4,376		$	4,258		$	2,653			3	%		65	%
PER SHARE DATA
(unaudited)
Basic Earnings Per Share	$	0.37		$	0.36		$	0.23			3	%		61	%
Diluted Earnings Per Share	$	0.36		$	0.35		$	0.22			3	%		64	%
Weighted Average Basic Shares Outstanding		11,821,817			11,795,534			11,753,371			0	%		1	%
Weighted Average Diluted Shares Outstanding		12,039,538			12,067,845			12,162,746			0	%		-1	%
Common Shares Outstanding		11,834,846			11,807,649			11,839,426			0	%		0	%
Book Value Per Share	$	9.73		$	9.45		$	8.60			3	%		13	%
Tangible Book Value Per Share	$	9.73		$	9.45		$	8.60			3	%		13	%
KEY FINANCIAL RATIOS
(unaudited)
Annualized Return on Average Equity		15.53	%		15.41	%		10.66	%		1	%		46	%
Annualized Return on Average Assets		1.59	%		1.46	%		0.96	%		9	%		66	%
Net Interest Margin		4.90	%		4.82	%		4.40	%		2	%		11	%
Efficiency Ratio		58.08	%		57.04	%		68.66	%		2	%		-15	%
AVERAGE BALANCES
(in $000's, unaudited)
Average Assets	$	1,114,248		$	1,155,178		$	1,121,712			-4	%		-1	%
Average Earning Assets	$	1,009,869		$	1,053,901		$	1,033,170			-4	%		-2	%
Average Total Loans	$	691,082		$	727,030		$	727,522			-5	%		-5	%
Average Loans Held For Sale	$	49,315		$	39,482		$	40,202			25	%		23	%
Average Deposits	$	919,944		$	965,574		$	925,993			-5	%		-1	%
Average Demand Deposits - Noninterest Bearing	$	235,288		$	258,374		$	261,471			-9	%		-10	%
Average Interest Bearing Deposits	$	684,656		$	707,200		$	664,522			-3	%		3	%
Average Interest Bearing Liabilities	$	740,911		$	763,602		$	738,391			-3	%		0	%
Average Equity	$	114,268		$	109,636		$	100,922			4	%		13	%
OTHER FINANCIAL INFORMATION
(in $000's, unaudited)
Interest Income on Gross Loans	$	14,721		$	15,109		$	12,345			-3	%		19	%
Interest Expense on Interest Bearing Deposits	$	4,319		$	4,026		$	2,411			7	%		79	%

	End of Period:									Percent Change From:
CONSOLIDATED BALANCE SHEETS	March 31,			December 31,			March 31,			December 31,			March 31,
(in $000's, unaudited)	2006			2005			2005			2005			2005
ASSETS
Cash and Due from Banks	$	40,065		$	35,560		$	33,163			13	%		21	%
Federal Funds Sold		94,200			62,900			76,200			50	%		24	%
Securities Available-for-Sale, at Fair Value		186,168			198,495			225,082			-6	%		-17	%
Loans Held For Sale		30,745			70,147			33,610			-56	%		-9	%
Loans:
Commercial Loans		262,625			256,713			293,488			2	%		-11	%
Real Estate-Mortgage		232,790			237,566			250,005			-2	%		-7	%
Real Estate-Land and Construction		156,468			149,851			129,881			4	%		20	%
Home Equity		41,429			41,772			53,595			-1	%		-23	%
Consumer Loans		1,495			1,721			2,147			-13	%		-30	%
Total Loans		694,807			687,623			729,116			1	%		-5	%
Deferred Loan Costs		1,058			1,155			754			-8	%		40	%
Loans, Net of Deferred Costs		695,865			688,778			729,870			1	%		-5	%
Allowance for Loan Losses		(9,748	)		(10,224	)		(11,249	)		-5	%		-13	%
Net Loans		686,117			678,554			718,621			1	%		-5	%
Premises & Equipment, Net		2,389			2,541			2,993			-6	%		-20	%
Accrued Interest Receivable and Other Assets		80,358			82,312			65,646			-2	%		22	%
Total Assets	$	1,120,042		$	1,130,509		$	1,155,315			-1	%		-3	%
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Demand Deposits-Noninterest Bearing	$	243,816		$	248,009		$	274,736			-2	%		-11	%
Demand Deposits-Interest Bearing		154,277			157,330			130,039			-2	%		19	%
Savings and Money Market		352,304			353,798			361,060			0	%		-2	%
Time Deposits, Under $100		33,003			35,209			37,829			-6	%		-13	%
Time Deposits, $100 and Over		115,293			109,373			118,773			5	%		-3	%
Brokered Deposits, $100 and Over		36,040			36,040			40,086			0	%		-10	%
Total Deposits		934,733			939,759			962,523			-1	%		-3	%
Securities Sold under Agreement to Repurchase		26,100			32,700			47,800			-20	%		-45	%
Notes Payable To Subsidiary Grantor Trusts		23,702			23,702			23,702			0	%		0	%
Accrued Interest Payable and Other Liabilities		20,310			22,731			19,468			-11	%		4	%
Total Liabilities		1,004,845			1,018,892			1,053,493			-1	%		-5	%
Shareholders' Equity:
Common Stock		67,120			66,799			68,919			0	%		-3	%
Accumulated Other Comprehensive Loss		(3,247	)		(2,721	)		(2,844	)		19	%		14	%
Retained Earnings		51,324			47,539			35,747			8	%		44	%
Total Shareholders' Equity		115,197			111,617			101,822			3	%		13	%
Total Liabilities & Shareholders' Equity	$	1,120,042		$	1,130,509		$	1,155,315			-1	%		-3	%
CREDIT QUALITY DATA
(in $000's, unaudited)
Nonaccrual Loans	$	2,292		$	3,672		$	3,450			-38	%		-34	%
Loans Over 90 Days Past Due and Still Accruing		238			0			287			N	/A		-17	%
Total Nonperforming Loans		2,530			3,672			3,737			-31	%		-32	%
Other Real Estate Owned		0			0			0			N	/A		N	/A
Total Nonperforming Assets	$	2,530		$	3,672		$	3,737			-31	%		-32	%
Net Charge-offs (Recoveries)	$	(13	)	$	176		$	1,661			-107	%		-101	%
Net Charge-offs (Recoveries) as Percent of Average Loans		-0.01	%		0.10	%		0.93	%		-110	%		-101	%
Allowance for Loan Losses to Total Loans		1.40	%		1.48	%		1.54	%		-5	%		-9	%
Allowance for Loan Losses to Nonperforming Loans		385.30	%		278.43	%		301.02	%		38	%		28	%
Nonperforming Assets to Total Assets		0.23	%		0.32	%		0.32	%		-28	%		-28	%
Nonperforming Loans to Total Loans		0.36	%		0.53	%		0.51	%		-32	%		-29	%
OTHER PERIOD-END STATISTICS
(unaudited)
Shareholders' Equity / Total Assets		10.29	%		9.87	%		8.81	%		4	%		17	%
Loan to Deposit Ratio		74.45	%		73.29	%		75.83	%		2	%		-2	%
Noninterest Bearing Deposits / Total Deposits		26.08	%		26.39	%		28.54	%		-1	%		-9	%
Leverage Ratio		12.49	%		11.55	%		11.18	%		8	%		12	%