Parent Company only Condensed Financial Information

12 Months Ended

Dec. 31, 2017

Parent Company only Condensed Financial Information

Parent Company only Condensed Finan3.0cial Information

20) 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,
	2017		2016
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	22,940	$	2,851
Investment in subsidiary bank		286,770		256,174
Other assets		916		825
Total assets	$	310,626	$	259,850
Liabilities and Shareholder’s Equity
Short-term borrowings		—		—
Subordinated debt, net of issuance costs		39,183		—
Other liabilities		204		—
Shareholder’s equity		271,239		259,850
Total liabilities and shareholder’s equity	$	310,626	$	259,850

Condensed Statements of Operations

	Year Ended December 31,
	2017		2016		2015
	(Dollars in thousands)
Dividend from subsidiary bank	$	16,000	$	18,000	$	—
Other income		114		—		—
Interest expense		(1,394)		(11)		(18)
Other expenses		(2,270)		(2,568)		(2,705)
Income (loss) before income taxes and equity in net income of subsidiary bank		12,450		15,421		(2,723)
Equity in net income of subsidiary bank:
Net income of subsidiary bank		10,078		10,897		18,081
Income tax benefit		1,300		1,063		1,139
Net income		23,828		27,381		16,497
Dividends and discount accretion on preferred stock		—		(1,512)		(1,792)
Net income available to common shareholders	$	23,828	$	25,869	$	14,705

Condensed Statements of Cash Flows

	Year Ended December 31,
	2017		2016		2015
	(Dollars in thousands)
Cash flows from operating activities:
Net Income	$	23,828	$	27,381	$	16,497
Adjustments to reconcile net income to net cash provided by (used in) operations:
Amortization of restricted stock award, net of forfeitures and taxes		912		479		265
Equity in undistributed loss/(net income) of subsidiary bank		(10,078)		(10,897)		(18,081)
Net change in other assets and liabilities		224		(109)		269
Net cash provided by (used in) operating activities		14,886		16,854		(1,050)
Cash flows from financing activities:
Net change in purchased funds and other short-term borrowings		—		(3,000)		3,000
Equity investment in subsidiary bank		(20,000)		—		—
Payment of cash dividends		(15,238)		(13,627)		(10,738)
Proceeds from issuance of subordinated debt, net of issuance costs		39,073		—		—
Proceeds from issuance of common stock, net of issuance costs		1,368		938		315
Net cash provided by (used in) financing activities		5,203		(15,689)		(7,423)
Net increase (decrease) in cash and cash equivalents		20,089		1,165		(8,473)
Cash and cash equivalents, beginning of year		2,851		1,686		10,159
Cash and cash equivalents, end of year	$	22,940	$	2,851	$	1,686