Business Combinations2 (Tables)

3 Months Ended

Mar. 31, 2020


	(Dollars in thousands)
Issuance of 15,684,064 shares of common stock
to Presidio shareholders and holders of restricted stock
(stock price = $11.36 on October 11, 2019)	$	178,171
Consideration for Presidio stock options exchanged for
Heritage Commerce Corp stock options		7,426
Cash paid for fractional shares		1
Total consideration	$	185,598

Schedule of unaudited pro forma combined consolidated financial statements and related adjustments


	March 31, 2019
	(Dollars in thousands, except per share amounts)
Net interest income	$	41,177
Provision (credit) for loan losses		(1,037)
Noninterest income		2,779
Noninterest expense		23,961
Income before income taxes		21,032
Income tax expense		5,677
Net income	$	15,355

Net income per share - basic	$	0.26
Net income per share - diluted	$	0.26

Presidio bank

Business Acquisition [Line Items]

Schedule of recognized identified assets acquired and liabilities assumed


	As					As
	Recorded		Fair			Recorded
	by		Value			at
	Presidio		Adjustments			Acquisition
	(Dollars in thousands)

Assets acquired:
Cash and cash equivalents	$	117,989	$	(1)	(a)	$	117,988
Securities available-for-sale		44,647		422	(b)		45,069
Securities held-to-maturity		463		—			463
Loans		698,493		(12,529)	(c)		685,964
Allowance for loan losses		(7,463)		7,463	(d)		—
Premises and equipment, net		1,756		—			1,756
Other intangible assets		—		11,147	(e)		11,147
Other assets, net		43,539		(1,378)	(f)		42,161
Total assets acquired	$	899,424	$	5,124			904,548

Liabilities assumed:
Deposits	$	774,260	$	(1)	(g)		774,259
Subordinated Debt		10,000		—	(h)		10,000
Other borrowings		442		—			442
Other liabilities		17,916		(49)	(i)		17,867
Total liabilities assumed	$	802,618	$	(50)			802,568
Net assets acquired							101,980
Purchase price							185,598
Goodwill recorded in the merger						$	83,618

Explanation of certain fair value related adjustments for the Presidio merger:

(a)

Represents cash paid for fractional shares in the transaction.

(b)

Represents the fair value adjustment on investment securities available-for-sale.

(c)

Represents the fair value adjustment to the net book value of loans includes an interest rate mark and credit mark adjustment.

(d)

Represents the elimination of Presidio’s allowance for loan losses.

(e)

Represents intangible assets recorded to reflect the fair value of core deposits and an above market lease. The core deposit asset was recorded as an identifiable intangible asset and is amortized on an accelerated basis over the estimated average life of the deposit base. The above market lease liability will be accreted on the straight line method over 60 months.

(f)

Represents an adjustment to net deferred tax assets resulting from the fair value adjustments related to the acquired assets, liabilities assumed and identifiable intangible assets recorded.

(g)

Represents the fair value adjustment on time deposits, which was amortized as interest expense.

(h)

The Company acquired $10,000,000 of subordinated debt from the Presidio transaction. The Presidio subordinated debt was redeemed on December 19, 2019.

(i)

Represents reversal of over accrued accounts payable.