Filed Pursuant to 424(b)(3)
Registration Statement No. 333-142035

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Shareholder,

On February 8, 2007, Diablo Valley Bank entered into an agreement and plan of merger with Heritage Commerce Corp and Heritage Bank of Commerce pursuant to which Diablo Valley Bank will merge with and into Heritage Bank of Commerce, with Heritage Bank of Commerce as the surviving corporation in the merger. You are cordially invited to attend a special meeting of the shareholders of Diablo Valley Bank on June 13, 2007 at 5:30 p.m., local time, at 387 Diablo Road, Danville, California 94526 to vote on approval of the merger. We are sending you this proxy statement/prospectus to ask you to vote on the approval of the merger at the special meeting.

If the merger is completed, Diablo Valley Bank common stock shareholders may elect to receive cash or Heritage Commerce Corp common stock in exchange for their shares of Diablo Valley Bank common stock, subject to certain limitations described in this document. The value you receive in exchange for your Diablo Valley Bank common stock is dependent on the per share consideration. The per share consideration is calculated by reference to the Heritage Commerce Corp common stock average closing price over a 20 day trading period that ends on the 5th business day before the effective date of the merger. Under this formula, the average closing price for the 20 day trading period ended April 30, 2007 (the last practicable date before this document was printed) would be $24.14 and the per share consideration would be $23.00; since per share consideration is determined by using the average closing price and not the most recent closing price, the actual market value of the per share consideration when received by each shareholder could be less or more than the "per share consideration" prescribed by this formula. The per share consideration will float within a band of $23.00 to $25.00 if the average closing price is between $24.55 and $27.44. If the average closing price is above $27.44, the per share consideration will be increased to reflect one-third of the increase in the average closing price above $27.44. If the average closing price is below $24.55, the aggregate amount of cash paid in the merger will be increased to an amount necessary to maintain a minimum per share consideration of $23.00. If the average closing price is below $23.50, Heritage Commerce Corp has the right to terminate the merger agreement.

Subject to the allocation provisions of the merger agreement, you may elect to receive all cash or all Heritage Commerce Corp common stock for the Diablo Valley Bank shares you own.

·       If you elect cash, the amount you receive per share will be equal to the per share consideration.

·       If you elect Heritage Commerce Corp common stock, the number of shares that you will receive will be equal to the number of your Diablo Valley Bank shares multiplied by an exchange ratio.  The exchange ratio will be calculated by dividing the per share consideration by the average closing price.  To the extent that the formula results in a fraction of a share, such fraction will not be issued but you will receive cash in lieu of such fractional interest.

The market prices of Heritage Commerce Corp common stock and Diablo Valley Bank common stock will fluctuate before the merger. You should obtain current stock price quotations for Heritage Commerce Corp common stock and Diablo Valley Bank common stock. Heritage Commerce Corp common stock is quoted on the NASDAQ Global Select Market under the symbol “HTBK.”  Diablo Valley Bank common stock is quoted on the Over-the-Counter Bulletin Board under the symbol “DBVB.”

We expect that the merger will generally be tax-free to you as to shares of Heritage Commerce Corp common stock you receive in the merger and generally taxable to you as to the cash you receive.

It is a condition to the merger that the holders of Diablo Valley Bank’s series A preferred stock will have their shares of series A preferred stock redeemed by Diablo Valley Bank for $32.00 per share in cash prior to the merger.

We cannot complete the merger unless Diablo Valley Bank’s common shareholders and holders of the series A preferred stock approve the merger.  In order for the merger to be approved, the holders of at least a majority of Diablo Valley Bank’s outstanding common shares and series A preferred shares, each voting as a separate class, must vote in favor of the merger. The members of the Board of Directors of Diablo Valley Bank, who in the aggregate have the power to vote approximately 17% of the outstanding shares of Diablo Valley Bank common stock (excluding the effect of exercisable options) and 19% of the outstanding series A preferred stock, have each executed voting agreements with Heritage Commerce Corp pursuant to which they have agreed to vote their shares of Diablo Valley Bank common stock in favor of the merger and against any competing business combination transaction. Regardless of whether you plan to attend the special shareholders’ meeting, please take the time to vote your shares in accordance with the instructions contained in this document. Failing to vote will have the same effect as voting against the merger. The Diablo Valley Bank Board of Directors recommends that Diablo Valley Bank shareholders vote “FOR” approval of the merger.

Also enclosed is an election form and instructions for electing your preferred form of merger consideration and exchanging your shares of Diablo Valley Bank common stock for shares of Heritage Commerce Corp and any cash payments you may be entitled to receive.  Please complete and return your election form together with your Diablo stock certificates in the separate BLUE envelope that is provided for that purpose.

ALL SHAREHOLDERS: YOUR PROXY CARD GOES IN THE WHITE ENVELOPE. COMMON SHAREHOLDERS: YOUR ELECTION FORM AND LETTER OF TRANSMITTAL, TOGETHER WITH YOUR STOCK CERTIFICATE, GO IN THE BLUE ENVELOPE.

If you hold your shares in “street name” through a bank or broker, you should follow instructions from your bank or broker to vote your shares, complete the required election and transmittal materials and submit your shares in exchange for the merger consideration.

This document describes the special meeting, the merger, the documents related to the merger and other related matters. Please carefully read this entire document, including the “Risk Factors” section beginning on page 20 for a discussion of the risks relating to the proposed merger. You also can obtain information about Heritage Commerce Corp from documents that it has filed with the Securities and Exchange Commission.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the Heritage Commerce Corp common stock to be issued under this document or determined if this document is accurate or adequate. Any representation to the contrary is a criminal offense.

The date of this document is April 30, 2007, and it is first being mailed or otherwise delivered to Diablo Valley Bank shareholders on or about May 14.

DIABLO VALLEY BANK
387 Diablo Road
Danville, California 94526

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

Diablo Valley Bank will hold a special meeting of shareholders at 387 Diablo Road, Danville, California 94526 at 5:30p.m., local time on June 13, 2007 to consider and vote upon the following proposals:

·       to approve the merger of Diablo Valley Bank with and into Heritage Bank of Commerce, a wholly-owned subsidiary of Heritage Commerce Corp, on the terms set forth in the Agreement and Plan of Merger, dated as of February 8, 2007, by and between Heritage Commerce Corp, Heritage Bank of Commerce and Diablo Valley Bank, as it may be amended from time to time; and

·       to approve the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the proposal to approve the merger.

The Diablo Valley Bank Board of Directors has fixed the close of business on April 27, 2007 as the record date for the special meeting. Only holders of Diablo Valley Bank common stock and series A preferred stock of record at that time are entitled to notice of, and to vote at, the special meeting or any adjournment or postponement of the special meeting.

In order for the merger to be approved, the holders of at least a majority of the Diablo Valley Bank common stock and of the series A preferred stock outstanding and entitled to vote thereon must vote in favor of approval of the merger.

Regardless of whether you plan to attend the special meeting, please submit your proxy with voting instructions. Please vote as soon as possible. If you hold stock in your name as a shareholder of record, please complete, sign, date and return the accompanying proxy card in the enclosed WHITE self-addressed, stamped envelope (or vote by telephone or internet in accordance with instructions on your proxy card). If you hold your stock in “street name” through a bank or broker, please direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker. This will not prevent you from voting in person, but it will help to secure a quorum and avoid added solicitation costs. Any holder of Diablo Valley Bank common stock or series A preferred stock who is present at the special meeting may vote in person instead of by proxy, thereby canceling any previous proxy. In any event, a proxy may be revoked in writing at any time before the special meeting in the manner described in the accompanying document. Common shareholders should also complete and submit their Election Form and Letter of Transmittal, together with their stock certificate, in the BLUE envelope.

Holders of Diablo Valley Bank common stock who do not vote in favor of approving the merger agreement and who otherwise comply with the requirements of California law will be entitled to appraisal rights. A summary of the applicable California law provision, including the requirements a Diablo Valley Bank shareholder must follow in order to exercise his or her appraisal rights, is contained in the accompanying proxy statement/prospectus. A copy of the California law provision relating to appraisal rights is attached as Appendix C to the proxy statement/prospectus.

The Diablo Valley Bank Board of Directors has approved the merger and the merger agreement and recommends that Diablo Valley Bank shareholders vote “FOR” approval of the merger.

YOUR VOTE IS IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD.

BY ORDER OF THE BOARD OF DIRECTORS,

Alfred D. McKelvy, Jr., Corporate Secretary
April 30, 2007

REFERENCES TO ADDITIONAL INFORMATION

This document, which is sometimes referred to as this proxy statement/prospectus, constitutes a proxy statement of Diablo Valley Bank to Diablo Valley Bank shareholders with respect to the solicitation of proxies for the special meeting described within and a prospectus of Heritage Commerce Corp for the shares of Heritage Commerce Corp common stock that Heritage Commerce Corp will issue to Diablo Valley Bank shareholders in the merger. This document incorporates important business and financial information about Heritage Commerce Corp from documents filed with the Securities and Exchange Commission (the “SEC”) that are not included in or delivered with this document. You may obtain copies of these documents, without charge, from the web site maintained by the SEC at www.sec.gov, as well as other sources. See “Where You Can Find More Information” beginning on page 94. You can also obtain documents incorporated by reference in this document, other than certain exhibits to those documents, by requesting them in writing or by telephone from Heritage Commerce Corp at the following address:

Heritage Commerce Corp
150 Almaden Boulevard
San Jose, California  95113
Attention:  Corporate Secretary
(408) 947-6900

You will not be charged for any of these documents that you request. Diablo Valley Bank shareholders requesting documents should do so by May 31, 2007 in order to receive them before the special meeting.

See “Where You Can Find More Information” on page 94.

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING

The questions and answers below highlight only selected procedural information from this document. They do not contain all of the information that may be important to you. You should read carefully the entire document and the additional documents incorporated by reference into this document to fully understand the voting procedures for the special meeting.

Q:             What is the proposed transaction for which I am being asked to vote?

A:             You are being asked to vote to adopt an Agreement and Plan of Merger, dated as of February 8, 2007, by and between Heritage Commerce Corp, Heritage Bank of Commerce and Diablo Valley Bank. Subject to the terms and conditions of the merger agreement, Diablo Valley Bank would merge with and into Heritage Bank of Commerce, a wholly-owned subsidiary of Heritage Commerce Corp, as the surviving corporation in the merger.

                           You are also being asked to give the proxyholders the authority to approve an adjournment of the special meeting, if necessary, to solicit additional proxies in the event there are not sufficient votes at the time of the special meeting to approve the proposed merger.

Q:             When and where is the special meeting?

A:             The special meeting is scheduled to take place at 387 Diablo Road, Danville, California 94526 at 5:30p.m., local time on June 13, 2007.

Q:             What do I need to do now?

A:             After you have carefully read this document and have decided how you wish to vote your shares, please vote your shares promptly. If you hold stock in your name as a shareholder of record, you must complete, sign, date and mail your proxy card in the enclosed postage paid return WHITE envelope as soon as possible (or vote by telephone or internet in accordance with instructions on your proxy card). If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker. Submitting your proxy card or directing your bank or broker to vote your shares will ensure that your shares are represented and voted at the special meeting.

You should also complete the election form and transmittal materials that accompany this proxy statement/prospectus to specify the merger consideration you prefer (or provide instructions to your broker if you hold your shares in “street name”) and mail and enclose the election form and transmittal materials in the BLUE envelope. To submit your Diablo Valley Bank share certificates for exchange, you should follow the instructions in the election form and transmittal materials.

Q:             What vote is required to approve the merger agreement?

A:             The merger agreement must be approved by the holders of a majority of the outstanding shares of Diablo Valley Bank common stock entitled to vote at the special meeting and by the holders of a majority of the series A preferred stock, each voting as a separate class. This means that if either the common stock shareholders as a class do not vote to approve the merger or the series A preferred shareholders as a class do not vote to approve the merger then the merger will not go forward. The Diablo Valley Bank Board of Directors recommends that you vote “FOR” approval of the merger. The members of the Board of Directors of Diablo Valley Bank, who in the aggregate have the power to vote approximately 17% of the outstanding shares of Diablo Valley Bank common stock (excluding the effect of exercisable options) and 19% of the outstanding shares of series A preferred stock, have each executed voting agreements with Heritage Commerce Corp pursuant to which they have agreed to vote their shares of Diablo Valley Bank common stock in favor of the merger and against any competing business combination transaction.

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Q:             If my shares of common stock are held in street name by my broker, will my broker automatically vote my shares for me?

A:             No. Your broker cannot vote your shares without instructions from you. You should instruct your broker as to how to vote your shares, following the directions your broker provides to you. Please check the voting form used by your broker.

Q:             What if I fail to instruct my broker?

A:             If you do not provide your broker with instructions, your broker generally will not be permitted to vote your shares on the merger proposal being presented at the special meeting. Because the approval of the merger requires the affirmative vote of the holders of a majority of the outstanding shares of Diablo Valley Bank common stock and the series A preferred stock, a failure to provide your broker instructions will have the same effect as a vote against the merger.

Q:             Can I attend the special meeting and vote my shares in person?

A:             Yes. All shareholders, including shareholders of record and shareholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Holders of record of Diablo Valley Bank common stock or series A preferred stock can vote in person at the special meeting. If you are not a shareholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted.

Q:             Can I change my vote?

A:             Yes. You may revoke any proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) delivering a written revocation letter to the Secretary of Diablo Valley Bank, or (3) attending the special meeting in person, notifying the Secretary and voting by ballot at the special meeting. The Diablo Valley Bank Secretary’s mailing address is 387 Diablo Road, Danville, California, 94526.

Any shareholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, and such vote will revoke any previous proxy but the mere presence (without notifying the Secretary of Diablo Valley Bank) of a shareholder at the special meeting will not constitute revocation of a previously given proxy.

Q:             Am I certain to receive the form of merger consideration that I elect for my common stock?

A:             No. The merger agreement provides that the total Diablo Valley Bank shares of common stock outstanding immediately prior to completion of the merger will be converted into total of $15,012,876 cash and 1,732,298 shares of Heritage Commerce Corp common stock, (subject to adjustment based on the average closing price of the Heritage Commerce Corp common stock over the 20 trading days ending on the fifth trading day immediately before the effective date of the merger). As a result, if more common stock shareholders elect to receive either form of consideration than is available under the merger agreement, shareholders electing the over-subscribed form of consideration will have their elections proportionately reduced and will receive a portion of their consideration in the other form of consideration, despite their election. This mechanism is more fully described in this proxy statement/prospectus under the caption “The Merger Agreement—Merger Consideration” beginning on page 42.

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Q:             If I own series A preferred stock will I participate in the merger consideration?

A:             No. It is a condition to the merger that holders of series A preferred stock will have their shares repurchased  by Diablo Valley Bank for $32.00 cash prior to the merger.

Q:             What do I need to do to receive the merger consideration for my common stock?

A:             You will need to sign, date and complete the election form and transmittal materials that accompany this proxy statement/prospectus and submit them in the enclosed BLUE envelope to the exchange agent, U.S. Stock Transfer Corporation, at the address given in the materials, together with the certificates representing your shares of Diablo Valley Bank common stock prior to the election deadline. The election deadline will be 5:00 p.m. San Francisco, California time one business day immediately preceding the date of the special meeting, and will be separately announced at least five business days, and not more than fifteen business days, prior to the deadline. If you do not submit an election prior to the election deadline, you will be allocated Heritage Commerce Corp common stock and/or cash pursuant to the procedures described under “The Merger Agreement—Merger Consideration” beginning on page 42. If your shares are held in “street name” you will have to provide instructions to your broker to make an election. If you do not make an election, you will receive separate instructions for submitting your Diablo Valley Bank common stock certificates in exchange for the merger consideration following completion of the merger.

Q:             What do I need to do to receive my cash for my series A preferred stock?

A:             Diablo Valley Bank will send a notice of redemption of preferred stock at least 30 days before the redemption date. The notice will include instructions for surrendering your shares for redemption.

Q:             What must I do if I want to seek appraisal rights because I do not want to receive the merger consideration?

A:             Holders of Diablo Valley Bank common stock will have appraisal rights as a result of the proposed merger. If you are a holder of Diablo Valley Bank common stock and wish to dissent from the merger and seek an appraisal of the value of your Diablo Valley Bank common shares you must follow the procedures established under California law, including:

·       not voting in favor of the merger,

·       delivery of notice of demand for appraisal within 30 days after Diablo Valley Bank mails notice of approval of the merger after the special shareholder meeting, and

·       delivery of your common shares to Diablo Valley Bank stock within 30 days after Diablo Valley Bank mails notice of approval of the merger.

These procedures are described in Appendix C of this document and are summarized on pages C-1 to C-3. Failure to follow the applicable procedures will result in the loss of appraisal rights.

Q:             Can I change my election after I submit my certificates?

A:             Yes. You can revoke your election and submit new election materials prior to the election deadline. You may do so by submitting a written notice to the exchange agent that is received prior to the election deadline. The revocation must specify the account name and such other information as the exchange agent may request; revocations may not be made in part. New elections must be submitted in accordance with the election procedures described in this proxy statement/prospectus. If you instructed a broker to submit an election for your shares, you must follow your broker’s directions for changing those instructions.

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Q:             When do you expect to complete the merger?

A:             We expect to complete the merger in the second or third quarter of 2007. However, we cannot assure you when or if the merger will occur. We must first obtain the approval of Diablo Valley Bank shareholders at the special meeting and the necessary regulatory approvals.

Q:             Will I be able to sell the shares of Heritage Commerce Corp common stock that I receive in the merger?

A:             Yes, in most cases. The shares of Heritage Commerce Corp common stock to be issued in the merger will be registered under the Securities Act of 1933, as amended (which we refer to as the “Securities Act”), and listed on the NASDAQ Global Select Market. However, certain shareholders who are deemed to be “affiliates” of Heritage Commerce Corp or Diablo Valley Bank under the Securities Act (generally, directors, executive officers and shareholders of Heritage Commerce Corp or Diablo Valley Bank holding more than 10% of the outstanding shares of common stock) must abide by certain transfer restrictions under the Securities Act.

Q:             What if I do not vote or I abstain from voting?

A:             If you do not vote or you abstain from voting, your failure to vote or abstention will have the effect of a vote against the items being considered.

Q:             What happens if I sell my shares of Diablo Valley Bank common stock before the special meeting?

A:             The record date for the special meeting is April 27, 2007, which is earlier than the date of the special meeting. If you hold your shares of Diablo Valley Bank common stock on the record date you will retain your right to vote at the special meeting. If you transfer your shares of Diablo Valley Bank common stock after the record date but prior to the date on which the merger is completed, you will lose the right to receive the merger consideration for shares of Diablo Valley Bank common stock and any dividends that have a record date after the date on which you transfer your shares. The right to receive the merger consideration will pass to the person who owns your shares of Diablo Valley Bank common stock when the merger is completed.

Q:             What will happen to my Diablo Valley Bank shares after completion of the merger?

A:             Upon completion of the merger, your shares of Diablo Valley Bank common stock will be canceled and will represent only the right to receive your portion of the merger consideration (or the fair value of your Diablo Valley Bank common stock if you seek appraisal rights) and any declared but unpaid dividends that you may be owed.

Q:             Whom should I call with questions?

A:             Diablo Valley Bank shareholders should call John J. Hounslow at 925-314-2801 with any questions about the merger.

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SUMMARY

This summary highlights selected information from this document. It does not contain all of the information that is important to you. We urge you to carefully read the entire document and the other documents to which we refer in order to fully understand the merger and the related transactions. See “Where You Can Find More Information” on page 94. Each item in this summary refers to the page of this document on which that subject is discussed in more detail.

Information about the Companies

Heritage Commerce Corp

Heritage Commerce Corp is registered with the Board of Governors of the Federal Reserve System as a Bank Holding Company under the Bank Holding Company Act (“BHCA”). Heritage Commerce Corp was organized in 1997 to be the holding company for Heritage Bank of Commerce. Subsequent to 1997, Heritage Commerce Corp became the holding company for Heritage Bank East Bay (“HBEB”); Heritage Bank South Valley (“HBSV”) and Bank of Los Altos (“BLA”). On January 1, 2003, HBEB, HBSV, and BLA were merged into Heritage Bank of Commerce. The former HBEB, HBSV, and BLA now operate as branch offices of Heritage Bank of Commerce and continue to serve their local markets. Heritage Commerce Corp’s principal source of income is dividends from Heritage Bank of Commerce. The expenditures of Heritage Commerce Corp, including (but not limited to) the payment of dividends to shareholders, if and when declared by the Board of Directors, the cost of servicing debt, legal fees, audit fees, and shareholder costs will generally be paid from dividends paid to Heritage Commerce Corp by Heritage Bank of Commerce. At December 31, 2006, Heritage Commerce Corp had consolidated assets of $1.04 billion, deposits of $847 million and shareholders’ equity of $123 million. Heritage Commerce Corp common stock is listed on the NASDAQ Global Select Market.

Heritage Bank of Commerce

Heritage Bank of Commerce is a California state-chartered bank headquartered in San Jose, California. It was incorporated in November 1993 and opened for business in January 1994. Heritage Bank of Commerce is a multi-community independent bank that offers a full range of banking services to small to medium sized businesses and their owners, managers and employees residing in Santa Clara, Alameda and Contra Costa counties in California. Heritage Bank of Commerce operates nine full service branch offices throughout this geographic footprint.

The principal executive offices of Heritage Commerce Corp and Heritage Bank of Commerce are located at 150 Almaden Boulevard, San Jose, California 95113.

Diablo Valley Bank

Diablo Valley Bank is a California state-chartered bank. Diablo Valley Bank operates two offices located at 387 Diablo Road, Danville, California and 300 Main Street, Pleasanton, California. At December 31, 2006, Diablo Valley Bank had total assets of approximately $249 million, total deposits of approximately $224 million and total shareholders’ equity of approximately $24.1 million. Diablo Valley Bank common stock is quoted on the Over-the-Counter Bulletin Board. Diablo Valley Bank’s principal executive offices are located at 387 Diablo Road in Danville.

The Merger and the Merger Consideration (page 42)

We are proposing the merger of Diablo Valley Bank with and into Heritage Bank of Commerce, a wholly-owned subsidiary of Heritage Commerce Corp. Heritage Bank of Commerce will survive the merger. As used in this document, the term “the merger” means the merger of Diablo Valley Bank with and into Heritage Bank of Commerce. The merger is governed by the Agreement of Plan and Merger

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dated February 8, 2007. A copy of the merger agreement is attached as Appendix A at the back of this proxy statement/prospectus. You are encouraged to read this merger agreement, which is the legal document that governs the merger.

The value that you will receive in exchange for your Diablo Valley Bank common stock is dependent on the per share consideration which will be calculated with reference to the average closing price for the Heritage Commerce Corp common stock. Average closing price means the average daily closing price of Heritage Commerce Corp common stock during the 20 trading days ending on the fifth trading day immediately before the effective date of the merger.

·       Per share consideration means:

(i)             If the average closing price is less than or equal to $24.55,

then the per share consideration is $23.00

(ii)         If the average closing price exceeds $24.55,

then the per share consideration will be an amount of the quotient equal to (A) the sum of (x) the product of the total stock consideration times the average closing price, plus (y) $15,012,876, divided by (B) 2,502,146

·       Total stock consideration means:

(i)             If the average closing price is less than $27.44, then 1,732,298 shares of Heritage Commerce Corp common stock; and

(ii)         If the average closing price exceeds $27.44, then 1,732,298 shares minus the number of shares equal to (A) .6666 times the difference between the average closing price and $27.44 multiplied by 1,732,298, divided by (B) the average closing price.

·       In general the per share consideration will float within a band of $23.00 to $25.00 if the average closing price is between $24.55 and $27.44. If the average closing price is above $27.44, the per share consideration will be increased to reflect one-third of the increase in the average closing price above $27.44. If the average closing price is below $24.55, the aggregate amount of cash paid in the merger will be increased to an amount necessary to maintain a minimum per share consideration of $23.00.

·       If the average closing price falls below $23.50, Heritage Commerce Corp has the right to terminate the agreement and plan of merger agreement.

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The following table gives examples of the exchange ratio, per share consideration and total consideration for various average closing prices between $21.00 and $30.00. The actual average closing price could be higher or lower than this range and the market value of Heritage Commerce Corp common stock at any time could be lower or higher than the average closing price used to calculate the per share consideration. This table assumes no exercise of outstanding options to acquire Diablo Valley Bank common stock.

Amounts shown in the “Total Consideration” column do not include approximately $7.5 million that will be paid to holders of options to acquire Diablo Valley Bank common stock (assuming no exercise of such options before completion of the merger). Holders of Diablo Valley Bank preferred stock may convert preferred stock to Diablo Valley Bank common stock on a one-for-one basis before redemption and instead receive the merger consideration, but as indicated above the per share merger consideration for each share of common stock is likely to be substantially less than $32.00 per share.

Subject to the allocation provisions of the merger agreement, you may elect to receive all cash or all Heritage common stock for the Diablo Valley Bank shares you own.

·       If you elect cash, the amount you receive per share will be equal to the per share consideration.

·       If you elect Heritage Commerce Corp common stock, the number of shares that you will receive will be equal to the number of your Diablo Valley Bank shares multiplied by an exchange ratio. The exchange ratio will be calculated by dividing the per share consideration by the average closing price. To the extent that the formula results in a fraction of a share, such fraction will not be issued but you will receive cash in lieu of such fractional interest.

As of the date of this proxy statement/prospectus, Diablo Valley Bank has 2,505,146 shares outstanding. Between the date hereof and the closing for the merger, additional stock options may be exercised. As a result of the additional shares pursuant to the exercise of outstanding stock options, the aggregate consideration to be paid by Heritage Commerce Corp will increase but the per share consideration due to Diablo Valley Bank shareholders will not decrease.

If you are a shareholder of record of Diablo Valley Bank common stock you may make different elections with respect to different shares. For example, if you are the record holder of 10,000 shares of Diablo Valley Bank common stock, you may elect to have 3,000 of those shares converted into the cash consideration and 7,000 of those shares converted into the Heritage Commerce Corp common stock consideration, subject to potential adjustment as described below. If you hold your stock in “street name” through a bank or broker, your election procedures may be subject to further limitations imposed by your bank or broker.

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The foregoing discussion applies primarily to holders of Diablo Valley Bank common stock. Holders of its series A preferred stock will receive $32.00 per share in redemption of those shares before completion of the merger.

Risk Factors (page 20)

See the section entitled “Risk Factors” beginning on page 20 for a discussion of risks associated with the merger.

Regardless of whether you make a cash election or a stock election, you may nevertheless receive a mix of cash and stock (page 43)

The merger agreement provides that the total Diablo Valley Bank shares of common stock outstanding immediately prior to completion of the merger will be converted into the right to receive $15,012,876 cash, subject to adjustment, and 1,732,298 shares of Heritage Commerce Corp common stock, subject to adjustment. As a result, if more shareholders elect to receive either form of consideration than is available under the merger agreement, shareholders electing the over-subscribed form of consideration will have their elections proportionately reduced and will receive a portion of their consideration in the other form, despite their election.

Consideration for Diablo Valley Bank Stock Options (page 44)

Upon completion of the merger each outstanding option to purchase shares of Diablo Valley Bank common stock, whether vested or not, will be cancelled and converted into the right to receive a lump sum cash payment, without interest, equal to the product of (1) the number of shares subject to such Diablo Valley Bank option and (2) the excess, if any, of the per share consideration over the exercise price per share of such Diablo Valley Bank option, subject to applicable tax withholding.

The Merger Will Generally Be Tax-Free to Diablo Valley Bank Shareholders Except to the Extent of the Cash They Receive (page 60)

Heritage Commerce Corp and Diablo Valley Bank have structured the merger to qualify as a reorganization for United States federal income tax purposes, and it is a condition to their respective obligations to complete the merger that each of Heritage Commerce Corp and Diablo Valley Bank receive a legal opinion to that effect. Accordingly, the merger will generally be tax-free to you, except to the extent of the cash you receive in the merger. The amount of gain that you recognize in the merger will generally be limited to the lesser of the amount of gain that you realize and the amount of cash that you receive in the merger (except for any cash you receive instead of fractional shares). The amount of gain that you realize is generally equal to the excess, if any, of the sum of the cash and the fair market value of the Heritage Commerce Corp common stock that you receive over your tax basis in the Diablo Valley Bank common stock you surrender in the merger.

The United States federal income tax consequences described above may not apply to all holders of Diablo Valley Bank common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you

Comparative Market Prices and Share Information (pages 38 and 90)

Heritage Commerce Corp common stock is quoted on the NASDAQ Global Select Market under the symbol “HTBK.”  Diablo Valley Bank common stock is quoted on the Over-the-Counter Bulletin Board under the symbol “DBVB.”  The following table shows the closing sale prices of Heritage Commerce Corp common stock and Diablo Valley Bank common stock as reported on the NASDAQ Global Select Market

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and the Over-the-Counter Bulletin Board, respectively, on February 8, 2007, the last trading day before we announced the merger, and the closing price on April 30, 2007, the last practicable trading day before the printing of this document. This table also shows the implied value of the consideration proposed for each share of Diablo Valley Bank common stock receiving Heritage Commerce Corp common stock in the merger, which was calculated by multiplying the closing price of Heritage Commerce Corp common stock on those dates by .9127 and 1.0522, the respective exchange ratios that would result if the applicable average Heritage Commerce Corp trading price were equal to the Heritage Commerce Corp closing prices on such dates.

The market price of Heritage Commerce Corp common stock and Diablo Valley Bank common stock will fluctuate prior to the merger. You should obtain market quotations for the shares.

Howe Barnes Hoefer & Arnett Has Provided an Opinion to the Diablo Valley Bank Board of Directors Regarding the Merger Consideration (page 31)

Howe Barnes Hoefer & Arnett delivered its opinion to Diablo Valley Bank’s Board of Directors that as of February 8, 2007, and based upon and subject to the factors and assumptions set forth in the opinion, the merger consideration to be received by holders of the outstanding shares of the common stock of Diablo Valley Bank under the agreement and plan of merger was fair from a financial point of view.

The full text of the written opinion of Howe Barnes Hoefer & Arnett, dated February 8, 2007, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Appendix B to this proxy statement/prospectus. Diablo Valley Bank’s shareholders are encouraged to read the opinion in its entirety. Howe Barnes Hoefer & Arnett provided its opinion for the information and assistance of the Diablo Valley Bank Board of Directors in connection with its consideration of the transaction. The Howe Barnes Hoefer & Arnett opinion is not a recommendation as to how any holder of Diablo Valley Bank common stock should vote with respect to the transaction.

The Diablo Valley Bank Board of Directors Recommends that Diablo Valley Bank Shareholders Vote “FOR” Approval of the Merger (pages 26 and 29)

The Diablo Valley Bank Board of Directors believes that the merger is in the best interests of Diablo Valley Bank and its shareholders and has approved the merger and the merger agreement. The Diablo Valley Bank Board of Directors recommends that Diablo Valley Bank shareholders vote “FOR” approval of the merger.

Diablo Valley Bank’s Directors and Officers Have Financial Interests in the Merger That May Differ From Your Interests (page 40)

In considering the information contained in this document, you should be aware that Diablo Valley Bank’s executive officers and directors have financial interests in the merger that may be different from, or in addition to, the interests of Diablo Valley Bank shareholders. These additional interests of Diablo Valley Bank’s executive officers and directors may create potential conflicts of interest and cause some of these persons to view the proposed transaction differently than you may view it as a shareholder.

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These interests include:

·       Certain officers and directors have stock options exercisable in full prior to the merger.

·       James Mayer, President of Diablo Valley Bank, has entered into an employment agreement with Heritage Bank of Commerce and a noncompetition agreement with Heritage Commerce Corp and Heritage Bank of Commerce, both agreements becoming effective on the effective date of the merger. These agreements supersede Mr. Mayer’s existing agreements with Diablo Valley Bank and eliminate his right to substantial payments from Diablo Valley Bank regarding this merger.

·       John J. Hounslow, Chairman of the Board of Diablo Valley Bank, has entered into a consulting agreement with Heritage Bank of Commerce and a noncompetition agreement with Heritage Commerce Corp and Heritage Bank of Commerce, both agreements becoming effective on the effective date of the merger. These agreements will supersede Mr. Hounslow’s existing agreements with Diablo Valley Bank and eliminate his right to receive substantial payments from Diablo Valley Bank regarding this merger on the effective date of the merger.

·       John J. Hounslow and Mark E. Lefanowicz will be appointed to the Board of Directors of Heritage Commerce Corp and Heritage Bank of Commerce.

·       Randall D. Greenfield, chief financial officer of Diablo Valley Bank, is a party to an employment agreement with Diablo Valley Bank that would result in substantial payments to him in the case the merger is completed and his employment with Heritage Bank of Commerce is terminated. The parties anticipate that Mr. Greenfield will not be hired by Heritage Bank of Commerce beyond an initial consulting period to assist in the transition and therefore he will receive the severance payments described in his agreement.

Diablo Valley Bank’s Board of Directors was aware of these interests and took them into account in its decision to approve and adopt the merger agreement. For information concerning these interests, please see the discussion under the caption “Diablo Valley Bank’s Directors and Officers Have Financial Interests in the Merger on page 40.”

Holders of Diablo Valley Bank Common Stock Have Appraisal Rights in the Merger (page 62)

Under California law, in the event the merger is completed, if you do not vote to approve and adopt the merger agreement, and you comply with the other requirements of the relevant provisions of California law described in this proxy statement/prospectus, you may elect to receive, in cash, the statutorily determined fair value of your shares of our common stock, with interest, in lieu of receiving the merger consideration. In order to qualify for dissenters’ rights, a Diablo Valley Bank shareholder must vote against the merger and must make a written demand on Diablo Valley Bank within 30 days after Diablo Valley Bank mails the notice of approval of the merger to shareholders. A shareholder who executes and returns an unmarked proxy will have his or her shares voted “For” the merger and, as a consequence, such shareholder will be foreclosed from exercising rights as a dissenting shareholder.

If the merger is approved, Diablo Valley Bank will, within ten days after the meeting, mail to any shareholder who did not vote for the merger a notice that the required shareholder approval of the merger was obtained. This notice of approval will state the price determined by Diablo Valley Bank to represent the “fair market value” of any dissenting shares and a brief description of the procedures to be followed by dissenting shareholders who wish to further pursue their statutory rights. The dissenting shareholder must deliver his or her share certificate for receipt by Diablo Valley Bank within 30 days after the date on which the notice of approval was mailed to the shareholder.

The Diablo Valley Bank Board of Directors has determined that the “fair market value” of one share of Diablo Valley Bank common stock for this purpose is $20.77. You may disagree with the Diablo Valley

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Bank Board of Directors’ determination of the fair market value. A copy of the full text of the relevant provisions of California law is attached as Appendix C, and any description in this proxy statement/prospectus of those provisions is qualified in its entirety by reference to Appendix C.

Diablo Valley Bank preferred shares, unless first converted to shares of common stock, will be redeemed for the redemption price of $32.00 per share before completion of the merger. Under California law, if the dissenting shares are surrendered for conversion into shares of Diablo Valley Bank common stock or are transferred prior to the shareholders’ delivery of such shares to Diablo Valley Bank, they lose their status as dissenting shares and the holders of such shares cease to be dissenting shareholders. The Diablo Valley Bank preferred shares that will be redeemed will be transferred to Diablo Valley Bank prior to the completion of the merger. As a result, the Diablo Valley Bank preferred shares, whether converted to shares of Diablo Valley Bank common stock or redeemed by Diablo Valley Bank, will lose their status as dissenting shares and, therefore, those shares will not be eligible for appraisal rights.

Conditions That Must Be Satisfied or Waived for the Merger to Occur (page 54)

Currently, we expect to complete the merger in the second or third quarter of 2007. As more fully described in this document and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied. These conditions include, among others, approval by Diablo Valley Bank shareholders, redemption of the Diablo Valley Bank series A preferred stock, absence of material adverse change in the parties, the receipt of all required regulatory approvals (such as approval by the Board of Governors of the Federal Reserve System and the California Department of Financial Institutions), the receipt of legal opinions by each company regarding the tax treatment of the merger and other customary conditions.

We cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.

Termination of the Merger Agreement (page 56)

We may mutually agree to terminate the merger agreement before completing the merger, even after shareholder approval, as long as the termination is approved by each of our boards of directors. In addition, either of us may decide to terminate the merger agreement at any time, if:

·       a final judicial or regulatory determination that any material provision of the merger agreement is unenforceable or denying a regulatory application;

·       the Diablo Valley Bank shareholders fail to approve the adoption of the merger agreement by the required vote;

·       the other party breaches any representation, warranty, covenant or agreement that gives rise to the failure of certain conditions precedent and fails to cure the breach within the agreed time;

·       after September 30, 2007, if the merger has not been consummated by then, unless the failure to consummate the merger was due to the failure of the party requesting termination to perform an obligation under the merger agreement; or

·       circumstances, in connection with the acceptance of a superior acquisition proposal by the Board of Directors of Diablo Valley Bank.

Heritage Commerce Corp may terminate the merger agreement if:

·       Diablo Valley Bank’s Board of Directors fails to provide notice or solicit proxies for the special meeting, fails to recommend the merger, changes or plans to change its positive recommendation of the merger, approves or recommends an acquisition proposal other than the merger, enters or plans

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to enter into agreements for another acquisition proposal, or recommends that Diablo Valley Bank shareholders tender their shares in connection with an offer that is not made by Heritage Commerce Corp;

·       Diablo Valley Bank breaches its obligations under the merger agreement with respect to the solicitation and consideration of offers other than the merger;

·       Diablo Valley Bank exercises its rights with regard to the consideration of other acquisition proposals under the merger agreement and continues discussions with persons concerning an acquisition proposal for more than 15 business days after the date of such acquisition proposal; or

·       the average closing price of Heritage Commerce Corp common stock for the 20 trading days ending on the fifth trading day immediately before the effective date of the merger is less than $23.50.

Diablo Valley Bank may terminate the merger agreement if Diablo Valley Bank’s Board of Directors authorizes Diablo Valley Bank, subject to complying with the terms of the merger agreement, to enter into a written agreement with respect to a superior acquisition proposal by a third party provided that:

·       Diablo Valley Bank’s Board of Directors complies with the provisions of the merger agreement relating to the non-solicitation of competing acquisition proposals and in responding to unsolicited acquisition proposals;

·       before taking any action Diablo Valley Bank promptly gives Heritage Commerce Corp notice of its decision to take such action, the notice specifies the material terms and conditions of the superior acquisition proposal and identifies the person making such superior acquisition proposal, and Diablo Valley Bank gives Heritage Commerce Corp at least five business days to propose revisions to the merger agreement in response to the superior acquisition proposal and Diablo Valley Bank negotiates in good faith with Heritage Commerce Corp with respect to such proposed revisions;

·       Diablo Valley Bank Board of Directors reasonably determines in good faith that it is necessary to terminate the merger agreement in order to comply with its fiduciary duties under applicable law;  and

·       Diablo Valley Bank pays a termination fee to Heritage Commerce Corp as described below.

Termination Fee if the Merger is Not Completed (page 57)

Diablo Valley Bank is required to pay Heritage Commerce Corp a termination fee of $3,380,000 under the following circumstances:

·       if Heritage Commerce Corp terminates the merger agreement because Diablo Valley Bank’s Board of Directors fails to recommend the merger, adversely alters or modifies its favorable recommendation, approves or recommends an acquisition proposal other than the merger, enters or plans to enter into agreements for another acquisition proposal, or recommends that Diablo Valley Bank shareholders tender their shares in connection with an offer that is not made by Heritage Commerce Corp;

·       if Heritage Commerce Corp terminates its merger agreement because Diablo Valley Bank breaches its obligations under the merger agreement with respect to the solicitation and consideration of offers other than the merger;

·       if Diablo Valley Bank terminates the merger agreement in connection with the acceptance of a superior acquisition proposal by the Diablo Valley Bank’s Board of Directors that is deemed necessary to fulfill its fiduciary duties as discussed above; or

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·       if there is a publicly known acquisition proposal other than the merger, and the merger agreement is later terminated because of Diablo Valley Bank shareholders’ failure to approve the merger or because the merger is not consummated in time because of Diablo Valley Bank’s actions, and Diablo Valley Bank completes an acquisition proposal within 12 months after termination of the merger agreement, or within 6 months of the termination of the merger agreement, enters into an agreement for an acquisition proposal.

Regulatory Approvals Required for the Merger (page 38)

Diablo Valley Bank and Heritage Commerce Corp have agreed to use their reasonable best efforts to obtain all regulatory approvals required to complete the transactions contemplated by the merger agreement. These approvals include approval from the Federal Reserve Board, the California Department of Financial Institutions and the Federal Deposit Insurance Corporation. Heritage Commerce Corp and Diablo Valley Bank have completed, or will complete, the filing of applications and notifications to obtain the required regulatory approvals.

Although we do not know of any reason why we cannot obtain these regulatory approvals in a timely manner, we cannot be certain when or if we will obtain them.

The Rights of Diablo Valley Bank Shareholders will be Governed by California Law and the Heritage Commerce Corp Articles of Incorporation and Bylaws after the Merger (page 42)

The legal rights of Diablo Valley Bank shareholders who become Heritage Commerce Corp shareholders will change as a result of the merger because the rights of the holders of Heritage Commerce Corp common stock will be governed by the Heritage Commerce Corp articles of incorporation and bylaws. The differences in the rights that Diablo Valley Bank shareholders will have as a result of the merger are discussed beginning on page 89.

Diablo Valley Bank will Hold its Special Meeting on June 13, 2007 (page 24)

The special meeting will be held on June 13, 2007 at 5:30 p.m., local time, at 387 Diablo Road, Danville, California 94526. At the special meeting, Diablo Valley Bank shareholders will be asked to:

·       approve the merger; and

·       approve the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the merger.

Record Date.   Only holders of record of Diablo Valley Bank common stock and series A preferred stock at the close of business on April 27, 2007 will be entitled to vote at the special meeting. Each share of Diablo Valley Bank common stock is entitled to one vote. Each holder of series A preferred stock is entitled to one vote, voting as a separate class from the common stock holders. As of the record date of April 27, 2007, there were 2,505,146 shares of Diablo Valley Bank common stock and 207,061 shares of Diablo Valley series A preferred stock entitled to vote at the special meeting.

Required Vote.   To approve the merger, the holders of at a majority of the outstanding shares of Diablo Valley Bank common stock and the outstanding shares of the series A preferred stock, each voting as a separate class, must vote in favor of approving the merger. Because approval is based on the affirmative vote of at least a majority of shares outstanding of each of the common stock and preferred stock, a Diablo Valley Bank shareholder’s failure to vote or an abstention will have the same effect as a vote against the merger.

Approval of any necessary adjournment of the special meeting may be obtained by the affirmative vote of the holders of a majority of the shares of the common stock present in person or by proxy, even if

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less than a quorum. Because approval of such adjournment is based on the affirmative vote of a majority of shares present in person or by proxy, abstentions will have the same effect as a vote against this proposal.

As of the record date, Diablo Valley Bank directors and executive officers and their affiliates had the right to vote 436,680 shares of Diablo Valley Bank common stock, or approximately 17% of the outstanding common shares (excluding exercisable options and shares of preferred stock convertible to common stock) and 40,122 shares of series A preferred stock, or approximately 19% of the outstanding preferred shares. As described below, the directors of Diablo Valley Bank have agreed to vote their shares of Diablo Valley Bank common stock in favor of the merger.

Diablo Valley Bank’s Directors Have Agreed to Vote in Favor of the Merger (page 26)

In consideration of Heritage Commerce Corp agreeing to enter into the merger agreement, each of the members of our Board of Directors entered into voting agreements with Heritage Commerce Corp under which they agreed to vote their shares of Diablo Valley Bank common stock in favor of the merger agreement and against any competing acquisition transaction. The shares subject to these voting agreements represent approximately 17% (28% inclusive of exercisable options and shares of preferred stock convertible to common stock) of the outstanding shares of Diablo Valley Bank common stock. A form of the voting agreement is attached to this proxy statement/prospectus as Appendix D.

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF HERITAGE COMMERCE CORP

Set forth below are highlights derived from Heritage Commerce Corp’s audited consolidated financial data as of and for the years ended December 31, 2002 through 2006. You should read this information in conjunction with Heritage Commerce Corp’s consolidated financial statements and related notes included in Heritage Commerce Corp’s Annual Report on Form 10-K for the year ended December 31, 2006, which is incorporated by reference in this document and from which this information is derived. See “Where You Can Find More Information” on page 94.

(1)             Represents net income divided by the average number of shares of common stock outstanding for the respective period.

(2)             Represents net income divided by the average number of shares of common stock and common stock-equivalents outstanding for the respective period.

(3)             Represents shareholders’ equity divided by the number of shares of common stock outstanding at the end of the period indicated.

(4)             Average balances used in this table are based on daily averages.

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SELECTED HISTORICAL FINANCIAL DATA OF DIABLO VALLEY BANK

Diablo Valley Bank commenced operations on October 20, 2003. Set forth below are highlights derived from Diablo Valley Bank’s audited financial statements as of and for the years ended December 31, 2003 through 2006.

*                     Operations commenced October 20, 2003

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The accompanying selected unaudited pro forma condensed combined statement of income data presents the Heritage Commerce Corp audited consolidated statement of income data for the year ended December 31, 2006 combined with Diablo Valley Bank’s audited statement of income data for the year ended December 31, 2006.  The selected unaudited pro forma condensed combined statement of income data gives effect to the merger as if it had occurred at the beginning of 2006.  The accompanying selected unaudited pro forma condensed combined balance sheet assumes the merger took place as of December 31, 2006.  The selected unaudited pro forma condensed combined balance sheet data combines the audited consolidated balance sheet data of Heritage Commerce Corp as of December 31, 2006 and the audited balance sheet data of Diablo Valley Bank as of December 31, 2006.

The selected unaudited pro forma condensed combined financial information includes purchase accounting adjustments to record the assets and liabilities of Diablo Valley Bank at their estimated fair values and is subject to further adjustments as additional information becomes available and as additional analyses are performed.  The selected unaudited pro forma condensed combined financial information presented below should be read together with the historical financial statements of Heritage Commerce Corp and Diablo Valley Bank, including the related notes and the other unaudited pro forma financial information, including the related notes, contained in this document or incorporated by reference.  See “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 64.  The selected unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had the impact of business integration costs and possible revenue enhancements and expense efficiencies, among other factors, been considered.

The pro forma financial information assumes that the Diablo Valley Bank common stock will be exchanged for 1,732,298 shares of Heritage Commerce Corp common stock and $15,012,876 of cash; however, the actual amount of cash paid may differ from this assumption.  For purposes of illustration, the selected unaudited pro forma condensed combined figures have been calculated assuming that the average closing price of Heritage Commerce Corp common stock is $26.27 (the average closing price for 20 trading days ending on the fifth trading day immediately before March 9, 2007) resulting in value to Diablo Valley Bank shareholders of $24.19 per share consideration.  We anticipate that the merger will provide the combined company with financial benefits that include reduced operating expenses and revenue enhancement opportunities.  The selected unaudited pro forma condensed combined financial information does not reflect the impact of possible revenue enhancements, expense efficiencies, asset dispositions and share repurchases, among other factors, that may result as a consequence of the merger and, accordingly, does not attempt to predict or suggest future results.  It also does not necessarily reflect what the historical results of the combined company would have been had our companies been combined during this period.  Upon completion of the merger, the operating results of Diablo Valley Bank will be reflected in the consolidated financial statements of Heritage Commerce Corp on a prospective basis.

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Comparative Unaudited Per Share Data

(1)          Per Diablo Valley Bank equivalent pro forma is calculated by multiplying pro forma combined by the hypothetical exchange ratio of .9208.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document contains or incorporates by reference a number of forward-looking statements, including statements about the financial conditions, results of operations, earnings outlook and prospects of Heritage Commerce Corp, Diablo Valley Bank and the potential combined company and may include statements for the period following the completion of the merger. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions.

The forward-looking statements involve certain risks and uncertainties. The ability of either Heritage Commerce Corp or Diablo Valley Bank to predict results or the actual effects of its plans and strategies, or those of the combined company, is subject to inherent uncertainty. Factors that may cause actual results or earnings to differ materially from such forward-looking statements include those set forth below under “Risk Factors,” as well as, among others, the following:

·       those discussed and identified in public filings with the SEC made by Heritage Commerce Corp;

·       completion of the merger is dependent on, among other things, receipt of shareholder and regulatory approvals, the timing of which cannot be predicted with precision and which may not be received at all;

·       the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

·       the integration of Diablo Valley Bank’s business and operations with those of Heritage Commerce Corp may take longer than anticipated, may be more costly than anticipated and may have unanticipated adverse results relating to Diablo Valley Bank’s or Heritage Commerce Corp’s existing businesses; and

·       the anticipated cost savings and other synergies of the merger may take longer to be realized or may not be achieved in their entirety, and attrition in key client, partner and other relationships relating to the merger may be greater than expected.

Because these forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this document or the date of any document incorporated by reference in this document.

All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this document and attributable to Heritage Commerce Corp or Diablo Valley Bank or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this document. Except to the extent required by applicable law or regulation, Heritage Commerce Corp and Diablo Valley Bank undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.

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RISK FACTORS

In addition to general investment risks and the other information contained in or incorporated by reference into this document, including the matters under the caption “Cautionary Statement Regarding Forward-Looking Statements” and the matters discussed under the caption “Risk Factors” included in the Annual Report on Form 10-K filed by Heritage Commerce Corp for the year ended December 31, 2006 as updated by subsequently filed Forms 10-Q and 10-K, you should carefully consider the following factors in deciding whether to vote for adoption of the merger agreement.

Because the Market Price of Heritage Commerce Corp Common Stock Will Fluctuate, Diablo Valley Bank Shareholders Cannot Be Sure of the Trading Price of the Merger Consideration They Will Receive.

The merger agreement is designed to ensure that a certain percentage of the total consideration that will be paid to Diablo Valley Bank shareholders in the merger will be paid in Heritage Commerce Corp common stock and the balance in cash. Upon completion of the merger, outstanding shares of Diablo Valley Bank common stock will be converted into Heritage Commerce Corp common stock or cash based on the formula described in this document. The exchange ratio, and the market value of the stock portion of the merger consideration implied by that exchange ratio, may vary from the closing price of Heritage Commerce Corp common stock on the date we announced the merger, on the date we mailed this document to Diablo Valley Bank shareholders, on the date of the special meeting of the Diablo Valley Bank shareholders and thereafter. Changes in the market value of Heritage Commerce Corp common stock prior to completion of the merger will affect the implied value of the merger consideration that Diablo Valley Bank shareholders will receive upon completion of the merger. Accordingly, at the time of the special meeting, Diablo Valley Bank shareholders will not know or be able to calculate the actual market value of the merger consideration they would receive upon completion of the merger. Heritage Commerce Corp is permitted to terminate the merger agreement if the market price of its common stock averaged over the 20 trading days ending the fifth trading day immediately before the effective date of the merger is below $23.50. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in our respective businesses, operations and prospects, and regulatory considerations. Many of these factors are beyond our control. You should obtain current market quotations for shares of Heritage Commerce Corp common stock and for shares of Diablo Valley Bank common stock.

We May Fail To Realize All of the Anticipated Benefits of the Merger.

The success of the merger will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining the businesses of Heritage Commerce Corp and Diablo Valley Bank. However, to realize these anticipated benefits and cost savings, we must successfully combine the businesses of Heritage Commerce Corp and Diablo Valley Bank. If we are not able to achieve these objectives, the anticipated benefits and cost savings of the merger may not be realized fully or at all or may take longer to realize than expected.

Heritage Commerce Corp and Diablo Valley Bank have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each bank’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Diablo Valley Bank and Heritage Commerce Corp during the transition period.

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The Market Price of Heritage Commerce Corp Common Stock after the Merger May Be Affected by Factors Different from Those Currently Affecting the Shares of Diablo Valley Bank or Heritage Commerce Corp.

The businesses of Heritage Commerce Corp and Diablo Valley Bank differ and, accordingly, the results of operations of the combined company and the market price of the combined company’s shares of common stock may be affected by factors different from those currently affecting the independent results of operations of Diablo Valley Bank. For a discussion of the businesses of Heritage Commerce Corp and Diablo Valley Bank and of certain factors to consider in connection with those businesses, see the descriptions of Heritage Commerce Corp and Diablo Valley Bank included in this document and information regarding Heritage Commerce Corp included in other documents that are incorporated by reference in this document and referred to under “Where You Can Find More Information.”

The Merger Agreement Limits Diablo Valley Bank’s Ability to Pursue Alternatives to the Merger.

The merger agreement contains “no shop” provisions that, subject to specified exceptions, limit Diablo Valley Bank’s ability to discuss, facilitate or commit to competing third-party proposals to acquire all or a significant part of Diablo Valley Bank, as well as a termination fee that is payable by Diablo Valley Bank under certain circumstances. These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Diablo Valley Bank from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the merger, or might result in a potential competing acquiror proposing to pay a lower per share price to acquire Diablo Valley Bank than it might otherwise have proposed to pay.

The Voting Agreements Limit Diablo Valley Bank’s Ability to Pursue Alternatives to the Merger.

The merger agreement must be approved by the holders of a majority of the outstanding shares of Diablo Valley Bank common stock entitled to vote at the special meeting. The members of the Board of Directors of Diablo Valley Bank, who in the aggregate have the power to vote approximately 17% of the outstanding shares of Diablo Valley Bank common stock, have each executed voting agreements with Heritage Commerce Corp pursuant to which they have agreed to vote their shares of Diablo Valley Bank common stock in favor of the merger and against any competing business combination transaction.

The Merger Is Subject to a Separate Class Vote by the Holders of the Diablo Valley Bank Series A Preferred Stock.

The merger agreement must be approved by the holders of a majority of the outstanding shares of Diablo Valley Bank series A preferred stock. The holders of the series A preferred stock vote as a separate class from the holders of common stock. As a result, for example, a majority of the common stock may be voted in favor of the merger, but if a majority of the series A preferred shares are voted against the merger, the merger will not go forward.

The Merger Is Subject to the Receipt of Consents and Approvals from Government Entities that May Impose Conditions that Could Have an Adverse Effect on Heritage Commerce Corp.

Before the merger may be completed, various approvals or consents must be obtained from the Federal Reserve Board and the California Department of Financial Institutions. These governmental entities may impose conditions on the completion of the merger or require changes to the terms of the merger. Although Heritage Commerce Corp and Diablo Valley Bank do not currently expect that any such conditions or changes will be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of Heritage Commerce Corp following the merger, any of which might have an adverse effect on Heritage Commerce Corp following the merger. Heritage Commerce Corp is not

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obligated to complete the merger if the regulatory approvals received in connection with the completion of the merger in its reasonable opinion include any conditions or restrictions that, in the aggregate, would be expected to have a material adverse effect on Heritage Commerce Corp or otherwise are burdensome to Heritage Commerce Corp.

Diablo Valley Bank Shareholders May Receive Merger Consideration that Is Inconsistent with their Elections.

Although Diablo Valley Bank shareholders will be able to elect to receive cash or Heritage Commerce Corp common stock for each of their shares of Diablo Valley Bank common stock, the merger agreement provides that a certain percentage of the total consideration to be paid to Diablo Valley Bank shareholders in the merger will be paid in Heritage Commerce Corp common stock and the balance in cash. Your election, therefore, may be proportionately reduced if the total stock or cash elections exceed these limitations. In that circumstance, you will receive a combination of cash and Heritage Commerce Corp common stock following a pro rata adjustment of all elections for Heritage Commerce Corp common stock in order to keep within these limitations.

For a more detailed description of the merger consideration, see “Merger Consideration” beginning on page 42.

Diablo Valley Bank Shareholders Will Have Less Influence as Shareholders of Heritage Commerce Corp than as Shareholders of Diablo Valley Bank.

Diablo Valley Bank’s shareholders currently have the right to vote in the election of the Board of Directors of Diablo Valley Bank and on other matters affecting Diablo Valley Bank. When the merger occurs, each Diablo Valley Bank shareholder that receives shares of Heritage Commerce Corp common stock will become a shareholder of Heritage Commerce Corp with a percentage ownership of the combined organization that is much smaller than the shareholder’s percentage ownership of Diablo Valley Bank. In fact, it is expected that the former shareholders of Diablo Valley Bank as a group will own less than 13% of the outstanding shares of Heritage Commerce Corp immediately after the merger. Because of this, Diablo Valley Bank’s shareholders will have less influence on the management and policies of Heritage Commerce Corp than they now have on the management and policies of Diablo Valley Bank.

Diablo Valley Bank Executive Officers and Directors Have Interests in the Merger that May be Different from, or in Addition to, the Interests of Diablo Valley Bank Shareholders.

Diablo Valley Bank’s officers and directors have interests in the merger that may be different from, or in addition to, the interests of Diablo Valley Bank shareholders. For example, certain executive officers and employees of Diablo Valley Bank may receive payments with respect to outstanding stock options that will be cashed out in the merger. Additionally, certain members of Diablo Valley Bank’s executive management team have agreed to new employment and consulting and non-competition agreements with Heritage Commerce Corp. Diablo Valley Bank’s Board of Directors was aware of these interests and took them into account in its decision to approve and adopt the merger agreement. For information concerning these interests, please see the discussion under the caption “Diablo Valley Bank’s Directors and Officers Have Financial Interests in the Merger.”

The Combined Loan Portfolios May Not Perform as Expected.

Heritage Commerce Corp’s performance and prospects after the merger will be dependent to a significant extent on the performance of the combined loan portfolios of Heritage Bank of Commerce and Diablo Valley Bank, and ultimately, on the financial condition of their respective borrowers and other customers. The existing loan portfolios of the two banks differ to some extent in the types of borrowers,

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industries and credits represented. In addition, there are differences in the documentation, classifications, credit ratings and management of the portfolios. As a result, Heritage Bank of Commerce and Diablo Valley Bank’s combined loan portfolio after the merger may have a different risk profile than the loan portfolio of either Diablo Valley Bank or Heritage Bank of Commerce before the merger. The performance of the two loan portfolios will be adversely affected if any such factor is worse than currently anticipated. In addition, to the extent that present customers of Diablo Valley Bank are not retained by Heritage Bank of Commerce or additional expenses are incurred in retaining them, there could be adverse effects on future consolidated results of operation of Heritage Bank of Commerce following the merger. Realization of improvement in profitability is dependent, in part, on the extent to which the revenues of Diablo Valley Bank are maintained and enhanced.

Heritage Commerce Corp May Engage in Further Expansion Through New Branch Openings or Acquisitions, which Could Adversely Affect Net Income.

Heritage Commerce Corp may engage in further expansion. There are risks associated with expansion and, in particular, expansion through acquisitions. These risks include, among others, incorrectly assessing the asset quality of a bank acquired in a particular acquisition, encountering greater than anticipated costs of opening new branches or incorporating acquired businesses, facing resistance from customers or employees, and being unable to profitably deploy assets acquired through expansion or in acquisitions. To the extent Heritage Commerce Corp issues capital stock in connection with additional acquisitions, these acquisitions and related stock issuances may have a dilutive effect on earnings per share and share ownership.

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THE DIABLO VALLEY BANK SPECIAL MEETING

This section contains information about the special meeting of Diablo Valley Bank shareholders that has been called to consider and approve the merger of Diablo Valley Bank with and into Heritage Bank of Commerce, with Heritage Bank of Commerce as the surviving corporation in the merger.

Together with this document, we are also sending you a notice of the special meeting and a form of proxy that is solicited by the Diablo Valley Bank Board of Directors. The special meeting will be held on June 13, 2007, at 5:30 p.m. local time, at 387 Diablo Road, Danville, California 94526, subject to any adjournments or postponements.

Matters to Be Considered

The purpose of the special meeting is to vote on a proposal for approval of the merger.

You also will be asked to vote on a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the merger.

Proxies

Each copy of this document mailed to holders of Diablo Valley Bank common stock and series A preferred stock is accompanied by a form of proxy with instructions for voting. If you hold stock in your name as a shareholder of record, you should complete and return the proxy card accompanying this document in the enclosed WHITE envelope (or vote by telephone or internet in accordance with instructions on the enclosed proxy card) to ensure that your vote is counted at the special meeting, or at any adjournment or postponement of the special meeting, regardless of whether you plan to attend the special meeting.

If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker.

If you hold stock in your name as a shareholder of record, you may revoke any proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) delivering a written revocation letter to Diablo Valley Bank’s Secretary or (3) attending the special meeting in person, notifying the Secretary, and voting by ballot at the special meeting. If you hold your stock in “street name” through a bank or broker, you must follow your bank’s or broker’s instructions to revoke your proxy.

Any shareholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, and such vote will revoke any previous proxy but the mere presence (without notifying Diablo Valley Bank’s Secretary) of a shareholder at the special meeting will not constitute revocation of a previously given proxy.

Written notices of revocation and other communications about revoking your proxy should be addressed to:

Diablo Valley Bank
387 Diablo Road
Danville, California 94526
Attention: Secretary

All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” approval of the merger and “FOR” approval of the proposal to adjourn the special meeting,

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if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the merger. According to the Diablo Valley Bank bylaws, business to be conducted at a special meeting of shareholders may only be brought before the meeting by means of Diablo Valley Bank’s notice of the meeting. Accordingly, no matters other than the matters described in this document will be presented for action at the special meeting or at any adjournment or postponement of the special meeting.

Election Form and Transmittal Materials

Diablo Valley Bank common stock shareholders should also complete, mail and enclose in the BLUE envelope the election form and transmittal materials accompanying this proxy statement/prospectus with their common stock certificates to the exchange agent. If you do not wish to make an election, you will receive separate instructions for submitting your Diablo Valley Bank common stock certificates in exchange for the merger consideration following completion of the merger. Holders of Diablo Valley Bank series A preferred shares will receive separate transmittal instructions related to the redemption of their shares of series A preferred stock by Diablo Valley Bank.

Solicitation of Proxies

Diablo Valley Bank will bear the entire cost of soliciting proxies from you (other than the costs of printing and mailing the proxy materials, which will be borne by Heritage Commerce Corp). In addition to solicitation of proxies by mail, Diablo Valley Bank will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of Diablo Valley Bank common stock and secure their voting instructions. Diablo Valley Bank will reimburse the record holders for their reasonable expenses in taking those actions. Diablo Valley Bank may use its regular employees, who will not be specially compensated, to solicit proxies from Diablo Valley Bank shareholders, either personally or by telephone, facsimile, letter or other electronic means.

Record Date

The close of business on April 27, 2007 has been fixed as the record date for determining the Diablo Valley Bank shareholders entitled to receive notice of and to vote at the special meeting. At that time, 2,505,146 shares of Diablo Valley Bank common stock were outstanding, held by approximately 156 holders of record, and 207,061 shares of Diablo Valley Bank series A preferred stock were outstanding, held by approximately 80 holders of record.

Voting Rights and Vote Required

The presence, in person or by properly executed proxy, of the holders of a majority of the outstanding shares of Diablo Valley Bank common stock and a majority of the outstanding shares of series A preferred stock entitled to vote is necessary to constitute a quorum at the special meeting. Abstentions will be counted for the purpose of determining whether a quorum is present.

Approval of the merger requires the affirmative vote of the holders of at least a majority of the outstanding shares of Diablo Valley Bank common stock and series A preferred stock entitled to vote at the special meeting, voting as separate classes. You are entitled to one vote for each share of Diablo Valley Bank common stock or  series A preferred stock you held as of the record date. The failure to vote by proxy or in person will have the same effect as a vote against the merger.

Approval of any proposal to adjourn or postpone the meeting, if necessary, for the purpose of soliciting additional proxies may be obtained by the affirmative vote of the holders of a majority of the shares present in person or by proxy, even if less than a quorum. Because approval of such adjournments is

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based on the affirmative vote of a majority of shares present in person or by proxy, abstentions will have the same effect as a vote against this proposal.

The Diablo Valley Bank Board of Directors urges you to promptly vote by completing, dating and signing the accompanying proxy card and to return it promptly in the enclosed postage-paid envelope or, if you hold your stock in “street name” through a bank or broker, by following the voting instructions of your bank or broker.

As of the record date, directors and executive officers of Diablo Valley Bank and their affiliates, had the right to vote 436,680 shares of Diablo Valley Bank common stock, or approximately 17% of the outstanding Diablo Valley Bank common stock (exclusive of exercisable options and shares of preferred stock convertible to common stock) and 40,122 shares of series A preferred stock or approximately 19%, of the outstanding series A preferred stock at that date. The directors have agreed to vote their shares of Diablo Valley Bank common stock, in favor of the proposals to be presented at the special meeting.

Recommendation of the Diablo Valley Bank Board of Directors

The Diablo Valley Bank Board of Directors has approved the merger agreement and the transactions it contemplates, including the merger. The Diablo Valley Bank Board of Directors determined that the merger, merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Diablo Valley Bank and its shareholders and recommends that you vote “FOR” approval of the merger and “FOR” authority to vote for adjournment or postponement of the meeting for the purpose of soliciting additional proxies. See “The Merger—Diablo Valley Bank’s Reasons for the Merger; Recommendation of the Diablo Valley Bank Board of Directors” for a more detailed discussion of the Diablo Valley Bank Board of Directors’ recommendation.

Attending the Meeting

All holders of Diablo Valley Bank common stock and series A preferred stock, including shareholders of record and shareholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Shareholders of record can vote in person at the special meeting. If you are not a shareholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted.

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THE MERGER

Background of the Merger

The Diablo Valley Bank Board of Directors has periodically discussed and reviewed Diablo Valley Bank’s business, strategic direction, performance and prospects in the context of developments in the financial services industry and the competitive landscape in the markets in which Diablo Valley Bank operates and elsewhere. The Diablo Valley Bank Board of Directors has also at times discussed with senior management various potential strategic alternatives involving possible acquisitions or business combinations that could complement and enhance the company’s competitive strengths and strategic position. Also, senior management of Diablo Valley Bank has, from time to time, had informal discussions with representatives of other financial institutions regarding industry trends and issues and exploratory discussions of the potential benefits and issues arising from possible business combinations.

Heritage Commerce Corp’s Board of Directors and senior management regularly review the financial services industry environment, including the trend towards consolidation in the industry, and periodically discuss ways in which to enhance the company’s competitive position. Senior management of Heritage Commerce Corp has, over time, considered the possibility of acquisitions and strategic combinations with a variety of financial institutions and the potential strategic fit with such institutions based on their lines of businesses, their management and employee cultures and their geographic locations.

In June 2006, John J. Hounslow, Chairman of the Board of Diablo Valley Bank, contacted William Del Biaggio Jr., Executive Vice-President and former Chairman of the Board of Heritage Commerce Corp, to get reacquainted socially. At a meeting on July 18, 2006, Mr. Del Biaggio suggested that Mr. Hounslow meet Walter T. Kaczmarek, the Chief Executive Officer of Heritage Commerce Corp and President of Heritage Bank of Commerce, as an introductory meeting to enable them to get acquainted, and to discuss Heritage Commerce Corp’s present and future interests in expanding its banking activities.

In August 2006, Mr. Kaczmarek and Mr. Hounslow met for the first time to get acquainted. In the course of the meeting Mr. Kaczmarek and Mr. Hounslow generally discussed each other's franchises and the interest of Heritage Commerce Corp in expanding its franchise in the San Francisco East Bay.

After the initial meeting in August 2006, and continuing through November 2006, Mr. Hounslow met with and had telephonic discussions with Mr. Kaczmarek. These discussions included the potential strategic fit, benefits, advantages and merits of a merger of Diablo Valley Bank and Heritage Bank of Commerce. In late October 2006, at the request of Messrs. Kaczmarek and Hounslow, respectively, Randall Greenfield, chief financial officer of Diablo Valley Bank, spoke with and had a few discussions with Lawrence McGovern, chief financial officer of Heritage Commerce Corp, concerning Diablo Valley Bank’s financial position and financial performance through the end of the third quarter of 2006.

On November 6, 2006, at the request of Diablo Valley Bank, Heritage Commerce Corp and Diablo Valley Bank executed a confidentiality agreement concerning proprietary information of Diablo Valley Bank, and Heritage Commerce Corp commenced its due diligence investigation of Diablo Valley Bank. Also during this period, Mr. Hounslow requested on behalf of Diablo Valley Bank that Heritage Commerce Corp provide a written list of potential terms for an acquisition of Diablo Valley Bank, indicating that while Diablo Valley Bank remained interested in a potential transaction, its Board of Directors believed that the previous indications of a possible purchase price were not sufficient to move forward.

On November 9, 2006, Mr. Hounslow, James Mayer, President of Diablo Valley Bank, Mr. Raymond Parker, Executive Vice President of Heritage Bank of Commerce, Mr. McGovern and Mr. Kaczmarek met for lunch to discuss and determine senior management compatibility.

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Heritage Commerce Corp Board of Directors at its regular November 16, 2006 meeting reviewed and discussed the status of negotiations with management. At the board meeting the board authorized management to continue negotiations, including a purchase price within specific ranges. The board also authorized management to enter into an engagement arrangement with RBC Capital Markets to act as the exclusive financial advisor to Heritage Commerce Corp. The next day on November 17, 2006 Mr. Kaczmarek contacted Mr. Hounslow to continue negotiations. Negotiations between the two companies ensued during the rest of the week on the pricing and structure of a proposed transaction.

On November 26, 2006, Diablo Valley Bank executed a confidentiality agreement concerning proprietary information of Heritage Commerce Corp and Heritage Bank of Commerce in order to commence due diligence into the affairs of Heritage Commerce Corp and Heritage Bank of Commerce. On November 30, 2006, Heritage Commerce Corp executed an engagement letter with RBC Capital Markets to act as its investment banking advisor for a possible transaction with Diablo Valley Bank. During the weeks of December 4 and December 11, 2006 Diablo Valley Bank and Heritage Commerce Corp had further discussions about preliminary structuring and pricing for a possible transaction.

As a result of these discussions, Heritage Commerce Corp proposed that, subject to the finalization of due diligence and definitive deal documentation, subject to the Diablo Valley Bank board members’ willingness to enter into voting agreements to support the transaction, and further subject to certain executives and key employees of Diablo Valley Bank entering into employment, consulting and non-competition arrangements, Heritage Commerce Corp would be willing to pay a purchase price of 1,732,298 shares of common stock and $23.5 million cash for all of the outstanding shares of Diablo Valley Bank and termination of all of the Diablo Valley Bank outstanding stock options. Following discussions among the Diablo Valley Bank board and its senior management, financial advisors and legal counsel, the Diablo Valley Bank board determined that such a transaction appeared to be in the best interests of its shareholders and instructed management, certain directors and Diablo Valley Bank’s advisors to negotiate definitive transaction documentation, including the proposed voting agreements.

On December 12, 2006, Diablo Valley Bank retained Howe Barnes Hoefer & Arnett to render financial advisory and investment banking services.

On December 16, 2006, Heritage Commerce Corp conducted on-site due diligence and investigation of Diablo Valley Bank. On December 22, 2006, Diablo Valley Bank conducted on-site due diligence and investigation of Heritage Commerce Corp and Heritage Bank of Commerce.

On December 19, 2006, preliminary drafts of the merger agreement and shareholder voting agreements were distributed to all parties and their legal counsel.

On December 21, 2006, at its regular board meeting the Heritage Commerce Corp board discussed the proposal terms of the merger. RBC Capital and Heritage Commerce Corp legal counsel attended the meeting to discuss the financial terms and structure of the proposed transaction and the legal and regulatory issues involved in completing a possible transaction with Diablo Valley Bank.

For the balance of December through February 8, 2007, the parties continued to negotiate the final terms of the transaction and the definitive transaction documentation. During this period, Diablo Valley Bank completed its due diligence investigation of Heritage Commerce Corp and Heritage Commerce Corp completed its due diligence investigation of Diablo Valley Bank. The parties also negotiated during this period to enter into employment arrangements with certain key members of Diablo Valley Bank’s senior management, a consulting agreement with Mr. Hounslow, an employment agreement with James Mayer, and non-competition agreements with Mr. Hounslow and Mr. Mayer as required by Heritage Commerce Corp as a condition to a transaction.

On February 8, 2007, the Diablo Valley Bank Board of Directors met. Mr. Hounslow updated the board on the progress of negotiations with Heritage Commerce Corp. Senior management then described

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to the board the due diligence regarding Heritage Commerce Corp conducted by Diablo Valley Bank and its advisors. Representatives of Bingham McCutchen LLP, outside legal counsel to Diablo Valley Bank, then made a presentation to the board describing the board’s duties and responsibilities under California law and the key terms of the merger and the merger agreement, and a discussion followed. Representatives of Howe Barnes Hoefer & Arnett then presented a summary of its financial analysis of the proposed merger and delivered its opinion that, as of that date, the consideration to be received by Diablo Valley Bank’s shareholders in the merger was fair from a financial point of view to Diablo Valley Bank’s shareholders. A discussion followed. Following further discussion and deliberations, including consideration of the matters described below under “Diablo Valley Bank’s Reasons for the Merger; Recommendation of the Diablo Valley Bank Board of Directors,” the members of the board present at the meeting unanimously approved the merger agreement and the transactions contemplated by the merger agreement and resolved to recommend that Diablo Valley Bank’s shareholders vote to adopt the merger agreement.

The Board of Directors of Heritage Commerce Corp and Heritage Bank of Commerce also met on February 8, 2007 to approve the terms of the agreement and plan of merger.

Thereafter, on February 8,  2007, the parties executed the merger agreement, the voting agreements and the employment, consulting and non-competition agreements with members of Diablo Valley Bank Management. On the next day, February 9, 2007, the transaction was announced in a joint press release, and Heritage Commerce Corp filed a Form 8-K with the SEC to disclose the transaction.

Diablo Valley Bank’s Reasons for the Merger; Recommendation of the Diablo Valley Bank Board of Directors

In reaching its conclusion that the merger agreement and the merger are advisable and in the best interests of Diablo Valley Bank and its shareholders, and in approving the merger agreement and the transactions contemplated thereby, Diablo Valley Bank’s Board of Directors considered and reviewed the transaction and its terms with Diablo Valley Bank’s senior management, as well as its financial and legal advisors, and considered a number of factors. The following include the material factors considered by Diablo Valley Bank’s Board of Directors:

·       the value to be received by Diablo Valley Bank shareholders under the merger agreement relative to the historical trading price of Diablo Valley Bank common stock, including the fact that as of the date of the merger agreement, the average implied value of the cash and stock merger consideration represented a premium of approximately 16% over the weighted average sale price of Diablo Valley Bank common stock over the two months preceding the announcement of the proposed merger;

·       the value to be received in the merger is supported by certain collars including a floor price of $23.00 share;

·       the greater liquidity of the Heritage Commerce Corp common stock relative to the Diablo Valley Bank common stock;

·       the ability of Diablo Valley Bank shareholders, through the Heritage Commerce Corp common stock component of the merger consideration, to participate in the potential growth of the combined Heritage Commerce Corp and Diablo Valley Bank institutions following consummation of the transaction;

·       the financial analyses conducted by Howe Barnes Hoefer & Arnett and its opinion to the Board of Directors that, as of the date of the merger agreement, the consideration to be received by Diablo Valley Bank’s shareholders was fair from a financial point of view to Diablo Valley Bank’s shareholders;

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·       the expectation that the receipt of Heritage Commerce Corp common stock by Diablo Valley Bank shareholders would generally be tax-free for U.S. federal income tax purposes;

·       the board’s understanding of, and the presentations of its management and financial advisor regarding, Diablo Valley Bank’s business, operations, management, financial condition, earnings and prospects;

·       the potential alternatives available to Diablo Valley Bank, including other potential extraordinary transactions and the alternative of remaining independent, and the risks and challenges inherent in successfully implementing Diablo Valley Bank’s business plans. The board also considered the value to the shareholders of these alternatives, the timing and likelihood of achieving value from these alternatives, and the possibility that Diablo Valley Bank’s future stock price might not have a value greater than the consideration to be paid in the merger;

·       the interest rate and economic environment and management’s view of their impact on regional banks like Diablo Valley Bank over the near and medium term;

·       the competitive environment facing regional banks like Diablo Valley Bank, and management’s belief that Diablo Valley Bank’s customers and employees would benefit from a combination with Heritage Commerce Corp due to the combined entity’s enhanced ability to serve its customers more broadly and effectively because of the combined entity’s greater scale, broader product portfolio and more comprehensive technology;

·       the consolidation occurring in the banking industry and the increased competition from other financial institutions;

·       the expertise of Heritage Commerce Corp’s management, its competitive position in geographic markets and the proximity and overlap of the geographic markets served by Heritage Commerce Corp;

·       the ability to complete the merger, including, in particular, the likelihood of obtaining regulatory approval and the provisions of the merger agreement regarding Diablo Valley Bank’s and Heritage Commerce Corp’s obligations to pursue the regulatory approvals;

·       the terms and conditions of the merger agreement, including the restrictions imposed on Diablo Valley Bank from soliciting alternative transactions and the termination fee that Diablo Valley Bank would be required to pay if the merger agreement were terminated under certain circumstances;

·       the existence and nature of the voting agreements;

·       the judgment and advice of Diablo Valley Bank’s senior management;

·       the taxable nature for U.S. federal income tax purposes of the cash portion of the merger consideration received by Diablo Valley Bank shareholders; and

·       the fact that the interests of certain of Diablo Valley Bank’s officers and directors may be different from, or in addition to, the interests of shareholders generally.

The Diablo Valley Bank Board of Directors also identified and considered a number of risks and uncertainties in its deliberations concerning the merger, including the following:

·       the possible disruption to Diablo Valley Bank’s business that may result from the announcement of the transaction and the resulting distraction of its management’s attention from the day-to-day operations of Diablo Valley Bank’s business;

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·       the difficulty inherent in integrating two businesses and the risk that the cost efficiencies, synergies and other benefits expected to be obtained in the transaction may not be fully realized;

·       the restrictions contained in the merger agreement on the operation of Diablo Valley Bank’s business during the period between the signing of the merger agreement and completion of the merger;

·       the termination fee to be paid to Heritage Commerce Corp if the merger agreement is terminated under certain circumstances; and

·       the possibility that the merger might not be completed and the effect of the resulting public announcement of termination of the merger agreement on, among other things, the market price of Diablo Valley Bank’s common stock and Diablo Valley Bank’s operating results, particularly in light of the costs incurred in connection with the transaction.

The above discussion of the information and factors considered by Diablo Valley Bank’s Board of Directors is not intended to be exhaustive, but indicates the material matters considered by the Board of Directors. In reaching its determination to approve the merger agreement and the transactions which it contemplates, the board did not quantify, rank or assign any relative or specific weight to, the foregoing factors, and individual directors may have considered various factors differently and may have given differing weights to different factors. Diablo Valley Bank’s Board of Directors did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. Diablo Valley Bank’s Board of Directors based its determination on the totality of the information presented.

Diablo Valley Bank’s Board of Directors determined, by unanimous vote that the merger on the terms and conditions set forth in the merger agreement is advisable and in the best interests of Diablo Valley Bank and its shareholders. Accordingly, Diablo Valley Bank’s Board of Directors, by unanimous vote, approved and adopted the merger agreement and the transactions contemplated thereby, and recommends that Diablo Valley Bank shareholders vote “FOR” the proposal to approve the merger agreement.

Opinion of Diablo Valley Bank’s Financial Advisor

Diablo Valley Bank’s Board of Directors retained Howe Barnes Hoefer & Arnett to render financial advisory and investment banking services. Howe Barnes Hoefer & Arnett is a nationally recognized investment banking firm with substantial expertise in transactions similar to the proposed transaction and is familiar with Diablo Valley Bank and its business. As part of its investment banking activities, Howe Barnes Hoefer & Arnett is regularly engaged in the independent valuation of financial institutions and securities in connection with mergers, acquisitions, underwritings, sales and distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes.

On February 8, 2007, the Diablo Valley Bank Board of Directors held a meeting to evaluate the proposed merger with Heritage Bank of Commerce. At this meeting, Howe Barnes Hoefer & Arnett rendered a written opinion that the terms of the proposed merger of Diablo Valley Bank with and into Heritage Bank of Commerce was fair, from a financial point of view, to Diablo Valley Bank common shareholders. The full text of Howe Barnes Hoefer & Arnett’ opinion is attached as Appendix B to this proxy statement/prospectus and should be read in its entirety.