Exhibit 99
| | |
| | FOR IMMEDIATE RELEASE |
| | DATE: January 27, 2009 |
President and Chief Executive Officer
(360) 943-1500
HERITAGE FINANCIAL CORPORATION OF OLYMPIA, WASHINGTON
ANNOUNCES FOURTH QUARTER and FULL YEAR 2008 RESULTS
2008 YEAR AND FOURTH QUARTER HIGHLIGHTS
| | • | | Net interest margin increased to 4.67% for the quarter ended December 31, 2008 from 4.39% for the prior year quarter ended December 31, 2007 and from 4.66% for the linked-quarter ended September 30, 2008 |
| | • | | Core efficiency ratio improved to 59.87% for the quarter ended December 31, 2008 from 61.24% for the prior year quarter ended December 31, 2007 |
| | • | | Year to date 2008 net income was $6.35 million vs. $10.71 million for 2007 |
| | • | | Core deposits as of December 31, 2008 increased 15% from December 31, 2007 |
| | • | | Nonperforming assets to total assets decreased to 0.57% at December 31, 2008 from 0.93% at September 30, 2008 |
| | • | | The ratio of total capital to risk-weighted assets increased to 13.73% from 10.55% at September 30, 2008 |
HERITAGE FINANCIAL CORPORATION (NASDAQ: HFWA) Brian L. Vance, President and CEO of Heritage Financial Corporation (“Company”) today reported net income for the year ended December 31, 2008 of $6,351,000 compared with $10,708,000 for the year ended December 31, 2007. Diluted earnings per common share for the year ended December 31, 2008 were $0.93 compared to $1.61 for the year ended December 31, 2007.
Net loss for the three months ended December 31, 2008 was $194,000 compared to net income of $2,775,000 for the quarter ended December 31, 2007. Diluted loss per common share for the quarter ended December 31, 2008 was $0.05 compared with diluted earnings per common share of $0.42 for the quarter ended December 31, 2007. The decreases in earnings from the prior year and prior year quarter ending December 31, 2007 are due primarily to increased provisioning for loan losses and an other-than-temporary impairment charge.
On November 21, 2008, for an aggregate sale price of $24 million in cash, the Company completed the placement to the U.S. Department of the Treasury (“Treasury”) of 24,000 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A, with a related Warrant to purchase 276,074 shares of the Company’s common stock. The preferred shares pay a cumulative dividend of 5% per annum for the first five years and 9% per annum thereafter if not redeemed first. For both the three months and year ended December 31, 2008, the dividends accrued on the preferred shares were $130,000.
Also, during the quarter ended December 31, 2008, the Company recorded a $668,000 ($434,000 net of tax) other-than-temporary impairment charge recorded on 11 private label mortgage-backed securities. The securities on which impairments were recognized were acquired with the redemption-in-kind of the investment in the AMF Ultra Short Mortgage Fund as previously reported in our third quarter earnings release dated October 23, 2008. As a result, for the year ended December 31, 2008, the Company recorded losses totaling $1.93 million ($1.25 million net of tax) relating to its investments in the AMF Ultra Short Mortgage Fund. Excluding this impairment charge, the diluted earnings per common share for the year ended December 31, 2008 were $1.12 compared to $1.61 for the year ended December 31, 2007. The following table shows the effects of the impairment charge on core operating earnings.
Core Common Earnings
(A non-GAAP measure of income from customary business activities)
| | | | | | | | | | | | | | | | |
| | | Quarter Ended
December 31, | | | Year Ended
December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Net income/(loss) | | $ | (194 | ) | | $ | 2,775 | | | $ | 6,351 | | | $ | 10,708 | |
Less: Dividends accrued on preferred shares | | | 143 | | | | — | | | | 143 | | | | — | |
| | | | | | | | | | | | | | | | |
Net income/(loss) available to common shareholders | | | (337 | ) | | | 2,775 | | | | 6,208 | | | | 10,708 | |
Add: Impairment charge on investment (net of tax) | | | 434 | | | | — | | | | 1,252 | | | | — | |
| | | | | | | | | | | | | | | | |
Core earnings | | $ | 97 | | | $ | 2,775 | | | $ | 7,460 | | | $ | 10,708 | |
| | | | | | | | | | | | | | | | |
Non-interest expense | | $ | 7,905 | | | $ | 6,898 | | | $ | 30,419 | | | $ | 28,288 | |
Deduct: Impairment charge on investment | | | 668 | | | | — | | | | 1,927 | | | | — | |
| | | | | | | | | | | | | | | | |
Core non-interest expense | | $ | 7,237 | | | $ | 6,898 | | | $ | 28,492 | | | $ | 28,288 | |
| | | | | | | | | | | | | | | | |
Diluted earnings per share: | | | | | | | | | | | | | | | | |
GAAP earnings/(loss) | | $ | (0.05 | ) | | $ | 0.42 | | | $ | 0.93 | | | $ | 1.61 | |
Core earnings | | $ | 0.01 | | | $ | 0.42 | | | $ | 1.12 | | | $ | 1.61 | |
Return on average equity: | | | | | | | | | | | | | | | | |
GAAP earnings/(loss) | | | (1.48 | %) | | | 12.87 | % | | | 6.98 | % | | | 12.87 | % |
Core earnings | | | 0.43 | % | | | 12.87 | % | | | 8.39 | % | | | 12.87 | % |
Efficiency ratio: | | | | | | | | | | | | | | | | |
GAAP earnings | | | 65.40 | % | | | 61.24 | % | | | 64.50 | % | | | 62.59 | % |
Core earnings | | | 59.87 | % | | | 61.24 | % | | | 60.41 | % | | | 62.59 | % |
For the year ended December 31, 2008, return on average common equity was 6.98% (core return on average common equity was 8.39%) compared to 12.87% for the year ended December 31, 2007. Due to the addition of preferred shares, the Company’s capital position increased significantly to 11.96% of total assets as of December 31, 2008 from 9.59% at December 31, 2007 and the ratio of total capital to risk-weighted assets increased to 13.73% at December 31, 2008 from 10.55% at September 30, 2008. Average equity for the year ended December 31, 2008 increased 10.1% to $91.6 million from $83.2 million for the year ended December 31, 2007. For the quarter ended December 31, 2008, the Company’s return on average common equity was negative 1.48% (core return on average common equity was 0.43%) compared to 12.87% for the quarter ended December 31, 2007.
The Company’s total assets increased $60.0 million to $946.1 million at December 31, 2008 from $886.1 million at December 31, 2007. Net loans (loans receivable less allowance for loan losses and excluding loans held for sale) increased $24.4 million, or 3.2%, to $793.3 million at December 31, 2008 from $768.9 million at December 31, 2007.
Deposits increased year over year $48.2 million, or 6.2%, to $824.5 million at December 31, 2008 from $776.3 million at December 31, 2007. Since December 31, 2007, core deposits (total deposits less certificate of deposit accounts) have increased $61.6 million, or 14.8%.
Net interest income before provision for loan losses was $38,342,000 for the year ended December 31, 2008 compared to $36,621,000 for the year ended December 31, 2007, an increase of 4.7%. For the quarter ended December 31, 2008, net interest income before provision for loan losses was $10,034,000 compared to $9,144,000 for the quarter ended December 31, 2007, an increase of 9.7%.
The net interest margin (net interest income divided by average earning assets) increased to 4.59% for the year ended December 31, 2008 compared to 4.50% for the year ended December 31, 2007. The net interest margin for the quarter ended December 31, 2008 increased to 4.67% from 4.66% for the quarter ended September 30, 2008 and from 4.39% for the quarter ended December 31, 2007.
Nonperforming assets (nonperforming loans plus other real estate owned) at December 31, 2008 were $5,428,000, or 0.57% of total assets, a decrease of $3,024,000 from $8,452,000, or 0.93% of total assets, at September 30, 2008 and an increase of $4,238,000 from $1,190,000, or 0.13% of total assets, at December 31, 2007. The Company’s nonperforming assets to total assets ratio of 0.57% at December 31, 2008 is 339 basis points lower than the September 30, 2008 average ratio of 3.96% for West Coast publicly traded commercial banks as monitored by D.A. Davidson and Company.
The loan loss provision in the fourth quarter of 2008 of $4,590,000 increased $2,830,000 from $1,760,000 in the third quarter of 2008 and $4,350,000 from $240,000 in the prior year quarter ended December 31, 2007. The Company had net charge-offs in the fourth quarter of 2008 of $1,794,000 versus $90,000 in the fourth quarter of 2007 and net charge-offs of $2,370,000 for the year ended December 31, 2008 versus $542,000 for the year ended December 31, 2007. The allowance for loan losses as a
percent of total loans increased to 1.91% at December 31, 2008 from 1.56% at September 30, 2008 and 1.33% at December 31, 2007. The increase in the loan loss reserves was a result of management’s continuing assessment of the increased risk in the loan portfolio due to the current economic environment which may lead to increases in potential problem loans. Management continues to see weakness develop specifically within its residential construction portfolio, as well as developing weaknesses in its Commercial and Industrial portfolio. Management is committed to ongoing and careful review of all existing and new loans to minimize loss exposure.
Non-interest income was $8,824,000 for the year ended December 31, 2008 compared to $8,572,000 for the year ended December 31, 2007, an increase of 2.9%. For the quarter ended December 31, 2008, non-interest income was $2,054,000 compared to $2,119,000 for the same period in 2007, a decrease of 3.1%.
Non-interest expense was $30,419,000 for the year ended December 31, 2008 compared to $28,288,000 for the year ended December 31, 2007, an increase of 7.5%. Excluding the impairment charge on investment, for the year ended December 31, 2008, non-interest expense increased $204,000, or 0.7%, from the prior year. For the quarter ended December 31, 2008, non-interest expense was $7,905,000 compared to $6,898,000 for the same period in 2007, an increase of 14.6%. Excluding the impairment charge on investment, for the quarter ended December 31, 2008, non-interest expense increased $339,000, or 4.9%, from the prior year.
The Company’s core efficiency ratio (efficiency ratio excluding the impairment charge on investment) for the quarter ended December 31, 2008 improved to 59.87% from 61.24% for the quarter ended December 31, 2007. The core efficiency ratio improved to 60.41% for the year ended December 31, 2008 from 62.59% for the year ended December 31, 2007.
Mr. Vance commented, “While I am disappointed in our 4th quarter loss, I believe it is important to remember we managed to post a respectable $6.4 million profit for a year in which the operating environment was very difficult. I also believe our shareholders and customers should note the fundamental strength of the Company in critically important areas. Our total capital is well above the “well capitalized” regulatory requirements; our credit quality improved as our non-performing assets decreased from the end of the third quarter and now stand at only .57% of total assets; our core deposits increased 15% year over year; our total company has no debt; and our overall liquidity improved and is now one of the strongest among Washington banks.”
“While I believe we have one of the strongest overall financial conditions of any bank in our region, I also realize we are currently facing one of the most challenging economic times in the last 80 years. We understand that profitability is always important, however, we also believe it is critically important during these difficult times to focus on the fundamental strengths of any company when analyzing its true performance. We believe we have created a banking company that will withstand and capitalize on the difficult times ahead.”
“Another key event in the fourth quarter was making the decision to sell $24 million in preferred equity securities to the U.S. Treasury,” Mr. Vance continued. “We were among the first 50 banks that received this opportunity out of a total of approximately 300 banks that have participated to date. Much has been said and written about the
Capital Purchase Program, but in the end we believe Treasury made a wise decision to invest in banks they believe are well managed and well positioned to assist their communities in the form of loans to individuals and businesses as well as being a secure place for deposits for our customers. During the months of November and December, Heritage originated a total of $33 million in new loans to individuals and businesses in the communities we serve. In addition, we renewed a total of $57 million in loans, keeping these dollars at work in our communities.”
Mr. Vance concluded, “It will take time to fully leverage this new capital, but we will continue to put this capital to work in our communities to assist as much as we possibly can during these difficult times.”
On January 27, 2009, the Company’s Board of Directors declared a dividend of $0.10 per share payable on February 20, 2009 to shareholders of record on February 5, 2009. This is the forty-fourth consecutive quarterly dividend to be paid.
The Company will hold a telephone conference call to discuss this earnings release on January 28, 2009 at 11:00 a.m. Pacific time. To access the call, please dial (800) 230-1074 a few minutes prior to 11:00 am PDT. The call will be available for replay ending February 10, 2009 by dialing (800) 475-6701 — access code 980944.
Heritage Financial Corporation is a bank holding company headquartered in Olympia, Washington. The Company operates two community banks, Heritage Bank and Central Valley Bank. Heritage Bank serves Pierce, Thurston, south King and Mason Counties in the south Puget Sound region of Washington through its fourteen full-service banking offices and its Online Banking Website www.HeritageBankWA.com. Central Valley Bank serves Yakima and Kittitas Counties in central Washington through its six full- service banking offices and its Online Banking Website www.CVBankWA.com. Additional information about Heritage Financial Corporation is available on its Internet Website www.HF-WA.com.
This release includes statements concerning future performance, developments, or events; expectations for growth and market forecasts; and other guidance on future periods. Forward-looking statements are subject to a number of risks and uncertainties that might cause actual results to differ materially from stated expectations. Specific factors include, but are not limited to, the effect of interest rate changes, risks associated with acquisition of other banks and opening new branches, the ability to control costs and expenses, and general economic conditions. These factors could affect the Company’s financial results. Additional information on these and other factors are included in the Company’s filings with the Securities and Exchange Commission.
HERITAGE FINANCIAL CORPORATION
CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Dollar amounts in thousands; unaudited)
| | | | | | | | | | | | |
| | | December 31,
2008 | | | September 30,
2008 | | | December 31,
2007 | |
Assets | | | | | | | | | | | | |
Cash on hand and in banks | | $ | 31,478 | | | $ | 20,287 | | | $ | 28,401 | |
Interest earning deposits | | | 29,156 | | | | 765 | | | | 6,062 | |
Investment securities available for sale | | | 31,922 | | | | 25,818 | | | | 35,660 | |
Investment securities held to maturity | | | 12,081 | | | | 12,983 | | | | 3,890 | |
Loans held for sale | | | 304 | | | | 570 | | | | 447 | |
Loans receivable | | | 808,726 | | | | 811,964 | | | | 779,319 | |
Less: Allowance for loan losses | | | (15,423 | ) | | | (12,628 | ) | | | (10,374 | ) |
| | | | | | | | | | | | |
Loans receivable, net | | | 793,303 | | | | 799,336 | | | | 768,945 | |
Other real estate owned | | | 2,031 | | | | 169 | | | | 169 | |
Premises and equipment, net | | | 15,721 | | | | 14,604 | | | | 14,819 | |
Federal Home Loan Bank and Federal Reserve Bank stock | | | 3,566 | | | | 3,516 | | | | 3,227 | |
Accrued interest receivable | | | 4,168 | | | | 4,528 | | | | 4,401 | |
Prepaid expenses and other assets | | | 8,979 | | | | 9,128 | | | | 6,520 | |
Goodwill and other intangible assets | | | 13,436 | | | | 13,456 | | | | 13,514 | |
| | | | | | | | | | | | |
Total assets | | $ | 946,145 | | | $ | 905,160 | | | $ | 886,055 | |
| | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | |
Deposits | | $ | 824,480 | | | $ | 795,065 | | | $ | 776,280 | |
Advances from Federal Home Loan Bank | | | — | | | | 13,900 | | | | 14,990 | |
Other borrowings | | | — | | | | 1,657 | | | | 1,951 | |
Accrued expenses and other liabilities | | | 8,518 | | | | 5,731 | | | | 7,867 | |
| | | | | | | | | | | | |
Total liabilities | | | 832,998 | | | | 816,353 | | | | 801,088 | |
| | | | | | | | | | | | |
Preferred stock | | | 23,367 | | | | — | | | | — | |
Common stock | | | 26,533 | | | | 25,689 | | | | 24,985 | |
Unearned compensation | | | (358 | ) | | | (380 | ) | | | (447 | ) |
Retained earnings | | | 63,253 | | | | 63,578 | | | | 60,780 | |
Accumulated other comprehensive income (loss), net | | | 352 | | | | (80 | ) | | | (351 | ) |
| | | | | | | | | | | | |
Total stockholders’ equity | | | 113,147 | | | | 88,807 | | | | 84,967 | |
| | | | | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 946,145 | | | $ | 905,160 | | | $ | 886,055 | |
| | | | | | | | | | | | |
HERITAGE FINANCIAL CORPORATION
CONDENSED STATEMENTS OF INCOME
(Dollar amounts in thousands, except per share amounts; unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Year Ended |
| | | December 31,
2008 | | | September 30,
2008 | | December 31,
2007 | | December 31,
2008 | | December 31,
2007 |
Interest income: | | | | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 13,553 | | | $ | 13,692 | | $ | 15,080 | | $ | 54,919 | | $ | 60,409 |
Taxable interest on investment securities | | | 455 | | | | 425 | | | 398 | | | 1,649 | | | 1,638 |
Nontaxable interest on investment securities | | | 52 | | | | 51 | | | 44 | | | 197 | | | 177 |
Interest on federal funds sold and interest earning deposits | | | 18 | | | | 14 | | | 43 | | | 152 | | | 148 |
Dividends on Federal Home Loan Bank Stock | | | — | | | | 11 | | | 7 | | | 31 | | | 19 |
| | | | | | | | | | | | | | | | |
Total interest income | | | 14,078 | | | | 14,193 | | | 15,572 | | | 56,948 | | | 62,391 |
| | | | | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | | | | |
Deposits | | | 4,021 | | | | 4,252 | | | 6,261 | | | 18,321 | | | 24,231 |
Borrowed funds | | | 23 | | | | 85 | | | 167 | | | 285 | | | 1,539 |
| | | | | | | | | | | | | | | | |
Total interest expense | | | 4,044 | | | | 4,337 | | | 6,428 | | | 18,606 | | | 25,770 |
| | | | | | | | | | | | | | | | |
Net interest income | | | 10,034 | | | | 9,856 | | | 9,144 | | | 38,342 | | | 36,621 |
Provision for loan losses | | | 4,590 | | | | 1,760 | | | 240 | | | 7,420 | | | 810 |
| | | | | | | | | | | | | | | | |
Net interest income after provision for loan losses | | | 5,444 | | | | 8,096 | | | 8,904 | | | 30,922 | | | 35,811 |
| | | | | | | | | | | | | | | | |
Non-interest income: | | | | | | | | | | | | | | | | |
Gain on sales of loans | | | 52 | | | | 112 | | | 12 | | | 435 | | | 64 |
Brokered mortgage income | | | 19 | | | | 41 | | | 125 | | | 212 | | | 676 |
Service charges on deposits | | | 1,023 | | | | 1,059 | | | 992 | | | 4,095 | | | 3,790 |
Rental income | | | 45 | | | | 77 | | | 82 | | | 285 | | | 324 |
Merchant visa income | | | 754 | | | | 819 | | | 746 | | | 3,039 | | | 2,869 |
Other income | | | 161 | | | | 143 | | | 162 | | | 758 | | | 849 |
| | | | | | | | | | | | | | | | |
Total non-interest income | | | 2,054 | | | | 2,251 | | | 2,119 | | | 8,824 | | | 8,572 |
| | | | | | | | | | | | | | | | |
Non-interest expense: | | | | | | | | | | | | | | | | |
Salaries & employee benefits | | | 3,645 | | | | 3,658 | | | 3,532 | | | 14,689 | | | 14,764 |
Occupancy and equipment | | | 960 | | | | 954 | | | 997 | | | 3,855 | | | 4,098 |
Data processing | | | 406 | | | | 400 | | | 400 | | | 1,575 | | | 1,572 |
Marketing | | | 268 | | | | 135 | | | 104 | | | 702 | | | 500 |
Office supplies & printing | | | 89 | | | | 101 | | | 92 | | | 369 | | | 387 |
Merchant visa | | | 620 | | | | 669 | | | 602 | | | 2,466 | | | 2,308 |
Professional services | | | 218 | | | | 167 | | | 125 | | | 710 | | | 635 |
State and local taxes | | | 220 | | | | 233 | | | 278 | | | 930 | | | 989 |
Impairment loss on securities | | | 668 | | | | 147 | | | — | | | 1,927 | | | — |
Other expense | | | 811 | | | | 796 | | | 768 | | | 3,196 | | | 3,035 |
| | | | | | | | | | | | | | | | |
Total non-interest expense | | | 7,905 | | | | 7,260 | | | 6,898 | | | 30,419 | | | 28,288 |
| | | | | | | | | | | | | | | | |
Income before federal income taxes | | | (407 | ) | | | 3,087 | | | 4,125 | | | 9,327 | | | 16,095 |
Federal income tax expense | | | (213 | ) | | | 1,006 | | | 1,350 | | | 2,976 | | | 5,387 |
| | | | | | | | | | | | | | | | |
Net income/(loss) | | $ | (194 | ) | | $ | 2,081 | | $ | 2,775 | | $ | 6,351 | | $ | 10,708 |
| | | | | | | | | | | | | | | | |
Net income/(loss) available to common shareholders | | $ | (337 | ) | | $ | 2,081 | | $ | 2,775 | | $ | 6,208 | | $ | 10,708 |
| | | | | | | | | | | | | | | | |
Basic earnings/(loss) per common share | | $ | (0.05 | ) | | $ | 0.32 | | $ | 0.42 | | $ | 0.94 | | $ | 1.63 |
Diluted earnings/(loss) per common share | | $ | (0.05 | ) | | $ | 0.31 | | $ | 0.42 | | $ | 0.93 | | $ | 1.61 |
Average number of common shares outstanding | | | 6,606,565 | | | | 6,601,433 | | | 6,575,116 | | | 6,598,647 | | | 6,558,448 |
Average number of diluted common shares outstanding | | | 6,606,565 | | | | 6,643,260 | | | 6,648,691 | | | 6,647,420 | | | 6,670,422 |
HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS
(Dollar amounts in thousands, except per share amounts; unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Year Ended | |
| | | December 31,
2008 | | | September 30,
2008 | | | December 31,
2007 | | | December 31,
2008 | | | December 31,
2007 | |
Performance Ratios: | | | | | | | | | | | | | | | | | | | | |
Net interest margin | | | 4.67 | % | | | 4.66 | % | | | 4.39 | % | | | 4.59 | % | | | 4.50 | % |
Efficiency ratio | | | 65.40 | % | | | 59.97 | % | | | 61.24 | % | | | 64.50 | % | | | 62.59 | % |
Return on average assets | | | -0.08 | % | | | 0.92 | % | | | 1.25 | % | | | 0.71 | % | | | 1.23 | % |
Return on average common equity | | | -1.48 | % | | | 9.25 | % | | | 12.87 | % | | | 6.98 | % | | | 12.87 | % |
Average Balances: | | | | | | | | | | | | | | | | | | | | |
Average assets | | $ | 914,322 | | | $ | 898,243 | | | $ | 883,948 | | | $ | 893,574 | | | $ | 872,667 | |
Average earning assets | | | 852,416 | | | | 838,617 | | | | 825,720 | | | | 834,762 | | | | 814,413 | |
Average total loans | | | 815,004 | | | | 808,794 | | | | 791,685 | | | | 798,169 | | | | 780,509 | |
Average deposits | | | 802,449 | | | | 787,852 | | | | 779,087 | | | | 787,758 | | | | 755,252 | |
Average equity | | | 101,068 | | | | 89,241 | | | | 85,555 | | | | 91,594 | | | | 83,175 | |
Average tangible equity | | | 87,621 | | | | 75,775 | | | | 71,982 | | | | 78,117 | | | | 69,553 | |
| | | | | | | | | | | | |
| | | As of Period End | |
| | | December 31,
2008 | | | September 30,
2008 | | | December 31,
2007 | |
Nonperforming Assets | | | | | | | | | | | | |
Nonaccrual loans | | $ | 3,397 | | | $ | 8,283 | | | $ | 1,021 | |
Other real estate owned | | | 2,031 | | | | 169 | | | | 169 | |
| | | | | | | | | | | | |
Nonperforming assets | | | 5,428 | | | | 8,452 | | | | 1,190 | |
Allowance for loan losses to: | | | | | | | | | | | | |
Total loans | | | 1.91 | % | | | 1.56 | % | | | 1.33 | % |
Nonperforming loans | | | 454.02 | % | | | 152.46 | % | | | 1016.06 | % |
Nonperforming loans to total loans | | | 0.42 | % | | | 1.02 | % | | | 0.13 | % |
Nonperforming assets to total assets | | | 0.57 | % | | | 0.93 | % | | | 0.13 | % |
Book Value Per Share | | | | | | | | | | | | |
Book value per common share | | $ | 13.40 | | | $ | 13.27 | | | $ | 12.79 | |
Tangible book value per common share | | $ | 11.40 | | | $ | 11.26 | | | $ | 10.76 | |
Capital Adequacy | | | | | | | | | | | | |
Stockholders’ equity to total assets | | | 11.96 | % | | | 9.81 | % | | | 9.59 | % |
Tier 1 leverage capital to average assets | | | 11.03 | % | | | 8.53 | % | | | 8.22 | % |
Total capital to risk-weighted assets | | | 13.73 | % | | | 10.55 | % | | | 10.70 | % |
HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS
(Dollar amounts in thousands; unaudited)
| | | | | | | | | | | | | | | | | | |
| | | Three months ending
December 31, 2008 | | | Three months ending
December 31, 2007 | |
| | | Average
Balance | | Interest
Earned/
Paid | | Average
Rate | | | Average
Balance | | Interest
Earned/
Paid | | Average
Rate | |
Interest Earning Assets: | | | | | | | | | | | | | | | | | | |
Loans, net | | $ | 799,312 | | $ | 13,553 | | 6.73 | % | | $ | 779,218 | | $ | 15,080 | | 7.68 | % |
Investments: | | | | | | | | | | | | | | | | | | |
Taxable | | | 35,205 | | | 455 | | 5.13 | % | | | 34,535 | | | 398 | | 4.57 | % |
Nontaxable | | | 5,899 | | | 52 | | 3.48 | % | | | 4,938 | | | 44 | | 3.56 | % |
Interest earning deposits | | | 8,461 | | | 18 | | 0.84 | % | | | 3,802 | | | 43 | | 4.44 | % |
Federal Home Loan Bank stock | | | 3,539 | | | — | | 0.00 | % | | | 3,227 | | | 6 | | 0.79 | % |
| | | | | | | | | | | | | | | | | | |
Total interest earning assets | | | 852,416 | | | 14,078 | | 6.55 | % | | | 825,720 | | | 15,571 | | 7.48 | % |
Non-interest earning assets | | | 61,906 | | | | | | | | | 58,228 | | | | | | |
| | | | | | | | | | | | | | | | | | |
Total assets | | $ | 914,322 | | | | | | | | $ | 883,948 | | | | | | |
| | | | | | | | | | | | | | | | | | |
Interest Bearing Liabilities: | | | | | | | | | | | | | | | | | | |
Certificates of deposit | | $ | 335,435 | | | 2,597 | | 3.07 | % | | $ | 360,921 | | | 4,380 | | 4.81 | % |
Savings accounts | | | 101,915 | | | 423 | | 1.65 | % | | | 78,699 | | | 380 | | 1.91 | % |
Interest bearing demand and money market accounts | | | 253,450 | | | 1,001 | | 1.57 | % | | | 231,709 | | | 1,501 | | 2.57 | % |
| | | | | | | | | | | | | | | | | | |
Total Interest bearing deposits | | | 690,800 | | | 4,021 | | 2.31 | % | | | 671,329 | | | 6,261 | | 3.70 | % |
FHLB advances and other borrowings | | | 4,890 | | | 23 | | 1.89 | % | | | 12,060 | | | 167 | | 5.50 | % |
| | | | | | | | | | | | | | | | | | |
Total interest bearing liabilities | | | 695,690 | | | 4,044 | | 2.31 | % | | | 683,389 | | | 6,428 | | 3.73 | % |
Non-interest bearing deposits | | | 111,649 | | | | | | | | | 107,758 | | | | | | |
Other non-interest bearing liabilities | | | 5,915 | | | | | | | | | 7,246 | | | | | | |
Stockholders’ equity | | | 101,068 | | | | | | | | | 85,555 | | | | | | |
| | | | | | | | | | | | | | | | | | |
Total liabilities & stockholders’ equity | | $ | 914,322 | | | | | | | | $ | 883,948 | | | | | | |
| | | | | | | | | | | | | | | | | | |
Net interest income | | | | | $ | 10,034 | | | | | | | | $ | 9,143 | | | |
| | | | | | | | | | | | | | | | | | |
Net interest spread | | | | | | | | 4.25 | % | | | | | | | | 3.75 | % |
Net interest margin | | | | | | | | 4.67 | % | | | | | | | | 4.39 | % |
Average interest earning assets to average interest bearing liabilities | | | | | | | | 122.53 | % | | | | | | | | 120.83 | % |
HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS
(Dollar amounts in thousands; unaudited)
| | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2008 | | | September 30, 2008 | | | December 31, 2007 | |
| | | Balance | | | % of Total | | | Balance | | | % of Total | | | Balance | | | % of Total | |
Loan Composition | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 443,821 | | | 54.9 | % | | $ | 445,948 | | | 54.9 | % | | $ | 421,405 | | | 54.0 | % |
Real estate mortgages: | | | | | | | | | | | | | | | | | | | | | |
One to four family residential | | | 57,535 | | | 7.1 | % | | | 57,727 | | | 7.1 | % | | | 57,579 | | | 7.4 | % |
Five or more family residential and commercial real estate | | | 157,542 | | | 19.5 | % | | | 160,879 | | | 19.8 | % | | | 163,715 | | | 21.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total real estate mortgages | | | 215,077 | | | 26.6 | % | | | 218,606 | | | 26.9 | % | | | 221,294 | | | 28.4 | % |
Real estate construction: | | | | | | | | | | | | | | | | | | | | | |
One to four family residential | | | 71,159 | | | 8.8 | % | | | 77,790 | | | 9.6 | % | | | 82,165 | | | 10.5 | % |
Five or more family residential and commercial real estate | | | 59,572 | | | 7.4 | % | | | 52,009 | | | 6.4 | % | | | 40,342 | | | 5.2 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total real estate construction | | | 130,731 | | | 16.2 | % | | | 129,799 | | | 16.0 | % | | | 122,507 | | | 15.7 | % |
Consumer | | | 21,255 | | | 2.6 | % | | | 20,106 | | | 2.5 | % | | | 16,641 | | | 2.1 | % |
| | | | | | | | | | | | | | | | | | | | | |
Subtotal | | | 810,884 | | | 100.2 | % | | | 814,459 | | | 100.2 | % | | | 781,847 | | | 100.3 | % |
Deferred loan fees | | | (1,854 | ) | | -0.2 | % | | | (1,926 | ) | | -0.2 | % | | | (2,081 | ) | | -0.3 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 809,030 | | | 100.0 | % | | $ | 812,533 | | | 100.0 | % | | $ | 779,766 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
Deposit Composition | | | | | | | | | | | | | | | | | | | | | |
Non-interest demand deposits | | $ | 115,551 | | | 14.0 | % | | $ | 108,844 | | | 13.7 | % | | $ | 110,463 | | | 14.2 | % |
NOW accounts | | | 122,104 | | | 14.8 | % | | | 123,534 | | | 15.5 | % | | | 117,702 | | | 15.2 | % |
Money market accounts | | | 141,716 | | | 17.2 | % | | | 130,166 | | | 16.4 | % | | | 112,884 | | | 14.5 | % |
Savings accounts | | | 98,715 | | | 12.0 | % | | | 98,931 | | | 12.4 | % | | | 75,419 | | | 9.7 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total core deposits | | | 478,086 | | | 58.0 | % | | | 461,475 | | | 58.0 | % | | | 416,468 | | | 53.6 | % |
Certificate of deposit accounts | | | 346,394 | | | 42.0 | % | | | 333,590 | | | 42.0 | % | | | 359,812 | | | 46.4 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total deposits | | $ | 824,480 | | | 100.0 | % | | $ | 795,065 | | | 100.0 | % | | $ | 776,280 | | | 100.0 | % |
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