Exhibit 99.1
| | |
| | FOR IMMEDIATE RELEASE |
| | DATE: July 29, 2009 |
| | | | |
| CONTACT: | | Brian L. Vance | | |
| | President and Chief Executive Officer | | |
| | (360) 943-1500 | | |
HERITAGE FINANCIAL ANNOUNCES SECOND QUARTER 2009 RESULTS
| | • | | A total risk-based capital ratio of 13.99% as of June 30, 2009 |
| | • | | Solid coverage ratios at June 30, 2009 including an allowance for loan losses to total loans of 3.02% and an allowance for loan losses to nonperforming loans of 104.1% |
| | • | | Strong liquidity position at June 30, 2009 including $82 million in cash and cash equivalents |
| | • | | Non-maturity deposits (total deposits less certificate of deposit accounts) as of June 30, 2009 increased 8% from December 31, 2008 and 12% from June 30, 2008 |
| | • | | Average earning assets for the quarter ended June 30, 2009 increased 9% from the prior year quarter ended June 30, 2008 |
Olympia, WA - HERITAGE FINANCIAL CORPORATION (NASDAQ GS: HFWA) Brian L. Vance, President and CEO of Heritage Financial Corporation (“Company”), today reported net income for the three months ended June 30, 2009 of $91,000 compared to net income of $1.8 million for the quarter ended June 30, 2008. Including preferred stock dividends, net loss applicable to common shareholders for the quarter ended June 30, 2009 was $239,000, or $0.04 per diluted common share, compared with earnings applicable to common shareholders of $1.8 million, or $0.27 per diluted common share for the quarter ended June 30, 2008. For the six months ended June 30, 2009, the net loss applicable to common shareholders was $1.2 million, or $0.18 per diluted common share compared to earnings applicable to common shareholders of $4.5 million, or $0.67 per diluted common share for the six months ended June 30, 2008. The decrease in earnings from the prior year periods ended June 30, 2008 is substantially attributable to the increased provision for loan losses.
Mr. Vance commented, “Although we are beginning to see encouraging pockets of economic improvement, we believe the Pacific Northwest will likely not see measurable or sustainable economic growth and real estate value stabilization until well into 2010. Therefore, as a result of the increased risk of loss in the loan portfolio, we continue to provision for loan losses at amounts substantially higher than we have historically. As a result of the higher provisions, our allowance for loan losses has increased to 3.02% of total loans. In addition, even with increases in nonperforming loans during the second quarter of 2009, we maintained an allowance for loan losses of over 100% to nonperforming loans. While we believe these strong coverage ratios are important in these difficult economic times, we also believe all credit metrics will likely continue to deteriorate through at least the balance of this year. One reason is the continuing struggles of the housing industry. While we believe we have maintained prudent levels of single-family residential construction exposure, a large part of this portfolio is in developed lots. This specific sector remains quite problematic and we believe will be the last to show signs of recovery. If this sector remains depressed for a continued period of time, even otherwise strong borrowers will ultimately show weakness likely resulting in an increase in our nonperforming loans and credit losses.”
“We continue to focus on maintaining a strong balance sheet. In addition to the coverage ratios, the Company is very well-capitalized with a total risk-based capital ratio of 13.99%. We continue to grow our core deposits, with non-maturity deposits increasing 8% since year-end and 12% from a year ago. Average earning assets during the current quarter increased 9% from the prior year quarter ended June 30. We continue to maintain a strong liquidity position with cash and other liquidity sources totaling over $300 million. We have lowered our loan to deposit ratio from 98% a year ago to 91% today.”
“We also continue to improve our core operating performance,” Mr. Vance continued. “We have increased our net interest margin to 4.59% in the current quarter from 4.55% in the prior year quarter ended June 30. We have increased our net interest income by 10% year over year. Even with much higher FDIC assessments, we have improved our efficiency ratio on a linked-quarter basis. We believe our model of building a strong balance sheet and solid core operating income will position us well for the future.”
The Company’s total assets increased $20.6 million to $966.8 million at June 30, 2009 from $946.1 million at December 31, 2008, and increased $65.3 million from June 30, 2008. Total loans decreased $23.9 million from December 31, 2008 and decreased $12.7 million from June 30, 2008. The decrease in loans during the first six months of fiscal 2009 was substantially a result of a combination of construction loan payoffs, prepayment of single-family residential mortgages, and seasonal paydowns of agricultural lines of credit. Real estate construction loans account for only 14.5% of total loans and account for only 8.0% of total loans in the single-family residential construction sector.
Deposits increased $17.6 million to $842.1 million at June 30, 2009 from $824.5 million at December 31, 2008 and increased $41.1 million from June 30, 2008. Since December 31, 2008, non-maturity deposits (total deposits less certificate of deposit accounts) have increased $37.4 million, or 7.8%. As a result, the percentage of certificate of deposit accounts to total deposits decreased to 38.8% at June 30, 2009 from 42.0% at December 31, 2008.
Much of the change in the mix of deposit accounts is a result of the Company reducing its amount of public deposits. In order to comply with new public deposit collateral requirements and reduce the Company’s exposure to uninsured public deposits, management implemented measures affecting public deposits. These measures included allowing some public certificate of deposit accounts to run-off and converting others to insured deposit accounts rather than renewing them. As a result, total public deposit balances decreased $43 million to $89 million at June 30, 2009 from $132 million at December 31, 2008. This lowered the Company’s uninsured public deposit accounts to $10 million at June 30, 2009 (which are fully collateralized) from $125 million at December 31, 2008.
At June 30, 2009, the Company’s capital position was 11.52% of total assets compared to 11.70% of total assets at March 31, 2009. The total risk-based capital ratio was 13.99% at June 30, 2009 compared to 14.10% at March 31, 2009.
Net interest income before provision for loan losses was $10.3 million for the quarter ended June 30, 2009 compared to $9.4 million for the quarter ended June 30, 2008, an increase of 10.1%. For the six months ended June 30, 2009, net interest income before provision for loan losses was $20.4 million compared to $18.5 million for the six months ended June 30, 2008, an increase of 10.6%. These increases were the result of growth in earning assets and the net interest margin. Average earning assets increased 9.2% to $903 million for the quarter ended June 30, 2009 from $827 million for the quarter ended June 30, 2008. The net interest margin (net interest income divided by average earning assets) increased to 4.59% for the quarter ended June 30, 2009 compared to 4.55% for the quarter ended June 30, 2008.
The loan loss provision in the second quarter of 2009 of $4.5 million decreased $710,000 from $5.3 million in the first quarter of 2009 and increased $3.8 million from $710,000 in the prior year quarter ended June 30, 2008. The Company had net charge-offs in the second quarter of 2009 of $988,000 compared to $518,000 in the first quarter of 2009 and $156,000 in the prior year quarter ended June 30, 2008. The allowance for loan losses as a percent of total loans increased to 3.02% at June 30, 2009 from 2.56% at March 31, 2009 and 1.41% at June 30, 2008. The increase in the allowance for loan losses was attributable to management’s continuing assessment of the increased risk in the loan portfolio as a result of the current economic environment, which may lead to increases in potential problem loans and loan losses. Management continues to see weakness 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.
Nonperforming assets (nonperforming loans plus other real estate owned) at June 30, 2009 were $23.1 million, or 2.39% of total assets, an increase from $15.4 million, or 1.61% of total assets at March 31, 2009 and an increase from $8.5 million, or 0.94% of total assets, at June 30, 2008. The increase during the quarter ended June 30, 2009 was primarily attributable to two residential construction borrower relationships totaling approximately $6.9 million being placed on non-accrual status and a restructured commercial loan totaling $3.2 million. At June 30, 2009, the Company’s coverage of
allowance for loan losses to nonperforming loans was 104.1%. Despite the strong coverage ratio, management expects the provision for loan losses to continue at high levels until there is measurable improvement in the local economic markets.
Non-interest income was $2.3 million for the three months ended June 30, 2009 and the comparable period in June 30, 2008. Non-interest income decreased slightly to $4.3 million for the six months ended June 30, 2009 compared to $4.5 million for the same period in 2008.
Non-interest expense was $8.0 million for the quarter ended June 30, 2009 compared to $8.3 million for the quarter ended June 30, 2008. For the six months ended June 30, 2009, non-interest expense was $15.9 million compared to $15.3 million for the six months ended June 30, 2008. The variances in non-interest expenses were substantially the result of the following:
| | • | | Increased FDIC assessment rates and a special FDIC assessment. For the three and six months ended June 30, 2009, Federal deposit insurance expenses increased $632,000 and $740,000, respectively, from the same periods in the prior year. |
| | • | | Impairment loss on securities decreased from $1.1 million for each of the three and six months ended June 30, 2008 to $59,000 and $234,000, respectively, for the three and six months ended June 30, 2009. |
| | • | | An assessment attributable to uncollateralized public deposits of a failed bank in the amount of $239,000 during the six months ended June 30, 2009. |
Earnings Conference Call
The Company will hold a telephone conference call to discuss this earnings release on July 30, 2009, at 11:00 a.m. Pacific time. To access the call, please dial (800) 230-1093 a few minutes prior to 11:00 am PDT. The call will be available for replay ending August 14, 2009, by dialing (800) 475-6701 — access code 106447.
About Heritage Financial
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.
Non-GAAP Financial Measures
This news release contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (GAAP). These measures include average tangible common equity, tangible book value per share and tangible common equity to tangible assets. Tangible common equity (tangible book value) excludes preferred stock, goodwill and other intangible assets. Tangible assets excludes goodwill and other intangible assets. Management has presented these non-GAAP financial measures in this earnings release because it believes that it provides more useful and comparative information to assess trends in the Company’s capital reflected in the current quarter and year-to-date results. Where applicable, the Company has also presented comparable capital information using GAAP financial measures.
Forward-Looking Statements
This press release contains statements that the Company believes are “forward-looking statements.” These statements relate to the Company’s financial condition, results of operations, plans, objectives, future performance or business. You should not place undue reliance on these statements, as they are subject to risks and uncertainties. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements.Factors which could cause actual results to differ materially include, but are not limited to, the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas; results of examinations of us by the Board of Governors of the Federal Reserve System and our bank subsidiaries by the Federal Deposit Insurance Corporation, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses or to write-down assets; our ability to control operating costs and expenses; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we have acquired or may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; our ability to manage loan delinquency rates; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; legislative or regulatory changes that adversely affect our business; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and other risks detailed in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2008. The Company does not undertake to update any forward-looking statement that may be made on behalf of the Company.
HERITAGE FINANCIAL CORPORATION
CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Dollar amounts in thousands; unaudited)
| | | | | | | | | | | | |
| | | June 30,
2009 | | | December 31,
2008 | | | June 30,
2008 | |
Assets | | | | | | | | | | | | |
Cash on hand and in banks | | $ | 21,874 | | | $ | 31,478 | | | $ | 30,337 | |
Interest earning deposits | | | 60,613 | | | | 29,156 | | | | 793 | |
Investment securities available for sale | | | 55,727 | | | | 31,922 | | | | 35,999 | |
Investment securities held to maturity | | | 10,294 | | | | 12,081 | | | | 3,252 | |
Loans held for sale | | | 2,431 | | | | 304 | | | | 160 | |
Loans receivable | | | 784,867 | | | | 808,726 | | | | 797,591 | |
Less: Allowance for loan losses | | | (23,707 | ) | | | (15,423 | ) | | | (11,244 | ) |
| | | | | | | | | | | | |
Loans receivable, net | | | 761,160 | | | | 793,303 | | | | 786,347 | |
Other real estate owned | | | 301 | | | | 2,031 | | | | 665 | |
Premises and equipment, net | | | 16,411 | | | | 15,721 | | | | 14,753 | |
Federal Home Loan Bank stock | | | 3,566 | | | | 3,566 | | | | 3,316 | |
Accrued interest receivable | | | 3,918 | | | | 4,168 | | | | 4,082 | |
Prepaid expenses and other assets | | | 17,071 | | | | 8,979 | | | | 8,302 | |
Goodwill and other intangible assets | | | 13,397 | | | | 13,436 | | | | 13,475 | |
| | | | | | | | | | | | |
Total assets | | $ | 966,763 | | | $ | 946,145 | | | $ | 901,481 | |
| | | | | | | | | | | | |
| | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | |
Deposits | | $ | 842,103 | | | $ | 824,480 | | | $ | 800,989 | |
Advances from Federal Home Loan Bank | | | — | | | | — | | | | 5,605 | |
Securities sold under agreement to repurchase | | | 9,163 | | | | — | | | | — | |
Other borrowings | | | — | | | | — | | | | 1,322 | |
Accrued expenses and other liabilities | | | 4,123 | | | | 8,518 | | | | 6,270 | |
| | | | | | | | | | | | |
Total liabilities | | | 855,389 | | | | 832,998 | | | | 814,186 | |
| | | | | | | | | | | | |
| | | |
Preferred stock | | | 23,426 | | | | 23,367 | | | | — | |
Common stock | | | 26,776 | | | | 26,546 | | | | 25,526 | |
Unearned compensation | | | (314 | ) | | | (358 | ) | | | (403 | ) |
Retained earnings | | | 61,557 | | | | 63,240 | | | | 62,433 | |
Accumulated other comprehensive income (loss), net | | | (71 | ) | | | 352 | | | | (261 | ) |
| | | | | | | | | | | | |
Total stockholders’ equity | | | 111,374 | | | | 113,147 | | | | 87,295 | |
| | | | | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 966,763 | | | $ | 946,145 | | | $ | 901,481 | |
| | | | | | | | | | | | |
HERITAGE FINANCIAL CORPORATION
CONDENSED STATEMENTS OF INCOME (LOSS)
(Dollar amounts in thousands, except per share amounts; unaudited)
| | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30,
2009 | | | March 31,
2009 | | | June 30,
2008 | | June 30,
2009 | | | June 30,
2008 |
Interest income: | | | | | | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 12,637 | | | $ | 12,895 | | | $ | 13,506 | | $ | 25,532 | | | $ | 27,674 |
Taxable interest on investment securities | | | 558 | | | | 447 | | | | 377 | | | 1,005 | | | | 769 |
Nontaxable interest on investment securities | | | 58 | | | | 55 | | | | 50 | | | 113 | | | | 95 |
Interest on federal funds sold and interest earning deposits | | | 56 | | | | 44 | | | | 32 | | | 100 | | | | 120 |
Dividends on Federal Home Loan Bank Stock | | | — | | | | — | | | | 11 | | | — | | | | 19 |
| | | | | | | | | | | | | | | | | | |
Total interest income | | | 13,309 | | | | 13,441 | | | | 13,976 | | | 26,750 | | | | 28,677 |
| | | | | | | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | | | | | | |
Deposits | | | 2,968 | | | | 3,363 | | | | 4,508 | | | 6,331 | | | | 10,048 |
Borrowed funds | | | 6 | | | | — | | | | 79 | | | 6 | | | | 176 |
| | | | | | | | | | | | | | | | | | |
Total interest expense | | | 2,974 | | | | 3,363 | | | | 4,587 | | | 6,337 | | | | 10,224 |
| | | | | | | | | | | | | | | | | | |
Net interest income | | | 10,335 | | | | 10,078 | | | | 9,389 | | | 20,413 | | | | 18,453 |
Provision for loan losses | | | 4,540 | | | | 5,250 | | | | 710 | | | 9,790 | | | | 1,070 |
| | | | | | | | | | | | | | | | | | |
Net interest income after provision for loan losses | | | 5,795 | | | | 4,828 | | | | 8,679 | | | 10,623 | | | | 17,383 |
| | | | | | | | | | | | | | | | | | |
Non-interest income: | | | | | | | | | | | | | | | | | | |
Gain on sales of loans | | | 105 | | | | 97 | | | | 229 | | | 202 | | | | 271 |
Brokered mortgage income | | | 53 | | | | 39 | | | | 64 | | | 92 | | | | 152 |
Service charges on deposits | | | 1,030 | | | | 989 | | | | 1,023 | | | 2,019 | | | | 2,013 |
Rental income | | | 36 | | | | 36 | | | | 80 | | | 72 | | | | 163 |
Merchant visa income | | | 769 | | | | 682 | | | | 766 | | | 1,451 | | | | 1,466 |
Other income | | | 279 | | | | 194 | | | | 112 | | | 473 | | | | 455 |
| | | | | | | | | | | | | | | | | | |
Total non-interest income | | | 2,272 | | | | 2,037 | | | | 2,274 | | | 4,309 | | | | 4,520 |
| | | | | | | | | | | | | | | | | | |
Non-interest expense: | | | | | | | | | | | | | | | | | | |
Salaries & employee benefits | | | 3,697 | | | | 3,831 | | | | 3,665 | | | 7,528 | | | | 7,386 |
Occupancy and equipment | | | 956 | | | | 1,033 | | | | 954 | | | 1,989 | | | | 1,942 |
Data processing | | | 428 | | | | 409 | | | | 386 | | | 837 | | | | 770 |
Marketing | | | 234 | | | | 226 | | | | 195 | | | 460 | | | | 298 |
Merchant Visa | | | 633 | | | | 565 | | | | 615 | | | 1,198 | | | | 1,177 |
Professional services | | | 182 | | | | 141 | | | | 163 | | | 323 | | | | 326 |
State and local taxes | | | 260 | | | | 195 | | | | 239 | | | 455 | | | | 476 |
Impairment loss on securities | | | 59 | | | | 175 | | | | 1,112 | | | 234 | | | | 1,112 |
Federal deposit insurance | | | 751 | | | | 145 | | | | 119 | | | 896 | | | | 156 |
Other expense | | | 826 | | | | 1,160 | | | | 838 | | | 1,986 | | | | 1,613 |
| | | | | | | | | | | | | | | | | | |
Total non-interest expense | | | 8,026 | | | | 7,880 | | | | 8,286 | | | 15,906 | | | | 15,256 |
| | | | | | | | | | | | | | | | | | |
Income (loss) before federal income taxes | | | 41 | | | | (1,015 | ) | | | 2,667 | | | (974 | ) | | | 6,647 |
Federal income tax expense (benefit) | | | (50 | ) | | | (421 | ) | | | 863 | | | (471 | ) | | | 2,183 |
| | | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 91 | | | $ | (594 | ) | | $ | 1,804 | | $ | (503 | ) | | $ | 4,464 |
| | | | | | | | | | | | | | | | | | |
Dividends accrued and discount accreted on preferred shares | | $ | 330 | | | $ | 329 | | | $ | — | | $ | 659 | | | $ | — |
| | | | | | | | | | | | | | | | | | |
Net income (loss) applicable to common shareholders | | $ | (239 | ) | | $ | (923 | ) | | $ | 1,804 | | $ | (1,162 | ) | | $ | 4,464 |
| | | | | | | | | | | | | | | | | | |
| | | | | |
Basic earnings/(loss) per common share | | $ | (0.04 | ) | | $ | (0.14 | ) | | $ | 0.27 | | $ | (0.18 | ) | | $ | 0.67 |
Diluted earnings/(loss) per common share | | $ | (0.04 | ) | | $ | (0.14 | ) | | $ | 0.27 | | $ | (0.18 | ) | | $ | 0.67 |
| | | | | |
Average number of common shares outstanding | | | 6,615,989 | | | | 6,610,410 | | | | 6,598,888 | | | 6,613,298 | | | | 6,593,220 |
Average number of diluted common shares outstanding | | | 6,615,989 | | | | 6,610,410 | | | | 6,645,380 | | | 6,613,298 | | | | 6,642,262 |
HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS
(Dollar amounts in thousands, except per share amounts; unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30,
2009 | | | March 31,
2009 | | | June 30,
2008 | | | June 30,
2009 | | | June 30,
2008 | |
Performance Ratios: | | | | | | | | | | | | | | | | | | | | |
Net interest margin | | | 4.59 | % | | | 4.68 | % | | | 4.55 | % | | | 4.64 | % | | | 4.50 | % |
Efficiency ratio | | | 63.66 | % | | | 65.04 | % | | | 71.05 | % | | | 64.34 | % | | | 66.41 | % |
Return on average assets | | | 0.04 | % | | | -0.25 | % | | | 0.82 | % | | | -0.11 | % | | | 1.02 | % |
Return on average common equity | | | -1.07 | % | | | -4.13 | % | | | 8.15 | % | | | -2.60 | % | | | 10.20 | % |
| | | | | |
Average Balances: | | | | | | | | | | | | | | | | | | | | |
Average assets | | $ | 967,781 | | | $ | 946,140 | | | $ | 884,062 | | | $ | 957,020 | | | $ | 880,727 | |
Average earning assets | | | 903,433 | | | | 872,749 | | | | 827,398 | | | | 888,143 | | | | 823,890 | |
Average total loans | | | 787,687 | | | | 801,618 | | | | 790,754 | | | | 793,027 | | | | 784,287 | |
Average deposits | | | 846,377 | | | | 827,044 | | | | 781,018 | | | | 836,765 | | | | 778,262 | |
Average equity | | | 113,365 | | | | 113,979 | | | | 88,747 | | | | 113,670 | | | | 87,995 | |
Average tangible common equity | | | 76,559 | | | | 77,182 | | | | 75,260 | | | | 76,869 | | | | 74,498 | |
| | | |
| | | As of Period End | | | | | | | |
| | | June 30,
2009 | | | March 31,
2009 | | | June 30,
2008 | | | | | | | |
Nonperforming Assets | | | | | | | | | | | | | | | | | | | | |
Nonaccrual loans by type: | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 2,970 | | | $ | 3,608 | | | $ | 111 | | | | | | | | | |
Real estate mortgages | | | 465 | | | | — | | | | — | | | | | | | | | |
Real estate construction | | | 16,077 | | | | 9,798 | | | | 7,643 | | | | | | | | | |
Consumer | | | — | | | | 10 | | | | 37 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total nonaccrual loans | | | 19,512 | | | | 13,416 | | | | 7,791 | | | | | | | | | |
Restructured loans | | | 3,264 | | | | — | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total nonperforming loans | | | 22,776 | | | | 13,416 | | | | 7,791 | | | | | | | | | |
Other real estate owned | | | 301 | | | | 2,022 | | | | 665 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Nonperforming assets | | | 23,077 | | | | 15,438 | | | | 8,456 | | | | | | | | | |
Allowance for loan losses to: | | | | | | | | | | | | | | | | | | | | |
Total loans | | | 3.02 | % | | | 2.56 | % | | | 1.41 | % | | | | | | | | |
Nonperforming loans | | | 104.09 | % | | | 150.23 | % | | | 144.32 | % | | | | | | | | |
Nonperforming loans to total loans | | | 2.90 | % | | | 1.71 | % | | | 0.98 | % | | | | | | | | |
Nonperforming assets to total assets | | | 2.39 | % | | | 1.61 | % | | | 0.94 | % | | | | | | | | |
| | | | | |
Financial Measures | | | | | | | | | | | | | | | | | | | | |
Book value per common share | | $ | 13.11 | | | $ | 13.19 | | | $ | 13.05 | | | | | | | | | |
Tangible book value per common share | | $ | 11.11 | | | $ | 11.19 | | | $ | 11.03 | | | | | | | | | |
Stockholders’ equity to total assets | | | 11.52 | % | | | 11.70 | % | | | 9.68 | % | | | | | | | | |
Tangible common equity to tangible assets | | | 7.82 | % | | | 7.96 | % | | | 8.31 | % | | | | | | | | |
Tier 1 leverage capital to average assets | | | 10.27 | % | | | 10.50 | % | | | 8.51 | % | | | | | | | | |
Total capital to risk-weighted assets | | | 13.99 | % | | | 14.10 | % | | | 10.75 | % | | | | | | | | |
Loans to deposits ratio | | | 90.68 | % | | | 91.46 | % | | | 98.19 | % | | | | | | | | |
HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS
(Dollar amounts in thousands; unaudited)
| | | | | | | | | | | | | | | | | | |
| | | Three months ending
June 30, 2009 | | | Three months ending
June 30, 2008 | |
| | | Average
Balance | | Interest
Earned/
Paid | | Average
Rate | | | Average
Balance | | Interest
Earned/
Paid | | Average
Rate | |
Interest Earning Assets: | | | | | | | | | | | | | | | | | | |
Loans, net | | $ | 767,710 | | $ | 12,637 | | 6.60 | % | | $ | 778,023 | | $ | 13,506 | | 6.98 | % |
Investments: | | | | | | | | | | | | | | | | | | |
Taxable | | | 54,060 | | | 558 | | 4.14 | % | | | 34,503 | | | 377 | | 4.39 | % |
Nontaxable | | | 6,869 | | | 58 | | 3.36 | % | | | 5,653 | | | 50 | | 3.55 | % |
Interest earning deposits | | | 71,228 | | | 56 | | 0.32 | % | | | 5,986 | | | 32 | | 2.15 | % |
Federal Home Loan Bank stock | | | 3,566 | | | — | | 0.00 | % | | | 3,233 | | | 11 | | 1.41 | % |
| | | | | | | | | | | | | | | | | | |
Total interest earning assets | | | 903,433 | | | 13,309 | | 5.91 | % | | | 827,398 | | | 13,976 | | 6.79 | % |
Non-interest earning assets | | | 64,348 | | | | | | | | | 56,664 | | | | | | |
| | | | | | | | | | | | | | | | | | |
Total assets | | $ | 967,781 | | | | | | | | $ | 884,062 | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | |
Interest Bearing Liabilities: | | | | | | | | | | | | | | | | | | |
Certificates of deposit | | $ | 321,851 | | | 2,059 | | 2.57 | % | | $ | 345,329 | | | 3,123 | | 3.64 | % |
Savings accounts | | | 82,073 | | | 206 | | 1.01 | % | | | 90,421 | | | 376 | | 1.67 | % |
Interest bearing demand and money market accounts | | | 322,468 | | | 703 | | 0.87 | % | | | 237,044 | | | 1,009 | | 1.71 | % |
| | | | | | | | | | | | | | | | | | |
Total Interest bearing deposits | | | 726,392 | | | 2,968 | | 1.64 | % | | | 672,794 | | | 4,508 | | 2.69 | % |
FHLB advances and other borrowings | | | — | | | — | | — | | | | 8,103 | | | 79 | | 3.94 | % |
Securities sold under agreement to repurchase | | | 2,988 | | | 6 | | 0.75 | % | | | — | | | — | | — | |
| | | | | | | | | | | | | | | | | | |
Total interest bearing liabilities | | | 729,380 | | | 2,974 | | 1.64 | % | | | 680,897 | | | 4,587 | | 2.71 | % |
Non-interest bearing deposits | | | 119,985 | | | | | | | | | 108,224 | | | | | | |
Other non-interest bearing liabilities | | | 5,051 | | | | | | | | | 6,194 | | | | | | |
Stockholders’ equity | | | 113,365 | | | | | | | | | 88,747 | | | | | | |
| | | | | | | | | | | | | | | | | | |
Total liabilities & stockholders’ equity | | $ | 967,781 | | | | | | | | $ | 884,062 | | | | | | |
| | | | | | | | | | | | | | | | | | |
Net interest income | | | | | $ | 10,335 | | | | | | | | $ | 9,389 | | | |
| | | | | | | | | | | | | | | | | | |
Net interest spread | | | | | | | | 4.27 | % | | | | | | | | 4.08 | % |
Net interest margin | | | | | | | | 4.59 | % | | | | | | | | 4.55 | % |
Average interest earning assets to average interest bearing liabilities | | | | | | | | 123.86 | % | | | | | | | | 121.52 | % |
HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS
(Dollar amounts in thousands; unaudited)
| | | | | | | | | | | | | | | | | | | | | |
| | | June 30, 2009 | | | December 31, 2008 | | | June 30, 2008 | |
| | | Balance | | | % of Total | | | Balance | | | % of Total | | | Balance | | | % of Total | |
Loan Composition | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 436,599 | | | 55.5 | % | | $ | 443,821 | | | 54.9 | % | | $ | 445,570 | | | 55.9 | % |
Real estate mortgages: | | | | | | | | | | | | | | | | | | | | | |
One to four family residential | | | 53,168 | | | 6.8 | % | | | 57,535 | | | 7.1 | % | | | 54,976 | | | 6.9 | % |
Five or more family residential and commercial real estate | | | 160,673 | | | 20.4 | % | | | 157,542 | | | 19.5 | % | | | 162,463 | | | 20.4 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total real estate mortgages | | | 213,841 | | | 27.2 | % | | | 215,077 | | | 26.6 | % | | | 217,439 | | | 27.3 | % |
Real estate construction: | | | | | | | | | | | | | | | | | | | | | |
One to four family residential | | | 62,961 | | | 8.0 | % | | | 71,159 | | | 8.8 | % | | | 71,831 | | | 9.0 | % |
Five or more family residential and commercial real estate | | | 52,086 | | | 6.5 | % | | | 59,572 | | | 7.3 | % | | | 46,397 | | | 5.8 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total real estate construction | | | 115,047 | | | 14.5 | % | | | 130,731 | | | 16.1 | % | | | 118,228 | | | 14.8 | % |
Consumer | | | 23,459 | | | 3.0 | % | | | 21,255 | | | 2.6 | % | | | 18,452 | | | 2.2 | % |
| | | | | | | | | | | | | | | | | | | | | |
Gross loans | | | 788,946 | | | 100.2 | % | | | 810,884 | | | 100.2 | % | | | 799,689 | | | 100.2 | % |
Deferred loan fees | | | (1,648 | ) | | -0.2 | % | | | (1,854 | ) | | -0.2 | % | | | (1,938 | ) | | -0.2 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 787,298 | | | 100.0 | % | | $ | 809,030 | | | 100.0 | % | | $ | 797,751 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Deposit Composition | | | | | | | | | | | | | | | | | | | | | |
Non-interest demand deposits | | $ | 121,309 | | | 14.4 | % | | $ | 115,551 | | | 14.0 | % | | $ | 115,774 | | | 14.5 | % |
NOW accounts | | | 197,411 | | | 23.4 | % | | | 122,104 | | | 14.8 | % | | | 119,940 | | | 15.0 | % |
Money market accounts | | | 115,156 | | | 13.7 | % | | | 141,716 | | | 17.2 | % | | | 120,692 | | | 15.1 | % |
Savings accounts | | | 81,591 | | | 9.7 | % | | | 98,715 | | | 12.0 | % | | | 101,977 | | | 12.7 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total non-maturity deposits | | | 515,467 | | | 61.2 | % | | | 478,086 | | | 58.0 | % | | | 458,383 | | | 57.2 | % |
Certificate of deposit accounts | | | 326,636 | | | 38.8 | % | | | 346,394 | | | 42.0 | % | | | 342,606 | | | 42.8 | % |
| | | | | | | | | | | | | | | | | | | | | |
Total deposits | | $ | 842,103 | | | 100.0 | % | | $ | 824,480 | | | 100.0 | % | | $ | 800,989 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | |
