OLYMPIA, Wash., April 25,
2019 /PRNewswire/ -- Heritage Financial Corporation (NASDAQ
GS: HFWA) (the "Company" or "Heritage"), the parent company of
Heritage Bank, today reported that the Company had net income of
$16.6 million for the quarter ended
March 31, 2019 compared to $9.1
million for the quarter ended March 31, 2018 and
$16.6 million for the linked-quarter
ended December 31, 2018. Diluted earnings per common share for
the quarter ended March 31, 2019 was $0.45 compared to $0.27 for the quarter ended March 31, 2018
and $0.45 for the linked-quarter
ended December 31, 2018.
Brian L. Vance, Chief Executive
Officer of Heritage, commented, "The past fifteen months have been
very busy with the integration and conversion of two acquisitions,
and a second team lift-out in Portland as well as selective additions to our
overall production platform. In addition, we have begun to
build-out our technology platform to create better efficiencies in
the back office which will ultimately enhance our processes and
contribute to our improving overhead ratio. We believe the combined
organization is well-positioned to continue to gain market share in
the communities we serve while at the same time improving the
customer experience."
Jeffrey J. Deuel, President and
Chief Executive Officer of Heritage Bank commented, "We are pleased
with our overall financial performance. We saw middle single-digit
annualized loan growth during the first quarter and our loan
pipelines remain strong. While we experienced a decline in
overall deposits in the quarter, it is not unusual to see seasonal
deposit run-off in the first quarter. Our relatively low
84.1% loan to deposit ratio provides us with the flexibility
necessary to successfully manage through the current competitive
rate environment."
Balance Sheet
The Company's total assets increased
$25.2 million, or 0.5%, to
$5.34 billion at March 31, 2019
from $5.32 billion at
December 31, 2018.
Investment securities available for sale increased $8.9 million, or 0.9%, to $985.0 million at March 31, 2019 from
$976.1 million at December 31,
2018 primarily as a result of a decrease in net unrealized losses
of $10.2 million due to a decrease in
interest rates during the first quarter that positively impacted
the fair value of our bond portfolio.
Total loans receivable, net increased $41.2 million, or 1.1%, to $3.66 billion at March 31, 2019 from
$3.62 billion at December 31,
2018. Total loans receivable, net, continued to be impacted by
slightly elevated prepayments during the first quarter 2019 in
addition to the seasonably low loan originations experienced during
the first quarter.
Prepaid expenses and other assets increased $24.5 million, or 24.9%, to $123.0 million at March 31, 2019 from
$98.5 million at December 31,
2018 primarily due to the adoption of Accounting Standards Update
2016-02, Leases, and the recognition of an operating lease
right of use asset. An offsetting operating lease right of use
liability was recorded in accrued expenses and other liabilities.
As of March 31, 2019, the right of
use asset was $28.4 million and the
related liability was $29.5
million.
Total deposits decreased $38.7
million, or 0.9%, to $4.39
billion at March 31, 2019 from $4.43 billion at December 31, 2018. The
decrease was due primarily to non-maturity deposits declining
$92.9 million, or 2.3%, offset
partially by an increase in certificates of deposit of $54.2 million, or 11.6%. The increase in
certificates of deposit was due primarily to an increase in
brokered certificates of deposit of $50.1
million during the quarter ended March 31, 2019 in response to the decrease in
non-maturity deposits. Non-maturity deposits as a percentage of
total deposits decreased to 88.1% as of March 31, 2019 from
89.5% as of December 31, 2018.
Federal Home Loan Bank advances were $25.0 million as of March
31, 2019 as compared to none at December 31, 2018.
Total stockholders' equity increased $17.5 million, or 2.3%, to $778.2 million at March 31, 2019 from
$760.7 million at December 31,
2018. Changes in stockholders' equity during the three months ended
March 31, 2019 were as follows:
|
Three Months
Ended
|
|
March 31,
2019
|
|
(In
thousands)
|
Balance, beginning of
period
|
$
|
760,723
|
|
Net
income
|
16,552
|
|
Accumulated other comprehensive gain
|
8,016
|
|
Dividends paid
|
(6,662)
|
|
ASU
2016-02 implementation
|
(399)
|
|
Other
|
(39)
|
|
Balance, end of
period
|
$
|
778,191
|
|
The Company and Heritage Bank continue to maintain capital
levels in excess of the applicable regulatory requirements for them
to be categorized as "well-capitalized". The Company had common
equity Tier 1 risk-based, Tier 1 leverage, Tier 1 risk-based and
total risk-based capital ratios of 11.8%, 10.7%, 12.2% and 13.0%,
respectively, at March 31, 2019, compared to 11.7%, 10.5%,
12.1% and 12.9%, respectively, at December 31, 2018.
Credit Quality
The allowance for loan losses increased
$1.1 million, or 3.2%, to
$36.2 million at March 31, 2019
from $35.0 million at
December 31, 2018. The increase was due to provision for loan
losses of $920,000 recorded during
the quarter ended March 31, 2019 and net recoveries of
$190,000 recognized during the same
period.
Nonperforming loans to loans receivable, net, increased to 0.47%
at March 31, 2019 from 0.37% at December 31, 2018 due
primarily to an increase in nonaccrual loans of $3.8 million, or 27.4%, to $17.5 million at March 31, 2019 from
$13.7 million at December 31,
2018. The increase was primarily related to the addition of two
commercial lending relationships totaling $5.1 million which showed increased signs of cash
flow deterioration. Management has allocated a specific
reserve totaling $781,000 for these
two credit relationships.
Changes in nonaccrual loans during the periods indicated were as
follows:
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
|
(In
thousands)
|
Nonaccrual
loans
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
13,703
|
|
|
$
|
14,780
|
|
|
$
|
10,703
|
|
Addition
of previously classified pass graded loans
|
—
|
|
|
96
|
|
|
4,066
|
|
Addition of previously
classified potential problem loans
|
6,189
|
|
|
983
|
|
|
2,324
|
|
Addition
of previously classified TDR loans
|
—
|
|
|
786
|
|
|
—
|
|
Net
principal payments
|
(2,392)
|
|
|
(2,639)
|
|
|
(1,365)
|
|
Charge-offs
|
(39)
|
|
|
(303)
|
|
|
—
|
|
Balance, end of
period
|
$
|
17,461
|
|
|
$
|
13,703
|
|
|
$
|
15,728
|
|
The allowance for loan losses to nonperforming loans was 207.04%
at March 31, 2019 compared to 255.73% at the linked-quarter
ended December 31, 2018. Nonperforming assets increased to
0.36% of total assets at March 31, 2019 compared to 0.30% of
total assets at December 31, 2018. The change from prior
periods in both ratios is due primarily to the increase in
nonaccrual loans discussed above.
Potential problem loans decreased $7.2
million, or 7.1%, to $94.1
million at March 31, 2019 compared to $101.3 million at December 31, 2018. The
activity for the quarter ended March 31,
2019 includes loans paid in full of $4.9 million, and the significant pay down of two
commercial lines of credit totaling $3.2
million, offset partially by the addition of a non-owner
occupied commercial loan of $3.0
million.
Changes in potential problem loans during the periods indicated
were as follows:
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
|
(In
thousands)
|
Potential problem
loans
|
|
Balance, beginning of
period
|
$
|
101,349
|
|
|
$
|
105,742
|
|
|
$
|
83,543
|
|
Addition of previously
classified pass graded loans
|
9,766
|
|
|
14,562
|
|
|
25,126
|
|
Upgrades
to pass graded loan status
|
—
|
|
|
(1,473)
|
|
|
(3,636)
|
|
Net
principal payments
|
(13,512)
|
|
|
(7,654)
|
|
|
(9,232)
|
|
Transfers of loans to
nonaccrual and TDR status
|
(3,300)
|
|
|
(9,727)
|
|
|
(2,403)
|
|
Charge-offs
|
(187)
|
|
|
(101)
|
|
|
(145)
|
|
Balance, end of
period
|
$
|
94,116
|
|
|
$
|
101,349
|
|
|
$
|
93,253
|
|
The allowance for loan losses to loans receivable, net,
increased to 0.98% at March 31, 2019 from 0.96% at
December 31, 2018. Included in the carrying value of loans are
net discounts on loans purchased in mergers and acquisitions which
may reduce the need for an allowance for loan losses on these loans
because they are carried at an amount below the outstanding
principal balance. The remaining net discount on purchased loans
was $11.2 million at March 31,
2019 compared to $11.8 million at
December 31, 2018. The Company believes that its allowance for
loan losses is appropriate to provide for probable incurred credit
losses based on an evaluation of known and inherent risks in the
loan portfolio at March 31, 2019.
Net recoveries were $190,000 for
the quarter ended March 31, 2019 compared to $23,000 for the same quarter in 2018 and net
charge-offs of $595,000 for the
linked-quarter ended December 31, 2018. The net recoveries
recorded during the quarter ended March 31, 2019 was due
primarily to a recovery related to a residential construction loan
of $602,000 as a result of a
bankruptcy resolution, offset partially by smaller charge-off
balances on a large volume of consumer loans.
Operating Results
Net interest income increased
$9.0 million, or 22.0%, to
$49.8 million for the quarter ended
March 31, 2019 compared to $40.8
million for the same period in 2018 primarily due to an
increase in the yield and average balance of total loans
receivable, net as a result of our mergers with Premier Commercial
Bancorp and Puget Sound Bancorp, Inc. on July 2, 2018 and January
16, 2018, respectively ("Premier and Puget Mergers"). Net
interest income decreased $1.5
million, or 2.8%, from $51.3
million for the linked-quarter ended December 31, 2018
due mostly to a slight decrease in loan yield, primarily as a
result of lower incremental accretion on purchased loans, and an
increase in the cost of interest bearing deposits.
Net interest margin increased 22 basis points to 4.34% for the
quarter ended March 31, 2019 from 4.12% for the same period in
2018 and decreased three basis points from 4.37% for the
linked-quarter ended December 31, 2018 due to the same reasons
as described above for net interest income.
The loan yield, excluding incremental accretion on purchased
loans, increased 38 basis points to 5.08% for the quarter ended
March 31, 2019 compared to 4.70% for the quarter ended
March 31, 2018 and increased two basis points from 5.06% for
the linked-quarter ended December 31, 2018. The increases in
loan yield, excluding incremental accretion of purchased loans,
from all prior periods was due to a combination of higher
contractual loan rates as a result of the increasing interest rate
environment as well as an increase in loan yields from the loans
acquired in the Premier and Puget Mergers as compared to legacy
Heritage loans during 2018. The incremental accretion and the
impact to loan yield will change during any period based on the
volume of prepayments, but it is expected to decrease over time as
the balance of the purchased loans decreases.
The following table presents the net interest margin, loan yield
and the effect of the incremental accretion on purchased loans on
these ratios for the periods presented below:
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
|
(Dollars in
thousands)
|
Yield non-GAAP
reconciliation: (2)
|
Net interest margin
(GAAP)
|
4.34
|
%
|
|
4.37
|
%
|
|
4.12
|
%
|
Exclude impact on net
interest margin from incremental accretion on purchased
loans(1)
|
0.12
|
%
|
|
0.15
|
%
|
|
0.16
|
%
|
Net interest margin,
excluding incremental accretion on purchased loans
(non-GAAP)(1)
|
4.22
|
%
|
|
4.22
|
%
|
|
3.96
|
%
|
|
|
|
|
|
|
Loan yield
(GAAP)
|
5.23
|
%
|
|
5.25
|
%
|
|
4.91
|
%
|
Exclude impact on loan
yield from incremental accretion on purchased
loans(1)
|
0.15
|
%
|
|
0.19
|
%
|
|
0.21
|
%
|
Loan yield, excluding
incremental accretion on purchased loans
(non-GAAP)(1)
|
5.08
|
%
|
|
5.06
|
%
|
|
4.70
|
%
|
|
|
|
|
|
|
Incremental accretion
on purchased loans(1)
|
$
|
1,373
|
|
|
$
|
1,703
|
|
|
$
|
1,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
As of the date of
completion of each merger and acquisition transaction, purchased
loans were recorded at their estimated fair value, including our
estimate of future expected cash flows until the ultimate
resolution of these credits. The difference between the contractual
loan balance and the fair value represents the purchased discount.
The purchased discount is accreted into income over the estimated
remaining life of the loan or pool of loans, based upon results of
the quarterly cash flow re-estimation. The incremental accretion
income represents the amount of income recorded on the purchased
loans in excess of the contractual stated interest rate in the
individual loan notes.
|
(2)
|
See Non-GAAP
Financial Measures section herein.
|
In addition to loan yield, also impacting net interest margin
were increases in the yields on investment securities due primarily
to higher interest rates on new investment purchases compared to
the interest rates of maturing investments. The yields on the
aggregate investment portfolio increased 40 basis points to 2.83%
for the quarter ended March 31, 2019 compared to 2.43% for the
quarter ended March 31, 2018 and increased 13 basis points
from 2.70% for the linked-quarter ended December 31, 2018.
The total cost of deposits increased 12 basis points to 0.33%
during the quarter ended March 31, 2019 compared to 0.21%
during the same quarter in 2018 and increased four basis points
from 0.29% during the linked-quarter ended December 31,
2018.
Donald J. Hinson, Executive Vice
President and Chief Financial Officer, commented, "Due to a decline
in incremental accretion on purchase loans, net interest margin
declined from the prior quarter. Our pre-accretion net interest
margin was unchanged at 4.22% as a result of a four basis point
increase in the total cost of deposits offsetting yield increases
in both the loan and investment portfolios. The cost of deposits
increased at a higher pace than recent quarters due to a decrease
in noninterest bearing deposits and the issuance of certificates of
deposits to offset the decline in balances of other deposit
categories during the quarter. The current shape of the yield curve
will impact our ability to continue to increase the pre-accretion
net interest margin as has occurred over the past several
quarters."
The provision for loan losses decreased $232,000, or 20.1%, to $920,000 for the quarter ended March 31,
2019 compared to $1.2 million for the
quarter ended March 31, 2018 and decreased $242,000, or 20.8%, from the linked-quarter ended
December 31, 2018. The amount of provision for loan losses was
necessary to increase the allowance for loan losses to an amount
that management determined to be appropriate at March 31, 2019
based on the use of a consistent methodology. The decrease in the
provision for loan losses was primarily as a result of net
recoveries recognized during the quarter.
Noninterest income decreased $140,000, or 1.9%, to $7.4
million for the quarter ended March 31, 2019 compared
to $7.5 million for the same period
in 2018 primarily due to a decrease in gain on sale of loans due to
lower mortgage origination volume and the Company's decision to
continue to portfolio originated Small Business Administration
("SBA") loans amidst a lower gain environment. Noninterest income
decreased $1.1 million, or 12.5%
from the linked-quarter ended December 31, 2018
primarily due to a gain on sale of building of $413,000 recognized during the fourth quarter of
2018 in addition to lower service charges recognized during the
first quarter 2019 primarily related to seasonal decreases.
Noninterest expense decreased $222,000, or 0.6%, to $36.5 million for the quarters ended
March 31, 2019 compared to $36.7
million for the same period in 2018. Acquisition-related
expenses incurred as a result of the Premier and Puget Mergers were
approximately $4.8 million during the
quarter ended March 31, 2018, of which $2.8 million were due to compensation and
employee benefits. Acquisition-related costs of $132,000 were incurred during the quarter ended
March 31, 2019 primarily related to compensation and employee
benefits. Without the effects of the acquisition-related expenses
the Company incurred an increase in compensation and employee
benefits due to additional employees, and an increase in occupancy
and equipment expense primarily due to additional rent expense.
Noninterest expense decreased $749,000, or 2.0%, from $37.3 million for the linked-quarter ended
December 31, 2018. Acquisition-related expenses incurred as a
result of the Premier and Puget Mergers were approximately
$1.3 million during the quarter ended
December 31, 2018. The decrease in
acquisition-related expenses was partially offset by higher
marketing expense due to the timing of contributions to community
sponsorships.
The ratio of noninterest expense to average total assets
(annualized) decreased to 2.79% for the quarter ended
March 31, 2019 compared to 3.27% for the same period in 2018
primarily due to acquisition-related expenses recognized in 2018.
The ratio increased from 2.78% for linked-quarter ended
December 31, 2018 primarily due to slightly lower average
total assets.
Income tax expense was $3.2
million for the quarter ended March 31, 2019 compared
to $1.4 million for the quarter ended
March 31, 2018 and $4.7 million
for the linked-quarter ended December 31, 2018. The effective
tax rate increased to 16.3% for the quarter ended March 31,
2019 compared to 13.3% for the comparable quarter in 2018 primarily
due to a decrease in tax exempt securities, impacts of stock-based
compensation activity, and an increased Oregon presence. The effective tax rate
decreased from 22.0% for the linked-quarter ended December 31,
2018 due to a change in the estimated current tax benefits from
certain low income housing tax credit projects in the amount of
$898,000 recorded during the quarter
ended December 31, 2018. Although
long-term tax benefits from the projects are still expected to
occur, the timing of some of the benefits was extended to future
periods.
Dividends
On April 24, 2019, the Company's Board
of Directors declared a quarterly cash dividend of $0.18 per common share. The dividend is payable
on May 22, 2019 to shareholders of record as of the close of
business on May 8, 2019.
Earnings Conference Call
The Company will hold a
telephone conference call to discuss this earnings release on
April 25, 2019 at 11:00 a.m. Pacific
time. To access the call, please dial (800) 288-8961 a few
minutes prior to 11:00 a.m. Pacific
time. The call will be available for replay through
May 9, 2019, by dialing (800)
475-6701 -- access code 466040.
About Heritage Financial
Heritage Financial
Corporation is an Olympia-based
bank holding company with Heritage Bank, a full-service commercial
bank, as its sole wholly-owned banking subsidiary. Heritage Bank
has a branching network of 63 banking offices in Washington and Oregon. Heritage Bank does business under the
Whidbey Island Bank name on Whidbey Island. Heritage's stock is
traded on the NASDAQ Global Select Market under the symbol "HFWA".
More information about Heritage Financial Corporation can be found
on its website at www.hf-wa.com and more information about Heritage
Bank can be found on its website at www.heritagebanknw.com.
Non-GAAP Financial Measures
This news
release contains certain non-GAAP (Generally Accepted Accounting
Principles) financial measures in addition to results presented in
accordance with GAAP. Management has presented these non-GAAP
financial measures in this earnings release because it believes
that they provide useful and comparative information to assess
trends in the Company's capital reflected in the current quarter
and year-to-date results and facilitate comparison of our
performance with the performance of our peers. Where applicable,
the Company has also presented comparable earnings information
using GAAP financial measures. These non-GAAP measures have
inherent limitations, are not required to be uniformly applied and
are not audited. They should not be considered in isolation or as a
substitute for total stockholders' equity or operating results
determined in accordance with GAAP. These non-GAAP measures may not
be comparable to similarly titled measures reported by other
companies. Reconciliations of the GAAP and non-GAAP financial
measures are presented below:
|
March
31,
2019
|
|
December
31,
2018
|
|
March
31,
2018
|
|
(Dollars in
thousands, except per share amounts)
|
Tangible common
shareholders' equity and tangible assets:
|
Stockholders' equity
(GAAP)
|
$
|
778,191
|
|
|
$
|
760,723
|
|
|
$
|
634,708
|
|
Exclude goodwill and
other intangible assets
|
260,528
|
|
|
261,553
|
|
|
204,112
|
|
Tangible common
stockholders' equity (non-GAAP)
|
$
|
517,663
|
|
|
$
|
499,170
|
|
|
$
|
430,596
|
|
|
|
|
|
|
|
Total assets
(GAAP)
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
|
$
|
4,676,250
|
|
Exclude goodwill and
other intangible assets
|
260,528
|
|
|
261,553
|
|
|
204,112
|
|
Tangible assets
(non-GAAP)
|
$
|
5,081,571
|
|
|
$
|
5,055,374
|
|
|
$
|
4,472,138
|
|
|
|
|
|
|
|
Common equity to
assets (GAAP)
|
14.6
|
%
|
|
14.3
|
%
|
|
13.6
|
%
|
Tangible common
equity to tangible assets (non-GAAP)
|
10.2
|
%
|
|
9.9
|
%
|
|
9.6
|
%
|
|
|
|
|
|
|
Common stock shares
outstanding
|
36,899,138
|
|
|
36,874,055
|
|
|
34,018,280
|
|
Book value per common
share (GAAP)
|
$
|
21.09
|
|
|
$
|
20.63
|
|
|
$
|
18.66
|
|
Tangible book value
per common share (non-GAAP)
|
$
|
14.03
|
|
|
$
|
13.54
|
|
|
$
|
12.66
|
|
|
Three Months
Ended
|
|
March 31, 2019
|
|
December
31, 2018
|
|
March 31, 2018
|
|
(Dollars in
thousands, except per share amounts)
|
Adjusted return on
average tangible common stockholders' equity:
|
Net income
(GAAP)
|
16,552
|
|
|
$
|
16,609
|
|
|
$
|
9,087
|
|
Exclude
acquisition-related expenses
|
132
|
|
|
1,301
|
|
|
4,808
|
|
Exclude amortization
of intangible assets
|
1,025
|
|
|
1,114
|
|
|
795
|
|
Exclude tax effect of
adjustments
|
(243)
|
|
|
(507)
|
|
|
(1,177)
|
|
Adjusted tangible net
income (non-GAAP)
|
$
|
17,466
|
|
|
$
|
18,517
|
|
|
$
|
13,513
|
|
|
|
|
|
|
|
Average stockholders'
equity (GAAP)
|
$
|
766,451
|
|
|
$
|
750,165
|
|
|
$
|
614,974
|
|
Exclude average
intangible assets
|
(261,194)
|
|
|
(262,177)
|
|
|
(191,335)
|
|
Average tangible
common stockholders' equity (non-GAAP)
|
$
|
505,257
|
|
|
$
|
487,988
|
|
|
$
|
423,639
|
|
|
|
|
|
|
|
Return on average
common equity, annualized (GAAP)
|
8.76
|
%
|
|
8.78
|
%
|
|
5.99
|
%
|
Return on average
tangible common equity, annualized (non-GAAP)
|
13.29
|
%
|
|
13.50
|
%
|
|
8.70
|
%
|
Adjusted return on
average tangible common equity, annualized (non-GAAP)
|
14.02
|
%
|
|
15.05
|
%
|
|
12.94
|
%
|
|
Three Months
Ended
|
|
March
31, 2019
|
|
December
31, 2018
|
|
March 31,
2018
|
|
(Dollars in
thousands, except per share amounts)
|
Earnings from core
operations:
|
Net income
(GAAP)
|
$
|
16,552
|
|
|
$
|
16,609
|
|
|
$
|
9,087
|
|
Exclude
acquisition-related expenses
|
132
|
|
|
1,301
|
|
|
4,808
|
|
Exclude tax effect of
adjustments
|
(28)
|
|
|
(273)
|
|
|
(1,010)
|
|
Adjusted net income
(non-GAAP)
|
$
|
16,656
|
|
|
$
|
17,637
|
|
|
$
|
12,885
|
|
Exclude dividends and
undistributed earnings allocated to participating
securities
|
(52)
|
|
|
(69)
|
|
|
(51)
|
|
Adjusted net income
allocated to common shareholders (non-GAAP)
|
$
|
16,604
|
|
|
$
|
17,568
|
|
|
$
|
12,834
|
|
|
|
|
|
|
|
Diluted weighted
average common shares
|
37,010,640
|
|
|
36,998,880
|
|
|
33,348,102
|
|
Diluted earnings per
share (GAAP)
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
$
|
0.27
|
|
Adjusted diluted
earnings per share (non-GAAP)
|
$
|
0.45
|
|
|
$
|
0.47
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
Average
assets
|
$
|
5,317,325
|
|
|
$
|
5,325,366
|
|
|
$
|
4,553,585
|
|
|
|
|
|
|
|
Return on average
assets, annualized (GAAP)
|
1.26
|
%
|
|
1.24
|
%
|
|
0.81
|
%
|
Adjusted return on
average assets, annualized (non-GAAP)
|
1.27
|
%
|
|
1.31
|
%
|
|
1.15
|
%
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
|
(Dollars in
thousands, except per share amounts)
|
Adjusted
noninterest expense:
|
Noninterest expense
(GAAP)
|
$
|
36,525
|
|
|
$
|
37,274
|
|
|
$
|
36,747
|
|
Exclude
acquisition-related expenses
|
(132)
|
|
|
(1,301)
|
|
|
(4,808)
|
|
Exclude amortization
of intangible assets
|
(1,025)
|
|
|
(1,114)
|
|
|
(795)
|
|
Adjusted noninterest
expense (non-GAAP)
|
$
|
35,368
|
|
|
$
|
34,859
|
|
|
$
|
31,144
|
|
|
|
|
|
|
|
Average
Assets
|
$
|
5,317,325
|
|
|
$
|
5,325,366
|
|
|
$
|
4,553,585
|
|
|
|
|
|
|
|
Noninterest expense
to average assets, annualized (GAAP)
|
2.79
|
%
|
|
2.78
|
%
|
|
3.27
|
%
|
Adjusted noninterest
expense to average assets, annualized (non-GAAP)
|
2.70
|
%
|
|
2.60
|
%
|
|
2.77
|
%
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
|
(Dollars in
thousands)
|
Net interest
income and interest and fees on loans:
|
Net interest income
(GAAP)
|
$
|
49,809
|
|
|
$
|
51,270
|
|
|
$
|
40,837
|
|
Exclude incremental
accretion on purchased loans
|
1,373
|
|
|
1,703
|
|
|
1,632
|
|
Adjusted net interest
income (non-GAAP)
|
$
|
48,436
|
|
|
$
|
49,567
|
|
|
$
|
39,205
|
|
|
|
|
|
|
|
Average total
interest earning assets, net
|
$
|
4,649,259
|
|
|
$
|
4,653,215
|
|
|
$
|
4,018,720
|
|
Net interest margin,
annualized (GAAP)
|
4.34
|
%
|
|
4.37
|
%
|
|
4.12
|
%
|
Net interest margin,
excluding incremental accretion on purchased loans, annualized
(non-GAAP)
|
4.22
|
%
|
|
4.22
|
%
|
|
3.96
|
%
|
|
|
|
|
|
|
Interest and fees on
loans (GAAP)
|
$
|
46,699
|
|
|
$
|
47,865
|
|
|
$
|
38,159
|
|
Exclude incremental
accretion on purchased loans
|
1,373
|
|
|
1,703
|
|
|
1,632
|
|
Adjusted interest and
fees on loans (non-GAAP)
|
$
|
45,326
|
|
|
$
|
46,162
|
|
|
$
|
36,527
|
|
|
|
|
|
|
|
Average total loans
receivable, net
|
$
|
3,622,494
|
|
|
$
|
3,615,362
|
|
|
$
|
3,150,869
|
|
Loan yield,
annualized (GAAP)
|
5.23
|
%
|
|
5.25
|
%
|
|
4.91
|
%
|
Loan yield, excluding
incremental accretion on purchased loans, annualized
(non-GAAP)
|
5.08
|
%
|
|
5.06
|
%
|
|
4.70
|
%
|
Forward-Looking Statements
This press release includes "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements often include words such as "believe,"
"expect," "anticipate," "estimate," and "intend" or future or
conditional verbs such as "will," "would," "should," "could," or
"may." Forward-looking statements are not historical facts but
instead represent management's current expectations and forecasts
regarding future events, many of which are inherently uncertain and
outside of our control. Actual results may differ, possibly
materially, from those currently expected or projected in these
forward-looking statements. Factors that could cause our actual
results to differ materially from those described in the
forward-looking statements, include changes in the interest rate
environment; changes in general economic conditions and conditions
within the securities markets; legislative and regulatory changes;
and other factors described in Heritage's latest annual Report on
Form 10-K and Quarterly Reports on Form 10-Q and other documents
filed with or furnished to the Securities and Exchange
Commission-which are available on our website at
www.heritagebanknw.com and on the SEC's website at www.sec.gov. The
Company cautions readers not to place undue reliance on any
forward-looking statements. Moreover, any of the forward-looking
statements that we make in this press release or the documents we
file with or furnish to the SEC are based only on information then
actually known to the Company and upon management's beliefs and
assumptions at the time they are made which may turn out to be
wrong because of inaccurate assumptions we might make, because of
the factors described above or because of other factors that we
cannot foresee. The Company does not undertake and specifically
disclaims any obligation to revise any forward-looking statements
to reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements. These risks could
cause our actual results for 2019 and beyond to differ materially
from those expressed in any forward-looking statements by, or on
behalf of, us, and could negatively affect the Company's operating
and stock price performance.
HERITAGE FINANCIAL
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
|
(In thousands,
except shares)
|
|
|
March 31,
2019
|
|
December 31,
2018
|
Assets
|
|
|
|
Cash on hand and in
banks
|
$
|
71,252
|
|
|
$
|
92,704
|
|
Interest earning
deposits
|
39,918
|
|
|
69,206
|
|
Cash and cash
equivalents
|
111,170
|
|
|
161,910
|
|
Investment securities
available for sale
|
985,009
|
|
|
976,095
|
|
Loans held for
sale
|
2,956
|
|
|
1,555
|
|
Loans receivable,
net
|
3,696,431
|
|
|
3,654,160
|
|
Allowance for loan
losses
|
(36,152)
|
|
|
(35,042)
|
|
Total loans
receivable, net
|
3,660,279
|
|
|
3,619,118
|
|
Other real estate
owned
|
1,904
|
|
|
1,983
|
|
Premises and
equipment, net
|
80,130
|
|
|
81,100
|
|
Federal Home Loan
Bank stock, at cost
|
7,377
|
|
|
6,076
|
|
Bank owned life
insurance
|
94,099
|
|
|
93,612
|
|
Accrued interest
receivable
|
15,621
|
|
|
15,403
|
|
Prepaid expenses and
other assets
|
123,026
|
|
|
98,522
|
|
Other intangible
assets, net
|
19,589
|
|
|
20,614
|
|
Goodwill
|
240,939
|
|
|
240,939
|
|
Total
assets
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Deposits
|
$
|
4,393,715
|
|
|
$
|
4,432,402
|
|
Federal Home Loan
Bank advances
|
25,000
|
|
|
—
|
|
Junior subordinated
debentures
|
20,375
|
|
|
20,302
|
|
Securities sold under
agreement to repurchase
|
24,923
|
|
|
31,487
|
|
Accrued expenses and
other liabilities
|
99,895
|
|
|
72,013
|
|
Total
liabilities
|
4,563,908
|
|
|
4,556,204
|
|
|
|
|
|
Common
stock
|
591,767
|
|
|
591,806
|
|
Retained
earnings
|
185,863
|
|
|
176,372
|
|
Accumulated other
comprehensive gain (loss), net
|
561
|
|
|
(7,455)
|
|
Total stockholders'
equity
|
778,191
|
|
|
760,723
|
|
Total liabilities and
stockholders' equity
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
|
|
|
|
Common stock shares
outstanding
|
36,899,138
|
|
|
36,874,055
|
|
HERITAGE FINANCIAL
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF
INCOME (Unaudited)
|
(Dollar amounts in
thousands, except per share amounts)
|
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Interest
income:
|
|
|
|
|
|
Interest and fees on
loans
|
$
|
46,699
|
|
|
$
|
47,865
|
|
|
$
|
38,159
|
|
Taxable interest on
investment securities
|
5,823
|
|
|
5,343
|
|
|
3,529
|
|
Nontaxable interest on
investment securities
|
950
|
|
|
1,003
|
|
|
1,341
|
|
Interest on other
interest earning assets
|
356
|
|
|
654
|
|
|
218
|
|
Total interest
income
|
53,828
|
|
|
54,865
|
|
|
43,247
|
|
Interest
expense:
|
|
|
|
|
|
Deposits
|
3,603
|
|
|
3,228
|
|
|
1,960
|
|
Junior subordinated
debentures
|
354
|
|
|
335
|
|
|
283
|
|
Other
borrowings
|
62
|
|
|
32
|
|
|
167
|
|
Total interest
expense
|
4,019
|
|
|
3,595
|
|
|
2,410
|
|
Net interest
income
|
49,809
|
|
|
51,270
|
|
|
40,837
|
|
Provision for loan
losses
|
920
|
|
|
1,162
|
|
|
1,152
|
|
Net interest income
after provision for loan losses
|
48,889
|
|
|
50,108
|
|
|
39,685
|
|
Noninterest
income:
|
|
|
|
|
|
Service charges and
other fees
|
4,485
|
|
|
4,852
|
|
|
4,543
|
|
Gain on sale of
investment securities, net
|
15
|
|
|
2
|
|
|
35
|
|
Gain on sale of loans,
net
|
252
|
|
|
473
|
|
|
874
|
|
Interest rate swap
fees
|
—
|
|
|
204
|
|
|
51
|
|
Other
income
|
2,656
|
|
|
2,933
|
|
|
2,045
|
|
Total noninterest
income
|
7,408
|
|
|
8,464
|
|
|
7,548
|
|
Noninterest
expense:
|
|
|
|
|
|
Compensation and
employee benefits
|
21,914
|
|
|
22,338
|
|
|
21,367
|
|
Occupancy and
equipment
|
5,458
|
|
|
5,322
|
|
|
4,627
|
|
Data
processing
|
2,173
|
|
|
2,433
|
|
|
2,605
|
|
Marketing
|
1,098
|
|
|
721
|
|
|
808
|
|
Professional
services
|
1,173
|
|
|
1,185
|
|
|
2,837
|
|
State/municipal
business and use taxes
|
798
|
|
|
804
|
|
|
688
|
|
Federal deposit
insurance premium
|
285
|
|
|
375
|
|
|
355
|
|
Other real estate
owned, net
|
86
|
|
|
88
|
|
|
—
|
|
Amortization of
intangible assets
|
1,025
|
|
|
1,114
|
|
|
795
|
|
Other
expense
|
2,515
|
|
|
2,894
|
|
|
2,665
|
|
Total noninterest
expense
|
36,525
|
|
|
37,274
|
|
|
36,747
|
|
Income before income
taxes
|
19,772
|
|
|
21,298
|
|
|
10,486
|
|
Income tax
expense
|
3,220
|
|
|
4,689
|
|
|
1,399
|
|
Net income
|
$
|
16,552
|
|
|
$
|
16,609
|
|
|
$
|
9,087
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
$
|
0.27
|
|
Diluted earnings per
common share
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
$
|
0.27
|
|
Dividends declared
per common share
|
$
|
0.18
|
|
|
$
|
0.27
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
Average number of
basic common shares outstanding
|
36,825,532
|
|
|
36,806,946
|
|
|
33,205,546
|
|
Average number of
diluted common shares outstanding
|
37,010,640
|
|
|
36,998,880
|
|
|
33,348,102
|
|
HERITAGE FINANCIAL
CORPORATION
|
FINANCIAL
STATISTICS (Unaudited)
|
(Dollar amounts in
thousands, except per share amounts)
|
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
December
31,
2018
|
|
March 31,
2018
|
Performance
Ratios:
|
|
|
|
|
|
Efficiency
ratio
|
63.84
|
%
|
|
62.40
|
%
|
|
75.95
|
%
|
Noninterest expense
to average assets, annualized
|
2.79
|
%
|
|
2.78
|
%
|
|
3.27
|
%
|
Return on average
assets, annualized
|
1.26
|
%
|
|
1.24
|
%
|
|
0.81
|
%
|
Return on average
equity, annualized
|
8.76
|
%
|
|
8.78
|
%
|
|
5.99
|
%
|
Return on average
tangible common equity, annualized
|
13.29
|
%
|
|
13.50
|
%
|
|
8.70
|
%
|
Net (recoveries)
charge-offs on loans to average loans, annualized
|
(0.02)
|
%
|
|
0.07
|
%
|
|
—
|
%
|
|
As of Period
End
|
|
March 31,
2019
|
|
December
31,
2018
|
Financial
Measures:
|
|
|
|
Book value per common
share
|
$
|
21.09
|
|
|
$
|
20.63
|
|
Tangible book value
per common share
|
$
|
14.03
|
|
|
$
|
13.54
|
|
Stockholders' equity
to total assets
|
14.6
|
%
|
|
14.3
|
%
|
Tangible common
equity to tangible assets
|
10.2
|
%
|
|
9.9
|
%
|
Common equity Tier 1
capital to risk-weighted assets
|
11.8
|
%
|
|
11.7
|
%
|
Tier 1 leverage
capital to average quarterly assets
|
10.7
|
%
|
|
10.5
|
%
|
Tier 1 capital to
risk-weighted assets
|
12.2
|
%
|
|
12.1
|
%
|
Total capital to
risk-weighted assets
|
13.0
|
%
|
|
12.9
|
%
|
Loans to deposits
ratio (1)
|
84.1
|
%
|
|
82.4
|
%
|
Deposits per
branch
|
$
|
69,742
|
|
|
$
|
69,256
|
|
|
|
|
|
|
|
|
|
(1)
|
Loans receivable, net
of deferred costs divided by deposits
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Allowance for Loan
Losses:
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
35,042
|
|
|
$
|
34,475
|
|
|
$
|
32,086
|
|
Provision for loan
losses
|
920
|
|
|
1,162
|
|
|
1,152
|
|
Net recoveries
(charge-offs):
|
|
|
|
|
|
Commercial
business
|
56
|
|
|
(259)
|
|
|
420
|
|
One-to-four family
residential
|
(15)
|
|
|
(15)
|
|
|
—
|
|
Real estate
construction and land development
|
618
|
|
|
6
|
|
|
—
|
|
Consumer
|
(469)
|
|
|
(327)
|
|
|
(397)
|
|
Total net recoveries
(charge-offs)
|
190
|
|
|
(595)
|
|
|
23
|
|
Balance, end of
period
|
$
|
36,152
|
|
|
$
|
35,042
|
|
|
$
|
33,261
|
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Other Real Estate
Owned:
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
1,983
|
|
|
$
|
2,032
|
|
|
$
|
—
|
|
Proceeds from
dispositions
|
(79)
|
|
|
—
|
|
|
—
|
|
Valuation
adjustments
|
—
|
|
|
(49)
|
|
|
—
|
|
Balance, end of
period
|
$
|
1,904
|
|
|
$
|
1,983
|
|
|
$
|
—
|
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Gain on Sale of
Loans, net:
|
|
|
|
|
|
Mortgage
loans
|
$
|
252
|
|
|
$
|
473
|
|
|
$
|
652
|
|
SBA loans
|
—
|
|
|
—
|
|
|
222
|
|
Total gain on sale of
loans, net
|
$
|
252
|
|
|
$
|
473
|
|
|
$
|
874
|
|
|
As of Period
End
|
|
March 31,
2019
|
|
December 31,
2018
|
Nonperforming
Assets:
|
|
|
|
Nonaccrual loans by
type:
|
|
|
|
Commercial
business
|
$
|
16,304
|
|
|
$
|
12,564
|
|
One-to-four family
residential
|
68
|
|
|
71
|
|
Real estate
construction and land development
|
923
|
|
|
899
|
|
Consumer
|
166
|
|
|
169
|
|
Total nonaccrual
loans(1)
|
17,461
|
|
|
13,703
|
|
Other real estate
owned
|
1,904
|
|
|
1,983
|
|
Nonperforming
assets
|
$
|
19,365
|
|
|
$
|
15,686
|
|
|
|
|
|
Restructured
performing loans
|
$
|
19,986
|
|
|
$
|
22,736
|
|
Accruing loans past
due 90 days or more
|
—
|
|
|
—
|
|
Potential problem
loans(2)
|
94,116
|
|
|
101,349
|
|
Allowance for loan
losses to:
|
|
|
|
Loans receivable,
net
|
0.98
|
%
|
|
0.96
|
%
|
Nonaccrual
loans
|
207.04
|
%
|
|
255.73
|
%
|
Nonperforming loans
to loans receivable, net
|
0.47
|
%
|
|
0.37
|
%
|
Nonperforming assets
to total assets
|
0.36
|
%
|
|
0.30
|
%
|
|
|
|
|
|
|
(1)
|
At March 31,
2019 and December 31, 2018, $5.5 million and $6.9 million of
nonaccrual loans were also considered troubled debt restructured
loans, respectively.
|
(2)
|
Potential
problem loans are those loans that are currently accruing interest
and are not considered impaired, but which are being monitored
because the financial information of the borrower causes the
Company concern as to their ability to comply with their loan
repayment terms.
|
|
As of Period
End
|
|
March 31,
2019
|
|
December 31,
2018
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
Loan
Composition
|
|
|
|
|
|
|
|
Commercial
business:
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$
|
838,403
|
|
|
22.7
|
%
|
|
$
|
853,606
|
|
|
23.4
|
%
|
Owner-occupied
commercial real estate
|
785,316
|
|
|
21.2
|
|
|
779,814
|
|
|
21.3
|
|
Non-owner occupied
commercial real estate
|
1,335,596
|
|
|
36.1
|
|
|
1,304,463
|
|
|
35.7
|
|
Total commercial
business
|
2,959,315
|
|
|
80.0
|
|
|
2,937,883
|
|
|
80.4
|
|
One-to-four family
residential
|
106,502
|
|
|
2.9
|
|
|
101,763
|
|
|
2.8
|
|
Real estate
construction and land development:
|
|
|
|
|
|
|
|
One-to-four family
residential
|
110,699
|
|
|
3.0
|
|
|
102,730
|
|
|
2.8
|
|
Five or more family
residential and commercial properties
|
126,379
|
|
|
3.4
|
|
|
112,730
|
|
|
3.1
|
|
Total real estate
construction and land development
|
237,078
|
|
|
6.4
|
|
|
215,460
|
|
|
5.9
|
|
Consumer
|
390,303
|
|
|
10.6
|
|
|
395,545
|
|
|
10.8
|
|
Gross loans
receivable
|
3,693,198
|
|
|
99.9
|
|
|
3,650,651
|
|
|
99.9
|
|
Deferred loan costs,
net
|
3,233
|
|
|
0.1
|
|
|
3,509
|
|
|
0.1
|
|
Loans receivable,
net
|
$
|
3,696,431
|
|
|
100.0
|
%
|
|
$
|
3,654,160
|
|
|
100.0
|
%
|
|
As of Period
End
|
|
March 31,
2019
|
|
December 31,
2018
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
Deposit
Composition
|
|
|
|
|
|
|
|
Noninterest bearing
demand deposits
|
$
|
1,338,675
|
|
|
30.5
|
%
|
|
$
|
1,362,268
|
|
|
30.7
|
%
|
Interest bearing
demand deposits
|
1,293,828
|
|
|
29.4
|
|
|
1,317,513
|
|
|
29.7
|
|
Money market
accounts
|
740,518
|
|
|
16.9
|
|
|
765,316
|
|
|
17.3
|
|
Savings
accounts
|
499,568
|
|
|
11.3
|
|
|
520,413
|
|
|
11.8
|
|
Total non-maturity
deposits
|
3,872,589
|
|
|
88.1
|
|
|
3,965,510
|
|
|
89.5
|
|
Certificates of
deposit
|
521,126
|
|
|
11.9
|
|
|
466,892
|
|
|
10.5
|
|
Total
deposits
|
$
|
4,393,715
|
|
|
100.0
|
%
|
|
$
|
4,432,402
|
|
|
100.0
|
%
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
|
Average
Balance
|
|
Interest Earned/ Paid
|
|
Average Yield/ Rate
(1)
|
|
Average
Balance
|
|
Interest Earned/ Paid
|
|
Average Yield/ Rate
(1)
|
|
Average
Balance
|
|
Interest Earned/ Paid
|
|
Average Yield/ Rate
(1)
|
Interest Earning
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
receivable, net (2) (3)
|
$
|
3,622,494
|
|
|
$
|
46,699
|
|
|
5.23
|
%
|
|
$
|
3,615,362
|
|
|
$
|
47,865
|
|
|
5.25
|
%
|
|
$
|
3,150,869
|
|
|
$
|
38,159
|
|
|
4.91
|
%
|
Taxable
securities
|
820,981
|
|
|
5,823
|
|
|
2.88
|
|
|
772,925
|
|
|
5,343
|
|
|
2.74
|
|
|
590,623
|
|
|
3,529
|
|
|
2.42
|
|
Nontaxable securities
(3)
|
149,825
|
|
|
950
|
|
|
2.57
|
|
|
160,626
|
|
|
1,003
|
|
|
2.48
|
|
|
223,631
|
|
|
1,341
|
|
|
2.43
|
|
Other interest
earning assets
|
55,959
|
|
|
356
|
|
|
2.58
|
|
|
104,302
|
|
|
654
|
|
|
2.49
|
|
|
53,597
|
|
|
218
|
|
|
1.65
|
|
Total interest earning
assets
|
4,649,259
|
|
|
53,828
|
|
|
4.70
|
%
|
|
4,653,215
|
|
|
54,865
|
|
|
4.68
|
%
|
|
4,018,720
|
|
|
43,247
|
|
|
4.36
|
%
|
Noninterest earning
assets
|
668,066
|
|
|
|
|
|
|
672,151
|
|
|
|
|
|
|
534,865
|
|
|
|
|
|
Total
assets
|
$
|
5,317,325
|
|
|
|
|
|
|
$
|
5,325,366
|
|
|
|
|
|
|
$
|
4,553,585
|
|
|
|
|
|
Interest Bearing
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of
deposit
|
$
|
502,153
|
|
|
$
|
1,440
|
|
|
1.16
|
|
|
$
|
496,903
|
|
|
$
|
1,218
|
|
|
0.97
|
|
|
$
|
423,569
|
|
|
$
|
760
|
|
|
0.73
|
|
Savings
accounts
|
507,670
|
|
|
674
|
|
|
0.54
|
|
|
516,620
|
|
|
613
|
|
|
0.47
|
|
|
506,158
|
|
|
416
|
|
|
0.33
|
|
Interest bearing
demand and money market accounts
|
2,051,046
|
|
|
1,489
|
|
|
0.29
|
|
|
2,074,138
|
|
|
1,397
|
|
|
0.27
|
|
|
1,745,795
|
|
|
784
|
|
|
0.18
|
|
Total interest bearing
deposits
|
3,060,869
|
|
|
3,603
|
|
|
0.48
|
|
|
3,087,661
|
|
|
3,228
|
|
|
0.41
|
|
|
2,675,522
|
|
|
1,960
|
|
|
0.30
|
|
Junior subordinated
debentures
|
20,328
|
|
|
354
|
|
|
7.06
|
|
|
20,255
|
|
|
335
|
|
|
6.56
|
|
|
20,035
|
|
|
283
|
|
|
5.73
|
|
Securities sold under
agreement to repurchase
|
33,055
|
|
|
47
|
|
|
0.58
|
|
|
34,046
|
|
|
29
|
|
|
0.34
|
|
|
30,265
|
|
|
17
|
|
|
0.23
|
|
Federal Home Loan
Bank advances and other borrowings
|
1,849
|
|
|
15
|
|
|
3.29
|
|
|
440
|
|
|
3
|
|
|
2.71
|
|
|
35,733
|
|
|
150
|
|
|
1.70
|
|
Total interest bearing
liabilities
|
3,116,101
|
|
|
4,019
|
|
|
0.52
|
|
|
3,142,402
|
|
|
3,595
|
|
|
0.45
|
|
|
2,761,555
|
|
|
2,410
|
|
|
0.35
|
|
Noninterest bearing
deposits
|
1,332,223
|
|
|
|
|
|
|
1,356,186
|
|
|
|
|
|
|
1,113,286
|
|
|
|
|
|
Other noninterest
bearing liabilities
|
102,550
|
|
|
|
|
|
|
76,613
|
|
|
|
|
|
|
63,770
|
|
|
|
|
|
Stockholders'
equity
|
766,451
|
|
|
|
|
|
|
750,165
|
|
|
|
|
|
|
614,974
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
5,317,325
|
|
|
|
|
|
|
$
|
5,325,366
|
|
|
|
|
|
|
$
|
4,553,585
|
|
|
|
|
|
Net interest
income
|
|
|
$
|
49,809
|
|
|
|
|
|
|
$
|
51,270
|
|
|
|
|
|
|
$
|
40,837
|
|
|
|
Net interest
spread
|
|
|
|
|
4.18
|
%
|
|
|
|
|
|
4.23
|
%
|
|
|
|
|
|
4.01
|
%
|
Net interest
margin
|
|
|
|
|
4.34
|
%
|
|
|
|
|
|
4.37
|
%
|
|
|
|
|
|
4.12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Annualized.
|
(2)
|
The average loan
balances presented in the table are net of allowances for loan
losses and include loans held for sale. Nonaccrual loans have been
included in the table as loans carrying a zero yield.
|
(3)
|
Yields on
tax-exempt securities and loans have not been stated on a
tax-equivalent basis.
|
HERITAGE FINANCIAL
CORPORATION
|
QUARTERLY
FINANCIAL STATISTICS (Unaudited)
|
(Dollar amounts in
thousands, except per share amounts)
|
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
September 30,
2018
|
|
June 30,
2018
|
|
March 31,
2018
|
Earnings:
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
49,809
|
|
|
$
|
51,270
|
|
|
$
|
51,096
|
|
|
$
|
43,743
|
|
|
$
|
40,837
|
|
Provision for loan
losses
|
920
|
|
|
1,162
|
|
|
1,065
|
|
|
1,750
|
|
|
1,152
|
|
Noninterest
income
|
7,408
|
|
|
8,464
|
|
|
8,080
|
|
|
7,573
|
|
|
7,548
|
|
Noninterest
expense
|
36,525
|
|
|
37,274
|
|
|
39,461
|
|
|
35,706
|
|
|
36,747
|
|
Net income
|
16,552
|
|
|
16,609
|
|
|
15,504
|
|
|
11,857
|
|
|
9,087
|
|
Basic earnings per
common share
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
$
|
0.42
|
|
|
$
|
0.35
|
|
|
$
|
0.27
|
|
Diluted earnings per
common share
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
$
|
0.42
|
|
|
$
|
0.35
|
|
|
$
|
0.27
|
|
Average
Balances:
|
|
|
|
|
|
|
|
|
|
Total loans
receivable, net
|
$
|
3,622,494
|
|
|
$
|
3,615,362
|
|
|
$
|
3,618,031
|
|
|
$
|
3,266,092
|
|
|
$
|
3,150,869
|
|
Investment
securities
|
970,806
|
|
|
933,551
|
|
|
883,919
|
|
|
839,196
|
|
|
814,254
|
|
Total interest
earning assets
|
4,649,259
|
|
|
4,653,215
|
|
|
4,596,734
|
|
|
4,156,310
|
|
|
4,018,720
|
|
Total
assets
|
5,317,325
|
|
|
5,325,366
|
|
|
5,278,565
|
|
|
4,726,719
|
|
|
4,553,585
|
|
Total interest
bearing deposits
|
3,060,869
|
|
|
3,087,661
|
|
|
3,075,720
|
|
|
2,727,056
|
|
|
2,675,522
|
|
Total noninterest
bearing deposits
|
1,332,223
|
|
|
1,356,186
|
|
|
1,314,203
|
|
|
1,175,331
|
|
|
1,113,286
|
|
Stockholders'
equity
|
766,451
|
|
|
750,165
|
|
|
744,389
|
|
|
636,735
|
|
|
614,974
|
|
Financial
Ratios:
|
|
|
|
|
|
|
|
|
|
Return on average
assets, annualized
|
1.26
|
%
|
|
1.24
|
%
|
|
1.17
|
%
|
|
1.01
|
%
|
|
0.81
|
%
|
Return on average
common equity, annualized
|
8.76
|
|
|
8.78
|
|
|
8.26
|
|
|
7.47
|
|
|
5.99
|
|
Return on average
tangible common equity, annualized
|
13.29
|
|
|
13.50
|
|
|
12.77
|
|
|
10.99
|
|
|
8.70
|
|
Efficiency
ratio
|
63.84
|
|
|
62.40
|
|
|
66.68
|
|
|
69.58
|
|
|
75.95
|
|
Noninterest expense
to average total assets, annualized
|
2.79
|
|
|
2.78
|
|
|
2.97
|
|
|
3.03
|
|
|
3.27
|
|
Net interest
margin
|
4.34
|
|
|
4.37
|
|
|
4.41
|
|
|
4.22
|
|
|
4.12
|
|
Net interest
spread
|
4.18
|
|
|
4.23
|
|
|
4.27
|
|
|
4.09
|
|
|
4.01
|
|
|
As of Period
End
or for the Three
Months Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Select Balance
Sheet:
|
|
|
|
|
|
Total
assets
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
|
$
|
4,676,250
|
|
Total loans
receivable, net
|
3,660,279
|
|
|
3,619,118
|
|
|
3,248,654
|
|
Investment
securities
|
985,009
|
|
|
976,095
|
|
|
821,567
|
|
Deposits
|
4,393,715
|
|
|
4,432,402
|
|
|
3,904,741
|
|
Noninterest bearing
demand deposits
|
1,338,675
|
|
|
1,362,268
|
|
|
1,178,202
|
|
Stockholders'
equity
|
778,191
|
|
|
760,723
|
|
|
634,708
|
|
Financial
Measures:
|
|
|
|
|
|
Book value per common
share
|
$
|
21.09
|
|
|
$
|
20.63
|
|
|
$
|
18.66
|
|
Tangible book value
per common share
|
14.03
|
|
|
13.54
|
|
|
12.66
|
|
Stockholders' equity
to assets
|
14.6
|
%
|
|
14.3
|
%
|
|
13.6
|
%
|
Tangible common
equity to tangible assets
|
10.2
|
|
|
9.9
|
|
|
9.6
|
|
Loans to deposits
ratio
|
84.1
|
|
|
82.4
|
|
|
84.0
|
|
Credit Quality
Metrics:
|
|
|
|
|
|
Allowance for loan
losses to:
|
|
|
|
|
|
Loans receivable,
net
|
0.98
|
%
|
|
0.96
|
%
|
|
1.01
|
%
|
Nonperforming
loans
|
207.04
|
|
|
255.73
|
|
|
211.48
|
|
Nonperforming loans
to loans receivable, net
|
0.47
|
|
|
0.37
|
|
|
0.48
|
|
Nonperforming assets
to total assets
|
0.36
|
|
|
0.30
|
|
|
0.34
|
|
Net (recoveries)
charge-offs on loans to average loans receivable, net
|
(0.02)
|
|
|
0.07
|
|
|
—
|
|
Other
Metrics:
|
|
|
|
|
|
Number of banking
offices
|
63
|
|
|
64
|
|
|
60
|
|
Average number of
full-time equivalent employees
|
878
|
|
|
867
|
|
|
796
|
|
Deposits per
branch
|
$
|
69,742
|
|
|
$
|
69,256
|
|
|
$
|
65,079
|
|
Average assets per
full-time equivalent employee
|
$
|
6,054
|
|
|
$
|
6,142
|
|
|
$
|
5,720
|
|
View original
content:http://www.prnewswire.com/news-releases/heritage-financial-announces-first-quarter-results-and-declares-regular-cash-dividend-300837958.html
SOURCE Heritage Financial Corporation