OLYMPIA, Wash., July 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 $16.0 million for
the quarter ended June 30, 2019 compared to $11.9 million for the quarter ended June 30,
2018 and $16.6 million for the
linked-quarter ended March 31, 2019. Basic and diluted
earnings per share for the quarter ended June 30, 2019 were
both $0.43 compared to $0.35 for the quarter ended June 30, 2018
and $0.45 for the linked-quarter
ended March 31, 2019.
The Company had net income of $32.5 million for the
six months ended June 30, 2019,
or $0.88 per share, compared to $20.9 million,
or $0.62 per share, for the six months ended June 30, 2018. There were no acquisition-related
expenses for the six months ended June 30,
2019 compared to acquisition-related expenses of
$0.17 per share for the six months
ended June 30, 2018.
Jeffrey J. Deuel, President and
Chief Executive Officer of Heritage commented, "We are pleased with
our progress in the first half of the year as we see the benefits
of our last two mergers and recent hiring initiatives in
Seattle and Portland. We saw mid-single digit annualized
loan growth despite elevated pay-offs. In addition, we are pleased
to see our new teams in Seattle
and Portland emerging from the
integration stage as high performing production teams with strong
pipeline growth in all of our markets. We have also made good
progress improving efficiencies across the organization while
also managing staffing levels."
"Further, we are proud that Heritage Bank provided project
funding to support the Tacoma Housing Authority's 1800 Hillside
Terrace construction project which added 64 affordable apartments
to the Hilltop area of Tacoma, and
that we have been selected to provide project funding for Plymouth
Housing Group's 2nd & Mercer construction project adding 93
units of affordable family housing to Seattle's Lower Queen Anne neighborhood. We
are pleased to be able to partner with these great organizations to
make a difference in our local communities."
Balance Sheet
The Company's total assets increased $34.6 million, or 0.6%, to $5.38 billion at June 30, 2019 from
$5.34 billion at March 31,
2019.
Total investment securities available for sale decreased
$24.3 million, or 2.5%, to
$960.7 million at June 30, 2019
from $985.0 million at March 31,
2019. Changes in investment securities available for sale during
the three and six months ended June 30,
2019 were as follows:
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
(In
thousands)
|
Balance, beginning of
period
|
$
|
985,009
|
|
|
$
|
976,095
|
|
Purchases
|
46,718
|
|
|
104,324
|
|
Maturities, calls, principal payments, and sales
|
(82,729)
|
|
|
(141,594)
|
|
Gain on
sale of investment securities, net
|
33
|
|
|
48
|
|
Change
in fair value of investment securities available for
sale
|
11,649
|
|
|
21,807
|
|
Balance, end of
period
|
$
|
960,680
|
|
|
$
|
960,680
|
|
Total loans receivable, net increased $21.6 million, or 0.6%, to $3.68 billion at June 30, 2019 from
$3.66 billion at March 31, 2019
due primarily to an increase in total real estate construction and
land development loans of $17.6
million, one-to-four family residential loans of
$10.9 million, and commercial and
industrial loans of $6.6 million,
offset partially by a decrease in owner-occupied commercial real
estate loans of $12.8 million.
Total deposits decreased $46.0
million, or 1.0%, to $4.35
billion at June 30, 2019 from $4.39 billion at March 31, 2019 due to a
decrease in total non-maturity deposits of $28.6 million, or 0.7%, and a decrease of
$17.4 million, or 3.3%, in
certificate of deposit accounts due primarily to maturities of
brokered certificates of deposit of $55.7
million. Certificate of deposit accounts, excluding
brokered deposits, increased $38.3
million, or 8.2%, during the second quarter in 2019.
Non-maturity deposits as a percentage of total deposits increased
to 88.4% as of June 30, 2019 from 88.1% as of March 31,
2019 due to the proportionally higher decrease in certificate of
deposit accounts.
Federal Home Loan Bank advances increased $65.7 million, or 262.80%, to $90.7 million at June 30, 2019 from
$25.0 million at March 31, 2019
to fund loan growth and the decrease in total deposits discussed
above.
Total stockholders' equity increased $18.4 million, or 2.4%, to $796.6 million at June 30, 2019 from
$778.2 million at March 31, 2019
due primarily to net income of $16.0
million and an increase in accumulated other comprehensive
gain of $9.2 million primarily due to
higher fair values of our fixed interest rate investment securities
available for sale. Changes in stockholders' equity during the
three and six months ended June 30,
2019 were as follows:
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
(In
thousands)
|
Balance, beginning of
period
|
$
|
778,191
|
|
|
$
|
760,723
|
|
Net
income
|
15,984
|
|
|
32,536
|
|
Accumulated other comprehensive gain
|
9,193
|
|
|
17,209
|
|
Dividends paid
|
(6,679)
|
|
|
(13,341)
|
|
ASU
2016-02 implementation
|
—
|
|
|
(399)
|
|
Other
|
(64)
|
|
|
(103)
|
|
Balance, end of
period
|
$
|
796,625
|
|
|
$
|
796,625
|
|
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%, 10.8%, 12.2% and 13.0%,
respectively, at June 30, 2019, compared to 11.8%, 10.7%,
12.2% and 13.0%, respectively, at March 31, 2019 and 11.2%,
10.4%, 11.7%, and 12.6%, respectively, at June 30, 2018.
Credit Quality
The allowance for loan losses increased $211,000, or 0.6%, to $36.4 million at June 30, 2019 from
$36.2 million at March 31, 2019.
The increase was due to provision for loan losses of $1.4 million recorded during the quarter ended
June 30, 2019 partially offset by net charge-offs of
$1.2 million recognized during the
same period.
Nonperforming loans to loans receivable, net, increased to 0.52%
at June 30, 2019 from 0.47% at March 31, 2019 due
primarily to an increase in nonaccrual loans of $1.8 million, or 10.5%, to $19.3 million at June 30, 2019 from
$17.5 million at March 31, 2019.
The increase was primarily related to the addition of three
commercial lending relationships totaling $3.5 million which showed increased signs of cash
flow deterioration, including one agricultural business
relationship of $657,000. Management has allocated a
specific reserve at June 30, 2019 of $159,000 for these three lending
relationships.
Changes in nonaccrual loans during the periods indicated were as
follows:
|
Three Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
(In
thousands)
|
Nonaccrual
loans
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
17,461
|
|
|
$
|
13,703
|
|
|
$
|
15,728
|
|
Addition
of previously classified pass graded loans
|
3,583
|
|
|
—
|
|
|
130
|
|
Addition of previously
classified potential problem loans
|
164
|
|
|
6,189
|
|
|
1,367
|
|
Net
principal payments
|
(1,554)
|
|
|
(2,392)
|
|
|
(264)
|
|
Charge-offs
|
(361)
|
|
|
(39)
|
|
|
(438)
|
|
Balance, end of
period
|
$
|
19,293
|
|
|
$
|
17,461
|
|
|
$
|
16,523
|
|
The allowance for loan losses to nonperforming loans was 188.48%
at June 30, 2019 compared to 207.04% at the linked-quarter
ended March 31, 2019. Nonperforming assets increased to 0.38%
of total assets at June 30, 2019 compared to 0.36% of total
assets at March 31, 2019. The change from the prior period in
both ratios is due primarily to the increase in nonaccrual loans
discussed above. The increase to nonperforming assets to
total assets was partially offset by decrease in other real estate
owned of $680,000 to $1.2 million at June 30, 2019 from
$1.9 million at March 31, 2019.
This decrease was due primarily to the sale of a property which
occurred during the quarter ended June 30, 2019.
Potential problem loans increased $20.0
million, or 21.2%, to $114.1
million at June 30, 2019 compared to $94.1 million at March 31, 2019. The
increase was primarily attributed to seven commercial lending
relationships totaling $27.3 million
at June 30, 2019 that experienced
cash flow deterioration as a result of customer-specific events. Of
these seven relationships, six relationships totaling $23.1 million were downgraded to Other Assets
Especially Mentioned while one relationship totaling $4.2 million was downgraded to Substandard. The
risk rating downgrade of these relationships will enhance the
Company's monitoring of these credits.
Changes in potential problem loans during the periods indicated
were as follows:
|
Three Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
(In
thousands)
|
Potential problem
loans
|
|
Balance, beginning of
period
|
$
|
94,116
|
|
|
$
|
101,349
|
|
|
$
|
93,253
|
|
Addition of
previously classified pass graded loans
|
30,911
|
|
|
9,766
|
|
|
19,829
|
|
Upgrades to pass
graded loan status
|
(2,858)
|
|
|
—
|
|
|
(5,407)
|
|
Net principal
payments
|
(3,091)
|
|
|
(10,535)
|
|
|
(4,233)
|
|
Transfers of loans to
nonaccrual and TDR status
|
(4,743)
|
|
|
(6,277)
|
|
|
(1,839)
|
|
Charge-offs
|
(240)
|
|
|
(187)
|
|
|
(112)
|
|
Balance, end of
period
|
$
|
114,095
|
|
|
$
|
94,116
|
|
|
$
|
101,491
|
|
The allowance for loan losses to loans receivable, net, was
0.98% at both June 30, 2019 and March 31, 2019. 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 $10.0
million at June 30, 2019 compared to $11.2 million at March 31, 2019. 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 June 30,
2019.
Net charge-offs were $1.2 million
for the quarter ended June 30, 2019 compared to $1.0 million for the same quarter in 2018 and net
recoveries of $190,000 for the
linked-quarter ended March 31, 2019. The net charge-off
recorded during the quarter ended June 30, 2019 was due
primarily to charge-offs on three commercial lending relationships
totaling $632,000, including one
agricultural business relationship charge-off of $278,000, and net charge-offs totaling
$436,000 on a large volume of
consumer loans.
Operating Results
Net interest income increased $6.8
million, or 15.5%, to $50.5
million for the quarter ended June 30, 2019 compared to
$43.7 million for the same period in
2018. Net interest income increased $15.7 million,
or 18.6%, to $100.3 million for the six months
ended June 30, 2019 compared
to $84.6 million for the six months ended June 30, 2018. The increases compared to the
prior periods in 2018 are due primarily to an increase in the yield
and average balance of total loans receivable, net as a result of
our merger with Premier Commercial Bancorp on July 2, 2018 ("Premier Merger"). Net interest
income increased $748,000, or 1.5%,
from $49.8 million for the
linked-quarter ended March 31, 2019 due primarily to an
increase in the yield and average balance of total loans
receivable, net, offset partially by an increase in the average
balance and in the cost of total interest bearing deposits
primarily as a result of rising interest rates.
Net interest margin increased 11 basis points to 4.33% for the
quarter ended June 30, 2019 from 4.22% for the quarter ended
June 30, 2018 and increased 17 basis
points to 4.34% for the six months ended June 30, 2019 from 4.17% for the same period in
2018 due to the same reasons underlying the increase in net
interest income, as described above. Net interest margin decreased
one basis point from 4.34% for the linked-quarter ended
March 31, 2019 primarily due to an increase in the cost of
interest bearing liabilities during the quarter ended June 30, 2019.
The loan yield, excluding incremental accretion on purchased
loans, increased 31 basis points to 5.12% for the quarter ended
June 30, 2019 compared to 4.81% for the quarter ended
June 30, 2018 and increased 35 basis points to 5.10% for the
six months ended June 30, 2019
compared to 4.75% for same period in 2018. Loan yield, excluding
incremental accretion on purchased loans, increased four basis
points from 5.08% for the linked-quarter ended March 31,
2019. 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 well as an increase
in loan yields from the loans acquired in the Premier Merger as
compared to legacy Heritage loans during 2018.
The impact on loan yield from incremental accretion on purchased
loans decreased eight basis points to 0.16% for the quarter ended
June 30, 2019 compared to 0.24% for
the quarter end June 30, 2018 and
decreased eight basis points to 0.15% for the six months ended
June 30, 2019 from 0.23% for the same
period in 2018. The decreases from the prior periods in 2018 were
primarily a result of the decrease in the balances of loans
acquired in the Premier Merger and our merger with Puget Sound
Bancorp, Inc. both of which occurred in 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 impact on loan yield from incremental accretion on purchased
loans for the quarter ended June 30,
2019 increased one basis point from 0.15% for the
linked-quarter ended March 31, 2019
due to prepayments of loans with larger discount balances during
the quarter ended June 30, 2019.
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
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
(Dollars in
thousands)
|
Yield non-GAAP
reconciliation: (2)
|
Net interest margin
(GAAP)
|
4.33
|
%
|
|
4.34
|
%
|
|
4.22
|
%
|
|
4.34
|
%
|
|
4.17
|
%
|
Exclude impact on net
interest margin from incremental accretion on purchased
loans(1)
|
0.12
|
%
|
|
0.12
|
%
|
|
0.19
|
%
|
|
0.12
|
%
|
|
0.18
|
%
|
Net interest margin,
excluding incremental accretion on purchased loans
(non-GAAP)(1)
|
4.21
|
%
|
|
4.22
|
%
|
|
4.03
|
%
|
|
4.22
|
%
|
|
3.99
|
%
|
|
|
|
|
|
|
|
|
|
|
Loan yield
(GAAP)
|
5.28
|
%
|
|
5.23
|
%
|
|
5.05
|
%
|
|
5.25
|
%
|
|
4.98
|
%
|
Exclude impact on loan
yield from incremental accretion on purchased
loans(1)
|
0.16
|
%
|
|
0.15
|
%
|
|
0.24
|
%
|
|
0.15
|
%
|
|
0.23
|
%
|
Loan yield, excluding
incremental accretion on purchased loans
(non-GAAP)(1)
|
5.12
|
%
|
|
5.08
|
%
|
|
4.81
|
%
|
|
5.10
|
%
|
|
4.75
|
%
|
|
|
|
|
|
|
|
|
|
|
Incremental accretion
on purchased loans(1)
|
$
|
1,416
|
|
|
$
|
1,373
|
|
|
$
|
1,992
|
|
|
$
|
2,789
|
|
|
$
|
3,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 yields, also impacting net interest margin
were changes in the yields on investment securities. The yields on
the aggregate investment portfolio increased 27 basis points to
2.80% for the quarter ended June 30, 2019 compared to 2.53%
for the quarter ended June 30, 2018 and increased 33 basis
points to 2.81% for the six months ended June 30, 2019 compared to 2.48% for the six
months ended June 30, 2018. The
increases compared to the same periods in 2018 primarily reflect
the effect of the rise in interest rates on our adjustable rate
investment securities as well as higher yielding interest rates on
new purchases of investments. The yield on the aggregate investment
portfolio decreased three basis points from 2.83% for the
linked-quarter ended March 31, 2019 due to decrease in market
interest rates impacting adjustable rate securities and calls
during the second quarter 2019 of higher yielding bonds.
The total cost of deposits increased four basis points from
0.33% during the linked-quarter ended March 31, 2019 and
increased 14 basis points to 0.37% during the quarter ended
June 30, 2019 compared to 0.23% during the same quarter in
2018. The total cost of deposits increased 13 basis points to 0.35%
during the six months ended June 30,
2019 compared to 0.22% during the same period in 2018. The
cost of deposits increased from all prior periods due to rising
market rates and competitive pressures in addition to the purchase
of $60.0 million in brokered
certificates of deposit during the first quarter 2019 to supplement
seasonal deposit runoff. Of the brokered certificates purchased in
the first quarter, $40.0 million had
matured as of June 30, 2019.
Donald J. Hinson, Executive Vice
President and Chief Financial Officer, commented, "Our net interest
margin decreased one basis point to 4.33% as a result of an eight
basis point increase in the total cost of funds and a three basis
decrease in yield on investments offsetting a five basis point
increase in the loan portfolio. The cost of funds increased due to
a higher reliance on overnight borrowings in the second quarter as
well as an increase in the cost of deposits. The current shape of
the yield curve and competitive pricing pressures has been and will
continue to impact our ability to maintain our net interest margin
at current levels."
The provision for loan losses decreased $383,000, or 21.9%, to $1.4 million for the quarter ended June 30,
2019 compared to $1.8 million for the
quarter ended June 30, 2018 and decreased $615,000, or 21.2%, to $2.3 million for the six months ended
June 30, 2019 compared to
$2.9 million for the six months ended
June 30, 2018. The decrease in the
provision for loan losses was primarily a result of lower growth in
total loans receivable, net during 2019. The provision for loan
losses increased $447,000, or 48.6%,
from the linked-quarter ended March 31, 2019 due primarily to
an increase in net-charge-offs to $1.2
million during the quarter ended June
30, 2019 compared to net recoveries of $190,000 during the linked-quarter ended
March 31, 2019. 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 June 30, 2019 based on the use of a consistent
methodology.
Noninterest income remained constant at $7.6 million for the quarters ended June 30,
2019 and 2018 and decreased $130,000,
or 0.9%, to $15.0 million for the six
months ended June 30, 2019 compared
to $15.1 million for the same period
in 2018. The decrease from the six months ended 2018 was due
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, offset partially by an increase in
other income, including recoveries of zero-balance purchased loan
notes which were charged-off prior to the consummation of the
related acquisition or merger. These recoveries were primarily from
our merger with Washington Banking Company which was effective
May 1, 2014. Noninterest income
increased $135,000, or 1.8%, from the
linked-quarter ended March 31, 2019 primarily due to an
increase in interchange revenue included in service charges and
other fees and an increase in contract income due to higher volume
of interest rate swap transactions, offset partially by a decrease
in other income primarily due to a decrease in the recoveries on
zero balance purchased loan notes, primarily from our merger with
Washington Banking Company, and a decrease in merchant fees
recognized.
Noninterest expense increased $1.8
million, or 5.2%, to $37.5
million for the quarter ended June 30, 2019 compared to
$35.7 million for the quarter ended
June 30, 2018 and increased
$1.6 million, or 2.2%, to
$74.1 million for the six months
ended June 30, 2019 compared to
$72.5 million for the same period in
2018. Acquisition-related expenses incurred were approximately
$880,000 during the quarter ended
June 30, 2018, of which $425,000
and $337,000 were due to data
processing expense and professional services expense, respectively.
There were no acquisition-related costs incurred during the quarter
ended June 30, 2019. Without the effects of the
acquisition-related expenses, the Company incurred an increase in
compensation and employee benefits due to additional employees
acquired in the Premier Merger and the expansion of the commercial
banking team in greater Portland,
Oregon, and an increase in occupancy and equipment expense
primarily due to additional expense from properties acquired in the
Premier Merger, offset partially by the buy-out of a third party
contract in the amount $1.7 million
during the quarter ended June 30,
2018. The Company expects the accumulated savings in future
professional services expenses to fully offset the cost of the
buy-out by the end of 2019.
Noninterest expense increased $1.0
million, or 2.8%, from $36.5
million for the linked-quarter ended March 31, 2019 due
primarily to increases in professional services and federal deposit
premiums as well as a $279,000 loss
on disposition of other real estate owned property during the
quarter that was acquired in the Premier Merger.
The ratio of noninterest expense to average total assets
(annualized) decreased to 2.81% for the quarter ended June 30,
2019 compared to 3.03% for the same period in 2018 primarily due to
acquisition-related expenses recognized in 2018. The ratio
increased from 2.79% for the linked-quarter ended March 31,
2019 primarily due to higher noninterest expense during the quarter
ended June 30, 2019.
Income tax expense was $3.2
million for the quarter ended June 30, 2019 compared to
$2.0 million for the quarter ended
June 30, 2018 and $3.2 million
for the linked-quarter ended March 31, 2019. The effective tax
rate was 16.7% for the quarter ended June 30, 2019 compared to
14.5% for the comparable quarter in 2018 and 16.3% for the
linked-quarter ended March 31, 2019. Income tax expense was
$6.4 million for the six months ended
June 30, 2019 compared to
$3.4 million for the six months ended
June 30, 2018.The effective tax rate
was 16.5% for the six months ended June 30,
2019 compared to 14.0% for the six months ended June 30, 2018. The increases in the effective tax
rate for both periods in 2019 compared to the same periods in 2018
were due primarily to a decrease in tax exempt securities, the
impact of stock-based compensation activity, an increased
Oregon presence, and higher
pre-tax income. The increase in the effective tax rate from the
linked-quarter ended March 31, 2019 was due primarily to
higher discrete tax items relating to stock-based compensation
which was recognized during the quarter ended March 31, 2019,
reducing the effective tax rate for that quarter.
Dividends
On July 24, 2019, the Company's Board of Directors declared
a quarterly cash dividend of $0.19
per share. The dividend is payable on August 22, 2019 to
shareholders of record as of the close of business on
August 8, 2019.
Earnings Conference Call
The Company will hold a telephone conference call to discuss
this earnings release on July 25, 2019 at 11:00 a.m. Pacific time. To access the call,
please dial (800) 230-1085 a few minutes prior to 11:00 a.m. Pacific time. The call will be
available for replay through August 8,
2019, by dialing (800) 475-6701 -- access code 469443.
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 62 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:
|
June 30,
2019
|
|
March 31,
2019
|
|
December 31,
2018
|
|
September 30,
2018
|
|
June 30,
2018
|
|
(Dollar amounts in
thousands, except per share amounts)
|
Tangible common
shareholders' equity and tangible assets:
|
Stockholders' equity
(GAAP)
|
$
|
796,625
|
|
|
$
|
778,191
|
|
|
$
|
760,723
|
|
|
$
|
746,133
|
|
|
$
|
639,523
|
|
Exclude goodwill and
other intangible assets
|
259,502
|
|
|
260,528
|
|
|
261,553
|
|
|
262,565
|
|
|
203,316
|
|
Tangible common
stockholders' equity (non-GAAP)
|
$
|
537,123
|
|
|
$
|
517,663
|
|
|
$
|
499,170
|
|
|
$
|
483,568
|
|
|
$
|
436,207
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
(GAAP)
|
$
|
5,376,686
|
|
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
|
$
|
5,276,214
|
|
|
$
|
4,789,488
|
|
Exclude goodwill and
other intangible assets
|
259,502
|
|
|
260,528
|
|
|
261,553
|
|
|
262,565
|
|
|
203,316
|
|
Tangible assets
(non-GAAP)
|
$
|
5,117,184
|
|
|
$
|
5,081,571
|
|
|
$
|
5,055,374
|
|
|
$
|
5,013,649
|
|
|
$
|
4,586,172
|
|
|
|
|
|
|
|
|
|
|
|
Common equity to
assets (GAAP)
|
14.8
|
%
|
|
14.6
|
%
|
|
14.3
|
%
|
|
14.1
|
%
|
|
13.4
|
%
|
Tangible common
equity to tangible assets (non-GAAP)
|
10.5
|
%
|
|
10.2
|
%
|
|
9.9
|
%
|
|
9.6
|
%
|
|
9.5
|
%
|
|
|
|
|
|
|
|
|
|
|
Shares
outstanding
|
36,882,771
|
|
|
36,899,138
|
|
|
36,874,055
|
|
|
36,873,123
|
|
|
34,021,094
|
|
Book value per share
(GAAP)
|
$
|
21.60
|
|
|
$
|
21.09
|
|
|
$
|
20.63
|
|
|
$
|
20.24
|
|
|
$
|
18.80
|
|
Tangible book value
per share (non-GAAP)
|
$
|
14.56
|
|
|
$
|
14.03
|
|
|
$
|
13.54
|
|
|
$
|
13.11
|
|
|
$
|
12.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
(Dollar amounts in
thousands)
|
Adjusted return on
average tangible common stockholders' equity:
|
Net income
(GAAP)
|
15,984
|
|
|
$
|
16,552
|
|
|
$
|
11,857
|
|
|
$
|
32,536
|
|
|
$
|
20,944
|
|
Exclude
acquisition-related expenses
|
—
|
|
|
132
|
|
|
880
|
|
|
132
|
|
|
5,688
|
|
Exclude consultant
agreement buyout
|
—
|
|
|
—
|
|
|
1,693
|
|
|
—
|
|
|
1,693
|
|
Exclude amortization
of intangible assets
|
1,026
|
|
|
1,025
|
|
|
796
|
|
|
2,051
|
|
|
1,591
|
|
Exclude tax effect of
adjustments
|
(215)
|
|
|
(243)
|
|
|
(707)
|
|
|
(458)
|
|
|
(1,884)
|
|
Adjusted tangible net
income (non-GAAP)
|
$
|
16,795
|
|
|
$
|
17,466
|
|
|
$
|
14,519
|
|
|
$
|
34,261
|
|
|
$
|
28,032
|
|
|
|
|
|
|
|
|
|
|
|
Average stockholders'
equity (GAAP)
|
$
|
782,719
|
|
|
$
|
766,451
|
|
|
$
|
636,735
|
|
|
$
|
774,630
|
|
|
$
|
625,914
|
|
Exclude average
intangible assets
|
(260,167)
|
|
|
(261,194)
|
|
|
(203,838)
|
|
|
(260,678)
|
|
|
(197,621)
|
|
Average tangible
common stockholders' equity (non-GAAP)
|
$
|
522,552
|
|
|
$
|
505,257
|
|
|
$
|
432,897
|
|
|
$
|
513,952
|
|
|
$
|
428,293
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
common equity, annualized (GAAP)
|
8.19
|
%
|
|
8.76
|
%
|
|
7.47
|
%
|
|
8.47
|
%
|
|
6.75
|
%
|
Return on average
tangible common equity, annualized (non-GAAP)
|
12.27
|
%
|
|
13.29
|
%
|
|
10.99
|
%
|
|
12.77
|
%
|
|
9.86
|
%
|
Adjusted return on
average tangible common equity, annualized (non-GAAP)
|
12.89
|
%
|
|
14.02
|
%
|
|
13.45
|
%
|
|
13.44
|
%
|
|
13.20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
(Dollar amounts in
thousands, except per share amounts)
|
Earnings from core
operations:
|
Net income
(GAAP)
|
$
|
15,984
|
|
|
$
|
16,552
|
|
|
$
|
11,857
|
|
|
$
|
32,536
|
|
|
$
|
20,944
|
|
Exclude
acquisition-related expenses
|
—
|
|
|
132
|
|
|
880
|
|
|
132
|
|
|
5,688
|
|
Exclude consultant
agreement buyout
|
—
|
|
|
—
|
|
|
1,693
|
|
|
—
|
|
|
1,693
|
|
Exclude tax effect of
adjustments
|
—
|
|
|
(28)
|
|
|
(540)
|
|
|
(28)
|
|
|
(1,550)
|
|
Adjusted net income
(non-GAAP)
|
$
|
15,984
|
|
|
$
|
16,656
|
|
|
$
|
13,890
|
|
|
$
|
32,640
|
|
|
$
|
26,775
|
|
Exclude dividends and
undistributed earnings allocated to participating
securities
|
(48)
|
|
|
(52)
|
|
|
(57)
|
|
|
(100)
|
|
|
(110)
|
|
Adjusted net income
allocated to common shareholders (non-GAAP)
|
$
|
15,936
|
|
|
$
|
16,604
|
|
|
$
|
13,833
|
|
|
$
|
32,540
|
|
|
$
|
26,665
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares
|
37,014,872
|
|
|
37,010,640
|
|
|
34,107,292
|
|
|
37,011,735
|
|
|
33,729,936
|
|
Diluted earnings per
share (GAAP)
|
$
|
0.43
|
|
|
$
|
0.45
|
|
|
$
|
0.35
|
|
|
$
|
0.88
|
|
|
$
|
0.62
|
|
Adjusted diluted
earnings per share (non-GAAP)
|
$
|
0.43
|
|
|
$
|
0.45
|
|
|
$
|
0.41
|
|
|
$
|
0.88
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
|
Average
assets
|
$
|
5,350,805
|
|
|
$
|
5,317,325
|
|
|
$
|
4,726,719
|
|
|
$
|
5,334,157
|
|
|
$
|
4,640,630
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets, annualized (GAAP)
|
1.20
|
%
|
|
1.26
|
%
|
|
1.01
|
%
|
|
1.23
|
%
|
|
0.91
|
%
|
Adjusted return on
average assets, annualized (non-GAAP)
|
1.20
|
%
|
|
1.27
|
%
|
|
1.18
|
%
|
|
1.23
|
%
|
|
1.16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
(Dollar amounts in
thousands)
|
Adjusted
noninterest expense:
|
Noninterest expense
(GAAP)
|
$
|
37,547
|
|
|
$
|
36,525
|
|
|
$
|
35,706
|
|
|
$
|
74,072
|
|
|
$
|
72,453
|
|
Exclude
acquisition-related expenses
|
—
|
|
|
(132)
|
|
|
(880)
|
|
|
(132)
|
|
|
(5,688)
|
|
Exclude amortization
of intangible assets
|
(1,026)
|
|
|
(1,025)
|
|
|
(796)
|
|
|
(2,051)
|
|
|
(1,591)
|
|
Exclude consultant
agreement buyout
|
—
|
|
|
—
|
|
|
(1,693)
|
|
|
—
|
|
|
(1,693)
|
|
Adjusted noninterest
expense (non-GAAP)
|
$
|
36,521
|
|
|
$
|
35,368
|
|
|
$
|
32,337
|
|
|
$
|
71,889
|
|
|
$
|
63,481
|
|
|
|
|
|
|
|
|
|
|
|
Average
Assets
|
$
|
5,350,805
|
|
|
$
|
5,317,325
|
|
|
$
|
4,726,719
|
|
|
$
|
5,334,157
|
|
|
$
|
4,640,630
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense
to average assets, annualized (GAAP)
|
2.81
|
%
|
|
2.79
|
%
|
|
3.03
|
%
|
|
2.80
|
%
|
|
3.15
|
%
|
Adjusted noninterest
expense to average assets, annualized (non-GAAP)
|
2.74
|
%
|
|
2.70
|
%
|
|
2.74
|
%
|
|
2.72
|
%
|
|
2.76
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
(Dollars in
thousands)
|
Net interest
income and interest and fees on loans:
|
Net interest income
(GAAP)
|
$
|
50,536
|
|
|
$
|
49,788
|
|
|
$
|
43,741
|
|
|
$
|
100,324
|
|
|
$
|
84,578
|
|
Exclude incremental
accretion on purchased loans
|
1,416
|
|
|
1,373
|
|
|
1,992
|
|
|
2,789
|
|
|
3,624
|
|
Adjusted net interest
income (non-GAAP)
|
$
|
49,120
|
|
|
$
|
48,415
|
|
|
$
|
41,749
|
|
|
$
|
97,535
|
|
|
$
|
80,954
|
|
|
|
|
|
|
|
|
|
|
|
Average total
interest earning assets, net
|
$
|
4,681,588
|
|
|
$
|
4,649,259
|
|
|
$
|
4,156,310
|
|
|
$
|
4,665,513
|
|
|
$
|
4,087,894
|
|
Net interest margin,
annualized (GAAP)
|
4.33
|
%
|
|
4.34
|
%
|
|
4.22
|
%
|
|
4.34
|
%
|
|
4.17
|
%
|
Net interest margin,
excluding incremental accretion on purchased loans, annualized
(non-GAAP)
|
4.21
|
%
|
|
4.22
|
%
|
|
4.03
|
%
|
|
4.22
|
%
|
|
3.99
|
%
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on
loans (GAAP)
|
$
|
48,107
|
|
|
$
|
46,699
|
|
|
$
|
41,141
|
|
|
$
|
94,806
|
|
|
$
|
79,300
|
|
Exclude incremental
accretion on purchased loans
|
1,416
|
|
|
1,373
|
|
|
1,992
|
|
|
2,789
|
|
|
3,624
|
|
Adjusted interest and
fees on loans (non-GAAP)
|
$
|
46,691
|
|
|
$
|
45,326
|
|
|
$
|
39,149
|
|
|
$
|
92,017
|
|
|
$
|
75,676
|
|
|
|
|
|
|
|
|
|
|
|
Average total loans
receivable, net
|
$
|
3,654,475
|
|
|
$
|
3,622,494
|
|
|
$
|
3,266,092
|
|
|
$
|
3,638,573
|
|
|
$
|
3,208,799
|
|
Loan yield,
annualized (GAAP)
|
5.28
|
%
|
|
5.23
|
%
|
|
5.05
|
%
|
|
5.25
|
%
|
|
4.98
|
%
|
Loan yield, excluding
incremental accretion on purchased loans, annualized
(non-GAAP)
|
5.12
|
%
|
|
5.08
|
%
|
|
4.81
|
%
|
|
5.10
|
%
|
|
4.75
|
%
|
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)
(Dollar amounts in
thousands, except shares)
|
|
|
June 30,
2019
|
|
March 31,
2019
|
|
December 31,
2018
|
Assets
|
|
|
|
|
|
Cash on hand and in
banks
|
$
|
95,878
|
|
|
$
|
71,252
|
|
|
$
|
92,704
|
|
Interest earning
deposits
|
43,412
|
|
|
39,918
|
|
|
69,206
|
|
Cash and cash
equivalents
|
139,290
|
|
|
111,170
|
|
|
161,910
|
|
Investment securities
available for sale
|
960,680
|
|
|
985,009
|
|
|
976,095
|
|
Loans held for
sale
|
3,692
|
|
|
2,956
|
|
|
1,555
|
|
Loans receivable,
net
|
3,718,283
|
|
|
3,696,431
|
|
|
3,654,160
|
|
Allowance for loan
losses
|
(36,363)
|
|
|
(36,152)
|
|
|
(35,042)
|
|
Total loans
receivable, net
|
3,681,920
|
|
|
3,660,279
|
|
|
3,619,118
|
|
Other real estate
owned
|
1,224
|
|
|
1,904
|
|
|
1,983
|
|
Premises and
equipment, net
|
84,296
|
|
|
80,130
|
|
|
81,100
|
|
Federal Home Loan
Bank stock, at cost
|
10,005
|
|
|
7,377
|
|
|
6,076
|
|
Bank owned life
insurance
|
94,417
|
|
|
94,099
|
|
|
93,612
|
|
Accrued interest
receivable
|
15,401
|
|
|
15,621
|
|
|
15,403
|
|
Prepaid expenses and
other assets
|
126,259
|
|
|
123,026
|
|
|
98,522
|
|
Other intangible
assets, net
|
18,563
|
|
|
19,589
|
|
|
20,614
|
|
Goodwill
|
240,939
|
|
|
240,939
|
|
|
240,939
|
|
Total
assets
|
$
|
5,376,686
|
|
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Deposits
|
$
|
4,347,708
|
|
|
$
|
4,393,715
|
|
|
$
|
4,432,402
|
|
Federal Home Loan
Bank advances
|
90,700
|
|
|
25,000
|
|
|
—
|
|
Junior subordinated
debentures
|
20,448
|
|
|
20,375
|
|
|
20,302
|
|
Securities sold under
agreement to repurchase
|
23,141
|
|
|
24,923
|
|
|
31,487
|
|
Accrued expenses and
other liabilities
|
98,064
|
|
|
99,895
|
|
|
72,013
|
|
Total
liabilities
|
4,580,061
|
|
|
4,563,908
|
|
|
4,556,204
|
|
|
|
|
|
|
|
Common
stock
|
591,703
|
|
|
591,767
|
|
|
591,806
|
|
Retained
earnings
|
195,168
|
|
|
185,863
|
|
|
176,372
|
|
Accumulated other
comprehensive gain (loss), net
|
9,754
|
|
|
561
|
|
|
(7,455)
|
|
Total stockholders'
equity
|
796,625
|
|
|
778,191
|
|
|
760,723
|
|
Total liabilities and
stockholders' equity
|
$
|
5,376,686
|
|
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
|
|
|
|
|
|
Shares
outstanding
|
36,882,771
|
|
|
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
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
Interest
income:
|
|
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
$
|
48,107
|
|
|
$
|
46,699
|
|
|
$
|
41,141
|
|
|
$
|
94,806
|
|
|
$
|
79,300
|
|
Taxable interest on
investment securities
|
5,933
|
|
|
5,823
|
|
|
4,068
|
|
|
11,756
|
|
|
7,597
|
|
Nontaxable interest on
investment securities
|
893
|
|
|
950
|
|
|
1,220
|
|
|
1,843
|
|
|
2,561
|
|
Interest on other
interest earning assets
|
283
|
|
|
335
|
|
|
240
|
|
|
618
|
|
|
458
|
|
Total interest
income
|
55,216
|
|
|
53,807
|
|
|
46,669
|
|
|
109,023
|
|
|
89,916
|
|
Interest
expense:
|
|
|
|
|
|
|
|
|
|
Deposits
|
4,017
|
|
|
3,603
|
|
|
2,195
|
|
|
7,620
|
|
|
4,155
|
|
Junior subordinated
debentures
|
340
|
|
|
354
|
|
|
315
|
|
|
694
|
|
|
598
|
|
Other
borrowings
|
323
|
|
|
62
|
|
|
418
|
|
|
385
|
|
|
585
|
|
Total interest
expense
|
4,680
|
|
|
4,019
|
|
|
2,928
|
|
|
8,699
|
|
|
5,338
|
|
Net interest
income
|
50,536
|
|
|
49,788
|
|
|
43,741
|
|
|
100,324
|
|
|
84,578
|
|
Provision for loan
losses
|
1,367
|
|
|
920
|
|
|
1,750
|
|
|
2,287
|
|
|
2,902
|
|
Net interest income
after provision for loan losses
|
49,169
|
|
|
48,868
|
|
|
41,991
|
|
|
98,037
|
|
|
81,676
|
|
Noninterest
income:
|
|
|
|
|
|
|
|
|
|
Service charges and
other fees
|
4,845
|
|
|
4,485
|
|
|
4,695
|
|
|
9,330
|
|
|
9,238
|
|
Gain on sale of
investment securities, net
|
33
|
|
|
15
|
|
|
18
|
|
|
48
|
|
|
53
|
|
Gain on sale of loans,
net
|
368
|
|
|
252
|
|
|
706
|
|
|
620
|
|
|
1,580
|
|
Interest rate swap
fees
|
161
|
|
|
—
|
|
|
309
|
|
|
161
|
|
|
360
|
|
Other
income
|
2,157
|
|
|
2,677
|
|
|
1,847
|
|
|
4,834
|
|
|
3,892
|
|
Total noninterest
income
|
7,564
|
|
|
7,429
|
|
|
7,575
|
|
|
14,993
|
|
|
15,123
|
|
Noninterest
expense:
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
21,982
|
|
|
21,914
|
|
|
19,321
|
|
|
43,896
|
|
|
40,688
|
|
Occupancy and
equipment
|
5,451
|
|
|
5,458
|
|
|
4,810
|
|
|
10,909
|
|
|
9,437
|
|
Data
processing
|
2,109
|
|
|
2,173
|
|
|
2,507
|
|
|
4,282
|
|
|
5,112
|
|
Marketing
|
1,106
|
|
|
1,098
|
|
|
823
|
|
|
2,204
|
|
|
1,631
|
|
Professional
services
|
1,305
|
|
|
1,173
|
|
|
3,529
|
|
|
2,478
|
|
|
6,366
|
|
State/municipal
business and use taxes
|
809
|
|
|
798
|
|
|
716
|
|
|
1,607
|
|
|
1,404
|
|
Federal deposit
insurance premium
|
426
|
|
|
285
|
|
|
375
|
|
|
711
|
|
|
730
|
|
Other real estate
owned, net
|
289
|
|
|
86
|
|
|
—
|
|
|
375
|
|
|
—
|
|
Amortization of
intangible assets
|
1,026
|
|
|
1,025
|
|
|
796
|
|
|
2,051
|
|
|
1,591
|
|
Other
expense
|
3,044
|
|
|
2,515
|
|
|
2,829
|
|
|
5,559
|
|
|
5,494
|
|
Total noninterest
expense
|
37,547
|
|
|
36,525
|
|
|
35,706
|
|
|
74,072
|
|
|
72,453
|
|
Income before income
taxes
|
19,186
|
|
|
19,772
|
|
|
13,860
|
|
|
38,958
|
|
|
24,346
|
|
Income tax
expense
|
3,202
|
|
|
3,220
|
|
|
2,003
|
|
|
6,422
|
|
|
3,402
|
|
Net income
|
$
|
15,984
|
|
|
$
|
16,552
|
|
|
$
|
11,857
|
|
|
$
|
32,536
|
|
|
$
|
20,944
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.43
|
|
|
$
|
0.45
|
|
|
$
|
0.35
|
|
|
$
|
0.88
|
|
|
$
|
0.62
|
|
Diluted earnings per
share
|
$
|
0.43
|
|
|
$
|
0.45
|
|
|
$
|
0.35
|
|
|
$
|
0.88
|
|
|
$
|
0.62
|
|
Dividends declared
per share
|
$
|
0.18
|
|
|
$
|
0.18
|
|
|
$
|
0.15
|
|
|
$
|
0.36
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
basic shares outstanding
|
36,870,159
|
|
|
36,825,532
|
|
|
33,934,661
|
|
|
36,847,969
|
|
|
33,572,117
|
|
Average number of
diluted shares outstanding
|
37,014,872
|
|
|
37,010,640
|
|
|
34,107,292
|
|
|
37,011,735
|
|
|
33,729,936
|
|
HERITAGE FINANCIAL
CORPORATION
FINANCIAL
STATISTICS (Unaudited)
(Dollar amounts in
thousands, except per share amounts)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
Performance
Ratios:
|
|
|
|
|
|
|
|
|
|
Efficiency
ratio
|
64.62
|
%
|
|
63.84
|
%
|
|
69.58
|
%
|
|
64.23
|
%
|
|
72.67
|
%
|
Noninterest expense
to average assets, annualized
|
2.81
|
%
|
|
2.79
|
%
|
|
3.03
|
%
|
|
2.80
|
%
|
|
3.15
|
%
|
Return on average
assets, annualized
|
1.20
|
%
|
|
1.26
|
%
|
|
1.01
|
%
|
|
1.23
|
%
|
|
0.91
|
%
|
Return on average
equity, annualized
|
8.19
|
%
|
|
8.76
|
%
|
|
7.47
|
%
|
|
8.47
|
%
|
|
6.75
|
%
|
Return on average
tangible common equity, annualized
|
12.27
|
%
|
|
13.29
|
%
|
|
10.99
|
%
|
|
12.77
|
%
|
|
9.86
|
%
|
Net charge-offs
(recoveries) on loans to average loans, annualized
|
0.13
|
%
|
|
(0.02)
|
%
|
|
0.13
|
%
|
|
0.05
|
%
|
|
0.06
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of Period
End
|
|
June 30,
2019
|
|
March 31,
2019
|
|
December 31,
2018
|
Financial
Measures:
|
|
|
|
|
|
Book value per
share
|
$
|
21.60
|
|
|
$
|
21.09
|
|
|
$
|
20.63
|
|
Tangible book value
per share
|
$
|
14.56
|
|
|
$
|
14.03
|
|
|
$
|
13.54
|
|
Stockholders' equity
to total assets
|
14.8
|
%
|
|
14.6
|
%
|
|
14.3
|
%
|
Tangible common
equity to tangible assets
|
10.5
|
%
|
|
10.2
|
%
|
|
9.9
|
%
|
Common equity Tier 1
capital to risk-weighted assets
|
11.8
|
%
|
|
11.8
|
%
|
|
11.7
|
%
|
Tier 1 leverage
capital to average quarterly assets
|
10.8
|
%
|
|
10.7
|
%
|
|
10.5
|
%
|
Tier 1 capital to
risk-weighted assets
|
12.2
|
%
|
|
12.2
|
%
|
|
12.1
|
%
|
Total capital to
risk-weighted assets
|
13.0
|
%
|
|
13.0
|
%
|
|
12.9
|
%
|
Loans to deposits
ratio (1)
|
85.5
|
%
|
|
84.1
|
%
|
|
82.4
|
%
|
Deposits per
branch
|
$
|
70,124
|
|
|
$
|
69,742
|
|
|
$
|
69,256
|
|
|
(1) Loans receivable, net of deferred costs divided by
deposits
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
Allowance for Loan
Losses:
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
36,152
|
|
|
$
|
35,042
|
|
|
$
|
33,261
|
|
|
$
|
35,042
|
|
|
$
|
32,086
|
|
Provision for loan
losses
|
1,367
|
|
|
920
|
|
|
1,750
|
|
|
2,287
|
|
|
2,902
|
|
Net (charge-offs)
recoveries:
|
|
|
|
|
|
|
|
|
|
Commercial
business
|
(712)
|
|
|
56
|
|
|
(474)
|
|
|
(656)
|
|
|
(54)
|
|
One-to-four family
residential
|
(15)
|
|
|
(15)
|
|
|
(15)
|
|
|
(30)
|
|
|
(15)
|
|
Real estate
construction and land development
|
7
|
|
|
618
|
|
|
2
|
|
|
625
|
|
|
2
|
|
Consumer
|
(436)
|
|
|
(469)
|
|
|
(552)
|
|
|
(905)
|
|
|
(949)
|
|
Total net
(charge-offs) recoveries
|
(1,156)
|
|
|
190
|
|
|
(1,039)
|
|
|
(966)
|
|
|
(1,016)
|
|
Balance, end of
period
|
$
|
36,363
|
|
|
$
|
36,152
|
|
|
$
|
33,972
|
|
|
$
|
36,363
|
|
|
$
|
33,972
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
Other Real Estate
Owned:
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
1,904
|
|
|
$
|
1,983
|
|
|
$
|
—
|
|
|
$
|
1,983
|
|
|
$
|
—
|
|
Additions from
transfer of loan
|
—
|
|
|
—
|
|
|
434
|
|
|
—
|
|
|
434
|
|
Proceeds from
dispositions
|
(350)
|
|
|
(79)
|
|
|
—
|
|
|
(429)
|
|
|
—
|
|
Loss on sales,
net
|
(279)
|
|
|
—
|
|
|
—
|
|
|
(279)
|
|
|
—
|
|
Valuation
adjustments
|
(51)
|
|
|
—
|
|
|
—
|
|
|
(51)
|
|
|
—
|
|
Balance, end of
period
|
$
|
1,224
|
|
|
$
|
1,904
|
|
|
$
|
434
|
|
|
$
|
1,224
|
|
|
$
|
434
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
Gain on Sale of
Loans, net:
|
|
|
|
|
|
|
|
|
|
Mortgage
loans
|
$
|
368
|
|
|
$
|
252
|
|
|
$
|
572
|
|
|
$
|
620
|
|
|
$
|
1,224
|
|
SBA loans
|
—
|
|
|
—
|
|
|
134
|
|
|
—
|
|
|
356
|
|
Total gain on sale of
loans, net
|
$
|
368
|
|
|
$
|
252
|
|
|
$
|
706
|
|
|
$
|
620
|
|
|
$
|
1,580
|
|
|
As of Period
End
|
|
June 30,
2019
|
|
March 31,
2019
|
|
December 31,
2018
|
Nonperforming
Assets:
|
|
|
|
|
|
Nonaccrual loans by
type:
|
|
|
|
|
|
Commercial
business
|
$
|
18,287
|
|
|
$
|
16,304
|
|
|
$
|
12,564
|
|
One-to-four family
residential
|
19
|
|
|
68
|
|
|
71
|
|
Real estate
construction and land development
|
793
|
|
|
923
|
|
|
899
|
|
Consumer
|
194
|
|
|
166
|
|
|
169
|
|
Total nonaccrual
loans(1)
|
19,293
|
|
|
17,461
|
|
|
13,703
|
|
Other real estate
owned
|
1,224
|
|
|
1,904
|
|
|
1,983
|
|
Nonperforming
assets
|
$
|
20,517
|
|
|
$
|
19,365
|
|
|
$
|
15,686
|
|
|
|
|
|
|
|
Restructured
performing loans
|
$
|
25,925
|
|
|
$
|
19,986
|
|
|
$
|
22,736
|
|
Accruing loans past
due 90 days or more
|
—
|
|
|
—
|
|
|
—
|
|
Potential problem
loans(2)
|
114,095
|
|
|
94,116
|
|
|
101,349
|
|
Allowance for loan
losses to:
|
|
|
|
|
|
Loans receivable,
net
|
0.98
|
%
|
|
0.98
|
%
|
|
0.96
|
%
|
Nonaccrual
loans
|
188.48
|
%
|
|
207.04
|
%
|
|
255.73
|
%
|
Nonperforming loans
to loans receivable, net
|
0.52
|
%
|
|
0.47
|
%
|
|
0.37
|
%
|
Nonperforming assets
to total assets
|
0.38
|
%
|
|
0.36
|
%
|
|
0.30
|
%
|
|
|
(1)
|
At June 30, 2019
and December 31, 2018, $8.1 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
|
|
June 30,
2019
|
|
March 31,
2019
|
|
December 31,
2018
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
Loan
Composition
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
business:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$
|
845,046
|
|
|
22.7
|
%
|
|
$
|
838,403
|
|
|
22.7
|
%
|
|
$
|
853,606
|
|
|
23.4
|
%
|
Owner-occupied
commercial real estate
|
772,499
|
|
|
20.8
|
|
|
785,316
|
|
|
21.2
|
|
|
779,814
|
|
|
21.3
|
|
Non-owner occupied
commercial real estate
|
1,333,047
|
|
|
35.8
|
|
|
1,335,596
|
|
|
36.1
|
|
|
1,304,463
|
|
|
35.7
|
|
Total commercial
business
|
2,950,592
|
|
|
79.3
|
|
|
2,959,315
|
|
|
80.0
|
|
|
2,937,883
|
|
|
80.4
|
|
One-to-four family
residential
|
117,425
|
|
|
3.2
|
|
|
106,502
|
|
|
2.9
|
|
|
101,763
|
|
|
2.8
|
|
Real estate
construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
One-to-four family
residential
|
111,319
|
|
|
3.0
|
|
|
110,699
|
|
|
3.0
|
|
|
102,730
|
|
|
2.8
|
|
Five or more family
residential and commercial properties
|
143,341
|
|
|
3.8
|
|
|
126,379
|
|
|
3.4
|
|
|
112,730
|
|
|
3.1
|
|
Total real estate
construction and land development
|
254,660
|
|
|
6.8
|
|
|
237,078
|
|
|
6.4
|
|
|
215,460
|
|
|
5.9
|
|
Consumer
|
392,926
|
|
|
10.6
|
|
|
390,303
|
|
|
10.6
|
|
|
395,545
|
|
|
10.8
|
|
Gross loans
receivable
|
3,715,603
|
|
|
99.9
|
|
|
3,693,198
|
|
|
99.9
|
|
|
3,650,651
|
|
|
99.9
|
|
Deferred loan costs,
net
|
2,680
|
|
|
0.1
|
|
|
3,233
|
|
|
0.1
|
|
|
3,509
|
|
|
0.1
|
|
Loans receivable,
net
|
$
|
3,718,283
|
|
|
100.0
|
%
|
|
$
|
3,696,431
|
|
|
100.0
|
%
|
|
$
|
3,654,160
|
|
|
100.0
|
%
|
|
As of Period
End
|
|
June 30,
2019
|
|
March 31,
2019
|
|
December 31,
2018
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
Deposit
Composition
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest bearing
demand deposits
|
$
|
1,320,743
|
|
|
30.3
|
%
|
|
$
|
1,338,675
|
|
|
30.5
|
%
|
|
$
|
1,362,268
|
|
|
30.7
|
%
|
Interest bearing
demand deposits
|
1,263,843
|
|
|
29.1
|
|
|
1,293,828
|
|
|
29.4
|
|
|
1,317,513
|
|
|
29.7
|
|
Money market
accounts
|
757,156
|
|
|
17.4
|
|
|
740,518
|
|
|
16.9
|
|
|
765,316
|
|
|
17.3
|
|
Savings
accounts
|
502,198
|
|
|
11.6
|
|
|
499,568
|
|
|
11.3
|
|
|
520,413
|
|
|
11.8
|
|
Total non-maturity
deposits
|
3,843,940
|
|
|
88.4
|
|
|
3,872,589
|
|
|
88.1
|
|
|
3,965,510
|
|
|
89.5
|
|
Certificates of
deposit
|
503,768
|
|
|
11.6
|
|
|
521,126
|
|
|
11.9
|
|
|
466,892
|
|
|
10.5
|
|
Total
deposits
|
$
|
4,347,708
|
|
|
100.0
|
%
|
|
$
|
4,393,715
|
|
|
100.0
|
%
|
|
$
|
4,432,402
|
|
|
100.0
|
%
|
|
Three Months
Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
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)
|
$
|
3,654,475
|
|
|
$
|
48,107
|
|
|
5.28
|
%
|
|
$
|
3,622,494
|
|
|
$
|
46,699
|
|
|
5.23
|
%
|
|
$
|
3,266,092
|
|
|
$
|
41,141
|
|
|
5.05
|
%
|
Taxable
securities
|
840,254
|
|
|
5,933
|
|
|
2.83
|
|
|
820,981
|
|
|
5,823
|
|
|
2.88
|
|
|
638,092
|
|
|
4,068
|
|
|
2.56
|
|
Nontaxable securities
(3)
|
139,278
|
|
|
893
|
|
|
2.57
|
|
|
149,825
|
|
|
950
|
|
|
2.57
|
|
|
201,104
|
|
|
1,220
|
|
|
2.43
|
|
Other interest
earning assets
|
47,581
|
|
|
283
|
|
|
2.39
|
|
|
55,959
|
|
|
335
|
|
|
2.43
|
|
|
51,022
|
|
|
240
|
|
|
1.89
|
|
Total interest earning
assets
|
4,681,588
|
|
|
55,216
|
|
|
4.73
|
%
|
|
4,649,259
|
|
|
53,807
|
|
|
4.69
|
%
|
|
4,156,310
|
|
|
46,669
|
|
|
4.50
|
%
|
Noninterest earning
assets
|
669,217
|
|
|
|
|
|
|
668,066
|
|
|
|
|
|
|
570,409
|
|
|
|
|
|
Total
assets
|
$
|
5,350,805
|
|
|
|
|
|
|
$
|
5,317,325
|
|
|
|
|
|
|
$
|
4,726,719
|
|
|
|
|
|
Interest Bearing
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of
deposit
|
$
|
514,220
|
|
|
$
|
1,694
|
|
|
1.32
|
%
|
|
$
|
502,153
|
|
|
$
|
1,440
|
|
|
1.16
|
%
|
|
$
|
418,129
|
|
|
$
|
797
|
|
|
0.76
|
%
|
Savings
accounts
|
500,135
|
|
|
707
|
|
|
0.57
|
|
|
507,670
|
|
|
674
|
|
|
0.54
|
|
|
512,832
|
|
|
487
|
|
|
0.38
|
|
Interest bearing
demand and money market accounts
|
2,016,901
|
|
|
1,616
|
|
|
0.32
|
|
|
2,051,046
|
|
|
1,489
|
|
|
0.29
|
|
|
1,796,095
|
|
|
911
|
|
|
0.20
|
|
Total interest bearing
deposits
|
3,031,256
|
|
|
4,017
|
|
|
0.53
|
|
|
3,060,869
|
|
|
3,603
|
|
|
0.48
|
|
|
2,727,056
|
|
|
2,195
|
|
|
0.32
|
|
Junior subordinated
debentures
|
20,400
|
|
|
340
|
|
|
6.68
|
|
|
20,328
|
|
|
354
|
|
|
7.06
|
|
|
20,108
|
|
|
315
|
|
|
6.28
|
|
Securities sold under
agreement to repurchase
|
29,265
|
|
|
45
|
|
|
0.62
|
|
|
33,055
|
|
|
47
|
|
|
0.58
|
|
|
27,935
|
|
|
16
|
|
|
0.23
|
|
Federal Home Loan
Bank advances and other borrowings
|
42,101
|
|
|
278
|
|
|
2.65
|
|
|
1,849
|
|
|
15
|
|
|
3.29
|
|
|
79,120
|
|
|
402
|
|
|
2.04
|
|
Total interest bearing
liabilities
|
3,123,022
|
|
|
4,680
|
|
|
0.60
|
%
|
|
3,116,101
|
|
|
4,019
|
|
|
0.52
|
%
|
|
2,854,219
|
|
|
2,928
|
|
|
0.41
|
%
|
Noninterest bearing
deposits
|
1,345,917
|
|
|
|
|
|
|
1,332,223
|
|
|
|
|
|
|
1,175,331
|
|
|
|
|
|
Other noninterest
bearing liabilities
|
99,147
|
|
|
|
|
|
|
102,550
|
|
|
|
|
|
|
60,434
|
|
|
|
|
|
Stockholders'
equity
|
782,719
|
|
|
|
|
|
|
766,451
|
|
|
|
|
|
|
636,735
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
5,350,805
|
|
|
|
|
|
|
$
|
5,317,325
|
|
|
|
|
|
|
$
|
4,726,719
|
|
|
|
|
|
Net interest
income
|
|
|
$
|
50,536
|
|
|
|
|
|
|
$
|
49,788
|
|
|
|
|
|
|
$
|
43,741
|
|
|
|
Net interest
spread
|
|
|
|
|
4.13
|
%
|
|
|
|
|
|
4.17
|
%
|
|
|
|
|
|
4.09
|
%
|
Net interest
margin
|
|
|
|
|
4.33
|
%
|
|
|
|
|
|
4.34
|
%
|
|
|
|
|
|
4.22
|
%
|
|
Six Months
Ended
|
|
June 30,
2019
|
|
June 30,
2018
|
|
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)
|
$
|
3,638,573
|
|
|
$
|
94,806
|
|
|
5.25
|
%
|
|
$
|
3,208,799
|
|
|
$
|
79,300
|
|
|
4.98
|
%
|
Taxable
securities
|
830,671
|
|
|
11,756
|
|
|
2.85
|
|
|
614,488
|
|
|
7,597
|
|
|
2.49
|
|
Nontaxable securities
(3)
|
144,522
|
|
|
1,843
|
|
|
2.57
|
|
|
212,305
|
|
|
2,561
|
|
|
2.43
|
|
Other interest
earning assets
|
51,747
|
|
|
618
|
|
|
2.41
|
|
|
52,302
|
|
|
458
|
|
|
1.77
|
|
Total interest earning
assets
|
4,665,513
|
|
|
109,023
|
|
|
4.71
|
%
|
|
4,087,894
|
|
|
89,916
|
|
|
4.44
|
%
|
Noninterest earning
assets
|
668,644
|
|
|
|
|
|
|
552,736
|
|
|
|
|
|
Total
assets
|
$
|
5,334,157
|
|
|
|
|
|
|
$
|
4,640,630
|
|
|
|
|
|
Interest Bearing
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of
deposit
|
$
|
508,220
|
|
|
$
|
3,133
|
|
|
1.24
|
%
|
|
$
|
420,834
|
|
|
$
|
1,557
|
|
|
0.75
|
%
|
Savings
accounts
|
503,882
|
|
|
1,381
|
|
|
0.55
|
|
|
509,514
|
|
|
902
|
|
|
0.36
|
|
Interest bearing
demand and money market accounts
|
2,033,878
|
|
|
3,106
|
|
|
0.31
|
|
|
1,771,084
|
|
|
1,696
|
|
|
0.19
|
|
Total interest bearing
deposits
|
3,045,980
|
|
|
7,620
|
|
|
0.50
|
|
|
2,701,432
|
|
|
4,155
|
|
|
0.31
|
|
Junior subordinated
debentures
|
20,364
|
|
|
694
|
|
|
6.87
|
|
|
20,071
|
|
|
598
|
|
|
6.01
|
|
Securities sold under
agreement to repurchase
|
31,149
|
|
|
91
|
|
|
0.59
|
|
|
29,094
|
|
|
33
|
|
|
0.23
|
|
Federal Home Loan
Bank advances and other borrowings
|
22,086
|
|
|
294
|
|
|
2.68
|
|
|
57,546
|
|
|
552
|
|
|
1.93
|
|
Total interest bearing
liabilities
|
3,119,579
|
|
|
8,699
|
|
|
0.56
|
%
|
|
2,808,143
|
|
|
5,338
|
|
|
0.38
|
%
|
Noninterest bearing
deposits
|
1,339,108
|
|
|
|
|
|
|
1,144,479
|
|
|
|
|
|
Other noninterest
bearing liabilities
|
100,840
|
|
|
|
|
|
|
62,094
|
|
|
|
|
|
Stockholders'
equity
|
774,630
|
|
|
|
|
|
|
625,914
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
5,334,157
|
|
|
|
|
|
|
$
|
4,640,630
|
|
|
|
|
|
Net interest
income
|
|
|
$
|
100,324
|
|
|
|
|
|
|
$
|
84,578
|
|
|
|
Net interest
spread
|
|
|
|
|
4.15
|
%
|
|
|
|
|
|
4.06
|
%
|
Net interest
margin
|
|
|
|
|
4.34
|
%
|
|
|
|
|
|
4.17
|
%
|
|
|
(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
|
|
June 30,
2019
|
|
March 31,
2019
|
|
December 31,
2018
|
|
September 30,
2018
|
|
June 30,
2018
|
Earnings:
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
50,536
|
|
|
$
|
49,788
|
|
|
$
|
51,288
|
|
|
$
|
51,125
|
|
|
$
|
43,741
|
|
Provision for loan
losses
|
1,367
|
|
|
920
|
|
|
1,162
|
|
|
1,065
|
|
|
1,750
|
|
Noninterest
income
|
7,564
|
|
|
7,429
|
|
|
8,446
|
|
|
8,051
|
|
|
7,575
|
|
Noninterest
expense
|
37,547
|
|
|
36,525
|
|
|
37,273
|
|
|
39,461
|
|
|
35,706
|
|
Net income
|
15,984
|
|
|
16,552
|
|
|
16,681
|
|
|
15,640
|
|
|
11,857
|
|
Basic earnings per
share
|
$
|
0.43
|
|
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
$
|
0.42
|
|
|
$
|
0.35
|
|
Diluted earnings per
share
|
$
|
0.43
|
|
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
$
|
0.42
|
|
|
$
|
0.35
|
|
Average
Balances:
|
|
|
|
|
|
|
|
|
|
Total loans
receivable, net
|
$
|
3,654,475
|
|
|
$
|
3,622,494
|
|
|
$
|
3,615,362
|
|
|
$
|
3,618,031
|
|
|
$
|
3,266,092
|
|
Investment
securities
|
979,532
|
|
|
970,806
|
|
|
933,551
|
|
|
883,919
|
|
|
839,196
|
|
Total interest
earning assets
|
4,681,588
|
|
|
4,649,259
|
|
|
4,653,215
|
|
|
4,596,734
|
|
|
4,156,310
|
|
Total
assets
|
5,350,805
|
|
|
5,317,325
|
|
|
5,323,366
|
|
|
5,278,565
|
|
|
4,726,719
|
|
Total interest
bearing deposits
|
3,031,256
|
|
|
3,060,869
|
|
|
3,087,661
|
|
|
3,075,720
|
|
|
2,727,056
|
|
Total noninterest
bearing deposits
|
1,345,917
|
|
|
1,332,223
|
|
|
1,356,186
|
|
|
1,314,203
|
|
|
1,175,331
|
|
Stockholders'
equity
|
782,719
|
|
|
766,451
|
|
|
750,165
|
|
|
744,389
|
|
|
636,735
|
|
Financial
Ratios:
|
|
|
|
|
|
|
|
|
|
Return on average
assets, annualized
|
1.20
|
%
|
|
1.26
|
%
|
|
1.24
|
%
|
|
1.17
|
%
|
|
1.01
|
%
|
Return on average
common equity, annualized
|
8.19
|
|
|
8.76
|
|
|
8.78
|
|
|
8.26
|
|
|
7.47
|
|
Return on average
tangible common equity, annualized
|
12.27
|
|
|
13.29
|
|
|
13.50
|
|
|
12.77
|
|
|
10.99
|
|
Efficiency
ratio
|
64.62
|
|
|
63.84
|
|
|
62.40
|
|
|
66.68
|
|
|
69.58
|
|
Noninterest expense
to average total assets, annualized
|
2.81
|
|
|
2.79
|
|
|
2.78
|
|
|
2.98
|
|
|
3.03
|
|
Net interest
margin
|
4.33
|
|
|
4.34
|
|
|
4.37
|
|
|
4.41
|
|
|
4.22
|
|
Net interest
spread
|
4.13
|
|
|
4.17
|
|
|
4.23
|
|
|
4.27
|
|
|
4.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of Period End
or for the Three Months Ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
December 31,
2018
|
|
September 30,
2018
|
|
June 30,
2018
|
Select Balance
Sheet:
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
5,376,686
|
|
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
|
$
|
5,276,214
|
|
|
$
|
4,789,488
|
|
Total loans
receivable, net
|
3,681,920
|
|
|
3,660,279
|
|
|
3,619,118
|
|
|
3,614,579
|
|
|
3,294,316
|
|
Investment
securities
|
960,680
|
|
|
985,009
|
|
|
976,095
|
|
|
920,737
|
|
|
873,670
|
|
Deposits
|
4,347,708
|
|
|
4,393,715
|
|
|
4,432,402
|
|
|
4,398,127
|
|
|
3,968,935
|
|
Noninterest bearing
demand deposits
|
1,320,743
|
|
|
1,338,675
|
|
|
1,362,268
|
|
|
1,311,825
|
|
|
1,157,630
|
|
Stockholders'
equity
|
796,625
|
|
|
778,191
|
|
|
760,723
|
|
|
746,133
|
|
|
639,523
|
|
Financial
Measures:
|
|
|
|
|
|
|
|
|
|
Book value per
share
|
$
|
21.60
|
|
|
$
|
21.09
|
|
|
$
|
20.63
|
|
|
$
|
20.24
|
|
|
$
|
18.80
|
|
Tangible book value
per share
|
14.56
|
|
|
14.03
|
|
|
13.54
|
|
|
13.11
|
|
|
12.82
|
|
Stockholders' equity
to assets
|
14.8
|
%
|
|
14.6
|
%
|
|
14.3
|
%
|
|
14.1
|
%
|
|
13.4
|
%
|
Tangible common
equity to tangible assets
|
10.5
|
|
|
10.2
|
|
|
9.9
|
|
|
9.6
|
|
|
9.5
|
|
Loans to deposits
ratio
|
85.5
|
|
|
84.1
|
|
|
82.4
|
|
|
83.0
|
|
|
83.9
|
|
Credit Quality
Metrics:
|
|
|
|
|
|
|
|
|
|
Allowance for loan
losses to:
|
|
|
|
|
|
|
|
|
|
Loans receivable,
net
|
0.98
|
%
|
|
0.98
|
%
|
|
0.96
|
%
|
|
0.94
|
%
|
|
1.02
|
%
|
Nonperforming
loans
|
188.48
|
|
|
207.04
|
|
|
255.73
|
|
|
233.25
|
|
|
205.60
|
|
Nonperforming loans
to loans receivable, net
|
0.52
|
|
|
0.47
|
|
|
0.37
|
|
|
0.41
|
|
|
0.50
|
|
Nonperforming assets
to total assets
|
0.38
|
|
|
0.36
|
|
|
0.30
|
|
|
0.32
|
|
|
0.35
|
|
Net charge-offs
(recoveries) on loans to average loans receivable, net
|
0.13
|
|
|
(0.02)
|
|
|
0.07
|
|
|
0.06
|
|
|
0.13
|
|
Other
Metrics:
|
|
|
|
|
|
|
|
|
|
Number of banking
offices
|
62
|
|
|
63
|
|
|
64
|
|
|
64
|
|
|
59
|
|
Average number of
full-time equivalent employees
|
880
|
|
|
878
|
|
|
867
|
|
|
878
|
|
|
819
|
|
Deposits per
branch
|
$
|
70,124
|
|
|
$
|
69,742
|
|
|
$
|
69,256
|
|
|
$
|
68,721
|
|
|
$
|
67,270
|
|
Average assets per
full-time equivalent employee
|
$
|
6,082
|
|
|
$
|
6,054
|
|
|
$
|
6,142
|
|
|
$
|
6,014
|
|
|
$
|
5,770
|
|
View original
content:http://www.prnewswire.com/news-releases/heritage-financial-announces-second-quarter-2019-results-and-declares-regular-cash-dividend-300890788.html
SOURCE Heritage Financial Corporation