Heritage Financial Corporation · NASDAQ:HFWA
Heritage Financial — Investor Presentation (May 2015)
21 slides from Heritage Financial's investor presentation, May 12, 2015
Slide 1: Investor Presentation May 2015
Investor Presentation May 2015 Brian Vance Chief Executive Officer Jeff Deuel President & Chief Operating Officer Don Hinson Executive Vice President & Chief Financial Officer Bryan McDonald Executive Vice President & Chief Lending Officer
Slide 2: Forward-Looking Statement
FORWARD – LOOKING STATEMENT 2 This presentation contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to: • The expected revenues, cost savings, synergies and other benefits from the Washington Banking merger and our other merger and acquisition
Slide 3: Company Overview
3 COMPANY OVERVIEW
Slide 4: Overview
OVERVIEW 4 Overview NASDAQ Symbol HFWA Market Capitalization $509.5 million Institutional Ownership 76.4% Total Assets $3.5 billion Headquarters Olympia, WA # of Branches 66 Year Established 1927 Note: Financial information as of 3/31/2015 and market information as of 5/1/2015 Three banks, one chart
Slide 5: Historical Growth – Organic and Acquisitive
5 HISTORICAL GROWTH – ORGANIC AND ACQUISITIVE Source: Company financials, as of 12/31/2014 Note: All dollars in millions Acquired North Pacific Bancorporation Acquired Washington Independent Bancshares Inc. Acquired Western Washington Bancorp Completed 2 FDIC deals - Pierce Commercial Bank and Cowli
Slide 6: Strong and Diverse Economic Landscape
6 STRONG AND DIVERSE ECONOMIC LANDSCAPE • Thriving local economy with job growth in technology and aerospace sectors • Seattle economy ranks 11th largest in the country by GDP, which increased 4.1% since 2013 • Seattle’s population grew 5.2% from 2010 to 2014 • Washington per capita income ranked 14
Slide 7: Financial Update
7 FINANCIAL UPDATE
Slide 8: Financial Update – Q1 2015
FINANCIAL UPDATE – Q1 2015 8 • Diluted earnings per share were $0.32 for the quarter, an increase of $0.08 per share from the prior quarter • Return on average assets increased to 1.15% compared to 0.83% for the quarter ended December 31, 2014 • Return on average tangible common equity increased to
Slide 9: Loan Portfolio
9 LOAN PORTFOLIO Loan Portfolio Trends Loan Portfolio Mix - % of Total* Source: Company financials, as of 3/31/2015 Note: All dollars in millions *Includes non-covered and covered loans **Excludes impact from incremental accretion on purchased loans • Total CRE of 52.0% of total loans • Total C&I an
Slide 10: Deposit Profile
10 DEPOSIT PROFILE Deposit Trends Deposit Mix - % of Total Source: Company financials, as of 3/31/2015 Note: All dollars in millions • Noninterest bearing demand of 24.0% of total deposits • Non-maturity deposits of 83.2% of total deposits • Cost of total deposits of 0.18% in Q1 2015 Noninterest Bea
Slide 11: Net Interest Margin Trends
11 NET INTEREST MARGIN TRENDS Net Interest Margin (Core vs. Accretion)* Source: Company financials, as of 3/31/2015 *Impact on net interest margin from incremental accretion on purchased loans 4.37% 4.29% 4.20% 4.23% 4.12% 3.83% 3.86% 3.87% 0.45% 0.38% 0.38% 0.25% 0.43% 0.49% 0.88% 0.44% 4.82% 4.67%
Slide 12: Cash, Interest Earning Deposits & Investment Securities
12 CASH, INTEREST EARNING DEPOSITS & INVESTMENT SECURITIES Cash, Interest Earning Deposits & Investment Securities Investment Portfolio Mix Source: Company financials, as of 3/31/2015 Note: All dollars in millions • Total cash, interest earning deposits and investment securities of $872 million, or
Slide 13: Non-Interest Expense
13 NON-INTEREST EXPENSE Source: Company financials, as of 3/31/2015 Note: All dollars in thousands Non-Interest Expense Detail and Efficiency Ratio $16,636 $20,820 $22,594 $21,372 $27,903 $46,745 $11,813 $14,259 $19,910 $27,109 $29,020 $31,612 $52,634 $14,225 59.2% 54.5% 67.8% 70.1% 76.9% 75.4% 63.5
Slide 14: Credit Quality Trends
CREDIT QUALITY TRENDS 14 Source: Company financials, as of 3/31/2015 Note: All dollars in thousands Note: Excludes purchased covered loans
Slide 15: Capital Ratio Trends
CAPITAL RATIO TRENDS 15 Source: Company financials, as of 3/31/2015
Slide 16: Profitability Trends
PROFITABILITY TRENDS 16 Source: Company financials, as of 3/31/2015 Note: All dollars in thousands, except per share - - Earnings Per Share $0.16 $0.16 $0.23 $0.24 $0.32 $- $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 ROAA $2,543 $4,148 $7,068 $7,255 $9,779 $- $2
Slide 17: Total Shareholder Return
TOTAL SHAREHOLDER RETURN 17 Total Return* – Last Twelve Months Source: SNL Financial, as of 5/1/2015 Note: SNL U.S. Bank $1B-$5B index includes banks nationwide with total assets of $1.0 billion to $5.0 billion *Total return includes stock price appreciation and reinvested dividends **Average Street
Slide 18: HFWA Investment Thesis
HFWA INVESTMENT THESIS 18 • Western Washington geographic footprint with vibrant economy and attractive long-term demographics • Benefits of merger with Washington Banking Company are reflected in Q1 2015 results • Continued focus on growth trends and capital management – Grow organically and contin
Slide 19: Appendix
19 APPENDIX
Slide 20: Historical Financial Highlights
HISTORICAL FINANCIAL HIGHLIGHTS 20 Source: Company financials, as of 3/31/2015 Note: All dollars in thousands Note: All credit quality information excludes covered loans Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Balance Sheet Total Assets 1,662,473$ 3,391,579$ 3,451,320$ 3,457,750$ 3,459,349$ Asset Gr
Slide 21: Discounts on Acquired Loans
DISCOUNTS ON ACQUIRED LOANS 21 • $25.7 million remaining loan discount on acquired loans, including covered and non-covered portfolios $8,537 $7,785 $45,615 $35,773 $29,707 $25,699 3.24% 3.10% 3.71% 3.12% 2.80% 2.59% 2.50% 3.00% 3.50% 4.00% $- $10,000 $20,000 $30,000 $40,000 $50,000 12/31/2013 3/31/
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