Heritage Financial Corporation · NASDAQ:HFWA
Heritage Financial — Piper Jaffray West Coast Bank Symposium (November 2016)
23 slides from Heritage Financial's conference presentation, Nov 3, 2016
Slide 1: Piper Jaffray West Coast Bank Symposium
Piper Jaffray West Coast Bank Symposium Brian Vance Chief Executive Officer Don Hinson Chief Financial 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 our other merger and acquisition activities might not be realized w
Slide 3: Company Overview
3 COMPANY OVERVIEW
Slide 4: Overview
OVERVIEW 4 Overview NASDAQ Symbol HFWA Market Capitalization $539.0 million Institutional Ownership 75.8% Total Assets $3.85 billion Headquarters Olympia, WA # of Branches 63 Year Established 1927 Note: Financial information as of 09/30/2016 and market information as of 10/27/2016 Three banks, one c
Slide 5: Historical Growth – Organic and Acquisitive
5 HISTORICAL GROWTH – ORGANIC AND ACQUISITIVE Source: Company financials, as of 12/31/2015 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 13
Slide 7: Financial Update
7 FINANCIAL UPDATE
Slide 8: Financial Update – Q3 2016
FINANCIAL UPDATE – Q3 2016 8 • Diluted earnings per share were $0.37 for the quarter • Return on average assets was 1.16% and return on average tangible common equity was 11.99% • Dividend declared a regular cash dividend of $0.12 per share and a special cash dividend of $0.25 per share on October 2
Slide 9: Loan Portfolio
9 LOAN PORTFOLIO Loan Portfolio Trends Loan Portfolio Mix - % of Total Source: Company financials, as of 9/30/2016 Note: All dollars in millions *Excludes impact from incremental accretion on purchased loans • Total CRE of 53.5% of total loans • Total C&I and owner-occupied CRE of 47.2% of total loa
Slide 10: King County Metro
10 KING COUNTY METRO Source: Company financials, as of 9/30/2016 Note: All dollars in millions Funds Under Management = Loans + Deposits $276 $284 $365 $400 $83 $75 $105 $101 $- $100 $200 $300 $400 $500 $600 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Loans Deposits $359 $359 $470 $501
Slide 11: Deposit Profile
11 DEPOSIT PROFILE Deposit Trends Deposit Mix - % of Total Source: Company financials, as of 9/30/2016 Note: All dollars in millions • Noninterest bearing demand of 26.7% of total deposits • Non-maturity deposits of 88.6% of total deposits • Cost of total deposits of 0.16% in Q3 2016 Noninterest Bea
Slide 12: Net Interest Margin Trends
12 NET INTEREST MARGIN TRENDS Net Interest Margin (Core vs. Accretion)* Source: Company financials, as of 9/30/2016 *Impact on net interest margin from incremental accretion on purchased loans 3.83% 3.86% 3.87% 3.84% 3.76% 3.69% 3.82% 3.71% 3.76% 0.49% 0.88% 0.44% 0.35% 0.24% 0.28% 0.22% 0.29% 0.19%
Slide 13: Cash, Interest Earning Deposits & Investment Securities
13 CASH, INTEREST EARNING DEPOSITS & INVESTMENT SECURITIES Cash, Interest Earning Deposits & Investment Securities Investment Portfolio Mix Source: Company financials, as of 9/30/2016 Note: All dollars in millions • Total cash, interest earning deposits and investment securities of $937.4 million, o
Slide 14: Non-Interest Expense
14 NON-INTEREST EXPENSE Source: Company financials, as of 9/30/2016 Note: All dollars in thousands Overhead Ratio = Ratio of non-interest expense (annualized) to average total assets Non-Interest Expense Detail and Overhead Ratio $46,745 $48,074 $11,248 $11,579 $11,185 $52,634 $58,134 $15,121 $14,89
Slide 15: Credit Quality Trends
CREDIT QUALITY TRENDS 15 Source: Company financials, as of 9/30/2016 Note: All dollars in thousands - - - - Loan Loss Reserve and LLR/Loans $27,816 $28,278 $29,004 $29,746 1.22% 1.20% 1.21% 1.24% 1.18% 1.19% 1.20% 1.21% 1.22% 1.23% 1.24% 1.25% $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,00
Slide 16: Capital Ratio Trends
CAPITAL RATIO TRENDS 16 Source: Company financials, as of 9/30/2016 - - Tier-1 Capital Ratio 10.4% 10.5% 10.5% 10.5% 0.00% 4.00% 8.00% 12.00% 2015 Q1 2016 Q2 2016 Q3 2016 9.7% 9.9% 10.0% 9.9% 0.00% 4.00% 8.00% 12.00% 2015 Q1 2016 Q2 2016 Q3 2016 12.7% 12.6% 12.1% 12.0% 0.00% 4.00% 8.00% 12.00% 16.00
Slide 17: Profitability Trends
PROFITABILITY TRENDS 17 Source: Company financials, as of 9/30/2016 Note: All dollars in thousands, except per share - - - - - - Diluted Earnings Per Share $0.32 $0.32 $0.30 $0.30 $0.37 $- $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 ROAA $9,492 $9,493 $9,0
Slide 18: Total Shareholder Return
TOTAL SHAREHOLDER RETURN 18 Total Return* – Last Twelve Months Source: SNL Financial, as of 10/27/2016 Note: SNL U.S. Bank $1B-$5B index includes banks nationwide with total assets of $1.0 billion to $5.0 billion *Total return includes stock price appreciation and reinvested dividends **Average Stre
Slide 19: HFWA Investment Thesis
HFWA INVESTMENT THESIS 19 • Western Washington geographic footprint with vibrant economy and attractive long-term demographics • Continued focus on growth trends and capital management – Grow organically and continue to evaluate M&A opportunities – Continue to focus on improving shareholder value •
Slide 20: Appendix
20 APPENDIX
Slide 21: Historical Financial Highlights
HISTORICAL FINANCIAL HIGHLIGHTS 21 Source: Company financials, as of 9/30/2016 Note: All dollars in thousands Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Balance Sheet Total Assets 3,457,750$ 3,480,324$ 3,595,378$ 3,650,792$ 3,678,032$ 3,756,876$ 3,846,376$ Asset Growth (Anlzd. vs. Prior
Slide 22: Discounts on Acquired Loans
DISCOUNTS ON ACQUIRED LOANS 22 • $14.7 million remaining loan discount on acquired loans Source: Company information, as of 9/30/2016 Note: All dollars in thousands $23,446 $21,639 $20,350 $18,563 $17,494 $14,747 2.55% 2.48% 2.41% 2.31% 2.35% 2.12% 2.00% 2.25% 2.50% 2.75% 3.00% 3.25% 3.50% $- $5,000
Slide 23: Thank you for your ongoing support
Thank you for your ongoing support
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