Heritage Financial Corporation · NASDAQ:HFWA
Heritage Financial — Investor Presentation (August 2016)
22 slides from Heritage Financial's investor presentation, Aug 3, 2016
Slide 1: Investor Presentation August 2016
Investor Presentation August 2016 Brian Vance Chief Executive Officer Jeff Deuel President and Chief Operating 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 $525.5 million Institutional Ownership 80.4% Total Assets $3.76 billion Headquarters Olympia, WA # of Branches 63 Year Established 1927 Note: Financial information as of 06/30/2016 and market information as of 07/22/2016 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 – Q2 2016
FINANCIAL UPDATE – Q2 2016 8 • Diluted earnings per share were $0.30 for the quarter • Return on average assets was 0.96% and return on average tangible common equity was 10.03% • Dividend declared on July 20, 2016 of $0.12 per share • Total loans receivable, net of allowance for loan losses, increa
Slide 9: Loan Portfolio
9 LOAN PORTFOLIO Loan Portfolio Trends Loan Portfolio Mix - % of Total Source: Company financials, as of 6/30/2016 Note: All dollars in millions *Excludes impact from incremental accretion on purchased loans • Total CRE of 53.6% of total loans • Total C&I and owner-occupied CRE of 47.5% of total loa
Slide 10: Deposit Profile
10 DEPOSIT PROFILE Deposit Trends Deposit Mix - % of Total Source: Company financials, as of 6/30/2016 Note: All dollars in millions • Noninterest bearing demand of 26.0% of total deposits • Non-maturity deposits of 87.7% of total deposits • Cost of total deposits of 0.16% in Q2 2016 $1,399 $2,906 $
Slide 11: Net Interest Margin Trends
11 NET INTEREST MARGIN TRENDS Net Interest Margin (Core vs. Accretion)* Source: Company financials, as of 6/30/2016 *Impact on net interest margin from incremental accretion on purchased loans 4.12% 3.83% 3.86% 3.87% 3.84% 3.76% 3.69% 3.82% 3.71% 0.43% 0.49% 0.88% 0.44% 0.35% 0.24% 0.28% 0.22% 0.29%
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 6/30/2016 Note: All dollars in millions • Total cash, interest earning deposits and investment securities of $920.3 million, o
Slide 13: Non-Interest Expense
13 NON-INTEREST EXPENSE Source: Company financials, as of 6/30/2016 Note: All dollars in thousands Overhead Ratio = Ratio of non-interest expense (annualized) to average total assets Non-Interest Expense Detail and Overhead Ratio $27,903 $46,745 $48,074 $11,248 $11,579 $31,612 $52,634 $58,134 $15,12
Slide 14: Credit Quality Trends
CREDIT QUALITY TRENDS 14 Source: Company financials, as of 6/30/2016 Note: All dollars in thousands - - Loan Loss Reserve and LLR/Loans $27,729 $27,816 $28,278 $29,004 1.23% 1.22% 1.20% 1.21% 1.19% 1.19% 1.20% 1.20% 1.21% 1.21% 1.22% 1.22% 1.23% 1.23% 1.24% $- $5,000 $10,000 $15,000 $20,000 $25,000
Slide 15: Capital Ratio Trends
CAPITAL RATIO TRENDS 15 Source: Company financials, as of 6/30/2016 - - Tier-1 Capital Ratio 10.2% 10.4% 10.5% 10.5% 10.05% 10.10% 10.15% 10.20% 10.25% 10.30% 10.35% 10.40% 10.45% 10.50% 10.55% 2014 2015 Q1 2016 Q2 2016 9.8% 9.7% 9.9% 10.0% 0.00% 4.00% 8.00% 12.00% 2014 2015 Q1 2016 Q2 2016 13.9% 12
Slide 16: Profitability Trends
PROFITABILITY TRENDS 16 Source: Company financials, as of 6/30/2016 Note: All dollars in thousands, except per share - - Diluted Earnings Per Share $0.29 $0.32 $0.32 $0.30 $0.30 $- $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 ROAA $8,725 $9,492 $9,493 $9,091 $8,8
Slide 17: Total Shareholder Return
TOTAL SHAREHOLDER RETURN 17 Total Return* – Last Twelve Months Source: SNL Financial, as of 7/22/2016 Note: SNL U.S. Bank $1B-$5B index includes banks nationwide with total assets of $1.0 billion to $5.0 billion *Total return includes stock price appreciation and reinvested dividends **Average Stree
Slide 18: HFWA Investment Thesis
HFWA INVESTMENT THESIS 18 • Western Washington geographic footprint with vibrant economy and attractive long-term demographics • Benefits of merger with Washington Banking Company are reflected in financial results • Continued focus on growth trends and capital management – Grow organically and cont
Slide 19: Appendix
19 APPENDIX
Slide 20: Historical Financial Highlights
HISTORICAL FINANCIAL HIGHLIGHTS 20 Source: Company financials, as of 6/30/2016 Note: All dollars in thousands Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Balance Sheet Total Assets 3,459,349$ 3,480,324$ 3,595,378$ 3,650,792$ 3,678,032$ 3,756,876$ Asset Growth (Anlzd. vs. Prior Period) 0.2% 2.4%
Slide 21: Discounts on Acquired Loans
DISCOUNTS ON ACQUIRED LOANS 21 • $17.5 million remaining loan discount on acquired loans Source: Company information, as of 6/30/2016 Note: All dollars in thousands Covered Non-Covered Total 3/31/2015 Loan Balance 121,852$ 869,327$ 991,179$ Remaining Loan Mark 4,231$ 21,468$ 25,699$ Recorded Investm
Slide 22: Thank you for your ongoing support
Thank you for your ongoing support
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