Heritage Financial Corporation · NASDAQ:HFWA
Heritage Financial — Investor Presentation (February 2015)
21 slides from Heritage Financial's investor presentation, Feb 6, 2015
Slide 1: Investor Presentation February 2015
Exhibit 99.1 Investor Presentation February 2015 Brian Vance Chief Executive Officer Jeff Deuel President and Chief Operating Officer Don Hinson Executive Vice President and Chief Financial Officer Bryan McDonald Executive Vice President and Chief Lending Officer
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 activ
Slide 3: Overview
Overview Three banks, one charter Overview NASDAQ Symbol HFWA Market Capitalization $481.7 million Institutional Ownership 75.3% Total Assets $3.5 billion Headquarters Olympia, WA # of Branches 66 Year Established 1927 Note: Financial information as of 12/31/2014 and market information as of 2/2/201
Slide 4: Transformational Merger with WBCO in 2014
Transformational Merger with WBCO in 2014 Merger of Heritage Financial Corporation and Washington Banking Company combined two quality community banks to create a $3.5+ billion franchise Logical geographic fit Created significant operational scale and efficiencies Effective use of capital with impro
Slide 5: Deposit Market Share
Deposit Market Share Washington - Top 25 Rank Deposit WA - Number of Deposits in Growth Market Total HQ Institution (State) Branches Market (1-Year) Share HFWAranked5 th for depositmarket 1 Bank of America Corp. (NC) 189 $ 25,422,347 +3.6% 20.68% 2 Wells Fargo & Co. (CA) 159 $ 14,569,387 +7.5% 11.85
Slide 6: Strong and Diverse Economic Landscape
Strong and Diverse Economic Landscape Thriving local economy with job growth in technology Headquartered in Western Washington and aerospace sectors Seattleeconomyranks11th largestin the countryby GDP, which increased 4.1% since 2013 Seattle’s population grew 5.2% from 2010 to 2014 Washingtonper cap
Slide 7: Historical Growth – Organic and Acquisitive
Historical Growth –Organic and Acquisitive In addition to organic growth, HFWA has completed 6 whole bank mergers and 2 FDIC-assisted transactions since 1998 Merger with Washington Banking Company Acquired Valley Community Bancshares, Inc. with $254M in assets and Northwest Commercial Bank with $65M
Slide 8: Financial Update Q4 2014
Financial Update Q – 4 2014 Net income of $7.3 million, or $0.24 diluted earnings per share Return on average assets of 0.83% and return on average tangible common equity of 8.85% Net interest margin of 4.74%, which increased by 42 basis points from prior quarter. Excluding the impact from accretion
Slide 9: Loan Portfolio
Loan Portfolio Loan Portfolio Mix%- of Total* Loan Portfolio Trends Total CRE of 48.8% of total loans Total C&I and owner-occupied CRE of 47.5% of total loans Core yield on loans of 5.03% in Q4 2014** Total loans of $2.3 billion, including $126.2 million of covered loans remaining in loan portfolio
Slide 10: Deposit Profile
Deposit Profile Deposit Mix % - of Total Deposit Trends Noninterest bearing demand of 24.4% of total deposits Non-maturity deposits of 81.9% of total deposits Cost of total deposits of 0.20% in Q4 2014 Source: Company financials, as of 12/31/2014 Note: All dollars in millions 10
Slide 11: Net Interest Margin Trends
Net Interest Margin Trends Net Interest Margin (Core vs. Accretion)* 5.19% 4.82% 4.74% 4.67% 4.58% 4.55% 4.48% 4.32% Source: Company financials, as of 12/31/2014 *Impact on net interest margin from incremental accretion on purchased loans 11
Slide 12: Cash and Investment Securities Portfolio
Cash and Investment Securities Portfolio Investment Portfolio Mix Cash and Investment Securities Total cash and investment securities of $910 million, or 26.3% of total assets Average yield on taxable investment securities of 1.94% in Q4 2014 Average yield on non-taxable investment securities of 1.9
Slide 13: Non-Interest Expense
Non-Interest Expense Non-Interest Expense Detail and Efficiency Ratio Source: Company financials, as of 12/31/2014 Note: All dollars in thousands 13
Slide 14: Credit Quality Trends
Credit Quality Trends Net Charge Offs and NCOs/Avg. Loans NPAs / Assets Loan Loss Reserve and LLR/Loans Provision Expense Source: Company financials, as of 12/31/2014 Note: All dollars in thousands Note: Excludes purchased covered loans 14
Slide 15: Capital Ratio Trends
Capital Ratio Trends Tangible Common Equity Ratio Leverage Ratio Tier -1 Capital Ratio Risk Based Capital Ratio Source: Company financials, as of 12/31/2014 15
Slide 16: Profitability Trends
Profitability Trends ROAA ROATCE Earnings Per Share Net Income Source: Company financials, as of 12/31/2014 Note: All dollars in thousands, except per share 16
Slide 17: Total Shareholder Return
Total Shareholder Return Total Return* –Last Twelve Months Ticker HFWA Exchange NASDAQ Stock Price $ 15.92 Market Cap. ($MM) $ 481.7 Dividend Yield (Regular Div. Only) 2.51% Average Daily Volume (3 Mo.) Avg. Daily Volume (Shares) 71,611 Avg. Daily Volume ($000s) $ 1,140 52-Week High / Low Price 52-W
Slide 18: HFWA Investment Thesis
HFWA Investment Thesis 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 Returncapital to shareholdersvia dividendsand stockbuybacks,as
Slide 19: Appendix
aime, | Heritage J sa . ° i a Financial CORPORATION Appendix 19
Slide 20: Historical Financial Highlights
Historical Financial Highlights Last 5 Quarters Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Balance Sheet Total Assets $ 1,659,038 $ 1,662,473 $ 3,391,579 $ 3,451,320 $ 3,459,916 Asset Growth (Anlzd. vs. Prior Period) -3.7% 0.8% 416.0% 7.0% 1.0% Gross Loans (Incl. HFS) $ 1,231,920 $ 1,237,037 $ 2,236,57
Slide 21: Discounts on Acquired Loans
Discounts on Acquired Loans $29.7 million remaining loan discount on acquired loans, including covered and non-covered portfolios Total Acquired Loans Non- Total Discount on Acquired Loans Covered Covered Total 12/31/2013 Loan Balance $ 64,788 $ 198,384 $ 263,172 Remaining Loan Mark $ 1,034 $ 7,503
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