Heritage Financial Corporation · NASDAQ:HFWA
Heritage Financial — Investor Presentation (July 2015)
22 slides from Heritage Financial's investor presentation, Jul 29, 2015
Slide 1: Investor Presentation July 2015
Investor Presentation July 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 $563.1 million Institutional Ownership 78.5% Total Assets $3.5 billion Headquarters Olympia, WA # of Branches 66 Year Established 1927 Note: Financial information as of 6/30/2015 and market information as of 7/22/2015 Three banks, one char
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: Expanding Metro Markets
6 EXPANDING METRO MARKETS • We recently leased space in the City Centre building for our new downtown Seattle location which will open in early August • With the recently announced new lender hires, we will have 6 lenders, 2 support staff and 2 cash management officers moving from our current Westla
Slide 7: Strong and Diverse Economic Landscape
7 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 8: Financial Update
8 FINANCIAL UPDATE
Slide 9: Financial Update – Q2 2015
FINANCIAL UPDATE – Q2 2015 9 • Diluted earnings per share were $0.29 for the quarter, an increase from $0.16 per share from the prior year quarter • Return on average assets of 1.01% • Return on average tangible common equity of 10.50% • Dividend declared on July 22, 2015 of $0.11 per share • Noncov
Slide 10: Loan Portfolio
10 LOAN PORTFOLIO Loan Portfolio Trends Loan Portfolio Mix - % of Total* Source: Company financials, as of 6/30/2015 Note: All dollars in millions *Includes non-covered and covered loans **Excludes impact from incremental accretion on purchased loans • Total CRE of 52.9% of total loans • Total C&I a
Slide 11: Deposit Profile
11 DEPOSIT PROFILE Deposit Trends Deposit Mix - % of Total Source: Company financials, as of 6/30/2015 Note: All dollars in millions • Noninterest bearing demand of 24.7% of total deposits • Non-maturity deposits of 84.3% of total deposits • YTD non-maturity deposit growth of 4.4% • Cost of total de
Slide 12: Net Interest Margin Trends
12 NET INTEREST MARGIN TRENDS Net Interest Margin (Core vs. Accretion)* Source: Company financials, as of 6/30/2015 *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% 3.84% 0.45% 0.38% 0.38% 0.25% 0.43% 0.49% 0.88% 0.44% 0.35%
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 6/30/2015 Note: All dollars in millions • Total cash, interest earning deposits and investment securities of $823 million, or
Slide 14: Non-Interest Expense
14 NON-INTEREST EXPENSE Source: Company financials, as of 6/30/2015 Note: All dollars in thousands Non-Interest Expense Detail and Efficiency Ratio
Slide 15: Credit Quality Trends
CREDIT QUALITY TRENDS 15 Source: Company financials, as of 6/30/2015 Note: All dollars in thousands Note: Excludes purchased covered loans - - - - Loan Loss Reserve and LLR/Loans $22,369 $22,220 $22,153 $22,317 1.08% 1.08% 1.04% 1.03% 1.00% 1.01% 1.02% 1.03% 1.04% 1.05% 1.06% 1.07% 1.08% 1.09% $- $5
Slide 16: Capital Ratio Trends
CAPITAL RATIO TRENDS 16 Source: Company financials, as of 6/30/2015 - - - - Tier-1 Capital Ratio 13.6% 11.3% 10.2% 10.6% 10.6% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 2012 2013 2014 Q1 2015 Q2 2015 13.9% 11.4% 9.8% 10.0% 9.9% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00
Slide 17: Profitability Trends
PROFITABILITY TRENDS 17 Source: Company financials, as of 6/30/2015 Note: All dollars in thousands, except per share - - Earnings Per Share $0.16 $0.23 $0.24 $0.32 $0.29 $- $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 $4,148 $7,068 $7,255 $9,779 $8,725 $- $2
Slide 18: Total Shareholder Return
TOTAL SHAREHOLDER RETURN 18 Total Return* – Last Twelve Months Source: SNL Financial, as of 7/22/2015 Note: SNL U.S. Bank $1B-$5B index includes banks nationwide with total assets of $1.0 billion to $5.0 billion *Total return includes stock price appreciation and reinvested dividends **Average Stree
Slide 19: HFWA Investment Thesis
HFWA INVESTMENT THESIS 19 • Western Washington geographic footprint with vibrant economy and attractive long-term demographics • Benefits of merger with Washington Banking Company are reflected in YTD 2015 results • Continued focus on growth trends and capital management – Grow organically and conti
Slide 20: Appendix
20 APPENDIX
Slide 21: Historical Financial Highlights
HISTORICAL FINANCIAL HIGHLIGHTS 21 Source: Company financials, as of 6/30/2015 Note: All dollars in thousands Note: All credit quality information excludes covered loans Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Balance Sheet Total Assets 1,662,473$ 3,391,579$ 3,451,320$ 3,457,750$ 3,459,349$
Slide 22: Discounts on Acquired Loans
DISCOUNTS ON ACQUIRED LOANS 22 • $23.5 million remaining loan discount on acquired loans, including covered and non-covered portfolios Source: Company information, as of 6/30/2015 Note: All dollars in thousands Covered Non- Covered Total 3/31/2014 Loan Balance 62,450$ 188,461$ 250,911$ Remaining Loa
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