Heritage Financial Corporation · NASDAQ:HFWA
Heritage Financial — Investor Presentation (May 2011)
29 slides from Heritage Financial's investor presentation, May 12, 2011
Slide 1: Heritage Financial Corporation
HeritayeFinancialCornoration — ——_—"~—S—tt— Brian L.Vance, Presidenta CEO —~
Slide 2: Forward Looking Statements
Forward Looking Statements “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to: the credit risks of lending activities, including changes i
Slide 3: Overview
Overview Company & Economic Information Recent Achievements Financial Performance Peer Group Analysis Continuing Strategies
Slide 4: Company and Economic Information
Company and Economic Information
Slide 5: Financial Highlights
Total assets: $1.17 billion Branches: 26 Total assets: $160.0 million Branches: 6 Financial Highlights Corporate Structure Total Assets $1.34 billion Net Loans $965 million Total Deposits $1.1 billion Tangible Common Equity $188.5 million Loan/Deposit Ratio 87.8% Coverage Ratio (1) 83.2% Core Deposi
Slide 6: Economic Outlook
Economic Outlook We have not yet achieved measurable and sustainable economic growth in the Pacific Northwest Our local economy will continue to struggle until unemployment and real estate values improve However, we are beginning to see signs of improvement in some areas
Slide 7: Recent Achievements
Recent Achievements
Slide 8: Award Recognition
Award Recognition Washington Best Workplaces – Bronze Award - (Puget Sound Business Journal) Silver Award - Top Places to Work – Large Company and Equity Award - (Business Examiner) Best Bank in the South Sound – 2008, 2010 (The Olympian) Best of the Northwest for 2009 Top 20 Companies of the Decade
Slide 9: Capital
Raised $54 million in net proceeds from December 2010 public offering Redeemed $24 million TARP preferred securities in December 2010 Capital
Slide 10: Where We Were / Where We Are Now
Where We Were (June 30, 2010) Where We Are Now (Existing Branches) - Total Branches 20 20 Legacy Heritage / Central Valley branches 2 Organic de novo branches in Pierce County 9 Acquired Cowlitz branches 1 Acquired Pierce Commercial branch Acquisition strategy – continue to execute on our strategic
Slide 11: FDIC-Assisted Acquisitions
FDIC-Assisted Acquisitions Cowlitz Bank / Bay Bank Pierce Commercial Bank Date of acquisition - July 30, 2010 Date of acquisition - November 5, 2010 Nine branches One branch Entered into two largest markets in the Pacific NW: Seattle/Bellevue & Portland/Vancouver Increased market position in Pierce
Slide 12: De Novo Branching and Organic Growth
De Novo Branching Opened Sumner Branch in 2008 Opened Puyallup, WA branch in September 2010 Opened Gig Harbor, WA in February 2011 Plan to acquire/build 1-2 branches per year in strategic growth locations 2010/2011 Talent Recruitment Since September we have hired 9 new lenders A team of 3 lenders in
Slide 13: Largest State Banks
Largest State Banks Source: Puget Sound Business Journal: April 1 – 7, 2011 The largest banks based in Washington State are ranked by total assets as of Dec. 31, 2010 * Announced Sale
Slide 14: Financial Performance
— Financial Performance
Slide 15: Loans and Deposits
$1,200 $1,000 $800 $600 12/31/05 Hm Loans 12/31/06 12/31/07 i Deposits 12/31/08 12/31/09 =ste=% Loans to Deposits 12/31/10 3/31/11 105% 100% 95% 90% 85% 80%
Slide 16: Originated Loan Portfolio
Originated Loan Portfolio Construction Portfolio Financial data as of March 31, 2011 and does not include loans purchased in the Cowlitz Bank and Pierce Commercial Bank acquisitions. Total Originated Loans: $755 million Total Construction Loans: $60 million Diversified Loan Portfolio
Slide 17: Deposit Composition
Deposit Composition (June 30, 2010) Attractive Deposit Base Deposit Composition (December 31, 2010) Financial Data as of March 31, 2011 – Total Deposits $1.1 billion – Total Non-Maturity Deposits $741 million – Non-Maturity Deposits / Total Dep. 67.4% – Non-Int. Bearing Dep. / Total Dep. 17.2% – Cos
Slide 18: Quarterly and Annual Earnings
Quarterly Earnings Annual Earnings Annual Earnings
Slide 19: Loan Provisioning Peer Comparison
Peer Source: SNL Financial Regional Peer Group (13): Ticker Symbols – BANR, CACB, CASB, COLB, FFNW, HOME, NRIM, PCBK, PRWT, RVSB, TSBK, WBCO, WCBO. Loan Provisioning
Slide 20: Equity Growth
Equity Growth 2008 – Issued $24 million preferred securities in TARP 2009 – Raised $47 million in common equity 2010 – Raised $54 million in common equity and re-purchased TARP
Slide 21: Strong Capital Levels
Strong Capital Levels Peer Source: SNL Financial Regional Peer Group (13) All Ratios as of December 31, 2010
Slide 22: Dividend Announcement
Dividend Announcement The Board has approved a $0.03 dividend for shareholders of record on May 13, 2011 and payable on May 27, 2011
Slide 23: Peer Group Analysis
Peer Group Analysis
Slide 24: Peer Group Analysis
Heritage Financial (3/31/11) Heritage Financial (12/31/10) Peer Group Median (12/31/10) Peer Group Analysis Peer Source: SNL Financial *Stock pricing as of 4/29/2011 TCE Ratio (%) 14.3 13.8 8.8 NPLs/Loans (%) 3.4 3.2 5.4 Reserves/NPLs (%) 83.2 93.2 46.7 ROAA (%) 0.23 1.16 (0.34) Price/Tangible Book
Slide 25: Continuing Strategies
Continuing Strategies
Slide 26: Growth Strategy
Growth Strategy We believe in a three pronged approach to our growth strategy. Our Approach Open Bank Acquisitions Will Opportunistically Review Organic Growth De Novo Branching Capitalizing On Market Dislocations Increase market share Attract new talent FDIC-Assisted Acquisitions Experienced and Di
Slide 27: Acquisition Considerations Summary of Analysis
Acquisition Considerations Summary of Analysis Fill in or expand geographic footprint Opportunity to take advantage of FDIC loss share agreements Strengthen market share Potential to significantly grow our company Source: SNL Financial data as of December 31, 2010. Data from charts above is from WA
Slide 28: Summary
Experienced management team with a proven track record Building long-term franchise value while positioning the Company for sustainable profitability Legacy franchise remains intact with favorable financial performance trends; allows us to continue to play offense Well positioned for continued growt
Slide 29: Thank You
Thank You ie ——_——"~—S—t
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