Slide 1: Q4 2013 Investor Presentation
Brian L. Vance, CEO of HFWA and Heritage Bank Jeffrey J. Deuel, President and COO of Heritage Bank Donald J. Hinson, Executive Vice President and CFO of HFWA Q4 2013 Investor Presentation February 6, 2014 Heritage Financial Corporation Exhibit 99.1
Slide 2: Forward Looking Statement
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 pending Washington Banking merger and our other merger and acquisition activities might not be
Slide 3: Additional Information
ADDITIONAL INFORMATION In connection with the proposed merger between Heritage Financial Corporation (“Heritage”) and Washington Banking Company (“Washington Banking”), Heritage has filed a registration statement on Form S-4 with the Securities and Exchange Commission (“SEC”). The registration state
Slide 4: Overview
• Company Information • Financial Performance • Strategic Initiatives Overview
Slide 5: Company Information
5 Company Information
Slide 6: Our Company Overview
Overview Financial data as of December 31, 2013 • East Vancouver Branch opened January 13, 2014 NASDAQ Symbol HFWA Market Capitalization $277 million Headquarters Olympia, WA Branches Number of FTE Our Company
Slide 7: Combination creates $3.3 billion asset franchise
Combination creates $3.3 billion asset franchise with 67 branch locations (1) across Washington and Oregon from Bellingham, WA to Portland, OR Logical geographic fit Strength from the North (WBCO) joining strength from the South (HFWA) Doubles the branch footprint along the I-5 corridor #3 deposit m
Slide 8: Financial Highlights
Financial data as of and for the year ending December 31, 2013 Total Assets $1.66 billion Net Loans $1.20 billion Total Deposits $1.40 billion Tangible Common Equity $184.8 million Loan/Deposit Ratio 86.0% Return on Average Assets 0.62% Net Interest Margin 4.80% Financial Highlights
Slide 9: Financial Performance
9 Financial Performance
Slide 10: Loans, Deposits, Total Assets and Loan to Deposit Ratio
(in millions) GiLoans H=iDeposits mmTotalAssets -#+% Loans to Deposits 2009 2010 2011 2012 2013 100% + 95% + 90% + 85% + 80% 75%
Slide 11: Total Loan Portfolio
Financial data as of December 31, Total Loan Portfolio
Slide 12: Net Loan Trends
2009 2010 2011 2012 2013 CAGR Originated Loans $746.1 $720.0 $815.6 $855.4 $960.1 6.51% Purchased Covered Loans - $128.7 $105.4 $84.0 $57.6 n/a Purchased Non- Covered Loans - $131.0 $83.5 $59.0 $185.4 n/a Total $746.1 $979.8 $1,004.5 $998.4 $1,203.1 12.69% Dollars in millions Net Loan Trends
Slide 13: Deposit Base
Financial data as of and for the year ending December 31, 2013 Deposit Base
Slide 14: Diluted Earnings Per Share
Annual Earnings (Loss) Per Share Quarterly Earnings Per Share * Includes $0.69 earnings per share related to the after-tax gain on FDIC-assisted acquisitions. ** For the year and quarter ended December 31, 2013, earnings include $0.22 per share and $0.15 per share, respectively, of expenses (after-t
Slide 15: Strategic Initiatives
15 Strategic Initiatives
Slide 16: 2013 Strategic Initiatives
• Acquisitions • Enhance Pacific Northwest footprint • Organic Growth • Projected originated loan growth of 3-5% with actual growth of 11.8% • Maintain loan to deposit ratio 85-90% with year-end at 86% • Efficiency Improvements • Assets per Employee (ApE) • Deposits per Branch (DpB) 2013 Strategic I
Slide 17: 2013 Key Accomplishments
2013 Key Accomplishments Q1 Merger and Conversion with Northwest Commercial Bank Q2 Central Valley Bank Subsidiary Consolidation Q3 Merger with Valley Community Bancshares, Inc. (Valley Bank) Q4 Core System Conversion Valley Bank Conversion Closed 3 Heritage Bank Branches Consolidated 4 of 8 Valley
Slide 18: Resulting Performance Metrics
As of Period End Dec 31, 2012 Sept 30, 2013 Dec 31, 2013 YOY % Change Total Assets $1,345,540 $1,674,417 $1,659,038 23% Total Deposits $1,117,971 $1,425,985 $1,399,189 25% Number of Branches 6% Avg. Deposits per Branch $33,878 $33,952 $39,977 18% Number of FTE 2% Avg. Assets per Employee $3,707 $4,0
Slide 19: Cash Dividends
2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Long term cash dividend strategy is 35% to 40% payout range. Quarterly Dividend - $.03 $.05 $.05 $.06 $.08 $.08 $.08 $.08 $.08 $.08 $.08 Special Dividend - - - $.25 - $.20 - $.30 - $.10 - - Cash Dividends
Slide 20: Conclusion
20 Conclusion
Slide 21: Investment Value
• Strong financial foundation • Positioned to take advantage of the right opportunities • Continued focus on building long-term franchise value • Disciplined approach to acquisitions Investment Value
Slide 22: Thank You
Thank You Questions?