Heritage Financial Corporation · NASDAQ:HFWA
Heritage Financial — Investor Presentation (February 2016)
21 slides from Heritage Financial's investor presentation, Feb 12, 2016
Slide 1: 2015 Investor Presentation
2015 Investor Presentation February 2016 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 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 $542.9 million Institutional Ownership 85.3% Total Assets $3.65 billion Headquarters Olympia, WA # of Branches 66 Year Established 1927 Note: Financial information as of 12/31/2015 and market information as of 1/29/16 Three banks, one char
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 – 2015
FINANCIAL UPDATE – 2015 8 • Diluted earnings per share were $1.25 for the year, an increase from $0.82 per share from the prior year • Return on average assets of 1.06% • Return on average tangible common equity of 11.18% • Dividend declared on January 27, 2016 of $0.11 per share • Total loans recei
Slide 9: Loan Portfolio
9 LOAN PORTFOLIO Loan Portfolio Trends Loan Portfolio Mix - % of Total Source: Company financials, as of 12/31/2015 Note: All dollars in millions *Excludes impact from incremental accretion on purchased loans • Total CRE of 54.4% of total loans • Total C&I and owner-occupied CRE of 51.0% of total lo
Slide 10: Deposit Profile
10 DEPOSIT PROFILE Deposit Trends Deposit Mix - % of Total Source: Company financials, as of 12/31/2015 Note: All dollars in millions • Noninterest bearing demand of 24.8% of total deposits • Non-maturity deposits of 86.5% of total deposits • YTD non-maturity deposit growth of 12.9% • Cost of total
Slide 11: Net Interest Margin Trends
11 NET INTEREST MARGIN TRENDS Net Interest Margin (Core vs. Accretion)* Source: Company financials, as of 12/31/2015 *Impact on net interest margin from incremental accretion on purchased loans 4.20% 4.23% 4.12% 3.83% 3.86% 3.87% 3.84% 3.76% 3.69% 0.38% 0.25% 0.43% 0.49% 0.88% 0.44% 0.35% 0.24% 0.28
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 12/31/2015 Note: All dollars in millions • Total cash, interest earning deposits and investment securities of $945.2 million,
Slide 13: Non-Interest Expense
13 NON-INTEREST EXPENSE Source: Company financials, as of 12/31/2015 Note: All dollars in thousands Non-Interest Expense Detail and Efficiency Ratio $22,594 $21,372 $27,903 $46,745 $48,074 $27,109 $29,020 $31,612 $52,634 $58,134 67.8% 70.1% 76.9% 75.4% 65.6% 45.0% 50.0% 55.0% 60.0% 65.0% 70.0% 75.0%
Slide 14: Credit Quality Trends
CREDIT QUALITY TRENDS 14 Source: Company financials, as of 12/31/2015 Note: All dollars in thousands - - - - Loan Loss Reserve and LLR/Loans $22,369 $22,220 $27,729 $27,816 1.08% 1.08% 1.23% 1.22% 1.00% 1.05% 1.10% 1.15% 1.20% 1.25% $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 Q2 2014 Q3 2014 Q
Slide 15: Capital Ratio Trends
CAPITAL RATIO TRENDS 15 Source: Company financials, as of 12/31/2015 - - - - Tier-1 Capital Ratio 13.6% 11.3% 10.2% 10.4% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 2012 2013 2014 2015 13.9% 11.4% 9.8% 9.7% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 2012 2013 2014 2015
Slide 16: Profitability Trends
PROFITABILITY TRENDS 16 Source: Company financials, as of 12/31/2015 Note: All dollars in thousands, except per share - - - - Diluted Earnings Per Share $0.24 $0.32 $0.29 $0.32 $0.32 $- $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 ROAA $7,255 $9,779 $8,725 $9,492
Slide 17: Total Shareholder Return
TOTAL SHAREHOLDER RETURN 17 Total Return* – Last Twelve Months Source: SNL Financial, as of 1/29/16 Note: SNL U.S. Bank $1B-$5B index includes banks nationwide with total assets of $1.0 billion to $5.0 billion *Total return includes stock price appreciation and reinvested dividends **Average Street
Slide 18: HFWA Investment Thesis
HFWA INVESTMENT THESIS 18 • Western Washington geographic footprint with vibrant economy and attractive long-term demographics • Benefits of merger with Washington Banking Company are reflected in 2015 results • Continued focus on growth trends and capital management – Grow organically and continue
Slide 19: Appendix
19 APPENDIX
Slide 20: Historical Financial Highlights
HISTORICAL FINANCIAL HIGHLIGHTS 20 Source: Company financials, as of 12/31/2015 Note: All dollars in thousands Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Balance Sheet Total Assets 3,457,750$ 3,459,349$ 3,480,324$ 3,595,378$ 3,650,792$ Asset Growth (Anlzd. vs. Prior Period) 0.7% 0.2% 2.4% 13.2% 6.2% Gr
Slide 21: Discounts on Acquired Loans
DISCOUNTS ON ACQUIRED LOANS 21 • $20.4 million remaining loan discount on acquired loans Source: Company information, as of 12/31/2015 Note: All dollars in thousands Covered Non-Covered Total 12/31/2014 Loan Balance 131,882$ 927,231$ 1,059,113$ Remaining Loan Mark 5,682$ 24,025$ 29,707$ Recorded Inv
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