Heritage Financial Announces Fourth Quarter and Full Year 2009 Results
- Strong capital position at December 31, 2009 with a tangible common equity to tangible assets ratio of 12.1% and a total capital to risk-weighted assets ratio of 20.7%
- Solid coverage ratios at December 31, 2009 including an allowance for loan losses to total loans of 3.4% and an allowance for loan losses to nonperforming loans of 79.3%
- Strong liquidity position at December 31, 2009 with over 10% of total assets in cash and cash equivalents
- Non-maturity deposits (total deposits less certificate of deposit accounts) as of December 31, 2009 increased 12.2% from December 31, 2008
- Average interest earning assets for the quarter ended December 31, 2009 increased 12.5% from the quarter ended December 31, 2008
- Efficiency ratio improved to 61.3% for the year ended December 31, 2009 from 64.5% for the year ended December 31, 2008
OLYMPIA, Wash., Jan. 28 /PRNewswire-FirstCall/ -- HERITAGE FINANCIAL CORPORATION (Nasdaq: HFWA) Brian L. Vance, President and CEO of Heritage Financial Corporation ("Company" or "Heritage"), today reported net income for the three months ended December 31, 2009 of $772,000 compared to a net loss of $194,000 for the quarter ended December 31, 2008. Including preferred stock dividends, the net income applicable to common shareholders for the quarter ended December 31, 2009 was $441,000, or $0.04 per diluted common share, compared with a net loss applicable to common shareholders of $337,000, or $0.05 per diluted common share for the quarter ended December 31, 2008. For the year ended December 31, 2009, the net loss, including preferred stock dividends, applicable to common shareholders was $739,000, or $0.10 per diluted common share compared to net income applicable to common shareholders of $6.2 million, or $0.93 per diluted common share for the year ended December 31, 2008. The decrease in earnings from the year ended December 31, 2008 was substantially attributable to the increased provision for loan losses.
Mr. Vance commented, "As we look back on 2009, together with 2008, we see perhaps the most volatile and difficult period with regard to the financial services industry we have experienced in the last 80 years. As I evaluate our performance this past year, I believe Heritage has fared quite well on a relative and comparative basis. I will hasten to add that I am not satisfied that we posted a net loss for the year. There is no question that the economic difficulties that are affecting all other banks and most of our customers have also affected us. However, when we look at critical performance metrics such as capital, problem loans, loan loss allowance levels, pre-tax, pre-provision profitability, core deposit growth, and balance sheet liquidity, our performance ranks near the top in all of these metrics as compared to our Pacific Northwest peers."
"The Pacific Northwest has yet to see measurable or sustainable economic growth, and I believe will likely not in the near term," Mr. Vance continued. "I do believe, however, that Heritage's overall performance will continue to improve. To emphasize this point, even though we posted a loss for 2009, our trend lines of profitability measurement show an improving trend in each of the successive quarters of 2009. We are cautiously optimistic that we can continue these positive trend lines. And more importantly, I believe our overall balance sheet structure is well-positioned to take advantage of future growth opportunities."
"In conclusion, I would like to highlight our successful capital raise in September 2009 and welcome our newest shareholders to the Heritage family. We were very pleased with the success of our offering and I feel a strong sense of responsibility to wisely and profitably employ that new capital in growing our franchise as we work through 2010 and beyond."
The Company's total assets increased $68.7 million to $1.01 billion at December 31, 2009 from $946.1 million at December 31, 2008. At December 31, 2009, total loans decreased $36.5 million to $772.2 million from $808.7 million at December 31, 2008. The decrease in loans during 2009 was primarily a result of construction loan repayments and charge-offs. At December 31, 2009, real estate construction loan balances accounted for only 12.4% of total loans and only 6.0% of total loans are within the single-family residential construction sector.
Deposits increased $15.6 million to $840.1 million at December 31, 2009 from $824.5 million at December 31, 2008. Since December 31, 2008, non-maturity deposits (total deposits less certificate of deposit accounts) increased $58.1 million, or 12.2%. As a result, the percentage of certificate of deposit accounts to total deposits decreased to 36.2% at December 31, 2009 from 42.0% at December 31, 2008.
A significant amount of the change in the mix of deposit accounts was a result of the Company reducing its public deposits. In order to comply with new public deposit collateral requirements and reduce the Company's exposure to uninsured public deposits, management implemented additional measures to manage public deposits. These measures included allowing some public certificate of deposit accounts to run-off and converting others to insured deposit accounts. As a result, total public deposit balances decreased $63 million to $69 million at December 31, 2009 from $132 million at December 31, 2008. The Company's uninsured public deposit accounts (which are fully collateralized) declined to $0.5 million at December 31, 2009 from $125 million at December 31, 2008.
At December 31, 2009, the Company's stockholders' equity to total assets was 15.6% compared to 12.0% at December 31, 2008. In addition, the Company had Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios at December 31, 2009 of 14.4%, 19.4% and 20.7%, respectively, as compared to 11.0%, 12.5% and 13.7% at December 31, 2008, respectively. The increase in capital was a result of the September 2009 sale of approximately 4.3 million shares of common stock in a public offering. The shares were sold at $11.50 per share and net proceeds from the offering were approximately $46.6 million. The net proceeds were utilized primarily to fund the increases in investment securities pending their allocation to specific uses.
Net interest income before provision for loan losses was $10.8 million for the quarter ended December 31, 2009 compared to $10.0 million for the quarter ended December 31, 2008, an increase of 7.2%. For the year ended December 31, 2009, net interest income before provision for loan losses was $41.7 million compared to $38.3 million for the year ended December 31, 2008, an increase of 8.7%. These increases were the result of growth in interest earning assets. Average interest earning assets increased 12.5% to $958.6 million for the quarter ended December 31, 2009 from $852.4 million for the quarter ended December 31, 2008. The net interest margin (net interest income divided by average interest earning assets) was 4.45% for the quarter ended December 31, 2009 compared to 4.67% for the quarter ended December 31, 2008.
The provision for loan losses in the fourth quarter of 2009 of $5.0 million increased $300,000 from $4.7 million in the third quarter of 2009 and increased $360,000 from $4.6 million in the prior year quarter ended December 31, 2008. The Company had net charge-offs in the fourth quarter of 2009 of $3.8 million compared to $3.3 million in the third quarter of 2009 and $1.8 million in the prior year quarter ended December 31, 2008. The net charge-offs in the fourth quarter of 2009 and throughout the year occurred primarily in the single-family residential construction sector. The allowance for loan losses as a percent of total loans increased to 3.39% at December 31, 2009 from 3.20% at September 30, 2009 and 1.91% at December 31, 2008. The increase in the allowance for loan losses was attributable to management's continuing assessment of the increased risk in the loan portfolio as a result of the current economic environment, which has led to increases in potential problem loans and loan losses. Management continues to see weakness specifically within its residential construction portfolio, as well as some weakness in its commercial business loan portfolio. Management is committed to ongoing and careful review of all existing and new loans to seek to minimize loss exposure.
Nonperforming assets (nonperforming loans plus other real estate owned) at December 31, 2009 were $33.7 million, or 3.32% of total assets, a decrease from $35.8 million, or 3.52% of total assets at September 30, 2009 and an increase from $5.4 million, or 0.57% of total assets, at December 31, 2008. Slower sales and excess inventory in the housing market has been the primary cause of the increase in nonperforming assets. Residential construction and land development loans represented 76.7% of our nonperforming loans at December 31, 2009. At December 31, 2009, the Company's coverage of allowance for loan losses to nonperforming loans was 79.3%. Management expects the provision for loan losses to continue at elevated levels until there is measurable improvement in its local economic markets.
Non-interest income was $2.3 million for the three months ended December 31, 2009 compared to $2.1 million for the three months ended December 31, 2008. The increase was primarily due to increased SBA loan sales. Non-interest income decreased slightly to $8.7 million for the year ended December 31, 2009 from $8.8 million for the same period in 2008.
Non-interest expense was $7.4 million for the quarter ended December 31, 2009 compared to $7.9 million for the quarter ended December 31, 2008. For the year ended December 31, 2009, non-interest expense was $30.9 million compared to $30.4 million for the year ended December 31, 2008. The variances in non-interest expenses were primarily the result of the following:
- For the three months and year ended December 31, 2009, Federal deposit insurance expenses increased $211,000 and $1.2 million, respectively, from the same periods in the prior year.
- For the three months ended December 31, 2009, impairment loss on securities was $236,000 compared to $668,000 for the three months ended December 31, 2008. For the year ended December 31, 2009, impairment loss on securities was $500,000 compared to $1.9 million for the year ended December 31, 2008.
- For the three months and year ended December 31, 2009, salaries and employee benefits decreased $571,000 and $430,000, respectively, from the same periods in the prior year.
- An assessment attributable to uncollateralized public deposits of a failed bank of $184,000 during the year ended December 31, 2009 (included in other expense).
- For the year ended December 31, 2009, marketing expense increased $288,000 from the same period in the prior year. A significant amount of this increase was the result of the costs associated with a checking account acquisition program.
Earnings Conference Call
The Company will hold a telephone conference call to discuss this earnings release on January 28, 2010, at 11:00 a.m. Pacific time. To access the call, please dial (800) 230-1074 a few minutes prior to 11:00 a.m. Pacific time. The call will be available for replay ending February 11, 2010, by dialing (800) 475-6701 -- access code 140793.
About Heritage Financial
Heritage Financial Corporation is a bank holding company headquartered in Olympia, Washington. The Company operates two community banks, Heritage Bank and Central Valley Bank. Heritage Bank serves Pierce, Thurston, south King and Mason Counties in the south Puget Sound region of Washington through its fourteen full-service banking offices and its Online Banking Website www.HeritageBankWA.com. Central Valley Bank serves Yakima and Kittitas Counties in central Washington through its six full-service banking offices and its Online Banking Website www.CVBankWA.com. Additional information about Heritage Financial Corporation is available on its Internet Website www.HF-WA.com.
Non-GAAP Financial Measures
This news release contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (GAAP). These measures include average tangible common equity, tangible book value per share and tangible common equity to tangible assets. Tangible common equity (tangible book value) excludes preferred stock, goodwill and other intangible assets. Tangible assets exclude goodwill and other intangible assets. Management has presented these non-GAAP financial measures in this earnings release because it believes that it provides useful and comparative information to assess trends in the Company's capital reflected in the current quarter and year-to-date results. Where applicable, the Company has also presented comparable capital information using GAAP financial measures. Reconciliation of the GAAP and non-GAAP financial measures are presented below.
December 31, September 30, December 31,
(in thousands) 2009 2009 2008
------------- -------------- -------------
Stockholders' equity $158,498 $158,557 $113,147
Less: goodwill and other
intangible assets 13,358 13,377 13,436
------ ------ ------
Tangible equity 145,140 145,180 99,711
Less: preferred stock 23,487 23,456 23,367
------ ------ ------
Tangible common equity $121,653 $121,724 $76,344
======== ======== =======
Total assets $1,014,859 $1,017,956 $946,145
Less: goodwill and other
intangible assets 13,358 13,377 13,436
------ ------ ------
Tangible assets $1,001,501 $1,004,579 $932,709
========== ========== ========
Forward-Looking Statements
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas; results of examinations of us by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") and of our bank subsidiaries by the Federal Deposit Insurance Corporation (the "FDIC"), the Washington State Department of Financial Institutions, Division of Banks (the "Washington DFI") or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, including the interpretation of regulatory capital or other rules; our ability to control operating costs and expenses; the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risk associated with the loans on our balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; computer systems on which we depend could fail or experience a security breach; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to implement our branch expansion strategy; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we have acquired or may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; future legislative changes in the TARP Capital Purchase Program; and other risks detailed from time to time in our filings with the Securities and Exchange Commission.
The Company cautions readers not to place undue reliance on any forward-looking statements. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for 2009 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us, and could negatively affect the Company's operating and stock price performance.
HERITAGE FINANCIAL CORPORATION
CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Dollar amounts in thousands; unaudited)
December 31, September 30, December 31,
2009 2009 2008
---- ---- ----
Assets
------
Cash on hand and in banks $20,106 $17,222 $31,478
Interest earning deposits 87,125 121,850 29,156
Investment securities
available for sale 90,736 60,416 31,922
Investment securities held
to maturity 13,636 9,785 12,081
Loans held for sale 825 - 304
Loans receivable 772,247 783,175 808,726
Less: Allowance for loan
losses (26,164) (25,052) (15,423)
------- ------- -------
Loans receivable, net 746,083 758,123 793,303
Other real estate owned 704 151 2,031
Premises and equipment, net 16,394 16,339 15,721
Federal Home Loan Bank stock 3,566 3,566 3,566
Accrued interest receivable 4,018 4,206 4,168
Prepaid expenses and other
assets 18,308 12,921 8,979
Goodwill and other intangible
assets 13,358 13,377 13,436
------ ------ ------
Total assets $1,014,859 $1,017,956 $946,145
========== ========== ========
Liabilities and Stockholders'
Equity
-----------------------------
Deposits $840,128 $845,147 $824,480
Securities sold under
agreement to repurchase 10,440 9,404 -
Accrued expenses and other
liabilities 5,793 4,848 8,518
----- ----- -----
Total liabilities 856,361 859,399 832,998
Preferred stock 23,487 23,456 23,367
Common stock 73,534 73,546 26,546
Unearned compensation (270) (292) (358)
Retained earnings 61,980 61,539 63,240
Accumulated other
comprehensive income (loss),
net (233) 308 352
---- --- ---
Total stockholders' equity 158,498 158,557 113,147
------- ------- -------
Total liabilities and
stockholders' equity $1,014,859 $1,017,956 $946,145
========== ========== ========
Common stock, shares
outstanding 11,057,972 11,055,658 6,699,550
HERITAGE FINANCIAL CORPORATION
CONDENSED STATEMENTS OF INCOME (LOSS)
(Dollar amounts in thousands, except per share amounts; unaudited)
Three Months Ended Year Ended
------------------------------ -------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- -------- --------
Interest
income:
Interest and
fees on
loans $12,452 $12,583 $13,553 $50,567 $54,919
Taxable
interest on
investment
securities 692 598 455 2,295 1,649
Nontaxable
interest on
investment
securities 68 63 52 244 197
Interest on
federal
funds sold
and interest
earning
deposits 75 60 18 235 152
Dividends on
Federal Home
Loan Bank
stock - - - - 31
--- --- --- --- ---
Total
interest
income 13,287 13,304 14,078 53,341 56,948
------ ------ ------ ------ ------
Interest expense:
Deposits 2,514 2,753 4,021 11,598 18,321
Borrowed
funds 19 22 23 47 285
--- --- --- --- ---
Total
interest
expense 2,533 2,775 4,044 11,645 18,606
----- ----- ----- ------ ------
Net
interest
income 10,754 10,529 10,034 41,696 38,342
Provision for
loan losses 4,950 4,650 4,590 19,390 7,420
----- ----- ----- ------ -----
Net
interest
income
after
provision
for loan
losses 5,804 5,879 5,444 22,306 30,922
----- ----- ----- ------ ------
Non-interest
income:
Gain on sales
of loans 178 42 52 422 435
Brokered
mortgage
income 36 28 19 156 212
Service
charges on
deposits 1,086 1,086 1,023 4,191 4,095
Rental income 36 37 45 144 285
Merchant Visa
income 754 802 754 3,008 3,039
Other income 163 110 161 746 758
--- --- --- --- ---
Total
non-interest
income 2,253 2,105 2,054 8,667 8,824
----- ----- ----- ----- -----
Non-interest
expense:
Salaries &
employee
benefits 3,074 3,658 3,645 14,259 14,689
Occupancy and
equipment 988 952 960 3,928 3,855
Data processing 412 433 406 1,681 1,575
Marketing 247 283 268 990 702
Merchant Visa 631 671 620 2,500 2,466
Professional
services 269 230 218 823 710
State and local
taxes 272 240 220 967 930
Impairment loss
on securities 236 29 668 500 1,927
Federal deposit
insurance 350 369 139 1,616 426
Other expense 898 747 761 3,631 3,139
--- --- --- ----- -----
Total
non-interest
expense 7,377 7,612 7,905 30,895 30,419
----- ----- ----- ------ ------
Income
(loss)
before
federal
income
taxes 680 372 (407) 78 9,327
Federal income
tax expense
(benefit) (92) 60 (213) (503) 2,976
--- --- ---- ---- -----
Net income
(loss) $772 $312 $(194) $581 $6,351
==== ==== ===== ==== ======
Dividends
accrued and
discount
accreted
on preferred
shares $331 $330 $143 $1,320 $143
==== ==== ==== ====== ====
Net income
(loss)
applicable
to common
shareholders $441 $(18) $(337) $(739) $6,208
==== ==== ===== ===== ======
Basic
earnings/(loss)
per common share $0.04 $(0.00) $(0.05) $(0.10) $0.93
Diluted
earnings/(loss)
per common share $0.04 $(0.00) $(0.05) $(0.10) $0.93
Average number
of common shares
outstanding 10,989,598 7,070,697 6,606,565 7,831,614 6,598,647
Average number
of diluted
common shares
outstanding 11,016,089 7,070,697 6,606,565 7,831,614 6,647,420
HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS
(Dollar amounts in thousands, except per share amounts; unaudited)
Three Months Ended Year Ended
---------------------------- ------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- -------- --------
Performance Ratios:
-------------------
Net interest
margin 4.45% 4.58% 4.67% 4.57% 4.59%
Efficiency ratio 56.72% 60.25% 65.40% 61.34% 64.49%
Return on average
assets 0.30% 0.13% (0.08)% 0.06% 0.71%
Return on average
common equity 1.28% (0.08)% (1.48)% (0.72)% 6.98%
Average Balances:
-----------------
Average assets $1,022,564 $975,500 $914,322 $978,199 $893,574
Average earning
assets 958,606 912,010 852,416 911,920 834,762
Average total
loans 778,638 785,596 812,778 787,527 795,752
Average deposits 845,606 841,569 802,449 840,204 787,758
Average equity 160,478 117,635 101,068 126,467 91,594
Average common
equity 137,020 94,208 90,374 103,055 88,906
Average tangible
common equity 123,651 80,819 87,621 89,656 75,429
As of Period End
----------------------------
December September December
31, 2009 30, 2009 31, 2008
-------- -------- --------
Financial Measures:
-------------------
Book value per common
share $12.21 $12.23 $13.40
Tangible book value
per common share $11.00 $11.02 $11.40
Stockholders' equity
to total assets 15.62% 15.58% 11.96%
Tangible common
equity to tangible
assets 12.15% 12.12% 8.19%
Tier 1 leverage
capital to average
assets 14.40% 15.12% 11.03%
Tier 1 capital to
risk-weighted assets 19.41% 18.94% 12.52%
Total capital to
risk-weighted assets 20.69% 20.22% 13.73%
Loans to deposits
ratio 88.90% 89.70% 96.26%
HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS
(Dollar amounts in thousands, except per share amounts; unaudited)
Three Months Ended Year Ended
---------------------------- -------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- -------- --------
Allowance for Loan
Losses:
------------------
Allowance balance,
beginning of period $25,052 $23,707 $12,628 $15,423 $10,374
Provision for loan
losses 4,950 4,650 4,590 19,390 7,420
Net charge-offs:
Commercial 69 1,137 10 2,667 143
Real estate mortgages 189 - - 188 280
Real estate
construction 3,564 2,157 1,743 5,724 1,818
Consumer 16 11 42 70 130
--- --- --- --- ---
Total net
charge-offs 3,838 3,305 1,795 8,649 2,371
----- ----- ----- ----- -----
Allowance balance, end
of period $26,164 $25,052 $15,423 $26,164 $15,423
======= ======= ======= ======= =======
As of Period End
----------------------------
December September December
31, 2009 30, 2009 31, 2008
-------- -------- --------
Nonperforming Assets:
---------------------
Nonaccrual loans by
type:
Commercial $7,266 $4,362 $1,176
Real estate mortgages - 676 -
Real estate
construction 25,288 30,644 2,221
Consumer - - -
--- --- ---
Total nonaccrual
loans 32,554 35,682 3,397
Restructured loans 425 - -
--- --- ---
Total nonperforming
loans 32,979 35,682 3.397
Other real estate
owned 704 151 2,031
--- --- -----
Nonperforming assets 33,683 $35,833 5,428
====== ======= =====
Accruing loans past due
90 days or more $277 $710 $664
Potential problem
loans(1) 45,848 37,346 43,061
Allowance for loan
losses to:
Total loans 3.39% 3.20% 1.91%
Nonperforming loans 79.34% 70.21% 454.02%
Nonperforming loans to
total loans 4.27% 4.56% 0.42%
Nonperforming assets to
total assets 3.32% 3.52% 0.57%
(1) Potential problem loans are those loans that are currently accruing
interest and are not considered impaired, but which are being
monitored because the financial information of the borrower causes
concern as to their ability to comply with their loan repayment
terms.
HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS
(Dollar amounts in thousands; unaudited)
Three months ended Three months ended
December 31, 2009 December 31, 2008
-------------------------- --------------------------
Interest Interest
Average Earned/ Average Average Earned/ Average
Balance Paid Rate Balance Paid Rate
------- ---- ---- ------- ---- ----
Interest Earning
Assets:
Loans, net $753,460 $12,452 6.56% $799,312 $13,553 6.73%
Investments:
Taxable 79,893 692 3.43% 35,205 455 5.13%
Nontaxable 8,896 68 3.05% 5,899 52 3.48%
Interest earning
deposits 112,791 75 0.27% 8,461 18 0.84%
Federal Home Loan
Bank stock 3,566 - - 3,539 - -
----- --- --- ----- --- ---
Total interest
earning
assets 958,606 13,287 5.50% 852,416 14,078 6.55%
Non-interest
earning assets 63,958 61,906
------ ------
Total assets $1,022,564 $914,322
========== ========
Interest Bearing
Liabilities:
Certificates of
deposit $317,332 1,777 2.22% $335,435 2,597 3.07%
Savings accounts 79,390 150 0.75% 101,915 423 1.65%
Interest bearing
demand and
money market
accounts 320,598 587 0.73% 253,450 1,001 1.57%
------- --- ---- ------- ----- ----
Total interest
bearing
deposits 717,320 2,514 1.39% 690,800 4,021 2.31%
FHLB advances
and other
borrowings - - 0.00% 4,890 23 1.89%
Securities sold
under agreement
to repurchase 9,990 19 0.75% - - -
----- --- ---- --- --- ---
Total interest
bearing
liabilities 727,310 2,533 1.38% 695,690 4,044 2.31%
Non-interest
bearing deposits 128,286 111,649
Other non-interest
bearing
liabilities 6,490 5,915
Stockholders'
equity 160,478 101,068
------- -------
Total
liabilities &
stockholders'
equity $1,022,564 $914,322
========== ========
Net interest
income $10,754 $10,034
======= =======
Net interest
spread 4.12% 4.25%
Net interest
margin 4.45% 4.67%
Average interest
earning assets
to average
interest bearing
liabilities 131.80% 122.53%
HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS
(Dollar amounts in thousands; unaudited)
December September December
31, 2009 30, 2009 31, 2008
--------------- ---------------- --------------
% of % of % of
Balance Total Balance Total Balance Total
------- ----- ------- ----- ------- -----
Loan Composition
----------------
Commercial $408,622 52.8% $443,553 56.6% $443,821 54.9%
Real estate
mortgages:
One to four
family
residential 54,448 7.0% 57,686 6.9% 57,535 7.1%
Five or more
family
residential and
commercial real
estate 194,613 25.2% 158,670 20.2% 157,542 19.5%
------- ---- ------- ---- ------- ----
Total real
estate
mortgages 249,061 32.2% 212,356 27.1% 215,077 26.6%
Real estate
construction:
One to four
family
residential 46,060 6.0% 54,863 7.0% 71,159 8.8%
Five or more
family
residential
and commercial
real estate 49,665 6.4% 52,057 6.7% 59,572 7.3%
------ --- ------ --- ------ ---
Total real
estate
construction 95,725 12.4% 106,920 13.7% 130,731 16.1%
Consumer 21,261 2.8% 21,973 2.8% 21,255 2.6%
------ --- ------ --- ------ ---
Gross loans 774,669 100.2% 784,802 100.2% 810,844 100.2%
Deferred loan fees (1,597) (0.2)% (1,627) (0.2)% (1,854) (0.2)%
------ ---- ------ ---- ------ ----
Total loans $773,072 100.0% $783,175 100.0% $809,030 100.0%
======== ===== ======== ===== ======== =====
Deposit Composition
-------------------
Non-interest demand
deposits $133,169 15.8% $122,062 14.4% $115,551 14.0%
NOW accounts 211,509 25.2% 206,361 24.4% 122,104 14.8%
Money market
accounts 113,332 13.5% 117,286 13.9% 141,716 17.2%
Savings accounts 78,205 9.3% 78,672 9.3% 98,715 12.0%
------ --- ------ --- ------ ----
Total
non-maturity
deposits 536,215 63.8% 524,381 62.0% 478,086 58.0%
Certificate of
deposit accounts 303,913 36.2% 320,766 38.0% 346,394 42.0%
------- ---- ------- ---- ------- ----
Total deposits $840,128 100.0% $845,147 100.0% $824,480 100.0%
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SOURCE Heritage Financial Corporation
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