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| 8-K - 8-K - HERITAGE FINANCIAL CORP /WA/ | d671796d8k.htm |
 Q4
2013 Investor Presentation February 6, 2014
Heritage Financial Corporation
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
Exhibit 99.1 |
 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 pending Washington Banking merger and our other merger
and acquisition activities might not be realized within the anticipated time frames or
at all, and costs or difficulties relating to integration matters, including
but not limited to, customer and employee retention might be greater than expected;
The possibility that the requisite shareholder approvals for the pending Washington
Banking merger may not be obtained; The credit and concentration risks of
lending activities; Changes in general economic conditions, either nationally or
in our market areas; Competitive market pricing factors and interest rate
risks; Market interest rate volatility;
Balance sheet (for example, loans) concentrations;
Fluctuations in demand for loans and other financial services in our market
areas; Changes in legislative or regulatory requirements or the results of
regulatory examinations; The ability to recruit and retain key management and
staff; Risks associated with our ability to implement our expansion strategy and
merger integration; Stability of funding sources and continued availability of
borrowings; Adverse changes in the securities markets;
The inability of key third-party providers to perform their obligations to
us; 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
2014
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.
Forward
Looking
Statement
Changes in accounting policies and practices and 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; and These and other risks as
may be detailed from time to time in our filings with the Securities and Exchange Commission. |
 3
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
statement
includes
a
preliminary
joint
proxy
statement
of
Heritage
and
Washington
Banking
that
also
constitutes
a
preliminary
prospectus
of
Heritage,
which,
when
finalized,
will
be
sent
to
the
shareholders
of
Heritage
and
Washington
Banking.
Shareholders
are
advised
to
read
the
preliminary
joint
proxy
statement/prospectus
regarding
the
proposed
merger,
the
definitive
joint
proxy
statement/prospectus
(when
it
becomes
available),
and
any
other
relevant
documents
filed
with
the
SEC,
as
well
as
any
amendments
or
supplements
to
those
documents,
because
they
contain,
or
will
contain,
as
the
case
may
be,
important
information
about
Heritage,
Washington
Banking
and
the
proposed
transaction.
Copies
of
all
documents
relating
to
the
merger
filed
by
Heritage
and
Washington
Banking
can
be
obtained
free
of
charge
from
the
SEC’s
website
at
www.sec.gov
.
These
documents
also
can
be
obtained
free
of
charge
by
accessing
Heritage’s
website
at
http://www.hf-wa.com/docs.aspx?iid=1024198
or
by
accessing
Washington
Banking’s
website
at
http://investor.washingtonbanking.info/docs.aspx?iid=1025104
.
Alternatively,
these
documents,
can
be
obtained
free
of
charge
from
Heritage
upon
written
request
to
Heritage
Financial
Corporation,
Secretary,
201
Fifth
Avenue
S.W.,
Olympia,
WA
98501
or
by
calling
(360)
943-1500,
or
from
Washington
Banking,
upon
written
request
to
Washington
Banking
Company,
Secretary,
450
SW
Bayshore
Drive,
Oak
Harbor,
Washington
98277
or
by
calling
(360)
240-6458.
Heritage,
Washington
Banking
and
certain
of
their
respective
directors
and
executive
officers
may
be
deemed
to
be
participants
in
the
solicitation
of
proxies
from
shareholders
in
connection
with
the
proposed
transaction
under
the
rules
of
the
SEC.
Information
about
these
participants
may
be
found
in
the
definitive
proxy
statement
of
Heritage
relating
to
its
2013
Annual
Meeting
of
Shareholders
filed
with
the
SEC
by
Heritage
on
March
19,
2013
and
the
definitive
proxy
statement
of
Washington
Banking
relating
to
its
2013
Annual
Meeting
of
Shareholders
filed
with
the
SEC
on
March
26,
2013.
These
definitive
proxy
statements
can
be
obtained
free
of
charge
from
the
sources
indicated
above.
Additional
information
regarding
the
interests
of
these
participants
will
also
be
included
in
the
joint
proxy
statement/prospectus
regarding
the
proposed
transaction
when
it
becomes
available.
Forward
Looking
Statement |
 •
Company Information
•
Financial Performance
•
Strategic Initiatives
4
Overview |
 Company Information
5 |
 6
Financial data as of December 31, 2013
•
East Vancouver Branch opened January 13, 2014
Overview
NASDAQ Symbol
HFWA
Market Capitalization
$277 million
Headquarters
Olympia, WA
Branches
35
Number of FTE
373
Our
Company |
 7
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 market share within combined market
area among banks and thrifts headquartered in
the state of Washington
(2)
Strength of both franchises will provide momentum for
accelerated growth initiatives in King County (Greater
Seattle / Bellevue)
Larger scale, deeper resources, creates new
opportunities
WBCO
(30
Branches)
HFWA
(36
Branches)
WBCO
Proposed
(1
Branch)
WBCO
Announced
Merger
Source: SNL Financial and FDIC deposit reports, as of 6/30/2013
(1) 36 HFWA branches as of 2/3/2014
(2) Combined footprint of all counties in Washington with either
a HFWA branch or WBCO
branch. Includes all institutions with corporate headquarters in
the state of Washington |
 8
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 |
 Financial Performance
9 |
 10
Balance
Sheet |
 11
Financial
data
as
of
December
31,
2013
Total
Loan
Portfolio |
 12
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 |
 13
Financial data as of and for the year ending December 31, 2013
Deposit Base |
 Annual Earnings (Loss) Per Share
Quarterly Earnings Per Share
14
* 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-tax) related to 2013 company initiatives.
Diluted Earnings Per Share |
 15
Strategic Initiatives
15 |
 •
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)
16
2013 Strategic Initiatives |
 17
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 Bank Branches
Announced WBCO Merger |
 18
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
33
42
35
6%
Avg. Deposits per Branch
$33,878
$33,952
$39,977
18%
Number of FTE
363
415
373
2%
Avg. Assets per Employee
$3,707
$4,035
$4,448
20%
Dollars in thousands
Resulting Performance Metrics |
 Long term cash dividend strategy is 35% to 40% payout range.
19
2011
2012
2013
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Quarterly
Dividend
-
$.03
$.05
$.05
$.06
$.08
$.08
$.08
$.08
$.08
$.08
$.08
Special
Dividend
-
-
-
$.25
-
$.20
-
$.30
-
$.10
-
-
Cash Dividends |
 20
Conclusion
20 |
 •
Strong financial foundation
•
Positioned to take advantage of the right
opportunities
•
Continued focus on building long-term
franchise value
•
Disciplined approach to acquisitions
21
Investment Value |
 Thank You
Questions? |