Second Quarter 2024 Highlights
- Net income was $14.2 million, or
$0.41 per diluted share, for the
second quarter compared to $5.7
million, or $0.16 per diluted
share, for the first quarter.
- The second quarter results include a loss on sale of securities
of $1.9 million, or $0.04 per diluted share.
- Loans receivable increased $104.5
million, or 2.4% (9.5% annualized), during the second
quarter.
- Net interest margin was 3.29% for the second quarter compared
to 3.32% for the first quarter.
- Cost of total deposits was 1.34% for the second quarter
compared to 1.19% for the first quarter.
- Noninterest expense to average total assets was 2.21% for the
second quarter compared to 2.29% for the first quarter.
- Declared a regular cash dividend of $0.23 per share on July 24, 2024.
- Announced CEO succession plan, with Bryan McDonald named as President of Heritage
Financial Corporation and as Chief Executive Officer of Heritage
Bank effective July 1, 2024;
Jeff Deuel will continue as Chief
Executive Officer of Heritage Financial Corporation until
May 6, 2025.
OLYMPIA,
Wash., July 25, 2024 /PRNewswire/ -- Heritage
Financial Corporation (Nasdaq GS: HFWA) (the "Company"), the parent
company of Heritage Bank (the "Bank"), today reported net income of
$14.2 million for the second quarter
of 2024 compared to $5.7 million for
the first quarter of 2024 and $16.8
million for the second quarter of 2023. Diluted earnings per
share for the second quarter of 2024 were $0.41 compared to $0.16 for the first quarter of 2024 and
$0.48 for the second quarter of
2023.
In the second quarter of 2024, the Company incurred a pre-tax
loss of $1.9 million on the sale of
investment securities due to the strategic repositioning of
its balance sheet, which decreased diluted earnings per share by
$0.04 for the quarter. The Company
sold $38.7 million in investment
securities with an estimated weighted average book yield of 2.73%.
The proceeds from sales were used to fund loan growth for the
quarter.
Jeff Deuel, Chief Executive
Officer of the Company, commented, "We are pleased with our
accomplishments for the second quarter including recognizing strong
loan growth and we are seeing greater benefit from our ongoing
expense management measures. Although we continue to experience
modest margin compression, we expect our strategies will result in
improved profitability as we transition into a more normalized rate
environment."
Financial Highlights
The following table provides financial highlights at the dates
and for the periods indicated:
|
As of or for the
Quarter Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
June 30,
2023
|
|
(Dollars in
thousands, except per share amounts)
|
|
Net income
|
$
14,159
|
|
$
5,748
|
|
$
16,846
|
|
Pre-tax, pre-provision
income(1)
|
$
17,263
|
|
$
8,260
|
|
$
21,780
|
|
Diluted earnings per
share
|
$
0.41
|
|
$
0.16
|
|
$
0.48
|
|
Return on average
assets(2)
|
0.80 %
|
|
0.33 %
|
|
0.95 %
|
|
Pre-tax, pre-provision
return on average assets(1)(2)
|
0.98 %
|
|
0.47 %
|
|
1.22 %
|
|
Return on average
common equity(2)
|
6.75 %
|
|
2.73 %
|
|
8.19 %
|
|
Return on average
tangible common equity(1)(2)
|
9.74 %
|
|
4.07 %
|
|
12.04 %
|
|
Adjusted return on
average tangible common equity(1)(2)
|
10.76 %
|
|
9.34 %
|
|
12.04 %
|
|
Net interest
margin(2)
|
3.29 %
|
|
3.32 %
|
|
3.56 %
|
|
Cost of total
deposits(2)
|
1.34 %
|
|
1.19 %
|
|
0.61 %
|
|
Efficiency
ratio
|
69.4 %
|
|
83.0 %
|
|
65.5 %
|
|
Adjusted efficiency
ratio(1)
|
67.1 %
|
|
68.9 %
|
|
65.5 %
|
|
Noninterest expense to
average total assets(2)
|
2.21 %
|
|
2.29 %
|
|
2.32 %
|
|
Total assets
|
$ 7,059,857
|
|
$ 7,091,283
|
|
$ 7,115,410
|
|
Loans receivable,
net
|
$ 4,481,396
|
|
$ 4,378,429
|
|
$ 4,204,936
|
|
Total
deposits
|
$ 5,515,652
|
|
$ 5,532,327
|
|
$ 5,595,543
|
|
Loan to deposit
ratio(3)
|
82.2 %
|
|
80.0 %
|
|
76.0 %
|
|
Book value per
share
|
$
24.66
|
|
$
24.43
|
|
$
23.39
|
|
Tangible book value per
share(1)
|
$
17.56
|
|
$
17.36
|
|
$
16.34
|
|
|
|
(1)
|
Represents a non-GAAP
financial measure. See "Non-GAAP Financial Measures" section for a
reconciliation to the comparable GAAP financial measure.
|
|
(2)
|
Annualized.
|
|
(3)
|
Loans receivable
divided by total deposits.
|
Balance Sheet
Cash and cash equivalents decreased $75.9
million, or 40.0%, to $113.8
million at June 30, 2024 from
$189.6 million at March 31, 2024 primarily due to an increase in
loans.
Total investment securities decreased $71.9 million, or 4.2%, to $1.66 billion at June 30,
2024 from $1.73 billion at
March 31, 2024. As previously
discussed, the Company sold $38.7 million in investment
securities at a loss of $1.9 million
as part of its ongoing strategic balance sheet repositioning, in
addition to which there were investment maturities and repayments
of $33.6 million during the second
quarter of 2024.
The following table summarizes the composition of the Company's
investment securities portfolio at the dates indicated:
|
June 30,
2024
|
|
March 31,
2024
|
|
Change
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
|
$
|
|
%
|
|
(Dollars in
thousands)
|
|
Investment
securities available for sale, at fair value:
|
|
U.S. government and
agency securities
|
$
12,474
|
|
0.8 %
|
|
$
13,417
|
|
0.8 %
|
|
$
(943)
|
|
(7.0) %
|
|
Municipal
securities
|
69,720
|
|
4.2
|
|
71,955
|
|
4.2
|
|
(2,235)
|
|
(3.1)
|
|
Residential CMO and
MBS
|
446,468
|
|
26.9
|
|
476,742
|
|
27.5
|
|
(30,274)
|
|
(6.4)
|
|
Commercial CMO and
MBS
|
378,768
|
|
22.8
|
|
409,468
|
|
23.7
|
|
(30,700)
|
|
(7.5)
|
|
Corporate
obligations
|
11,384
|
|
0.7
|
|
11,191
|
|
0.6
|
|
193
|
|
1.7
|
|
Other asset-backed
securities
|
12,434
|
|
0.7
|
|
13,737
|
|
0.8
|
|
(1,303)
|
|
(9.5)
|
|
Total
|
$
931,248
|
|
56.1 %
|
|
$
996,510
|
|
57.6 %
|
|
$
(65,262)
|
|
(6.5) %
|
|
Investment
securities held to maturity, at amortized cost:
|
|
U.S. government and
agency securities
|
$
151,146
|
|
9.1 %
|
|
$
151,110
|
|
8.7 %
|
|
$
36
|
|
— %
|
|
Residential CMO and
MBS
|
256,742
|
|
15.5
|
|
262,359
|
|
15.2
|
|
(5,617)
|
|
(2.1)
|
|
Commercial CMO and
MBS
|
319,454
|
|
19.3
|
|
320,537
|
|
18.5
|
|
(1,083)
|
|
(0.3)
|
|
Total
|
$
727,342
|
|
43.9 %
|
|
$
734,006
|
|
42.4 %
|
|
$
(6,664)
|
|
(0.9) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment
securities
|
$
1,658,590
|
|
100.0 %
|
|
$
1,730,516
|
|
100.0 %
|
|
$
(71,926)
|
|
(4.2) %
|
Loans receivable increased $104.5
million, or 2.4%, to $4.53
billion at June 30, 2024 from
$4.43 billion at March 31, 2024. New loans funded in the second
quarter of 2024 and first quarter of 2024 totaled $166.7 million and $101.7
million, respectively. Loan prepayments increased slightly
during the second quarter of 2024 to $48.5
million, compared to $39.1
million during the prior quarter.
Non-owner occupied CRE increased $56.9
million, or 3.3%, due primarily to new loan production of
$40.7 million during the second
quarter of 2024 and advances on outstanding commitments.
Residential real estate loans increased $27.0 million, or 7.0%, due primarily to
residential loan purchases. Commercial and industrial loans
increased $19.1 million, or 2.5%, due
primarily to new loan production of $62.8
million during the quarter, offset by pay downs on
outstanding commitments.
The following table summarizes the Company's loans receivable,
net at the dates indicated:
|
June 30,
2024
|
|
March 31,
2024
|
|
Change
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
|
$
|
|
%
|
|
(Dollars in
thousands)
|
|
Commercial
business:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$
779,495
|
|
17.2 %
|
|
$
760,391
|
|
17.2 %
|
|
$
19,104
|
|
2.5 %
|
|
Owner-occupied
commercial real estate ("CRE")
|
953,518
|
|
21.0
|
|
951,583
|
|
21.5
|
|
1,935
|
|
0.2
|
|
Non-owner occupied
CRE
|
1,759,605
|
|
38.8
|
|
1,702,665
|
|
38.4
|
|
56,940
|
|
3.3
|
|
Total commercial
business
|
3,492,618
|
|
77.0
|
|
3,414,639
|
|
77.1
|
|
77,979
|
|
2.3
|
|
Residential real
estate
|
413,358
|
|
9.1
|
|
386,357
|
|
8.7
|
|
27,001
|
|
7.0
|
|
Real estate
construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
80,451
|
|
1.8
|
|
84,081
|
|
1.9
|
|
(3,630)
|
|
(4.3)
|
|
Commercial and
multifamily
|
378,695
|
|
8.4
|
|
372,532
|
|
8.4
|
|
6,163
|
|
1.7
|
|
Total real estate
construction and land development
|
459,146
|
|
10.2
|
|
456,613
|
|
10.3
|
|
2,533
|
|
0.6
|
|
Consumer
|
167,493
|
|
3.7
|
|
170,556
|
|
3.9
|
|
(3,063)
|
|
(1.8)
|
|
Loans
receivable
|
4,532,615
|
|
100.0 %
|
|
4,428,165
|
|
100.0 %
|
|
104,450
|
|
2.4
|
|
Allowance for credit
losses on loans
|
(51,219)
|
|
|
|
(49,736)
|
|
|
|
(1,483)
|
|
3.0
|
|
Loans receivable,
net
|
$
4,481,396
|
|
|
|
$
4,378,429
|
|
|
|
$
102,967
|
|
2.4 %
|
Total deposits decreased $16.7
million, or 0.3%, to $5.52
billion at June 30, 2024 from
$5.53 billion at March 31, 2024. Certificates of deposit increased
$103.5 million, or 13.3%, to
$883.2 million at June 30, 2024 from $779.7
million at March 31, 2024
primarily due to transfers from non-maturity deposit accounts as
customers moved balances to higher yielding accounts. Average total
deposits increased $29.2 million to
$5.56 billion for the second quarter
of 2024, from $5.53 billion for the
first quarter of 2024.
The following table summarizes the Company's total deposits at
the dates indicated:
|
June 30,
2024
|
|
March 31,
2024
|
|
Change
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
|
$
|
|
%
|
|
(Dollars in
thousands)
|
|
Noninterest demand
deposits
|
$
1,599,367
|
|
29.0 %
|
|
$
1,637,111
|
|
29.5 %
|
|
$
(37,744)
|
|
(2.3) %
|
|
Interest bearing demand
deposits
|
1,487,670
|
|
27.0
|
|
1,552,584
|
|
28.1
|
|
(64,914)
|
|
(4.2)
|
|
Money market
accounts
|
1,098,821
|
|
19.9
|
|
1,099,983
|
|
19.9
|
|
(1,162)
|
|
(0.1)
|
|
Savings
accounts
|
446,583
|
|
8.1
|
|
462,974
|
|
8.4
|
|
(16,391)
|
|
(3.5)
|
|
Total non-maturity
deposits
|
4,632,441
|
|
84.0
|
|
4,752,652
|
|
85.9
|
|
(120,211)
|
|
(2.5)
|
|
Certificates of
deposit
|
883,211
|
|
16.0
|
|
779,675
|
|
14.1
|
|
103,536
|
|
13.3
|
|
Total
deposits
|
$
5,515,652
|
|
100.0 %
|
|
$
5,532,327
|
|
100.0 %
|
|
$
(16,675)
|
|
(0.3) %
|
Total borrowings were $500 million
at June 30, 2024 and March 31, 2024. Federal Reserve Bank ("FRB") Bank
Term Funding Program borrowings totaling $400 million matured in May 2024 and were replaced with $400 million in borrowings from the Federal Home
Loan Bank ("FHLB") during the second quarter of 2024.
Total stockholders' equity increased $2.9
million, or 0.3%, to $850.5
million at June 30, 2024
compared to $847.6 million at
March 31, 2024 due primarily to
$14.2 million of net income
recognized for the quarter, partially offset by $8.1 million in dividends paid to common
shareholders and $4.4 million in
common stock repurchases.
On April 24, 2024, the Company's
Board of Directors authorized the repurchase of up to 5% of the
Company's outstanding common stock or approximately 1.7 million
shares. The new stock repurchase program superseded the previous
stock repurchase program, which was authorized in March 2020 and allowed for the buyback of
approximately 1.8 million shares. The previous program was
substantially completed during the quarter ended March 31, 2024. During the second quarter of
2024, the Company repurchased 240,153 shares.
The Company and Bank continued to maintain capital levels in
excess of the applicable regulatory requirements for them both to
be categorized as "well-capitalized" at June
30, 2024.
The following table summarizes the capital ratios for the
Company at the dates indicated:
|
June 30,
2024
|
|
March 31,
2024
|
|
Stockholders' equity to
total assets
|
12.0 %
|
|
12.0 %
|
|
Tangible common equity
to tangible assets (1)
|
8.9
|
|
8.8
|
|
Common equity tier 1
capital ratio (2)
|
12.6
|
|
12.6
|
|
Leverage ratio
(2)
|
10.1
|
|
10.0
|
|
Tier 1 capital ratio
(2)
|
13.0
|
|
13.0
|
|
Total capital ratio
(2)
|
13.9
|
|
13.9
|
|
|
|
(1)
|
Represents a non-GAAP
financial measure. See "Non-GAAP Financial Measures" section for a
reconciliation to the comparable GAAP financial measure.
|
|
(2)
|
Current quarter ratios
are estimates pending completion and filing of the Company's
regulatory reports.
|
Allowance for Credit Losses and Provision for Credit
Losses
The allowance for credit losses ("ACL") on loans as a percentage
of loans receivable was 1.13% at June 30,
2024 compared to 1.12% at March 31,
2024. During the second quarter of 2024, the Company
recorded a $1.5 million provision for
credit losses on loans, compared to a $1.7
million provision for credit losses on loans during the
first quarter of 2024. The provision for credit losses on loans
during the second quarter of 2024 was primarily driven by loan
growth during the quarter.
During the second quarter of 2024, the Company recorded a
$202,000 reversal of provision for
credit losses on unfunded commitments compared to a $312,000 reversal of provision for credit losses
on unfunded commitments during the first quarter of 2024. The
reversal of provision for credit losses on unfunded commitments
during the second quarter of 2024 was due primarily to a decrease
in the unfunded exposure on loans and an increase in utilization
rates.
The following table provides detail on the changes in the ACL on
loans and the ACL on unfunded commitments, and the related
provision for (reversal of) credit losses for the periods
indicated:
|
As of or for the
Quarter Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
June 30,
2023
|
|
ACL on
Loans
|
|
ACL on
Unfunded
|
|
Total
|
|
ACL on
Loans
|
|
ACL on
Unfunded
|
|
Total
|
|
ACL on
Loans
|
|
ACL on
Unfunded
|
|
Total
|
|
(Dollars in
thousands)
|
|
Balance, beginning of
period
|
$ 49,736
|
|
$
976
|
|
$ 50,712
|
|
$ 47,999
|
|
$ 1,288
|
|
$ 49,287
|
|
$ 44,469
|
|
$ 1,856
|
|
$ 46,325
|
|
Provision for (reversal
of) credit losses
|
1,470
|
|
(202)
|
|
1,268
|
|
1,704
|
|
(312)
|
|
1,392
|
|
1,988
|
|
(79)
|
|
1,909
|
|
Net recoveries (net
charge-offs)
|
13
|
|
—
|
|
13
|
|
33
|
|
—
|
—
|
33
|
|
(49)
|
|
—
|
|
(49)
|
|
Balance, end of
period
|
$ 51,219
|
|
$
774
|
|
$ 51,993
|
|
$ 49,736
|
|
$
976
|
|
$ 50,712
|
|
$ 46,408
|
|
$ 1,777
|
|
$ 48,185
|
Credit Quality
The percentage of classified loans to loans receivable increased
to 1.8% at June 30, 2024, compared to
1.6% at March 31, 2024. Classified
loans include loans rated substandard or worse. The increase was
due primarily to the downgrade of a single $15.1 million commercial and multifamily
construction loan to substandard from special mention. Total loans
designated as special mention decreased by $8.5 million to $93.7
million at June 30, 2024,
compared to $102.2 million at
March 31, 2024.
The following table illustrates total loans by risk rating and
their respective percentage of total loans at the dates
indicated:
|
June 30,
2024
|
|
March 31,
2024
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
|
(Dollars in
thousands)
|
|
Risk Rating:
|
|
|
|
|
|
|
|
|
Pass
|
$
4,356,425
|
|
96.1 %
|
|
$
4,255,750
|
|
96.1 %
|
|
Special
Mention
|
93,694
|
|
2.1
|
|
102,232
|
|
2.3
|
|
Substandard
|
82,496
|
|
1.8
|
|
70,183
|
|
1.6
|
|
Total
|
$
4,532,615
|
|
100.0 %
|
|
$
4,428,165
|
|
100.0 %
|
Nonaccrual loans to loans receivable were 0.08% and 0.11% at
June 30, 2024 and March 31, 2024, respectively. Changes in
nonaccrual loans during the periods indicated were as follows:
|
Quarter
Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
June 30,
2023
|
|
(Dollars in
thousands)
|
|
Balance, beginning of
period
|
$
4,792
|
|
$
4,468
|
|
$
4,815
|
|
Additions
|
549
|
|
593
|
|
—
|
|
Net principal payments
and transfers to accruing status
|
(483)
|
|
(269)
|
|
(185)
|
|
Payoffs
|
(769)
|
|
—
|
|
—
|
|
Charge-offs
|
(263)
|
|
—
|
|
—
|
|
Balance, end of
period
|
$
3,826
|
|
$
4,792
|
|
$
4,630
|
Liquidity
Total liquidity sources available at June
30, 2024 were $2.41 billion.
This includes on- and off-balance sheet liquidity. The Company has
access to FHLB advances and the FRB Discount Window. The Company's
available liquidity sources at June 30,
2024 represented a coverage ratio of 43.7% of total deposits
and 116.1% of estimated uninsured deposits.
The following table summarizes the Company's available
liquidity:
|
Quarter
Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
(Dollars in
thousands)
|
|
On-balance sheet
liquidity
|
|
|
|
|
Cash and cash
equivalents
|
$
113,757
|
|
$
189,647
|
|
Unencumbered
investment securities available for sale (1)
|
926,822
|
|
708,378
|
|
Total on-balance sheet
liquidity
|
$
1,040,579
|
|
$
898,025
|
|
Off-balance sheet
liquidity
|
|
|
|
|
FRB borrowing
availability
|
$
278,632
|
|
$
71,300
|
|
FHLB borrowing
availability (2)
|
943,492
|
|
1,384,631
|
|
Fed funds line
borrowing availability with correspondent banks
|
145,000
|
|
145,000
|
|
Total off-balance
sheet liquidity
|
$
1,367,124
|
|
$
1,600,931
|
|
Total available
liquidity
|
$
2,407,703
|
|
$
2,498,956
|
|
|
|
(1)
|
Investment securities
available for sale at fair value.
|
|
(2)
|
Includes FHLB total
borrowing availability of $1.34 billion at June 30, 2024 based on
pledged assets, however, maximum credit capacity is 45% of the
Bank's total assets one quarter in arrears or
$3.19 billion.
|
Net Interest Income and Net Interest Margin
Net interest income decreased $417,000, or 0.8%, during the second quarter of
2024 compared to the first quarter of 2024 due primarily to an
increase of $2.6 million in interest
expense offset partially by a $2.2
million increase in interest income. Net interest margin
decreased three basis points to 3.29% during the second quarter of
2024 from 3.32% during the first quarter of 2024.
The cost of interest bearing deposits increased 19 basis points
to 1.89% for the second quarter of 2024 from 1.70% for the first
quarter of 2024. This increase was primarily due to customers
transferring balances from non-maturity deposits to higher rate
certificates of deposit.
The yield on interest earning assets increased 14 basis points
to 4.93% for the second quarter of 2024, compared to 4.79% for the
first quarter of 2024. The yield on loans receivable, net,
increased 11 basis points to 5.52% during the second quarter of
2024 compared to 5.41% during the first quarter of 2024 due
primarily to higher rates on new and renewed loans. The impact to
loan yield from recoveries of interest and fees on loans classified
as nonaccrual was three basis points during the second quarter of
2024, compared to no impact during the first quarter of 2024. The
yield on taxable securities increased nine basis points to 3.38%
during the second quarter of 2024 compared to 3.29% during the
first quarter of 2024 due primarily to sales of lower yielding
investments during the first and second quarters of 2024.
Net interest income decreased $4.7
million, or 8.4%, during the second quarter of 2024 compared
to the second quarter of 2023 and the net interest margin decreased
27 basis points to 3.29% from 3.56% during this same period. The
decrease was due primarily to an increase in interest expense
resulting from increased deposit rates and borrowing expense,
partially offset by an increase in yields earned on interest
earning assets following increases in market interest rates.
The following table provides relevant net interest income
information for the periods indicated:
|
Quarter
Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
June 30,
2023
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate (1)
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate (1)
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate (1)
|
|
(Dollars in
thousands)
|
|
Interest Earning
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable, net
(2)(3)
|
$ 4,415,790
|
|
$ 60,608
|
|
5.52 %
|
|
$ 4,303,394
|
|
$ 57,862
|
|
5.41 %
|
|
$ 4,145,556
|
|
$ 53,623
|
|
5.19 %
|
|
Taxable
securities
|
1,685,795
|
|
14,156
|
|
3.38
|
|
1,810,709
|
|
14,834
|
|
3.29
|
|
1,989,297
|
|
14,774
|
|
2.98
|
|
Nontaxable securities
(3)
|
18,812
|
|
165
|
|
3.53
|
|
21,302
|
|
181
|
|
3.42
|
|
71,803
|
|
520
|
|
2.90
|
|
Interest earning
deposits
|
121,539
|
|
1,653
|
|
5.47
|
|
108,733
|
|
1,476
|
|
5.46
|
|
90,754
|
|
1,154
|
|
5.10
|
|
Total interest earning
assets
|
6,241,936
|
|
76,582
|
|
4.93 %
|
|
6,244,138
|
|
74,353
|
|
4.79 %
|
|
6,297,410
|
|
70,071
|
|
4.46 %
|
|
Noninterest earning
assets
|
864,855
|
|
|
|
|
|
848,314
|
|
|
|
|
|
845,455
|
|
|
|
|
|
Total
assets
|
$ 7,106,791
|
|
|
|
|
|
$ 7,092,452
|
|
|
|
|
|
$ 7,142,865
|
|
|
|
|
|
Interest Bearing
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of
deposit
|
$
838,285
|
|
$
9,128
|
|
4.38 %
|
|
$
733,816
|
|
$
7,671
|
|
4.20 %
|
|
$
421,451
|
|
$
2,483
|
|
2.36 %
|
|
Savings
accounts
|
453,099
|
|
190
|
|
0.17
|
|
475,075
|
|
230
|
|
0.19
|
|
551,201
|
|
157
|
|
0.11
|
|
Interest bearing demand
and money market accounts
|
2,625,593
|
|
9,135
|
|
1.40
|
|
2,659,999
|
|
8,487
|
|
1.28
|
|
2,782,353
|
|
5,967
|
|
0.86
|
|
Total interest bearing
deposits
|
3,916,977
|
|
18,453
|
|
1.89
|
|
3,868,890
|
|
16,388
|
|
1.70
|
|
3,755,005
|
|
8,607
|
|
0.92
|
|
Junior subordinated
debentures
|
21,874
|
|
539
|
|
9.91
|
|
21,800
|
|
547
|
|
10.09
|
|
21,577
|
|
499
|
|
9.28
|
|
Securities sold under
agreement to repurchase
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
39,755
|
|
63
|
|
0.64
|
|
Borrowings
|
500,230
|
|
6,477
|
|
5.21
|
|
500,660
|
|
5,888
|
|
4.73
|
|
417,896
|
|
5,078
|
|
4.87
|
|
Total interest bearing
liabilities
|
4,439,081
|
|
25,469
|
|
2.31 %
|
|
4,391,350
|
|
22,823
|
|
2.09 %
|
|
4,234,233
|
|
14,247
|
|
1.35 %
|
|
Noninterest demand
deposits
|
1,638,262
|
|
|
|
|
|
1,657,132
|
|
|
|
|
|
1,900,640
|
|
|
|
|
|
Other noninterest
bearing liabilities
|
186,010
|
|
|
|
|
|
197,023
|
|
|
|
|
|
183,250
|
|
|
|
|
|
Stockholders'
equity
|
843,438
|
|
|
|
|
|
846,947
|
|
|
|
|
|
824,742
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$ 7,106,791
|
|
|
|
|
|
$ 7,092,452
|
|
|
|
|
|
$ 7,142,865
|
|
|
|
|
|
Net interest income and
spread
|
|
|
$ 51,113
|
|
2.62 %
|
|
|
|
$ 51,530
|
|
2.70 %
|
|
|
|
$ 55,824
|
|
3.11 %
|
|
Net interest
margin
|
|
|
|
|
3.29 %
|
|
|
|
|
|
3.32 %
|
|
|
|
|
|
3.56 %
|
|
|
|
(1)
|
Annualized; average
balances are calculated using daily balances.
|
|
(2)
|
Average loans
receivable, net includes loans held for sale and loans classified
as nonaccrual, which carry a zero yield. Interest earned on loans
receivable, net includes the amortization of net deferred loan fees
of $971,000, $809,000 and $726,000 for the second quarter of 2024,
first quarter of 2024 and second quarter of 2023,
respectively.
|
|
(3)
|
Yields on tax-exempt
loans and securities have not been stated on a tax-equivalent
basis.
|
Noninterest Income
Noninterest income increased $8.1
million to $5.2 million during
the second quarter of 2024 from a loss of $2.9 million during the first quarter of 2024.
The increase was due primarily to the reduction of loss resulting
from the sale of investment securities recognized in the
second quarter of 2024 compared to the prior quarter.
Noninterest income decreased $2.0
million from the same period in 2023 due primarily to a
$1.9 million pre-tax loss on the sale
of investment securities during the second quarter of 2024. Card
revenue declined modestly due to a reduction in card activity
as non-maturity deposit balances have declined.
The following table presents the key components of noninterest
income and the change for the periods indicated:
|
Quarter
Ended
|
|
Quarter Over
Quarter Change
|
|
Prior
Year
Quarter
Change
|
|
June 30,
2024
|
|
March 31,
2024
|
|
June 30,
2023
|
|
$
|
|
%
|
|
$
|
|
%
|
|
(Dollars in
thousands)
|
|
Service charges and
other fees
|
$
2,817
|
|
$
2,788
|
|
$
2,682
|
|
$
29
|
|
1.0 %
|
|
$ 135
|
|
5.0 %
|
|
Card revenue
|
1,930
|
|
1,839
|
|
2,123
|
|
91
|
|
4.9
|
|
(193)
|
|
(9.1)
|
|
Loss on sale of
investment securities
|
(1,921)
|
|
(9,973)
|
|
—
|
|
8,052
|
|
(80.7)
|
|
(1,921)
|
|
(100.0)
|
|
Gain on sale of loans,
net
|
—
|
|
26
|
|
101
|
|
(26)
|
|
(100.0)
|
|
(101)
|
|
(100.0)
|
|
Interest rate swap
fees
|
52
|
|
—
|
|
115
|
|
52
|
|
—
|
|
(63)
|
|
(54.8)
|
|
Bank owned life
insurance income
|
931
|
|
920
|
|
837
|
|
11
|
|
1.2
|
|
94
|
|
11.2
|
|
Gain on sale of other
assets, net
|
49
|
|
—
|
|
—
|
|
49
|
|
—
|
|
49
|
|
100.0
|
|
Other income
|
1,388
|
|
1,500
|
|
1,423
|
|
(112)
|
|
(7.5)
|
|
(35)
|
|
(2.5)
|
|
Total noninterest
income (loss)
|
$
5,246
|
|
$
(2,900)
|
|
$
7,281
|
|
$
8,146
|
|
(280.9) %
|
|
$
(2,035)
|
|
(27.9) %
|
Noninterest Expense
Noninterest expense decreased $1.3
million, or 3.2%, during the second quarter of 2024 from the
first quarter of 2024 due primarily to a decline in compensation
and employee benefits. Compensation and employee benefits declined
due primarily to severance costs resulting from staff reductions of
$1.1 million recognized during the
first quarter of 2024 offset partially by an increase in salary
expense due to annual merit increases in base pay. Occupancy and
equipment declined due primarily to a decrease in maintenance costs
related to winter weather conditions experienced in the first
quarter of 2024. Data processing increased during the quarter due
to a non-recurring $230,000 refund
recognized in the first quarter of 2024 related to a contract
termination.
Noninterest expense decreased $2.2
million, or 5.4%, during the second quarter of 2024 compared
to the same period in 2023, primarily due to a decrease in data
processing and other expense. Data processing decreased primarily
due to a decline in ongoing costs resulting from prior
technology-related contract renewals and terminations. Other
expense decreased due to a decrease in customer account loss
expense and a reduction in employee related expenses which included
additional expenses in the second quarter of 2024 related to newly
added teams. Compensation and employee benefits decreased due to a
reduction in full-time equivalent employees to 748 at June 30, 2024 from 813 at June 30, 2023.
The following table presents the key components of noninterest
expense and the change for the periods indicated:
|
Quarter
Ended
|
|
Quarter Over
Quarter Change
|
|
Prior Year
Quarter Change
|
|
June 30,
2024
|
|
March 31,
2024
|
|
June 30,
2023
|
|
$
|
|
%
|
|
$
|
|
%
|
|
(Dollars in
thousands)
|
|
Compensation and
employee benefits
|
$
24,448
|
|
$
25,476
|
|
$
24,781
|
|
$
(1,028)
|
|
(4.0) %
|
|
$
(333)
|
|
(1.3) %
|
|
Occupancy and
equipment
|
4,765
|
|
4,932
|
|
4,666
|
|
(167)
|
|
(3.4)
|
|
99
|
|
2.1
|
|
Data
processing
|
3,785
|
|
3,537
|
|
4,500
|
|
248
|
|
7.0
|
|
(715)
|
|
(15.9)
|
|
Marketing
|
244
|
|
211
|
|
441
|
|
33
|
|
15.6
|
|
(197)
|
|
(44.7)
|
|
Professional
services
|
795
|
|
567
|
|
751
|
|
228
|
|
40.2
|
|
44
|
|
5.9
|
|
State/municipal
business and use taxes
|
1,160
|
|
1,300
|
|
1,054
|
|
(140)
|
|
(10.8)
|
|
106
|
|
10.1
|
|
Federal deposit
insurance premium
|
812
|
|
795
|
|
797
|
|
17
|
|
2.1
|
|
15
|
|
1.9
|
|
Amortization of
intangible assets
|
421
|
|
421
|
|
623
|
|
—
|
|
—
|
|
(202)
|
|
(32.4)
|
|
Other
expense
|
2,666
|
|
3,131
|
|
3,712
|
|
(465)
|
|
(14.9)
|
|
(1,046)
|
|
(28.2)
|
|
Total noninterest
expense
|
$
39,096
|
|
$
40,370
|
|
$
41,325
|
|
$
(1,274)
|
|
(3.2) %
|
|
$
(2,229)
|
|
(5.4) %
|
Income Tax Expense
Income tax expense increased $716,000 during the second quarter of 2024 to
$1.8 million compared to $1.1 million for the first quarter of 2024. The
increase in income tax expense during the current quarter compared
to the prior quarter was primarily due to an increase in pre-tax
income during the second quarter of 2024. The effective tax rate
declined during the second quarter of 2024 compared to the prior
quarter due to recognition of a discrete tax expense item related
to restricted stock awards in the first quarter of 2024 and a
reduction in forecasted pre-tax income which caused a downward
adjustment to the annualized effective tax rate.
Income tax expense decreased during the second quarter of 2024
compared to the second quarter of 2023 due to lower pre-tax income
during the second quarter of 2024. The effective tax rate declined
due to lower pre-tax income which increased the impact of favorable
permanent tax items such as tax-exempt investments, investments in
bank owned life insurance and tax credits.
The following table presents the income tax expense and related
metrics and the change for the periods indicated:
|
Quarter
Ended
|
|
Change
|
|
June 30,
2024
|
|
March 31,
2024
|
|
June 30,
2023
|
|
Quarter Over
Quarter
|
Prior Year
Quarter
|
|
(Dollars in
thousands)
|
|
Income before income
taxes
|
$
15,995
|
|
$
6,868
|
|
$
19,871
|
|
$
9,127
|
|
$
(3,876)
|
|
Income tax
expense
|
$
1,836
|
|
$
1,120
|
|
$
3,025
|
|
$
716
|
|
$
(1,189)
|
|
Effective income tax
rate
|
11.5 %
|
|
16.3 %
|
|
15.2 %
|
|
(4.8) %
|
|
(3.7) %
|
Dividends
On July 24, 2024, the Company's
Board of Directors declared a quarterly cash dividend of
$0.23 per share. The dividend is
payable on August 21, 2024 to
shareholders of record as of the close of business on August 7, 2024.
Earnings Conference Call
The Company will hold a telephone conference call to discuss
this earnings release on Thursday, July 25, 2024 at
10:00 a.m. Pacific time. To access
the call, please dial (833) 470-1428 -- access code 281184 a few
minutes prior to 10:00 a.m. Pacific
time. The call will be available for replay through
August 1, 2024 by dialing (866)
813-9403 -- access code 638306.
About Heritage Financial Corporation
Heritage Financial Corporation is an Olympia, Washington-based bank holding company
with Heritage Bank, a full-service commercial bank, as its sole
wholly-owned banking subsidiary. Heritage Bank has a branch network
of 50 banking offices in Washington, Oregon and Idaho. Heritage Bank does business under the
Whidbey Island Bank name on Whidbey Island, Washington. The Company's stock is
traded on the Nasdaq Global Select Market under the symbol "HFWA."
More information about Heritage Financial Corporation can be found
on its website at www.hf-wa.com and more information about Heritage
Bank can be found on its website at www.heritagebanknw.com.
Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements often include words such as "believe,"
"expect," "anticipate," "estimate," and "intend" or future or
conditional verbs such as "will," "would," "should," "could," or
"may." Forward-looking statements are not historical facts but
instead represent management's current expectations and forecasts
regarding future events, many of which are inherently uncertain and
outside of our control. Actual results may differ, possibly
materially, from those currently expected or projected in these
forward-looking statements. Factors that could cause our actual
results to differ materially from those described in the
forward-looking statements include, but are not limited to, the
following: changes in general economic conditions generally, and in
the financial services industry, nationally or in our local market
areas, other markets where our lending relationships, or other
aspects of our business operations or financial markets including,
without limitation, as a result of employment levels, labor
shortages and the effects of inflation, a potential recession or
slowed economic growth, or increased political instability due to
acts of war or terrorism; changes in the interest rate environment,
including prior increases in the Board of Governors of the Federal
Reserve System (the "Federal Reserve") benchmark rate and duration
at which such increased interest rate levels are maintained, which
could adversely affect our revenues and expenses, the value of
assets and obligations, and the availability and cost of capital
and liquidity; the impact of continuing elevated inflation and the
current and future monetary policies of the Federal Reserve in
response thereto; the effects of recent developments and events in
the financial services industry, including the large-scale deposit
withdrawals over a short-period of time that resulted in a number
of bank failures; the impact of recent bank failures or adverse
developments at other banks and related negative press about the
banking industry in general on investor and depositor sentiment;
the extensive regulatory framework that applies to us; potential
changes in federal policy and at regulatory agencies as a result of
the upcoming 2024 presidential election; changes in the interest
rate environment; the quality and composition of our securities
portfolio and the impact of any adverse changes including market
liquidity within the securities markets; legislative and regulatory
changes, including changes in banking, securities and tax law, in
regulatory policies and principles, or the interpretation of
regulatory capital or other rules; risks related to climate change
and the negative impact it may have on our customers and their
businesses; severe weather, natural disasters, widespread disease
or pandemics; credit and interest rate risks associated with our
business, customers, borrowings, repayment, investment, and deposit
practices; fluctuations in deposits; the concentration of large
deposits from certain clients, who have balances above current
Federal Deposit Insurance Corporation insurance limits; liquidity
issues, including our ability to borrow funds or raise additional
capital, if necessary; the overall health of local and national
real estate markets; concentrations within our loan portfolio; the
level of nonperforming assets on our balance sheet; disruptions,
fraudulent activity, security breaches, or other adverse events,
failures or interruptions in, or attacks on, our information
technology systems or on the third-party vendors who perform
several of our critical processing functions, including as a result
of sophisticated attacks using artificial intelligence and similar
tools; rapid technological change in the financial services
industry; increased competition in the financial services industry
from non-banks such as credit unions and Fintech companies,
including digital asset service providers; the composition of our
executive management team and our ability to attract and retain key
personnel; effects of critical accounting policies and judgments or
new and revised accounting policies, including 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; the commencement and outcome of litigation and other
legal proceedings and regulatory actions against us or to which we
may become subject; our success at managing the risks involved in
the foregoing items; and other factors described in our latest
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and
other documents filed with or furnished to the Securities and
Exchange Commission (the "SEC") which are available on our website
at www.heritagebanknw.com and on the SEC's website at www.sec.gov.
We caution readers not to place undue reliance on any
forward-looking statements. Moreover, any of the forward-looking
statements that we make in this press release or the documents we
file with or furnish to the SEC are based only on information then
actually known to us and upon management's beliefs and assumptions
at the time they are made which may turn out to be wrong because of
inaccurate assumptions we might make, because of the factors
described above or because of other factors that we cannot foresee.
We do not undertake and specifically disclaim 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.
|
HERITAGE FINANCIAL
CORPORATION
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
|
|
(Dollars in
thousands, except shares)
|
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Assets
|
|
|
|
|
|
|
Cash on hand and in
banks
|
$
55,469
|
|
$
52,947
|
|
$
55,851
|
|
Interest earning
deposits
|
58,288
|
|
136,700
|
|
169,122
|
|
Cash and cash
equivalents
|
113,757
|
|
189,647
|
|
224,973
|
|
Investment securities
available for sale, at fair value (amortized cost of $1,022,211,
$1,087,789 and $1,227,787, respectively)
|
931,248
|
|
996,510
|
|
1,134,353
|
|
Investment securities
held to maturity, at amortized cost (fair value of $642,051,
$649,001 and $662,450, respectively)
|
727,342
|
|
734,006
|
|
739,442
|
|
Total investment
securities
|
1,658,590
|
|
1,730,516
|
|
1,873,795
|
|
Loans
receivable
|
4,532,615
|
|
4,428,165
|
|
4,335,627
|
|
Allowance for credit
losses on loans
|
(51,219)
|
|
(49,736)
|
|
(47,999)
|
|
Loans receivable,
net
|
4,481,396
|
|
4,378,429
|
|
4,287,628
|
|
Premises and equipment,
net
|
73,218
|
|
74,092
|
|
74,899
|
|
Federal Home Loan Bank
stock, at cost
|
22,303
|
|
4,303
|
|
4,186
|
|
Bank owned life
insurance
|
126,420
|
|
125,615
|
|
125,655
|
|
Accrued interest
receivable
|
19,855
|
|
19,898
|
|
19,518
|
|
Prepaid expenses and
other assets
|
319,428
|
|
323,472
|
|
318,571
|
|
Other intangible
assets, net
|
3,951
|
|
4,372
|
|
4,793
|
|
Goodwill
|
240,939
|
|
240,939
|
|
240,939
|
|
Total
assets
|
$
7,059,857
|
|
$
7,091,283
|
|
$
7,174,957
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
Non-interest bearing
deposits
|
$
1,599,367
|
|
$
1,637,111
|
|
$
1,715,847
|
|
Interest bearing
deposits
|
3,916,285
|
|
3,895,216
|
|
3,884,025
|
|
Total
deposits
|
5,515,652
|
|
5,532,327
|
|
5,599,872
|
|
Borrowings
|
500,000
|
|
500,000
|
|
500,000
|
|
Junior subordinated
debentures
|
21,912
|
|
21,838
|
|
21,765
|
|
Accrued expenses and
other liabilities
|
171,786
|
|
189,538
|
|
200,059
|
|
Total
liabilities
|
6,209,350
|
|
6,243,703
|
|
6,321,696
|
|
|
|
|
|
|
|
Common stock
|
541,294
|
|
544,636
|
|
549,748
|
|
Retained
earnings
|
379,714
|
|
373,629
|
|
375,989
|
|
Accumulated other
comprehensive loss, net
|
(70,501)
|
|
(70,685)
|
|
(72,476)
|
|
Total stockholders'
equity
|
850,507
|
|
847,580
|
|
853,261
|
|
Total liabilities and
stockholders' equity
|
$
7,059,857
|
|
$
7,091,283
|
|
$
7,174,957
|
|
|
|
|
|
|
|
Shares
outstanding
|
34,496,197
|
|
34,689,843
|
|
34,906,233
|
|
HERITAGE FINANCIAL
CORPORATION
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
|
|
(Dollars in
thousands, except per share amounts)
|
|
|
Quarter
Ended
|
|
Six Months
Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
June 30,
2023
|
|
June 30,
2024
|
|
June 30,
2023
|
|
Interest
Income
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
$
60,608
|
|
$
57,862
|
|
$
53,623
|
|
$
118,470
|
|
$
104,073
|
|
Taxable interest on
investment securities
|
14,156
|
|
14,834
|
|
14,774
|
|
28,990
|
|
29,431
|
|
Nontaxable interest on
investment securities
|
165
|
|
181
|
|
520
|
|
346
|
|
1,106
|
|
Interest on interest
earning deposits
|
1,653
|
|
1,476
|
|
1,154
|
|
3,129
|
|
2,126
|
|
Total interest
income
|
76,582
|
|
74,353
|
|
70,071
|
|
150,935
|
|
136,736
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
18,453
|
|
16,388
|
|
8,607
|
|
34,841
|
|
13,135
|
|
Junior subordinated
debentures
|
539
|
|
547
|
|
499
|
|
1,086
|
|
981
|
|
Securities sold under
agreement to repurchase
|
—
|
|
—
|
|
63
|
|
—
|
|
110
|
|
Borrowings
|
6,477
|
|
5,888
|
|
5,078
|
|
12,365
|
|
6,844
|
|
Total interest
expense
|
25,469
|
|
22,823
|
|
14,247
|
|
48,292
|
|
21,070
|
|
Net interest
income
|
51,113
|
|
51,530
|
|
55,824
|
|
102,643
|
|
115,666
|
|
Provision for credit
losses
|
1,268
|
|
1,392
|
|
1,909
|
|
2,660
|
|
3,734
|
|
Net interest income
after provision for credit losses
|
49,845
|
|
50,138
|
|
53,915
|
|
99,983
|
|
111,932
|
|
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
Service charges and
other fees
|
2,817
|
|
2,788
|
|
2,682
|
|
5,605
|
|
5,306
|
|
Card revenue
|
1,930
|
|
1,839
|
|
2,123
|
|
3,769
|
|
4,123
|
|
Loss on sale of
investment securities, net
|
(1,921)
|
|
(9,973)
|
|
—
|
|
(11,894)
|
|
(286)
|
|
Gain on sale of loans,
net
|
—
|
|
26
|
|
101
|
|
26
|
|
150
|
|
Interest rate swap
fees
|
52
|
|
—
|
|
115
|
|
52
|
|
168
|
|
Bank owned life
insurance income
|
931
|
|
920
|
|
837
|
|
1,851
|
|
1,546
|
|
Gain on sale of other
assets, net
|
49
|
|
—
|
|
—
|
|
49
|
|
2
|
|
Other income
|
1,388
|
|
1,500
|
|
1,423
|
|
2,888
|
|
4,530
|
|
Total noninterest
income (loss)
|
5,246
|
|
(2,900)
|
|
7,281
|
|
2,346
|
|
15,539
|
|
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
24,448
|
|
25,476
|
|
24,781
|
|
49,924
|
|
50,317
|
|
Occupancy and
equipment
|
4,765
|
|
4,932
|
|
4,666
|
|
9,697
|
|
9,558
|
|
Data
processing
|
3,785
|
|
3,537
|
|
4,500
|
|
7,322
|
|
8,842
|
|
Marketing
|
244
|
|
211
|
|
441
|
|
455
|
|
843
|
|
Professional
services
|
795
|
|
567
|
|
751
|
|
1,362
|
|
1,379
|
|
State/municipal
business and use taxes
|
1,160
|
|
1,300
|
|
1,054
|
|
2,460
|
|
2,062
|
|
Federal deposit
insurance premium
|
812
|
|
795
|
|
797
|
|
1,607
|
|
1,647
|
|
Amortization of
intangible assets
|
421
|
|
421
|
|
623
|
|
842
|
|
1,246
|
|
Other
expense
|
2,666
|
|
3,131
|
|
3,712
|
|
5,797
|
|
7,036
|
|
Total noninterest
expense
|
39,096
|
|
40,370
|
|
41,325
|
|
79,466
|
|
82,930
|
|
Income before income
taxes
|
15,995
|
|
6,868
|
|
19,871
|
|
22,863
|
|
44,541
|
|
Income tax
expense
|
1,836
|
|
1,120
|
|
3,025
|
|
2,956
|
|
7,238
|
|
Net income
|
$
14,159
|
|
$
5,748
|
|
$
16,846
|
|
$
19,907
|
|
$
37,303
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
0.41
|
|
$
0.17
|
|
$
0.48
|
|
$
0.58
|
|
$
1.06
|
|
Diluted earnings per
share
|
$
0.41
|
|
$
0.16
|
|
$
0.48
|
|
$
0.57
|
|
$
1.06
|
|
Dividends declared per
share
|
$
0.23
|
|
$
0.23
|
|
$
0.22
|
|
$
0.46
|
|
$
0.44
|
|
Average shares
outstanding - basic
|
34,609,900
|
|
34,825,471
|
|
35,058,155
|
|
34,717,685
|
|
35,083,133
|
|
Average shares
outstanding - diluted
|
34,919,395
|
|
35,227,138
|
|
35,126,590
|
|
35,127,407
|
|
35,348,268
|
|
HERITAGE FINANCIAL
CORPORATION
|
|
FINANCIAL STATISTICS
(Unaudited)
|
|
(Dollars in
thousands)
|
|
|
Average Balances,
Yields, and Rates Paid:
|
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate (1)
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate (1)
|
|
Interest Earning
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable,
net(2)(3)
|
$ 4,359,592
|
|
$
118,470
|
|
5.46 %
|
|
$ 4,092,769
|
|
$
104,073
|
|
5.13 %
|
|
Taxable
securities
|
1,748,252
|
|
28,990
|
|
3.33
|
|
1,998,268
|
|
29,431
|
|
2.97
|
|
Nontaxable
securities(3)
|
20,057
|
|
346
|
|
3.47
|
|
77,317
|
|
1,106
|
|
2.88
|
|
Interest earning
deposits
|
115,136
|
|
3,129
|
|
5.47
|
|
87,086
|
|
2,126
|
|
4.92
|
|
Total interest earning
assets
|
6,243,037
|
|
150,935
|
|
4.86 %
|
|
6,255,440
|
|
136,736
|
|
4.41 %
|
|
Noninterest earning
assets
|
856,584
|
|
|
|
|
|
847,195
|
|
|
|
|
|
Total
assets
|
$ 7,099,621
|
|
|
|
|
|
$ 7,102,635
|
|
|
|
|
|
Interest Bearing
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of
deposit
|
$
786,050
|
|
$ 16,799
|
|
4.30 %
|
|
$
386,026
|
|
$
3,707
|
|
1.94 %
|
|
Savings
accounts
|
464,087
|
|
420
|
|
0.18
|
|
576,046
|
|
299
|
|
0.10
|
|
Interest bearing demand
and money market accounts
|
2,642,796
|
|
17,622
|
|
1.34
|
|
2,805,645
|
|
9,129
|
|
0.66
|
|
Total interest bearing
deposits
|
3,892,933
|
|
34,841
|
|
1.80
|
|
3,767,717
|
|
13,135
|
|
0.70
|
|
Junior subordinated
debentures
|
21,837
|
|
1,086
|
|
10.00
|
|
21,539
|
|
981
|
|
9.18
|
|
Securities sold under
agreement to repurchase
|
—
|
|
—
|
|
—
|
|
41,469
|
|
110
|
|
0.53
|
|
Borrowings
|
500,445
|
|
12,365
|
|
4.97
|
|
282,502
|
|
6,844
|
|
4.89
|
|
Total interest bearing
liabilities
|
4,415,215
|
|
48,292
|
|
2.20 %
|
|
4,113,227
|
|
21,070
|
|
1.03 %
|
|
Noninterest demand
deposits
|
1,647,697
|
|
|
|
|
|
1,984,200
|
|
|
|
|
|
Other noninterest
bearing liabilities
|
191,516
|
|
|
|
|
|
186,553
|
|
|
|
|
|
Stockholders'
equity
|
845,193
|
|
|
|
|
|
818,655
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$ 7,099,621
|
|
|
|
|
|
$ 7,102,635
|
|
|
|
|
|
Net interest income and
spread
|
|
|
$
102,643
|
|
2.66 %
|
|
|
|
$
115,666
|
|
3.38 %
|
|
Net interest
margin
|
|
|
|
|
3.31 %
|
|
|
|
|
|
3.73 %
|
|
|
|
(1)
|
Average balances are
calculated using daily balances.
|
|
(2)
|
Average loans
receivable, net includes loans held for sale and loans classified
as nonaccrual, which carry a zero yield. Interest earned on loans
receivable, net includes the amortization of net deferred loan fees
of $1.8 million and $1.5 million for the six months ended June 30,
2024 and 2023, respectively.
|
|
(3)
|
Yields on tax-exempt
loans and securities have not been stated on a tax-equivalent
basis.
|
|
HERITAGE FINANCIAL
CORPORATION
|
|
FINANCIAL STATISTICS
(Unaudited)
|
|
(Dollars in
thousands)
|
|
|
Nonperforming Assets and Credit Quality
Metrics:
|
|
|
Quarter
Ended
|
|
Six Months
Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
June 30,
2023
|
|
June 30,
2024
|
|
June 30,
2023
|
|
Allowance for Credit
Losses on Loans:
|
|
|
|
|
|
Balance, beginning of
period
|
$
49,736
|
|
$
47,999
|
|
$
44,469
|
|
$
47,999
|
|
$
42,986
|
|
Provision for credit
losses on loans
|
1,470
|
|
1,704
|
|
1,988
|
|
3,174
|
|
3,701
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
Commercial
business
|
(312)
|
|
(77)
|
|
—
|
|
(389)
|
|
(161)
|
|
Consumer
|
(238)
|
|
(123)
|
|
(144)
|
|
(361)
|
|
(297)
|
|
Total
charge-offs
|
(550)
|
|
(200)
|
|
(144)
|
|
(750)
|
|
(458)
|
|
Recoveries:
|
|
|
|
|
|
|
|
|
|
|
Commercial
business
|
518
|
|
217
|
|
38
|
|
735
|
|
89
|
|
Consumer
|
45
|
|
16
|
|
57
|
|
61
|
|
90
|
|
Total
recoveries
|
563
|
|
233
|
|
95
|
|
796
|
|
179
|
|
Net recoveries
(charge-offs)
|
13
|
|
33
|
|
(49)
|
|
46
|
|
(279)
|
|
Balance, end of
period
|
$
51,219
|
|
$
49,736
|
|
$
46,408
|
|
$
51,219
|
|
$
46,408
|
|
Net charge-offs
(recoveries) on loans to average loans receivable,
net(1)
|
— %
|
|
— %
|
|
— %
|
|
— %
|
|
0.01 %
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Nonperforming
Assets:
|
|
|
|
|
|
|
Nonaccrual
loans:
|
|
|
|
|
|
|
Commercial
business
|
$
3,826
|
|
$
4,792
|
|
$
4,468
|
|
Total nonaccrual
loans
|
3,826
|
|
4,792
|
|
4,468
|
|
Accruing loans past due
90 days or more
|
4,296
|
|
2,628
|
|
1,293
|
|
Total nonperforming
loans
|
8,122
|
|
7,420
|
|
5,761
|
|
Other real estate
owned
|
—
|
|
—
|
|
—
|
|
Nonperforming
assets
|
$
8,122
|
|
$
7,420
|
|
$
5,761
|
|
|
|
|
|
|
|
ACL on loans
to:
|
|
|
|
|
|
|
Loans
receivable
|
1.13 %
|
|
1.12 %
|
|
1.11 %
|
|
Nonaccrual
loans
|
1,338.71 %
|
|
1,037.90 %
|
|
1,074.28 %
|
|
Nonaccrual loans to
loans receivable
|
0.08 %
|
|
0.11 %
|
|
0.10 %
|
|
Nonperforming loans to
loans receivable
|
0.18 %
|
|
0.17 %
|
|
0.13 %
|
|
Nonperforming assets to
total assets
|
0.12 %
|
|
0.10 %
|
|
0.08 %
|
|
HERITAGE FINANCIAL
CORPORATION
|
|
QUARTERLY FINANCIAL
STATISTICS (Unaudited)
|
|
(Dollars in
thousands, except per share amounts)
|
|
|
Quarter
Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
September
30,
2023
|
|
June 30,
2023
|
|
Earnings:
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
51,113
|
|
$
51,530
|
|
$
53,871
|
|
$
55,618
|
|
$
55,824
|
|
Provision for (reversal
of) credit losses
|
1,268
|
|
1,392
|
|
1,424
|
|
(878)
|
|
1,909
|
|
Noninterest income
(loss)
|
5,246
|
|
(2,900)
|
|
(3,147)
|
|
6,271
|
|
7,281
|
|
Noninterest
expense
|
39,096
|
|
40,370
|
|
42,723
|
|
40,970
|
|
41,325
|
|
Net income
|
14,159
|
|
5,748
|
|
6,233
|
|
18,219
|
|
16,846
|
|
Pre-tax, pre-provision
net income (1)
|
17,263
|
|
8,260
|
|
8,001
|
|
20,919
|
|
21,780
|
|
Basic earnings per
share
|
$
0.41
|
|
$
0.17
|
|
$
0.18
|
|
$
0.52
|
|
$
0.48
|
|
Diluted earnings per
share
|
$
0.41
|
|
$
0.16
|
|
$
0.18
|
|
$
0.51
|
|
$
0.48
|
|
Average
Balances:
|
|
|
|
|
|
|
|
|
|
|
Loans receivable, net
(2)
|
$
4,415,790
|
|
$
4,303,394
|
|
$
4,233,743
|
|
$
4,201,554
|
|
$
4,145,556
|
|
Total investment
securities
|
1,704,607
|
|
1,832,011
|
|
1,861,587
|
|
1,992,303
|
|
2,061,100
|
|
Total interest earning
assets
|
6,241,936
|
|
6,244,138
|
|
6,269,805
|
|
6,363,043
|
|
6,297,410
|
|
Total assets
|
7,106,791
|
|
7,092,452
|
|
7,140,876
|
|
7,212,732
|
|
7,142,865
|
|
Total interest bearing
deposits
|
3,916,977
|
|
3,868,890
|
|
3,849,067
|
|
3,841,148
|
|
3,755,005
|
|
Total noninterest
demand deposits
|
1,638,262
|
|
1,657,132
|
|
1,772,261
|
|
1,859,374
|
|
1,900,640
|
|
Stockholders'
equity
|
843,438
|
|
846,947
|
|
813,383
|
|
821,494
|
|
824,742
|
|
Financial
Ratios:
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets (3)
|
0.80 %
|
|
0.33 %
|
|
0.35 %
|
|
1.00 %
|
|
0.95 %
|
|
Pre-tax, pre-provision
return on average assets (1)(3)
|
0.98
|
|
0.47
|
|
0.44
|
|
1.15
|
|
1.22
|
|
Return on average
common equity (3)
|
6.75
|
|
2.73
|
|
3.04
|
|
8.80
|
|
8.19
|
|
Return on average
tangible common equity (1)(3)
|
9.74
|
|
4.07
|
|
4.69
|
|
12.90
|
|
12.04
|
|
Adjusted return on
average tangible common equity (1)(3)
|
10.76
|
|
9.34
|
|
10.21
|
|
13.62
|
|
12.04
|
|
Efficiency
ratio
|
69.4
|
|
83.0
|
|
84.2
|
|
66.2
|
|
65.5
|
|
Adjusted efficiency
ratio
|
67.1
|
|
68.9
|
|
70.4
|
|
64.8
|
|
65.5
|
|
Noninterest expense to
average total assets (3)
|
2.21
|
|
2.29
|
|
2.37
|
|
2.25
|
|
2.32
|
|
Net interest spread
(3)
|
2.62
|
|
2.70
|
|
2.84
|
|
2.95
|
|
3.11
|
|
Net interest margin
(3)
|
3.29
|
|
3.32
|
|
3.41
|
|
3.47
|
|
3.56
|
|
|
|
(1)
|
Represents a
non-GAAP financial measure. See "Non-GAAP Financial Measures"
section for a reconciliation to the comparable GAAP financial
measure.
|
|
(2)
|
Average loans
receivable, net includes loans held for sale.
|
|
(3)
|
Annualized.
|
|
HERITAGE FINANCIAL
CORPORATION
|
|
QUARTERLY FINANCIAL
STATISTICS (Unaudited)
|
|
(Dollars in
thousands, except per share amounts)
|
|
|
As of or for the
Quarter Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
September
30,
2023
|
|
June 30,
2023
|
|
Select Balance
Sheet:
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
7,059,857
|
|
$
7,091,283
|
|
$
7,174,957
|
|
$
7,150,588
|
|
$
7,115,410
|
|
Loans receivable,
net
|
4,481,396
|
|
4,378,429
|
|
4,287,628
|
|
4,219,911
|
|
4,204,936
|
|
Total investment
securities
|
1,658,590
|
|
1,730,516
|
|
1,873,795
|
|
1,894,392
|
|
2,030,826
|
|
Total
deposits
|
5,515,652
|
|
5,532,327
|
|
5,599,872
|
|
5,635,187
|
|
5,595,543
|
|
Noninterest demand
deposits
|
1,599,367
|
|
1,637,111
|
|
1,715,847
|
|
1,789,293
|
|
1,857,492
|
|
Stockholders'
equity
|
850,507
|
|
847,580
|
|
853,261
|
|
813,546
|
|
819,733
|
|
Financial
Measures:
|
|
|
|
|
|
|
|
|
|
|
Book value per
share
|
$
24.66
|
|
$
24.43
|
|
$
24.44
|
|
$
23.31
|
|
$
23.39
|
|
Tangible book value per
share (1)
|
17.56
|
|
17.36
|
|
17.40
|
|
16.25
|
|
16.34
|
|
Stockholders' equity to
total assets
|
12.0 %
|
|
12.0 %
|
|
11.9 %
|
|
11.4 %
|
|
11.5 %
|
|
Tangible common equity
to tangible assets (1)
|
8.9
|
|
8.8
|
|
8.8
|
|
8.2
|
|
8.3
|
|
Loans to deposits
ratio
|
82.2
|
|
80.0
|
|
77.4
|
|
75.7
|
|
76.0
|
|
Regulatory Capital
Ratios:(2)
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1
capital ratio
|
12.6 %
|
|
12.6 %
|
|
12.9 %
|
|
12.9 %
|
|
12.8 %
|
|
Leverage
ratio
|
10.1
|
|
10.0
|
|
10.0
|
|
9.9
|
|
9.9
|
|
Tier 1 capital
ratio
|
13.0
|
|
13.0
|
|
13.3
|
|
13.3
|
|
13.2
|
|
Total capital
ratio
|
13.9
|
|
13.9
|
|
14.1
|
|
14.1
|
|
14.1
|
|
Credit Quality
Metrics:
|
|
|
|
|
|
|
|
|
|
|
ACL on
loans to:
|
|
|
|
|
|
|
|
|
|
|
Loans
receivable
|
1.13 %
|
|
1.12 %
|
|
1.11 %
|
|
1.10 %
|
|
1.09 %
|
|
Nonperforming
loans
|
1,338.7
|
|
1,037.9
|
|
1,074.3
|
|
1,531.7
|
|
1,002.3
|
|
Nonaccrual loans to
loans receivable
|
0.08
|
|
0.11
|
|
0.10
|
|
0.07
|
|
0.11
|
|
Nonperforming loans to
loans receivable
|
0.18
|
|
0.17
|
|
0.13
|
|
0.12
|
|
0.16
|
|
Nonperforming assets to
total assets
|
0.12
|
|
0.10
|
|
0.08
|
|
0.07
|
|
0.10
|
|
Net charge-offs
(recoveries) on loans to average loans receivable,
net(3)
|
0.00
|
|
0.00
|
|
0.06
|
|
(0.11)
|
|
0.00
|
|
Criticized Loans by
Credit Quality Rating:
|
|
Special
mention
|
$
93,694
|
|
$
102,232
|
|
$
79,977
|
|
$
72,152
|
|
$
84,623
|
|
Substandard
|
82,496
|
|
70,183
|
|
69,757
|
|
62,653
|
|
58,653
|
|
Other
Metrics:
|
|
|
|
|
|
|
|
|
|
|
Number of banking
offices
|
50
|
|
50
|
|
50
|
|
50
|
|
51
|
|
Deposits per
branch
|
$
110,313
|
|
$
110,647
|
|
$
111,997
|
|
$
112,704
|
|
$
109,717
|
|
Average number of
full-time equivalent employees
|
748
|
|
765
|
|
803
|
|
821
|
|
813
|
|
Average assets per
full-time equivalent employee
|
9,501
|
|
9,271
|
|
8,893
|
|
8,785
|
|
8,786
|
|
|
|
(1)
|
See Non-GAAP Financial
Measures section herein.
|
|
(2)
|
Current quarter ratios
are estimates pending completion and filing of the Company's
regulatory reports.
|
|
(3)
|
Annualized.
|
HERITAGE FINANCIAL
CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Dollars in thousands, except per share
amounts)
This earnings release contains certain financial measures not
presented in accordance with Generally Accepted Accounting
Principles ("GAAP") in addition to financial measures presented in
accordance with GAAP. The Company has presented these non-GAAP
financial measures in this earnings release because it believes
that they provide useful and comparative information to assess
trends in the Company's capital, performance and asset quality
reflected in the current quarter and comparable period results and
to facilitate comparison of its performance with the performance of
its peers. These non-GAAP measures have inherent limitations, are
not required to be uniformly applied and are not audited. They
should not be considered in isolation or as a substitute for
financial measures presented in accordance with GAAP. These
non-GAAP measures may not be comparable to similarly titled
measures reported by other companies. Reconciliations of the
non-GAAP measures used in this earnings release to the comparable
GAAP measures are presented below.
The Company considers the tangible common equity to tangible
assets ratio and tangible book value per share to be useful
measurements of the adequacy of the Company's capital levels.
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
September
30,
2023
|
|
June 30,
2023
|
|
Tangible Common
Equity to Tangible Assets and Tangible Book Value Per
Share:
|
|
Total stockholders'
equity (GAAP)
|
$
850,507
|
|
$
847,580
|
|
$
853,261
|
|
$
813,546
|
|
$
819,733
|
|
Exclude intangible
assets
|
(244,890)
|
|
(245,311)
|
|
(245,732)
|
|
(246,325)
|
|
(246,920)
|
|
Tangible common equity
(non-GAAP)
|
$
605,617
|
|
$
602,269
|
|
$
607,529
|
|
$
567,221
|
|
$
572,813
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
(GAAP)
|
$
7,059,857
|
|
$
7,091,283
|
|
$
7,174,957
|
|
$
7,150,588
|
|
$
7,115,410
|
|
Exclude intangible
assets
|
(244,890)
|
|
(245,311)
|
|
(245,732)
|
|
(246,325)
|
|
(246,920)
|
|
Tangible assets
(non-GAAP)
|
$
6,814,967
|
|
$
6,845,972
|
|
$
6,929,225
|
|
$
6,904,263
|
|
$
6,868,490
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity to
total assets (GAAP)
|
12.0 %
|
|
12.0 %
|
|
11.9 %
|
|
11.4 %
|
|
11.5 %
|
|
Tangible common equity
to tangible assets (non-GAAP)
|
8.9 %
|
|
8.8 %
|
|
8.8 %
|
|
8.2 %
|
|
8.3 %
|
|
|
|
|
|
|
|
|
|
|
|
Shares
outstanding
|
34,496,197
|
|
34,689,843
|
|
34,906,233
|
|
34,901,076
|
|
35,047,800
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share
(GAAP)
|
$
24.66
|
|
$
24.43
|
|
$
24.44
|
|
$
23.31
|
|
$
23.39
|
|
Tangible book value per
share (non-GAAP)
|
$
17.56
|
|
$
17.36
|
|
$
17.40
|
|
$
16.25
|
|
$
16.34
|
HERITAGE FINANCIAL
CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Dollars in thousands, except per share
amounts)
The Company considers the return on average tangible common
equity ratio to be a useful measurement of the Company's ability to
generate returns for its common shareholders. By removing the
impact of intangible assets and their related amortization and tax
effects, the performance of the Company's ongoing business
operations can be evaluated. The Company believes that presenting
an adjusted return on tangible common equity ratio, which excludes
certain non-recurring items is useful in measuring performance of
the Company's ongoing business operations by removing the
volatility of these non-recurring items.
|
Quarter
Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
September
30,
2023
|
|
June 30,
2023
|
|
Return on Average
Tangible Common Equity, annualized:
|
|
Net income
(GAAP)
|
$
14,159
|
|
$
5,748
|
|
$
6,233
|
|
$
18,219
|
|
$
16,846
|
|
Add amortization of
intangible assets
|
421
|
|
421
|
|
593
|
|
595
|
|
623
|
|
Exclude tax effect of
adjustment
|
(88)
|
|
(88)
|
|
(125)
|
|
(125)
|
|
(131)
|
|
Tangible net income
(non-GAAP)
|
$
14,492
|
|
$
6,081
|
|
$
6,701
|
|
$
18,689
|
|
$
17,338
|
|
|
|
|
|
|
|
|
|
|
|
Tangible net income
(non-GAAP)
|
$
14,492
|
|
$
6,081
|
|
$
6,701
|
|
$
18,689
|
|
$
17,338
|
|
Exclude loss on sale
of investment securities, net
|
1,921
|
|
9,973
|
|
10,005
|
|
1,940
|
|
—
|
|
Exclude gain on sale
of branch including related deposits, net
|
—
|
|
—
|
|
—
|
|
(610)
|
|
—
|
|
Exclude tax effect of
adjustment
|
(403)
|
|
(2,094)
|
|
(2,101)
|
|
(279)
|
|
—
|
|
Adjusted tangible net
income (non-GAAP)
|
$
16,010
|
|
$
13,960
|
|
$
14,605
|
|
$
19,740
|
|
$
17,338
|
|
|
|
|
|
|
|
|
|
|
|
Average stockholders'
equity (GAAP)
|
$
843,438
|
|
$
846,947
|
|
$
813,383
|
|
$
821,494
|
|
$
824,742
|
|
Exclude average
intangible assets
|
(245,106)
|
|
(245,536)
|
|
(246,022)
|
|
(246,663)
|
|
(247,278)
|
|
Average tangible common
stockholders' equity (non-GAAP)
|
$
598,332
|
|
$
601,411
|
|
$
567,361
|
|
$
574,831
|
|
$
577,464
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
common equity, annualized (GAAP)
|
6.75 %
|
|
2.73 %
|
|
3.04 %
|
|
8.80 %
|
|
8.19 %
|
|
Return on average
tangible common equity, annualized (non-GAAP)
|
9.74 %
|
|
4.07 %
|
|
4.69 %
|
|
12.90 %
|
|
12.04 %
|
|
Adjusted return on
average tangible common equity, annualized (non-GAAP)
|
10.76 %
|
|
9.34 %
|
|
10.21 %
|
|
13.62 %
|
|
12.04 %
|
The Company believes that presenting pre-tax pre-provision
income, which reflects its profitability before income taxes and
provision for credit losses, and the pre-tax, pre-provision return
on average assets are useful measurements in assessing its
operating income and expenses by removing the volatility that may
be associated with credit loss provisions.
|
Quarter
Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
September
30,
2023
|
|
June 30,
2023
|
|
Pre-tax,
Pre-provision Income and Pre-tax, Pre-provision Return on Average
Assets, annualized:
|
|
Net income
(GAAP)
|
$
14,159
|
|
$
5,748
|
|
$
6,233
|
|
$
18,219
|
|
$
16,846
|
|
Add income tax
expense
|
1,836
|
|
1,120
|
|
344
|
|
3,578
|
|
3,025
|
|
Add (subtract)
provision for (reversal of) credit losses
|
1,268
|
|
1,392
|
|
1,424
|
|
(878)
|
|
1,909
|
|
Pre-tax, pre-provision
income (non-GAAP)
|
$
17,263
|
|
$
8,260
|
|
$
8,001
|
|
$
20,919
|
|
$
21,780
|
|
|
|
|
|
|
|
|
|
|
|
Average total assets
(GAAP)
|
$
7,106,791
|
|
$
7,092,452
|
|
$
7,140,876
|
|
$
7,212,732
|
|
$
7,142,865
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets, annualized (GAAP)
|
0.80 %
|
|
0.33 %
|
|
0.35 %
|
|
1.00 %
|
|
0.95 %
|
|
Pre-tax, pre-provision
return on average assets (non-GAAP)
|
0.98 %
|
|
0.47 %
|
|
0.44 %
|
|
1.15 %
|
|
1.22 %
|
The Company believes that presenting an adjusted efficiency
ratio, which excludes certain non-recurring items is useful in
measuring operating income and expenses by removing the volatility
of these non-recurring items.
|
Quarter
Ended
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
September
30,
2023
|
|
June 30,
2023
|
|
Adjusted Efficiency
Ratio :
|
|
Total noninterest
expense (GAAP)
|
$
39,096
|
|
$
40,370
|
|
$
42,723
|
|
$
40,970
|
|
$
41,325
|
|
Net interest income
(GAAP)
|
$
51,113
|
|
$
51,530
|
|
$
53,871
|
|
$
55,618
|
|
$
55,824
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest
income (GAAP)
|
$
5,246
|
|
$
(2,900)
|
|
$
(3,147)
|
|
$
6,271
|
|
$
7,281
|
|
Exclude (gain) loss on
sale of investment securities, net
|
1,921
|
|
9,973
|
|
10,005
|
|
1,940
|
|
—
|
|
Exclude gain on sale
of branch including related deposits, net
|
—
|
|
—
|
|
—
|
|
(610)
|
|
—
|
|
Adjusted total
noninterest income (non-GAAP)
|
$
7,167
|
|
$
7,073
|
|
$
6,858
|
|
$
7,601
|
|
$
7,281
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio
(GAAP)
|
69.4 %
|
|
83.0 %
|
|
84.2 %
|
|
66.2 %
|
|
65.5 %
|
|
Adjusted efficiency
ratio (non-GAAP)
|
67.1 %
|
|
68.9 %
|
|
70.4 %
|
|
64.8 %
|
|
65.5 %
|
View original
content:https://www.prnewswire.com/news-releases/heritage-financial-announces-second-quarter-2024-results-and-declares-regular-cash-dividend-302206393.html
SOURCE Heritage Financial Corporation