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27.10.2016 14:05
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Heritage Financial Announces Third Quarter 2016 Results And Declares Regular And Special Cash Dividends
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PR Newswire
OLYMPIA, Wash., Oct. 27, 2016
OLYMPIA, Wash., Oct. 27, 2016 /PRNewswire/ -- Heritage Financial Corporation (NASDAQ GS: HFWA) (the "Company" or "Heritage") today reported that the Company had net income of $11.0 million for the quarter ended September 30, 2016 compared to net income of $9.5 million for the quarter ended September 30, 2015 and $8.9 million for the linked-quarter ended June 30, 2016. Diluted earnings per common share for the quarter ended September 30, 2016 was $0.37 compared to $0.32 for the quarter ended September 30, 2015 and $0.30 for the linked-quarter ended June 30, 2016.
The Company had net income of $29.0 million for the nine months ended September 30, 2016, or $0.97 per diluted common share, compared to net income of $28.0 million, or $0.93 per diluted common share, for the nine months ended September 30, 2015.
Brian L. Vance, President and CEO, commented, "Our loan growth remains a positive for the Company. Third quarter growth was 2.1% and year-to-date growth for the first nine months of 2016 was 9.9% on an annualized basis. In addition, this quarter we maintained our net interest margin, excluding incremental accretion on purchased loans, constant at 3.76% versus the same quarter in 2015 and up five basis points from 3.71% during the second quarter of 2016. Overall loan growth continues to be driven by a strong Pacific Northwest economy."
Mr. Vance added, "As I have commented in the past, we are focused on managing our noninterest expense. Our overhead expense ratio, as measured by our total noninterest expense as a percentage of average assets, continues to improve. Our overhead expense ratio was 2.81% for the quarter ended September 30, 2016 compared to 2.87% for the linked quarter ended June 30, 2016 and 3.05% for the quarter ended September 30, 2015. Expense control will remain a focus of ours going forward."
"And finally, I am pleased to announce that in addition to our regular quarterly cash dividend, the board has declared a special cash dividend of $0.25 payable to our shareholders in November."
Balance Sheet
The Company's total assets increased $89.5 million, or 2.4%, to $3.85 billion at September 30, 2016 from $3.76 billion at June 30, 2016.
Loans receivable, net of allowance for loan losses, increased $52.6 million, or 2.1%, to $2.55 billion at September 30, 2016 from $2.50 billion at June 30, 2016. The growth in loans receivable was due primarily to increases of $26.9 million in non-owner occupied commercial real estate loans, $13.9 million in commercial and industrial loans and $9.4 million in consumer loans.
Investment securities available for sale increased $3.2 million, or 0.4%, to $819.2 million at September 30, 2016 from $815.9 million at June 30, 2016. The increase was due primarily to purchases of investment securities of $59.0 million, offset partially by maturities, calls and payments of investment securities of $33.5 million, sales of investment securities of $18.5 million and a decrease of $2.0 million in the net unrealized gains on investment securities during the quarter ended September 30, 2016. The sales of investment securities resulted in recognized gains of $345,000 during the quarter ended September 30, 2016.
Bank owned life insurance increased $8.4 million, or 13.6%, to $70.0 million at September 30, 2016 from $61.6 million at June 30, 2016. The increase was primarily due to purchases of additional insurance policies totaling $8.0 million during the quarter ended September 30, 2016.
Prepaid expenses and other assets increased $8.8 million, or 13.4%, to $74.8 million at September 30, 2016 from $66.0 million at June 30, 2016 primarily as a result of the Company's $9.4 million investment in a low income housing tax credit partnership during the quarter ended September 30, 2016. This investment had a corresponding $9.4 million obligation recorded in accrued expenses and other liabilities at September 30, 2016. This obligation will decrease as projects in the partnership are funded.
Total deposits increased $83.5 million, or 2.6%, to $3.24 billion at September 30, 2016 from $3.16 billion at June 30, 2016. Non-maturity deposits as a percentage of total deposits increased to 88.6% at September 30, 2016 from 87.7% at June 30, 2016. The increase in this ratio was due to both a combination of an increase of $104.1 million in non-maturity deposits and a decrease of $20.5 million in certificates of deposit. The increase in non-maturity deposits was primarily due to a $45.6 million, or 5.6%, increase in noninterest bearing demand deposits to $865.9 million at September 30, 2016 from $820.4 million at June 30, 2016, a $35.0 million, or 3.8%, increase in NOW accounts to $963.8 million at September 30, 2016 from $928.8 million at June 30, 2016 and a $13.2 million, or 2.7%, increase in savings deposits to $508.6 million at September 30, 2016 from $495.4 million at June 30, 2016 . Certificates of deposit decreased $20.5 million, or 5.3%, to $368.6 million at September 30, 2016 from $389.2 million at June 30, 2016. Deposits per branch increased $1.3 million, or 2.6%, to $51.5 million at September 30, 2016 from $50.1 million at June 30, 2016.
Federal Home Loan Bank Advances decreased $15.3 million, or 46.4%, to $17.7 million at September 30, 2016 compared to $33.0 million at June 30, 2016. There were no borrowings outstanding at December 31, 2015.
Total stockholders' equity increased $6.0 million, or 1.2%, to $496.0 million at September 30, 2016 from $490.1 million at June 30, 2016. The increase was primarily due to net income of $11.0 million recognized during the quarter ended September 30, 2016, partially offset by $3.6 million in cash dividends, a decrease of $1.3 million in accumulated other comprehensive income and $762,000 in stock repurchases. The Company and Heritage Bank continue to maintain capital levels significantly in excess of the applicable regulatory requirements for them to be categorized as "well-capitalized". The Company had common equity Tier 1 risk-based, Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios at September 30, 2016 of 11.4%, 10.5%, 12.0% and 13.0%, respectively, compared to 11.5%, 10.5%, 12.1% and 13.0%, respectively, at June 30, 2016.
Credit Quality
The allowance for loan losses increased $1.8 million, or 6.3%, to $30.2 million for the quarter ended September 30, 2016 from $28.4 million for the linked-quarter ended June 30, 2016. The increase was due to a provision for loan losses of $1.5 million during the quarter ended September 30, 2016 and $290,000 in net recoveries recorded during the same period.
Nonperforming loans to loans receivable, net, decreased to 0.45% at September 30, 2016 from 0.55% at June 30, 2016. Nonaccrual loans decreased $2.3 million, or 16.8%, to $11.5 million ($3.0 million guaranteed by government agencies) at September 30, 2016 from $13.9 million ($2.2 million guaranteed by government agencies) at June 30, 2016. The decrease was due primarily to $2.8 million of net principal reductions and $320,000 of charge-offs, offset partially by $625,000 of new additions to nonaccrual loans and $219,000 of additions resulting from troubled debt restructured loans being transferred to nonaccrual status.
The allowance for loan losses to nonperforming loans was 261.79% at September 30, 2016 compared to 205.05% at June 30, 2016. Potential problem loans were $101.0 million at September 30, 2016 compared to $101.2 million at June 30, 2016. The $199,000, or 0.2%, decrease was primarily due to net loan payments of $8.0 million, loans transferred to impaired status of $1.3 million, loan grade improvements of $791,000 and loan charge-offs of $85,000, offset partially by the addition during the period of $10.0 million of loans graded as potential problem loans.
The allowance for loan losses to loans receivable, net was 1.17% at September 30, 2016 compared to 1.13% at June 30, 2016. The Company believes that its allowance for loan losses is appropriate to provide for probable incurred credit losses based on an evaluation of known and inherent risks in the loan portfolio at September 30, 2016. Included in the carrying value of loans are net discounts on loans purchased in mergers and acquisitions which may reduce the need for an allowance for loan losses on these loans because they are carried at an amount below the outstanding principal balance. The remaining net discounts on these purchased loans was $14.7 million at September 30, 2016 compared to $17.5 million at June 30, 2016.
Net recoveries were $290,000 for the quarter ended September 30, 2016 compared to net charge-offs of $125,000 for the same quarter in 2015 and net charge-offs of $2.4 million for the linked-quarter ended June 30, 2016. The increase in net recoveries in the quarter ended September 30, 2016 was due primarily to a recovery of $698,000 on a commercial and industrial loan that was charged-off in the amount of $925,000 during the first quarter of 2016.
Nonperforming assets decreased $3.9 million, or 25.2%, to $11.5 million ($3.0 million guaranteed by government agencies), or 0.30% of total assets, at September 30, 2016, compared to $15.4 million ($2.2 million guaranteed by government agencies), or 0.41% of total assets, at June 30, 2016 due to the decrease in nonperforming loans discussed above as well as a decrease in other real estate owned. The Bank had no other real estate owned at September 30, 2016, a decrease from $1.6 million at June 30, 2016. The decrease in other real estate owned was due to the disposition of all remaining properties, resulting in gains on sale of other real estate owned of $131,000 during the quarter ended September 30, 2016.
Operating Results
Net interest income increased $1.7 million, or 5.2%, to $33.6 million for the quarter ended September 30, 2016 compared to $31.9 million for the same period in 2015 and increased $521,000, or 1.6%, from $33.1 million for the linked-quarter ended June 30, 2016. Net interest income increased $2.4 million, or 2.4%, to $99.5 million for the nine months ended September 30, 2016 compared to $97.1 million for the same period in 2015. The increase in net interest income from the prior periods was primarily due to an increase in average interest earning assets, partially offset by a decrease in the yield on average interest earning assets during the respective periods.
Heritage's net interest margin for the quarter ended September 30, 2016 decreased five basis points to 3.95% from 4.00% for both the same period in 2015 and the linked-quarter ended June 30, 2016. The decrease in net interest margin from the prior periods was due substantially to a decrease of $339,000, or 17.5%, in incremental accretion on purchased loans to $1.6 million from the quarter ended September 30, 2016 compared to $1.9 million for the same period in 2015 and a decrease of $762,000, or 32.3%, from $2.4 million for the quarter ended June 30, 2016. The impact on net interest margin from incremental accretion on purchased loans decreased to 0.19% for the quarter ended September 30, 2016 from 0.24% for the same period in 2015 and from 0.29% in the linked-quarter ended June 30, 2016. The incremental accretion is highly dependent on purchased loan prepayments during the period.
The following table presents the net interest margin, loan yield and the effect of the incremental accretion on purchased loans on these ratios for the periods presented below:
| | Three Months Ended | | Nine Months Ended | ||||||||||||||||
| | September 30, 2016 | | June 30, 2016 | | September 30, 2015 | | September 30, 2016 | | September 30, 2015 | ||||||||||
| Net interest margin, excluding incremental accretion on purchased loans (1) | 3.76 | % | | 3.71 | % | | 3.76 | % | | 3.76 | % | | 3.83 | % | |||||
| Impact on net interest margin from incremental accretion on purchased loans (1) | 0.19 | % | | 0.29 | % | | 0.24 | % | | 0.24 | % | | 0.34 | % | |||||
| Net interest margin | 3.95 | % | | 4.00 | % | | 4.00 | % | | 4.00 | % | | 4.17 | % | |||||
| | | | | | | | | | | ||||||||||
| Loan yield, excluding incremental accretion on purchased loans (1) | 4.62 | % | | 4.59 | % | | 4.75 | % | | 4.65 | % | | 4.85 | % | |||||
| Impact on loan yield from incremental accretion on purchased loans (1) | 0.25 | % | | 0.38 | % | | 0.33 | % | | 0.32 | % | | 0.46 | % | |||||
| Loan yield | 4.87 | % | | 4.97 | % | | 5.08 | % | | 4.97 | % | | 5.31 | % | |||||
| | | | | | | | | | | ||||||||||
| Incremental accretion on purchased loans (1) | $ | 1,599 Werbung Mehr Nachrichten zur Heritage Financial Aktie kostenlos abonnieren
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