Olympia's Heritage Financial earns $2.7M profit in Q2

Net income falls from the year-ago period, but loan growth strong

Staff writerJuly 24, 2013 

The parent company to Olympia's Heritage Bank earned a $2.7M profit for the second quarter.

ROLF BOONE

The parent company to Heritage Bank earned another quarterly profit in its second quarter, although it was lower than the year-ago period as a result of costs tied to recent mergers and acquisitions.

 

One of those, Heritage Financial Corp.’s acquisition of the parent company to Valley Bank of Puyallup, closed last week.

 

For the second quarter, Heritage Financial earned net income of $2.7 million, or 18 cents a share, compared to net income of $3.2 million, or 21 cents a share, in the second quarter of 2012.

 

Net income fell as a result of costs associated with buying Northwest Commercial Bank of Lakewood, Valley Community Bancshares and Valley Bank of Puyallup and the merger of Central Valley Bank, which operates in the Yakima, Ellensburg area of the state.

 

Central Valley previously was operated as a subsidiary of Heritage Financial, but now is a division of Heritage Bank. The merger cost about $123,000, according to a second-quarter earnings report released on Wednesday.

 

Although net income fell in the second quarter, loan growth was strong, a sign that the economy and the closely watched state of the real estate market continue to improve.

 

Heritage generated $75 million in new loans for the second quarter, compared to $45 million in the year-ago period, most of that commercial loan activity, Heritage Financial President and Chief Executive Brian Vance said.

 

He said because general economic trends are improving, the company can underwrite loans more successfully because borrowers are on better footing than they once were.

 

Meanwhile, Heritage Financial has grown to about 350 employees, although the recent mergers and acquisitions have created some redundancies. The Central Valley/ Heritage Bank merger will result in 19 fewer positions, while some Valley Bank employees will be able to fill former Heritage positions lost through normal attrition, Vance said.

 

Vance added that the company still is in a bank buying mode, in particular potential deals between Portland and Seattle.

 

The company also announced two dividends: a quarterly cash dividend of 8 cents and a special dividend of 10 cents. Both will be paid on Aug. 15 to all shareholders of record on Aug. 6.

 

Heritage’s stock, which trades under the ticker symbol HFWA, closed down 13 cents at $15.56 a share. In the past 52 weeks, the stock has traded between $13.25 a share and $16.01 a share.

Rolf Boone rboone@theolympian.com 360-754-5403

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