Closures, merger hit Heritage profits

rboone@theolympian.comJanuary 31, 2014 

The parent company to Heritage Bank had a busy 2013, with much of the year, including in the fourth quarter, focused on acquisitions and mergers. But it was that type of activity that also cut into the company’s earnings during the final quarter of the year.

Net income at Heritage Financial Corp. fell to $710,000, or four cents per share, compared to net income of $3 million, or 20 cents per share, in the same quarter a year ago.

Earnings in the quarter were affected by costs tied to branch closures – Heritage consolidated seven branches, reducing the total to 35 from 42 — and cut its staff to 373 employees from 415.

Some costs were associated with its announced merger with Washington Banking Co., the parent to Whidbey Island Bank.

The merger is expected to close early in the second quarter, President and CEO Brian Vance said Thursday.

Excluding those costs, the consensus estimate among analysts who track the company expected earnings per share of 19 cents in the fourth quarter.

Last year Heritage acquired Northwest Commercial Bank in Lakewood, merged with its subsidiary Central Valley Bank, acquired the parent company to Valley Bank in Puyallup and announced its pending merger with Washington Banking Company.

For 2013, Heritage earned net income of $9.6 million, or 61 cents a share, compared to $13.3 million, or 87 cents a share, in 2012.

Vance, a close observer of the economy, said it progressed last year, citing higher real estate values, more activity at the Port of Tacoma and Boeing’s deal with machinists.

“I continue to see improvement,” he said.

Heritage also announced a cash dividend of eight cents, payable Feb. 24 to all shareholders of record on Feb. 10.

The company stock, which trades under the ticker symbol HFWA, fell 13 cents Thursday to close at $17.08 a share, not far from its 52-week high.

In the past 52 weeks, the stock has ranged from $13.25 a share to $18.64 a share.

Meanwhile, the parent company to Anchor Bank reported a loss for its fiscal second quarter.

Lacey-based Anchor Bancorp swung to a net loss of $248,000, compared to net income of $225,000 or nine cents a share in the same quarter last year.

President and Chief Executive Jerry Shaw said the quarterly loss was the result of some write downs in asset values and legal expenses tied to bankruptcies.

Shaw is upbeat about current trends.

“We continue excellent progress on clearing bad assets and are seeing a significant pickup in construction lending – one of our long-term strengths,” he said in an email. “As the local economy continues to improve, the counties and cities clear their backlogs of applications, and weather gets better; we expect increased activity in this sector. Business lending is slowly improving but uncertainty about taxation and employee costs constrain expansion plans for smaller companies; another of our strong suits. Improving trends are clearly in place.”

Anchor’s stock, which trades under the ticker symbol ANCB, was unchanged Thursday at $17.44 a share. In the past 52 weeks, it has ranged from $14.15 a share to $19 a share.

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

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