Following Friday's announcement that it had acquired Cowlitz Bank, Olympia-based Heritage Bank on Monday announced second quarter earnings of $855,000, compared with $91,000 in the second quarter of 2009. Earnings rose to 5 cents per share, compared with 4 cents a year ago.
Brian Vance, Heritage president and CEO, said, “We are pleased that we are continuing to experience improving profitability trends over the last few quarters, even though we recognize our profitability still continues to be modest.”
Total loans at Heritage increased $3.2 million to $761.2 million at the end of the quarter, compared with $758 million at the end of March.
The increase, according to a release, was “due substantially to a $13.7 million increase in commercial loans partially offset by a $9.5 million decrease in real estate construction loans.”
Demand for loans remains subdued and is expected to remain soft, Vance said.
“With the continuing uncertainty in the economy, our existing customers and potential new customers are reluctant to take on debt until the economic picture becomes clearer,” he said.
Nonperforming loans at Heritage settled at the end of the quarter at 3.91 percent of total loans, an increase from 3.81 percent at the end of March.
In the acquisition of Cowlitz Bank on Friday, Heritage entered into a “modified whole-bank loss-share transaction” with the Federal Deposit Insurance Corp. and acquired assets and approximately $350 million in deposits, Heritage said.
As part of the deal, Heritage purchased only those loans that were performing, worth about $152 million. Other than consumer loans, the loans that were acquired are subject to loss coverage of 80 percent by the FDIC.
Heritage stock rose 4.5 percent in trading Monday and closed at $15.52 per share.
The stock has risen 20.78 percent over the past 12 months, according to Bloomberg News.