OLYMPIA - Heritage Bank parent Heritage Financial Corp. earned a $9.1 million profit in the final quarter of the year, finishing 2010 with a flourish after the company acquired two banks, opened a branch and raised about $54 million in a public stock offering during the second half of the year.
The boost in earnings was attributed to the bank’s acquisition in November of Pierce Commercial Bank in Tacoma.
“It was a very good quarter for the bank,” Heritage President and Chief Executive Brian Vance said Thursday after a conference call with analysts.
Heritage’s net income soared to $9.1 million in the fourth quarter of 2010, up from $441,000 in the same period of 2009.
In the quarter, the company also repaid the $24 million the federal government had invested into it as part of the U.S. Treasury’s TARP capital purchase program.
Heritage had to make one more preferred stock dividend payment to the government as part of that program. That shaved its net income in the quarter to $9.1 million from $9.8 million, Vance said.
In the new year, the company will continue to focus on growth initiatives, Vance told analysts.
This includes opening one or two bank branches per year and possibly acquiring more banks, either with the assistance of the Federal Deposit Insurance Corporation or on its own, he said.
The sweet spot for an acquisition target is a bank in the range of $100 million to $500 million in assets, Vance said.
The company hasn’t restored its cash dividend, though it might once it sees “measurable and sustainable” earnings, he said.
Heritage Financial, like so many publicly traded companies, eliminated its cash dividend to control expenses as a result of the slower economy. Heritage last paid a 10 cent dividend to shareholders in February 2009.
Also in the year-over-year fourth-quarter period:
• Total assets: Rose to $1.36 billion from $1.01 billion.
• Total net loans: Rose to $1 billion from $773 million.
• Total deposits: Rose to $1.13 billion from $840 million.
Potential problem loans also increased to $50.7 million in the fourth quarter, a slight increase from $46.1 million in the third quarter of 2010. Vance defined potential problem loans as loans that “exhibit certain weakness,” but aren’t problem loans just yet.
The quarter-to-quarter increase was attributed to a $9.6 million credit relationship, consisting of three multifamily loans and two commercial real estate loans, he said.
“We do not believe there is a loss potential” with these loans, Vance said.
Meanwhile, the company’s stock, which trades under the ticker symbol HFWA, rose three cents to close at $14.80 a share Thursday. The stock has traded between $12.32 a share and $16.46 a share in the past 52 weeks.
Rolf Boone: 360-754-5403 firstname.lastname@example.org www.theolympian.com/bizblog