OLYMPIA – The company that owns Heritage Bank earned a $696,000 profit in the first quarter of the year, its second consecutive profitable quarter after enduring the challenges of a slower economy for most of 2009.
Heritage Financial Corp.’s first-quarter profit, which the company largely attributed to a decrease in the amount of money needed to cover potentially bad loans, compares with a $594,000 loss in the first quarter of 2009. If a preferred-stock dividend payment to the U.S. Treasury for participating in the Troubled Asset Relief Program is factored in, Heritage earned a $365,000 profit in the first quarter of the year. The U.S. Treasury invested $24 million into the company in 2008.
Heritage President and Chief Executive Brian Vance said Tuesday that he was pleased with the overall quarter and acknowledged that the company continues to outperform other banks of similar size.
Research analyst Jeff Rulis, who tracks the company and stock for D.A. Davidson in Oregon, said Tuesday that he would characterize Heritage’s first quarter as a sign of further stabilization.
“They are managing the balance sheet well and mitigating nonperforming assets,” he said. “I continue to like this stock and the bank itself.”
Based on stabilizing trends in the economy and Heritage’s first-quarter performance, Rulis also has raised his price target on the stock to $19 from $17, he said. On Tuesday, the stock, which trades under the ticker symbol HFWA, closed down 30 cents at $15.05 a share. In the past 52 weeks, the stock has traded between $15.15 and $14.75 a share.
Also in the year-over-year first-quarter period:
• Total assets increased to $1.012 billion from $956.3 million.
• The provision for loan losses fell to $3.75 million from $5.25 million.
Vance said it has been several quarters since the bank had to set aside less money to cover potentially bad loans. He also said he expects Heritage’s shareholders to approve a plan today at its annual shareholder meeting that will allow the company to increase its authorized shares to 50 million from 15 million.
“We are asking for the authority and the ability to issue more shares, but it doesn’t mean that we will,” he said.