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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 25, 1999
HERITAGE FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
WASHINGTON 0-29480 91-1857900
- ---------------------------- ------------ ------------------
(State or other jurisdiction (Commission IRS Employer
of incorporation) File Number) Identification No.
205 Fifth Avenue S.W.
Olympia WA 98501
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(Address of principal executive officers: (Zip Code)
Registrant's telephone number, including area code: (360) 943-1500
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ITEM 5 -- OTHER EVENTS
On October 28, 1998, Heritage Financial Corporation ("Heritage") announced that
it was changing its fiscal year end from June 30 to December 31, effective
December 31, 1998. On January 25, 1999, Heritage issued a news release
announcing financial results for the interim period ending December 31, 1998.
The news release is attached to this filing.
ITEM 7 -- FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements - not applicable
(b) Pro forma financial information - not applicable
(c) Exhibits:
99 News Release issued by Heritage, dated January 25, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Dated: January 26, 1999
HERITAGE FINANCIAL CORPORATION
By: /s/ Donald V. Rhodes
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Donald V. Rhodes
Chairman, President and Chief Executive Officer
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EXHIBIT 99
[HERITAGE FINANCIAL LOGO]
FOR RELEASE 8:00 A.M.
EASTERN TIME JANUARY 25, 1999
DATE: JANUARY 25, 1999
CONTACT: DONALD V. RHODES
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER (360) 943-1500
HERITAGE FINANCIAL CORPORATION OF OLYMPIA, WASHINGTON
ANNOUNCES INTERIM 1998 RESULTS
HERITAGE FINANCIAL CORPORATION (NASDAQ: HFWA) Donald V. Rhodes, Chairman,
President and Chief Executive Officer of Heritage Financial Corporation ("the
Company") has reported financial results for the interim period ended December
31, 1998. Effective December 31, 1998 the Company has changed its year end for
financial reporting purposes to December 31 from June 30.
Net income before merger related charges was $2,417,000 or $0.24 per diluted
share for the six months ended December 31, 1998 as compared to $1,256,000 or
$0.13 per diluted share for the same period last year. Including merger related
charges of $748,000 on a pre tax basis, net income for the six months ended
December 31, 1998 was $1,924,000 or $0.19 per diluted share in comparison to
$1,256,000 or $0.13 per diluted share for the same period prior year. These
nonrecurring charges are related to severance and other costs associated with
the merger and integration of North Pacific Bank into Heritage Bank in November
1998, costs associated with the formerly proposed acquisition of Harbor Bancorp
which was terminated by mutual agreement in December 1998, and costs associated
with the pending acquisition of Washington Independent Bancshares, Inc. (WIB).
The pending WIB transaction is expected to close during the quarter ending March
31, 1999 and is expected to be accounted for as a pooling of interests.
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Net income before merger related charges for the three months ended December 31,
1998 was $1,140,000 or $0.11 per diluted share. Including merger related charges
described above, net income for the three months ended December 31, 1998 was
$647,000 or $0.06 per diluted share. In comparison, net income for the three
months ended December 31, 1997 was $646,000 or $0.07 per diluted share.
Total assets and deposits at December 31, 1998 were $412.0 million and $308.8
million, respectively, which decreased slightly compared to June 30, 1998 due to
the one time withdrawal of approximately $17 million in temporary funds
deposited in June 1998. Excluding the impact of this $17 million withdrawal,
total assets and deposits increased 3% and 4%, respectively, during the six
months ended December 31, 1998. Net loans increased $12.9 million, or 5% to
$285.2 million from June 30, 1998. Commercial loans increased to $111.8 million
at December 31, 1998, compared with $100.5 million at June 30, 1998, an increase
of 11%.
Asset quality remained strong as nonperforming assets at December 31, 1998
amounted to $392,000, or 0.10% of total assets, compared with $451,000 or 0.11%
of total assets at June 30, 1998.
Heritage Financial Corporation is a bank holding company headquartered in
Olympia, Washington. The Company's wholly owned subsidiary, Heritage Bank,
serves Pierce, Thurston and Mason Counties in the South Puget Sound region of
Washington through its twelve full service banking offices.
Statements concerning future performance, developments or events, concerning
expectations for growth and market forecasts, and any other guidance on future
periods, constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and are subject to a number of risks
and uncertainties which might cause actual results to differ materially from
stated expectations. Specific factors include, but are not limited to the effect
of interest rate changes, risks associated with acquisition of other banks and
opening new branches, the ability to control costs and expenses, and general
economic condition. Additional information on these and other factors which
could affect the Company's financial results are included in filings by the
Company with the Securities and Exchange Commission.
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HERITAGE FINANCIAL CORPORATION
CONDENSED INCOME STATEMENTS
(Dollar amounts and shares in thousands except per share amounts; unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------------------------------------------------------------------
1997 1998 1997 1998
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $5,380 $7,829 $10,430 $15,646
Interest expense 2,571 3,089 4,976 6,234
--------------------------------------------------------------------------------
Net interest income 2,809 4,740 5,454 9,412
Provision for loan losses 30 90 60 180
Noninterest income 880 1,299 1,773 2,439
Noninterest expense 2,657 4,906 5,220 8,629
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Income before income taxes 1,002 1,043 1,947 3,042
Federal income tax 356 396 691 1,118
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Net income $ 646 $ 647 $ 1,256 $ 1,924
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Earnings per share (1):
Basic $ 0.07 $ 0.07 $ 0.13 $ 0.20
Diluted $ 0.07 $ 0.06 $ 0.13 $ 0.19
Weighted average shares
outstanding (1):
Basic 9,318 9,780 9,318 9,744
Diluted 9,410 10,047 9,412 10,023
Performance Ratio(2)
Net interest margin 4.63% 5.09% 4.66% 5.09%
Efficiency ratio (3) 72.03% 68.86% 72.23% 66.51%
Return on average assets 0.98% 0.63% 0.99% 0.94%
Return on average equity 9.20% 2.71% 9.04% 4.06%
</TABLE>
(1) Shares outstanding prior to January 8, 1998 are based on the historical
common shares outstanding for Heritage Bank for the periods indicated
multiplied by the exchange ratio utilized in the stock conversion (5.1492).
On January 8, 1998, the former stockholders of Heritage Bank received
5.1492 shares of Heritage Financial Corporation's common stock for each
share of the Bank's common stock exchanged.
(2) These ratios are calculated on an annualized basis, where applicable.
(3) Recurring noninterest expense divided by the sum of net interest income and
noninterest income.
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HERITAGE FINANCIAL CORPORATION
CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Dollar amounts and shares in thousands except per share amounts; unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, DECEMBER 31,
1997 1998 1998
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<S> <C> <C> <C>
Loans $215,492 $275,766 $288,743
Allowance for loan losses (2,812) (3,542) (3,550)
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Net loans 212,680 272,224 285,193
Mortgage backed securities 4,709 3,844 3,262
Investment and interest earning deposits 90,181 99,455 84,096
Noninterest earning assets 21,032 40,328 39,432
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Total assets $328,602 $415,851 $411,983
Deposits $296,394 $314,120 $308,811
Other liabilities 3,238 7,845 7,739
Stockholders' equity 28,970 93,886 95,433
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Total liabilities and equity $328,602 $415,851 $411,983
Asset Quality and Other Data
- ----------------------------
At quarter end:
Nonaccrual loans 344 369 392
Real estate owned -- 82 --
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Nonperforming assets 344 451 392
Allowance for loan losses to:
Loans 1.30% 1.28% 1.23%
Nonperforming loans 817.44% 959.89% 905.61%
Nonperforming assets to total assets 0.10% 0.11% 0.10%
Equity to assets ratio 8.82% 22.58% 23.16%
Book value per share (1) N/M $ 9.72 $ 9.74
Shares outstanding (1) N/M 9,656 9,789
</TABLE>
(1) Book value per share for December 31, 1997 is not comparable as the Company
did not complete its stock offering until January 8, 1998.
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