OLYMPIA — Heritage Bank’s parent earned a $2.2 million profit in the final quarter of 2011 after earning a $9.1 million profit in the same period a year ago, the company announced Wednesday as part of its fourth-quarter and full-year earnings release.
Although net income fell, the year-over-year period was skewed by a fourth-quarter 2010 profit that was influenced by financial gains associated with a bank acquisition, Heritage President and Chief Executive Brian Vance said Wednesday.
At the time, Heritage had just acquired Pierce Commercial Bank of Tacoma, he said.
For the fourth quarter of 2011, Heritage Financial Corp. earned a $2.2 million profit, or 14 cents a share, compared with a profit of $9.1 million, or 77 cents a share in the fourth quarter of 2010.
Heritage earned a $6.5 million profit for all of 2011, compared with $11.7 million in 2010.
Although strong long growth and lower expenses contributed to company earnings in the fourth quarter, Vance told analysts Wednesday that his outlook for the regional economy remains cautious.
Positive trends include lower unemployment rates and commercial real estate data that shows vacancy rates are falling – a sign that people and businesses are leasing again – for apartments, as well as retail, industrial and office space. Home values, however, continue to fall, he said.
Vance also told analysts that he was less than thrilled with a decision by the Federal Open Market Committee, which is part of the Federal Reserve, to keep interest rates low. Although low interest rates help borrowers, it ultimately means less revenue for the company, he said. Still, there were bright spots for Heritage in 2011:
• Bank branch deposit growth grew 48 percent in Bellevue; 21 percent in Longview; and 16 percent in Vancouver in the year-over-year fourth quarter.
• The company’s cash dividend was increased to six cents in the fourth quarter, after beginning at three cents, then increasing to five cents, earlier in the year. Heritage also paid a special 25-cent cash dividend in December.
• Heritage also announced a stock buy-back program last year, including repurchasing 132,000 shares at an average of $11.76 a share in the fourth quarter.
The company was unable to acquire a bank last year, so its capital can be used in other ways, such as to repurchase shares, Vance said. Reducing the number of shares outstanding is another way to reward shareholders because it increases the earnings per share, he said.
Heritage had several opportunities to acquire a bank last year, but “what we were willing to pay was not a sufficient price for the seller,” Vance said. Vance expects about five FDIC-assisted bank transactions to take place in the Northwest in 2012, he said.
Rolf Boone: 360-754-5403 rboone@theolympian.com
JOIN THE DISCUSSION | Register here
We welcome comments. Please keep them civil, short and to the point. ALL CAPS, spam, obscene, profane, abusive and off topic comments will be deleted. Repeat offenders will be blocked. Thanks for taking part — and abiding by these simple rules. A thorough explanation of rules of conduct can be found in our Terms of Service. If you have any questions, including why your comment may not be showing immediately after you submit it, be sure to visit the commenting FAQ.