May 4, 2016
Heritage Bank Main Branch, 2330 S. Virginia St. Reno
We are proud to have celebrated our 20 year anniversary in October of 2015. It’s very humbling to think about the growing number of families and businesses that have entrusted Heritage Bank with their banking needs over the years. And we are proud of our continued growth in Northern Nevada. In 2015, we opened a new branch in East Reno at Corporate Boulevard and Mill Street, increasing the number of full service branches to seven. We purchased the branch early in the year, completely renovating the 2,000 square foot building, and opened it to the public on December 7th, adding convenience and growing our number of employees.
In addition to our branch growth, 2015 proved to be another year of record profit. We continued to manage our overhead at a level far below our peers. We maintained our efficiency ratio of 45% which compares favorably to our peers at 66%. As a result, we were able to increase our profitability by 24%, improving our basic earnings per share from $6.86 per share in 2014 to $8.51 in 2015. In the last twenty-four months we were able to increase basic earnings per share 71% from $4.98 per share at year-end 2013 to $8.51 at year-end 2015.
Credit quality continues to improve dramatically as the Northern Nevada economy recovers. In 2015 we saw recoveries net of charge offs of $84,000. We were able to maintain a 1.9% allowance for future loan losses for year-end 2015, well above the peer level of 1.35% after a reversal of excess provision of $605,000.
Total deposits grew by 9% from $491 million at year-end 2014 to $535 million at year-end 2015 with the growth continuing to be in core deposits. Net loan growth continues to be strong at 9.7%, increasing from $409 million at year-end 2014 to $448 million at year-end 2015.
Our increased profitability enabled us to continue our stock buy-back program. In April of 2015, the Board of Directors authorized $2,000,000 for the next twelve months of the program. The stock buy-back program has been in existence since 2006 and enables us to provide liquidity for our shareholders. During 2015, we were able to repurchase 26,114 shares bringing the total repurchased to-date at 432,466 shares or approximately 26% of the bank. With our current capital levels exceeding regulatory requirements, we anticipate continuing the stock repurchase program in 2016.
During the past several years we’ve seen community banks fail, get acquired, and collapse their state charters to other states. We are proud to be the largest state chartered bank in all of Nevada. We continue to build on our excellent reputation which has propelled us to this point. Our customers know that we will respond to their banking needs with fair and accurate information delivered by knowledgeable and professional staff.
We are very optimistic about 2016 as Heritage Bank is again well positioned to increase profitability during the year. All indications are that the Northern Nevada economy will continue to outpace the national economic recovery, and our bank is positioned to take full advantage of that economic growth. We remain focused on providing an outstanding banking experience for our customers and a work environment in which our employees can be proud.
As always, we appreciate our team of employees, our customers, our stockholders, and our Board of Directors who continue to support the goals of Heritage Bancorp and our subsidiary Heritage Bank of Nevada.