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Heritage Bank and Trust

Norfolk, VA · Cert 22411

FDIC · 5 branches

Q4 2015

$313.0MAssets
$211.7MLoans
$269.9MDeposits
$34.9MEquity
Loan mix
81%RE $108.7M18%C&I $24.6M1%Consumer $0.9MQ4 2014Q4 2015
Deposit mix
60%Interest-bearing $161.6M40%Noninterest $108.2MQ4 2014Q4 2015

NIM

3.35%Q4 ’132.99%Q4 ’143.03%Q4 ’15-11%+3%

Non-interest income vs. expense

2.25%Q4 ’132.04%Q4 ’142.15%Q4 ’15-12%+12%

Market Position · Virginia Beach-Norfolk-Newport News, VA-NC · 2015 SOD (annual) · 1.2% share · #12 of 30 inst. · $0.3B of $22.8B

2.4% Norfolk (City)
2.0% Virginia Beach (City)
1.2% Chesapeake (City)

Executive Summary

  • Earnings: ROA of 0.72%, down 17 bps year over year; NIM at 2.82%.
  • Asset quality: problem loans at 0.00% of loans (0 bps YoY), with net charge-offs at 0.01%.
  • Capital: tier 1 leverage ratio of 10.56%.
  • Funding: loans stand at 78.43% of deposits as of Q4 2015.

Financial Results

Return on Assets (YTD, annualized)

0.72%-17 bps YoY

Net Interest Margin (YTD, annualized)

2.82%+8 bps YoY

Efficiency Ratio (YTD, annualized)

69.50%+376 bps YoY

Tier 1 Leverage Ratio

10.56%

Year to date, annualized, through each quarter.

MetricQ4 2014Q1 2015Q2 2015Q3 2015Q4 2015YoY ΔTrend
Earnings
Return on Assets0.88%0.65%0.62%0.66%0.72%-17 bps
Return on Equity8.32%6.17%5.83%6.20%6.68%-164 bps
Net Interest Margin2.73%2.77%2.92%2.91%2.82%+8 bps
Efficiency Ratio65.74%75.97%74.61%72.10%69.50%+376 bps
Non-Interest Burden1.67%2.07%2.14%2.05%1.87%+21 bps
Growth
Asset Growth (YoY)10.57%-2.16%-3.93%-0.12%-7.35%-1,792 bps
Loan Growth (YoY)3.78%7.33%-2.16%-2.30%-6.58%-1,036 bps
Deposit Growth (YoY)1.01%1.35%4.03%9.23%0.98%-3 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.00%0.00%0.00%0 bps
Net Charge-Offs / Loans-0.01%-0.01%0.00%0.00%0.01%+1 bps
Allowance / Loans0.86%0.83%0.88%0.89%0.91%+5 bps
Allowance Coverage of NPLsn/an/an/an/an/an/an/a
Capital
Tier 1 Leverage Ration/a10.27%10.91%10.93%10.56%n/a
Total Risk-Based Capital14.08%13.74%14.03%14.17%14.71%+63 bps
Equity / Assets10.37%10.84%10.82%10.44%11.15%+78 bps
Liquidity & Funding
Loans / Deposits84.79%84.56%77.79%73.48%78.43%-635 bps
Liquid Assets / Assets18.32%15.18%17.33%20.68%16.95%-137 bps
CRE / Total Capitaln/an/an/an/an/an/an/a