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Heritage Bank

Great Falls, MT · Cert 34970

FDIC

Q4 2006

$409.7MAssets
$341.4MLoans
$307.1MDeposits
$34.7MEquity
Loan mix
64%RE $105.4M35%C&I $57.8M0%Consumer $0.7MQ4 2005Q4 2006
Deposit mix
84%Interest-bearing $258.3M16%Noninterest $48.8MQ4 2005Q4 2006

NIM

5.45%Q4 ’046.08%Q4 ’056.48%Q4 ’06+1%-11%

Non-interest income vs. expense

3.26%Q4 ’043.13%Q4 ’052.94%Q4 ’06-5%-8%

Executive Summary

  • Earnings: ROA of 1.10%, down 12 bps year over year; NIM at 3.50%.
  • Asset quality: problem loans at 0.00% of loans (0 bps YoY), with net charge-offs at 0.01%.
  • Funding: loans stand at 111.15% of deposits as of Q4 2006.

Financial Results

Return on Assets (quarter, annualized)

1.10%-12 bps YoY

Net Interest Margin (quarter, annualized)

3.50%-42 bps YoY

Efficiency Ratio (quarter, annualized)

62.48%+196 bps YoY

Tier 1 Leverage Ratio

n/a

Discrete quarter, annualized.

MetricQ4 2005Q1 2006Q2 2006Q3 2006Q4 2006YoY ΔTrend
Earnings
Return on Assets1.23%1.02%1.20%1.21%1.10%-12 bps
Return on Equity15.21%12.78%15.09%14.83%13.21%-200 bps
Net Interest Margin3.92%3.63%3.62%3.59%3.50%-42 bps
Efficiency Ratio60.53%62.25%57.55%59.92%62.48%+196 bps
Non-Interest Burden1.88%1.86%1.58%1.63%1.74%-15 bps
Growth
Asset Growth (YoY)12.25%17.20%11.20%10.36%6.29%-596 bps
Loan Growth (YoY)16.51%16.90%14.07%9.62%7.05%-946 bps
Deposit Growth (YoY)16.60%25.05%14.33%2.53%1.08%-1,552 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.00%0.00%0.00%0 bps
Net Charge-Offs / Loans0.01%0.00%0.02%0.01%0.01%0 bps
Allowance / Loans1.18%1.16%1.14%1.13%1.14%-4 bps
Allowance Coverage of NPLsn/an/an/an/an/an/an/a
Capital
Tier 1 Leverage Ration/an/an/an/an/an/an/a
Total Risk-Based Capital10.14%10.22%10.23%10.40%10.57%+43 bps
Equity / Assets8.10%7.88%8.08%8.23%8.47%+37 bps
Liquidity & Funding
Loans / Deposits104.95%102.69%109.29%110.38%111.15%+620 bps
Liquid Assets / Assets0.11%1.58%0.13%0.20%0.48%+37 bps
CRE / Total Capitaln/an/an/an/an/an/an/a