Heritage Financial in Wash. keeps purging underperforming securities

Heritage Financial in Olympia, Wash., reported lower quarterly profit after it sold more underperforming securities.

The $7.1 billion-asset company said in a press release that its second-quarter net income fell by 14% from a year earlier, to $12.2 million.

During the quarter, Heritage sold $91.6 million of securities at a pretax loss of $6.9 million. Net proceeds were used to buy $56.4 million in higher-yielding securities and to fund new loans.

The company also shed underperforming securities in the first quarter and a year earlier.

Heritage also surrendered $8.5 million of its bank-owned life insurance portfolio in the second quarter, incurring $515,000 of tax expense.

“We continue to strategically reposition our balance sheet to improve future profitability and will consider investment in new production teams when favorable opportunities are presented,” Bryan McDonald, Heritage’s CEO, said in the release.

“Although these actions may impact current earnings, we believe future earnings will be enhanced, and we are optimistic that the combination of our strong balance sheet and prudent risk management will provide sustainable long-term returns for our shareholders,” he added.