OLYMPIA, Wash., Feb. 2, 2026 /PRNewswire/ -- Heritage Financial Corporation ("Heritage") (Nasdaq: HFWA) announced that effective January 31, 2026, it completed its previously announced merger (the "Merger") of Olympic Bancorp, Inc. ("Olympic") with and into Heritage, and the merger of Kitsap Bank with and into Heritage Bank. "We welcome Kitsap Bank's customers and employees to Heritage Bank and look forward to continuing to provide them with excellent service and quality products," said Bryan McDonald, Her ...

Heritage Financial Corporation (NASDAQ:HFWA) reported a significant earnings surprise with an EPS of $0.66, surpassing the Zacks Consensus Estimate.The company's revenue for the quarter ending December 2025 was $66.35 million, exceeding expectations and indicating strong financial performance.Despite a slight decrease in stock price, HFWA's market capitalization stands at approximately $895 million, with a 52-week high of $28.35 and a low of $19.84.Heritage Financial Corporation (NASDAQ:HFWA) is a prominent ...

Financial Data and Key Metrics Changes - Adjusted diluted earnings per share increased by 18% quarter-over-quarter and 29% year-over-year, with an adjusted return on assets (ROA) improving to 1.29% from 0.99% in the previous year [3] - Net interest income rose by $1 million or 1.7% from the prior quarter, driven by a higher interest margin [7] - The net interest margin increased to 3.7% from 3.64% in the prior quarter and from 3.36% in the fourth quarter of the previous year [8][9] Business Line Data and Key Metrics Changes - Total loan balances increased by $14 million in Q4, with the loan portfolio growing by 5.54% [5] - Total deposits increased by $63 million in Q4, primarily due to a $100 million increase in interest-bearing demand deposits [5] - Investment balances decreased by $31 million, with the yield on the investment portfolio dropping to 3.26% from 3.35% in the previous quarter [6] Market Data and Key Metrics Changes - The commercial lending group closed $254 million in new loan commitments, down from $317 million in the previous quarter [15] - The commercial loan pipeline ended the fourth quarter at $468 million, down from $511 million in the previous quarter [15] - Average interest rates for new commercial loans were 6.56%, down 11 basis points from the previous quarter [17] Company Strategy and Development Direction - The company plans to close the merger with Olympic Bancorp at the end of January, which is expected to enhance profitability and position the company for growth in the Puget Sound market [4] - The focus remains on integrating Olympic and ensuring successful operations while exploring future M&A opportunities [73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating future challenges and capitalizing on growth opportunities, with expectations for loan growth to return to historical levels in 2026 [16][18] - The company anticipates continued improvement in net interest margins and deposit costs due to recent rate cuts [22] Other Important Information - The company reported a reversal of provision for credit losses of $18,000 in Q4, attributed to a change in the loan portfolio mix [8] - Non-accrual loans totaled $21 million at year-end, representing 0.44% of total loans, an increase from 0.37% at the end of the previous quarter [10] Q&A Session Summary Question: Outlook for adjustable rate opportunity and margin - Management indicated that despite recent rate cuts, loan yields slightly grew, and they expect further improvement in margins without the merger [21][22] Question: Loan growth expectations and industry focus - Management expects loan growth to return to low single digits in Q1 and upper single digits as the year progresses, with visibility improving in the loan pipeline [25][31] Question: Operating expense growth and merger-related expenses - Management anticipates approximately $20 million-$21 million in merger-related expenses, with a projected run rate for Q2 and Q3 around $56 million [33][34] Question: Capital priorities post-merger - The primary focus is on closing the merger, which will utilize about 100 basis points of capital, with potential for buybacks considered after the deal closes [51][52] Question: Competition in loan yields and deposit costs - Management noted that competition remains strong but consistent, with expectations for deposit costs to continue decreasing [44][48]

Financial Data and Key Metrics Changes - Adjusted diluted earnings per share increased by 18% quarter-over-quarter and 29% year-over-year, with an adjusted return on assets (ROA) improving to 1.29% from 0.99% in the previous year [3] - Net interest income rose by $1 million or 1.7% from the prior quarter, driven by a higher interest margin [7] - The net interest margin increased to 3.7% from 3.64% in the prior quarter and from 3.36% in the fourth quarter of the previous year [8] Business Line Data and Key Metrics Changes - Total loan balances increased by $14 million in Q4, with the loan portfolio growing by 5.54% [5] - Total deposits increased by $63 million in Q4, primarily due to a $100 million increase in interest-bearing demand deposits [5] - Investment balances decreased by $31 million, with the yield on the investment portfolio dropping to 3.26% from 3.35% in the previous quarter [6] Market Data and Key Metrics Changes - The commercial lending group closed $254 million in new loan commitments, down from $317 million in the previous quarter [15] - The commercial loan pipeline ended the fourth quarter at $468 million, down from $511 million in the previous quarter [15] - Average interest rates for new commercial loans decreased to 6.56%, down 11 basis points from the previous quarter [17] Company Strategy and Development Direction - The company plans to close the merger with Olympic Bancorp at the end of January, which is expected to enhance profitability and position the company for growth in the Puget Sound market [4] - The focus remains on integrating Olympic and ensuring successful execution of the merger while continuing to explore additional M&A opportunities [73] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for margin improvement over the next year or two, particularly with the merger [22] - The company anticipates a return to loan growth at more historical levels in 2026, following a period of elevated loan payoffs [16] - Credit quality remains strong, with non-accrual loans at 0.44% of total loans, and management is confident in their credit underwriting practices [10][12] Other Important Information - The company recognized a reversal of provision for credit losses of $18,000 in Q4 due to a change in the mix of the loan portfolio [8] - Non-interest expenses decreased due to lower merger-related expenses, although compensation and benefits expenses increased due to incentive compensation accruals [9] Q&A Session Summary Question: Outlook for adjustable rate opportunity - Management indicated potential for nearly a 200 basis point increase in adjustable rates if repriced, with expectations for improved loan yields in the absence of rate cuts [20][22] Question: Loan growth expectations for 2026 - Management expects loan growth to return to low single digits in Q1, moving to upper single digits based on customer demand [25] Question: Operating expense growth expectations - Management anticipates approximately $20-$21 million in merger-related expenses, with a projected run rate for Q2 and Q3 around $56 million [33] Question: Capital priorities in 2026 - The primary focus is on closing the Olympic transaction, which will utilize about 100 basis points of capital, with potential for buybacks considered post-merger [51] Question: Trends in credit quality - Management noted no significant correlation in recent downgrades within the C&I category, attributing them to timing rather than broader industry issues [60]

Financial Data and Key Metrics Changes - Adjusted diluted earnings per share increased by 18% quarter-over-quarter and 29% year-over-year, reaching a new high [3] - Return on assets (ROA) improved to 1.29% from 0.99% in Q4 2024 [3] - Net interest income rose by $1 million or 1.7% from the prior quarter, driven by a higher interest margin [6] - Net interest margin increased to 3.7% from 3.64% in the prior quarter and from 3.36% in Q4 2024 [7] - Total loan balances increased by $14 million in Q4, with a loan portfolio growth of 5.54% [5] Business Line Data and Key Metrics Changes - Commercial lending closed $254 million in new loan commitments, down from $317 million last quarter [13] - Total new loan production was $271 million, offset by elevated payoffs and prepaids [13] - The yield on the investment portfolio decreased to 3.26% in Q4 compared to 3.35% in Q3 [6] Market Data and Key Metrics Changes - Total deposits increased by $63 million in Q4, primarily due to a $100 million increase in interest-bearing demand deposits [5] - The cost of interest-bearing demand deposits decreased to 1.8% from 1.89% in the prior quarter [5] Company Strategy and Development Direction - The company plans to close the merger with Olympic Bancorp at the end of January, which is expected to enhance profitability and growth in the Puget Sound market [4] - The company aims to resume loan growth at more historical levels in 2026, following a period of elevated loan payoffs [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating future challenges and capitalizing on growth opportunities [16] - The company anticipates continued improvement in net interest margin and deposit costs due to recent rate cuts [20][21] Other Important Information - The company remains above capital life thresholds, with a tangible common equity (TCE) ratio of 10.1%, up from 9.8% in the prior quarter [8] - Non-accrual loans totaled $21 million, representing 0.44% of total loans, an increase from 0.37% at the end of Q3 [9] Q&A Session Summary Question: Margin outlook given adjustable rate opportunities - Management noted that despite recent rate cuts, loan yields slightly grew in Q4, and they expect further improvement in margins without the merger [20][21] Question: Loan growth expectations for 2026 - Management indicated a potential for lower payoffs and a return to positive net advances in 2026, with good visibility in the loan pipeline [29] Question: Operating expense growth expectations - Management expects approximately $20-$21 million in merger-related expenses, with a run rate for Q2 and Q3 projected in the mid-$56 million range [32][33] Question: Thoughts on crossing the $10 billion asset threshold - Management stated that they are several years out from crossing the $10 billion mark on an organic basis, focusing on integrating Olympic first [35][36] Question: Competition in loan yields - Management acknowledged a competitive market for commercial loans but did not see any significant changes in competition levels [42][44] Question: Capital priorities in 2026 - Management highlighted the importance of closing the Olympic transaction and indicated potential for buybacks post-merger [48][49]

Financial Performance - Net income for Q4 2025 was $22.2 million, an increase of 15.6% from $19.2 million in Q3 2025 and 86.1% from $11.9 million in Q4 2024[3] - Diluted earnings per share rose to $0.65 in Q4 2025, compared to $0.55 in Q3 2025 and $0.34 in Q4 2024, marking a 29% year-over-year growth[3] - Net income for the quarter was $22,237,000, representing a 15.5% increase from $19,169,000 in the same quarter of the previous year[40] - Basic earnings per share increased to $0.66 from $0.56 year-over-year, marking a growth of 17.9%[40] - Net income (GAAP) for Q4 2025 was $22,237 million, an increase from $19,169 million in Q3 2025, representing a growth of 10.6%[60] - Tangible net income (non-GAAP) for Q4 2025 reached $22,462 million, up from $19,393 million in Q3 2025, marking an increase of 15.7%[60] - Adjusted tangible net income (non-GAAP) for Q4 2025 was $22,766 million, compared to $19,895 million in Q3 2025, reflecting a growth of 14.7%[60] Interest Income and Margin - Net interest income increased by $1.0 million, or 1.7%, from Q3 2025, with a net interest margin of 3.72%, up 8 basis points from 3.64%[4] - Net interest income rose by $4.6 million, or 8.6%, during the fourth quarter of 2025 compared to the same period in the prior year[23] - Total interest income for the fourth quarter of 2025 was $58.361 million, with a net interest margin of 3.72%[25] - Net interest income for Q4 2025 was $58,361,000, an increase from $57,371,000 in Q3 2025 and $54,983,000 in Q2 2025[46] - The net interest margin improved to 3.58% for the year ended December 31, 2025, compared to 3.31% in the previous year[42] Deposits and Loans - Total deposits grew by $62.7 million, or 1.1%, reaching $5.92 billion at the end of Q4 2025[10] - Loans receivable increased by $14.1 million, or 0.3%, during Q4 2025, with new loans funded totaling $173.1 million[8] - Non-maturity deposits rose by $75.1 million, or 1.5%, primarily due to increased customer balances in interest-bearing demand accounts[10] - Total deposits rose to $5,920,199 thousand, an increase of 1.07% from $5,857,464 thousand in the previous quarter[38] Expenses and Efficiency - Noninterest expense decreased by $132,000, or 0.3%, to $41.5 million in Q4 2025 compared to Q3 2025[29] - The efficiency ratio improved to 62.5% from 63.3% in Q3 2025, indicating better operational efficiency[4] - Total noninterest expense for the quarter was $41,483,000, slightly down from $41,615,000 in the previous year[40] - Adjusted efficiency ratio (non-GAAP) improved to 61.9% in Q4 2025 from 62.4% in Q3 2025, indicating enhanced operational efficiency[63] Tax and Shareholder Returns - Income tax expense increased by $305,000 to $3.4 million in Q4 2025, driven by higher pre-tax income[32] - The effective income tax rate for Q4 2025 was 13.4%, down from 27.0% in Q4 2024[33] - The Company declared a quarterly cash dividend of $0.24 per share, payable on February 11, 2026[34] Asset Quality and Capital - The allowance for credit losses on loans decreased to 1.10% at December 31, 2025, from 1.13% at September 30, 2025, with a $0.9 million reversal of provision for credit losses recorded[14] - Classified loans increased by $22.4 million, raising the percentage of classified loans to 2.4% at December 31, 2025, compared to 2.0% at September 30, 2025[17] - Total stockholders' equity rose by $17.4 million, or 1.9%, to $921.5 million at December 31, 2025, driven by $22.2 million in net income for the quarter[12] - The common equity tier 1 capital ratio improved to 12.7% from 12.4%, indicating stronger capital adequacy[48] Future Outlook - The company received regulatory and shareholder approvals for the acquisition of Olympic Bancorp, expected to close by January 31, 2026[4] - The Company will hold an earnings conference call on January 22, 2026, at 10:00 a.m. Pacific time[35]

Total deposits increased $193 million for the quarter, of which about $83 million was in noninterest-bearing deposits. Although there continues to be a change in the mix of interest-bearing deposits from non-maturity deposit balances to CDs, it is occurring at a much slower pace. The percentage of CDs to total deposits only increased to 16.5% from 16% at the end of Q2. And this is net of lowering our broker TD balances by $10 million during the quarter. It is noteworthy that in Q4, we have $420 million of C ...

INVESTOR PRESENTATION Q4 2025 FORWARD LOOKING STATEMENTS This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believes," "expects," "anticipates," "estimates," "forecasts," "intends," "plans," "targets," "potentially," "probably," "projects," "outlook" or similar expressions or future or conditional verbs such as "may," "will," "should," "would," and "could," as well as the negative of ...

Core Insights - Heritage Financial (HFWA) reported a revenue of $66.35 million for the quarter ended December 2025, marking an 8.8% year-over-year increase and a surprise of +0.99% over the Zacks Consensus Estimate of $65.7 million [1] - The earnings per share (EPS) for the same period was $0.66, compared to $0.51 a year ago, resulting in a surprise of +15.79% over the consensus EPS estimate of $0.57 [1] Financial Performance Metrics - Net Interest Margin was reported at 3.7%, matching the average estimate from three analysts [4] - The Efficiency Ratio was 62.5%, slightly better than the estimated 63.1% by three analysts [4] - Total Nonperforming Assets amounted to $21.17 million, exceeding the two-analyst average estimate of $16.75 million [4] - Total Nonaccrual Loans were also reported at $21.17 million, higher than the two-analyst average estimate of $14.25 million [4] - Average Balance of Total Interest Earning Assets was $6.22 billion, slightly below the $6.27 billion average estimate from two analysts [4] - Net charge-offs on loans to average loans receivable were reported at 0%, compared to the two-analyst average estimate of 0.1% [4] - Total Noninterest Income was $7.99 million, slightly below the three-analyst average estimate of $8 million [4] - Net Interest Income was reported at $58.36 million, exceeding the average estimate of $57.71 million from three analysts [4] Stock Performance - Shares of Heritage Financial have returned +7.1% over the past month, outperforming the Zacks S&P 500 composite's +0.7% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

分组1 - Heritage Financial (HFWA) reported quarterly earnings of $0.66 per share, exceeding the Zacks Consensus Estimate of $0.57 per share, and up from $0.51 per share a year ago, representing an earnings surprise of +15.79% [1] - The company posted revenues of $66.35 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 0.99%, compared to year-ago revenues of $60.96 million [2] - Heritage Financial shares have increased approximately 11% since the beginning of the year, outperforming the S&P 500's gain of 0.4% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $0.54 on revenues of $79.85 million, and for the current fiscal year, it is $2.50 on revenues of $341.35 million [7] - The Zacks Industry Rank for Financial - Savings and Loan is currently in the top 22% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] - Heritage Financial has a Zacks Rank of 2 (Buy), suggesting that the shares are expected to outperform the market in the near future [6]