Financial Position and Capital - As of December 31, 2024, the company's on-balance sheet liquidity position was $117.1 million in cash and cash equivalents and $1.47 billion in total investment securities[28]. - The regulatory capital ratios of the Bank were above the "well-capitalized" status, with a common equity tier 1 capital ratio of 12.0%, leverage ratio of 10.0%, Tier 1 capital ratio of 12.4%, and total capital ratio of 13.3%[28]. - As of December 31, 2024, the Bank was well-capitalized according to FDIC regulations and had regulatory capital exceeding Federal Reserve requirements[67]. - The Basel III Rule requires a minimum Common Equity Tier 1 Capital ratio of 7%, Tier 1 Capital ratio of 8.5%, and Total Capital ratio of 10.5% when including the capital conservation buffer[64]. - The Basel III Rule increased the required quantity and quality of capital, establishing more stringent criteria for Additional Tier 1 Capital and Tier 2 Capital[63]. - Banking organizations must maintain a capital conservation buffer of 2.5% in Common Equity Tier 1 Capital to make unrestricted capital distributions[64]. - The Bank is required to maintain adequate capital levels and exceeded its capital requirements under applicable guidelines as of December 31, 2024[96]. Loan Portfolio Composition - Commercial business loans comprised $3.76 billion, or 78.3% of total loans receivable, as of December 31, 2024[41]. - Real estate construction and land development loans totaled $479.4 million, representing 9.9% of total loans receivable[45]. - Residential real estate loans amounted to $403.0 million, or 8.4% of total loans receivable, with the company ceasing the origination of these loans in January 2024[48]. - Consumer loans were recorded at $164.7 million, or 3.4% of total loans receivable, as of December 31, 2024[49]. - The company has maintained a diversified portfolio of lending relationships without significant concentrations in any industry[30]. Employee and Corporate Culture - The company has a strong corporate culture supported by internal development and retention of management and officers in key roles[31]. - As of December 31, 2024, the company employed 733 full-time and 28 part-time employees, with a voluntary workforce turnover of 14.9%, down from 16.6% in 2023[126]. - In 2024, 43% of new hires came from underrepresented minority groups, an increase from 37% in 2023[124]. - The company achieved a 7.5-year average overall employee tenure and a 9.7-year average tenure for management as of December 31, 2024[127]. - The company launched two new Leadership Certificate Programs in April 2024, with 33 employees receiving certification since the launch[134]. - The company received recognition as one of the top 100 Best Places to Work in Washington and Oregon based on the 2024 employee engagement survey[130]. - The company’s total workforce composition as of December 31, 2024, was 69.5% female and 30.5% male[128]. - The company’s generational representation included 17% Baby Boomers, 37% Gen X-ers, 35% Millennials, and 10% Gen Z-ers as of December 31, 2024[135]. - Over 3,700 e-cards were posted on the internal recognition platform "Celebrate Great" in 2024, highlighting employee appreciation[136]. Financial Performance - Net income for 2024 was $43.3 million, a decrease of 30% compared to $61.8 million in 2023[339]. - Basic earnings per share decreased to $1.26 in 2024 from $1.76 in 2023, reflecting a decline of approximately 28.4%[339]. - Total assets decreased to $7.1 billion as of December 31, 2024, down from $7.2 billion in 2023[336]. - Loans receivable increased to $4.8 billion in 2024, compared to $4.3 billion in 2023, marking an increase of approximately 10.7%[336]. - Total noninterest expense decreased to $158.3 million in 2024 from $166.6 million in 2023, a reduction of about 5%[339]. - The company reported a total of $7.5 million in noninterest income for 2024, down from $18.7 million in 2023, indicating a decline of approximately 60%[339]. - The total stockholders' equity increased to $863.5 million in 2024 from $853.3 million in 2023, reflecting a growth of about 1.5%[336]. Regulatory Compliance and Risk Management - The Bank's liquidity risk management policies are under review in light of regulatory requirements and industry developments, particularly following the failures of Silicon Valley Bank and Signature Bank[93][95]. - The Company is subject to periodic examination by the Federal Reserve and must file reports regarding its operations and those of the Bank[72]. - The Bank is subject to examination, supervision, reporting, and enforcement requirements of the DFI and the FDIC as a Washington state-chartered bank[86]. - The Bank's ability to engage in certain acquisitions or mergers may require approval from the DFI, the FDIC, and other banking agencies[98]. - The FDIC adopted a special assessment for banking organizations with assets of $5 billion or more, at an annual rate of 13.4 basis points, starting from the first quarterly assessment period of 2024[89]. - The total base assessment rates for FDIC-insured institutions currently range from 2.5 basis points to 32 basis points, with a maximum rate of 18 basis points for institutions in the top two categories of examination composite ratings[87]. - The FDIC's reserve ratio is projected to reach the statutory minimum of 1.35% by September 30, 2028, with no adjustments to the base assessment rates currently projected[88]. Credit Losses and Allowance - The consolidated allowance for credit losses (ACL) on loans was $52.5 million as of December 31, 2024, with a provision for credit losses of $7.0 million for the year[329]. - The provision for credit losses was $6,282,000 in 2024, compared to $4,280,000 in 2023, indicating a rise in expected credit losses[346]. - The Company evaluates the need for an Allowance for Credit Losses (ACL) on investment securities available for sale at least quarterly, especially during adverse economic conditions[356]. - The ACL on loans is calculated using a historic loss, open pool CECL methodology, with loans evaluated collectively or individually based on risk characteristics[369]. - The Company assesses the adequacy of the ACL on loans quarterly, with potential adjustments required based on local and national economic conditions[377]. - The provision for credit losses includes provisions for loans, unfunded commitments, and investment securities[382]. Investment Securities - The Company classifies investment securities as held to maturity, trading, or available for sale, with unrealized gains and losses reported accordingly[354]. - Realized gains and losses on sales of investment securities are recorded on the trade date, with specific identification method used for determination[355]. - The allowance methodology for unfunded commitments includes considerations of current and future utilization based on historical data and economic forecasts[379]. Community Engagement and Sustainability - The company continues to assess the impact of the CRA Rule on its lending and investment activities in respective markets[110]. - The company must comply with stringent economic and trade sanctions regimes administered by the Office of Foreign Assets Control[112]. - In 2024, over 550 employees volunteered approximately 1,665 hours at more than 60 organizations in Washington, Oregon, and Idaho during the annual volunteer event[143]. - The EcoChallenge in 2024 involved 41 teams and resulted in 21,887 environmentally sustainable actions, enhancing community engagement and sustainability awareness[144].

Company Overview - Heritage Financial (HFWA) is headquartered in Olympia and has experienced a price change of -1.43% this year [3] - The company currently pays a dividend of $0.24 per share, resulting in a dividend yield of 3.98%, which is higher than the Financial - Savings and Loan industry's yield of 2.91% and the S&P 500's yield of 1.56% [3] Dividend Performance - The current annualized dividend of $0.96 represents a 4.3% increase from the previous year [4] - Over the past five years, Heritage Financial has increased its dividend four times, averaging an annual increase of 3.60% [4] - The company's current payout ratio is 54%, indicating that it pays out 54% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - Heritage Financial is expected to see earnings growth this fiscal year, with the Zacks Consensus Estimate for 2025 at $2.09 per share, reflecting a year-over-year growth rate of 12.97% [5] Investment Appeal - Heritage Financial is considered an attractive dividend play and a compelling investment opportunity, holding a Zacks Rank of 1 (Strong Buy) [7]

OLYMPIA, Wash., Jan. 27, 2025 /PRNewswire/ -- Heritage Bank ("Heritage" or "bank"), a wholly-owned subsidiary of Heritage Financial Corporation (Nasdaq: HFWA), is pleased to announce its expansion into Spokane, Wash., with the addition of James Krejci, senior vice president, commercial team leader; Timothy Engh, senior vice president, commercial banking officer; and Sean O'Regan, vice president, commercial banking officer. Subject to the completion of certain conditions, including receipt of the necessary r ...

Financial Performance - Net income for Q4 2024 was $11.9 million, or $0.34 per diluted share, up from $11.4 million, or $0.33 per diluted share in Q3 2024, and significantly higher than $6.2 million, or $0.18 per diluted share in Q4 2023[2][6] - Income before income taxes for Q4 2024 was $16,330,000, an increase of $3,264,000 (24.8%) compared to Q4 2023[38] - Net income for the quarter ended December 31, 2024, was $11,928,000, compared to $6,233,000 in the same quarter of 2023, an increase of 91.5%[46] - Basic earnings per share for the quarter ended December 31, 2024, was $0.35, up from $0.18 in the same quarter of 2023, indicating an increase of 94.4%[48] - Adjusted tangible net income (non-GAAP) reached $18,187 million, up from $16,055 million in the prior quarter[70] Revenue and Income Sources - Total interest income for the quarter ended December 31, 2024, was $78,960,000, an increase from $74,262,000 in the same quarter of 2023, representing a growth of 6.1%[46] - Net interest income for Q4 2024 was $53.763 million, representing a net interest margin of 3.39%[30] - Noninterest income increased by $1.5 million to $3.3 million in Q4 2024 compared to Q3 2024, primarily due to reduced losses from the sale of investment securities[31] - Noninterest income rose by $6.4 million from Q4 2023, attributed to decreased losses from investment securities sales[32] Expenses and Efficiency - Total noninterest expense for Q4 2024 was $39.540 million, a slight increase of 0.6% from Q3 2024, but a decrease of 7.5% compared to Q4 2023[36] - The efficiency ratio improved to 69.3%, down from 71.7% in Q3 2024, indicating better operational efficiency[7] - Total noninterest expense (GAAP) decreased to $39,540 million from $39,290 million in the previous quarter[71] Assets and Liabilities - Total assets as of December 31, 2024, were $7.149 billion, slightly down from $7.182 billion at the end of Q3 2024[30] - Loans receivable increased by $122.6 million, or 2.6%, to $4.80 billion at December 31, 2024, with new loans funded totaling $181.0 million in Q4 2024[6][12] - Total deposits decreased by $23.9 million, or 0.4%, to $5.68 billion at December 31, 2024, with non-maturity deposits down by $55.6 million, or 1.2%[6][13] - Total stockholders' equity decreased by $11.0 million, or 1.3%, to $863.5 million at December 31, 2024, primarily due to an increase in accumulated other comprehensive loss and dividends paid[15] Credit Quality - The allowance for credit losses on loans was 1.09% at December 31, 2024, compared to 1.10% at September 30, 2024, with a provision for credit losses of $1.1 million recorded during the fourth quarter[17] - Provision for credit losses for the quarter ended December 31, 2024, was $1,183,000, a decrease from $1,424,000 in the same quarter of 2023, indicating improved credit quality[46] - Total nonperforming loans decreased to $5,274,000 from $9,648,000 in the previous quarter, indicating improved credit quality[53] Dividends and Shareholder Returns - The company declared a regular cash dividend of $0.24 per share, a 4.3% increase from the previous dividend of $0.23 per share[6] - Dividends declared per share for the year ended December 31, 2024, were $0.92, compared to $0.88 in 2023, reflecting a growth of 4.5%[48] Future Outlook - The Company will hold an earnings conference call on January 23, 2025, at 10:00 a.m. Pacific time[40]

Financial Data and Key Metrics Changes - The company announced a CEO transition plan that has been in place since July 2024, aiming for a smooth transition for all stakeholders [4] - The current CEO will retire on May 5, 2025, and the CEO of Heritage Bank will also take on the role of CEO of the holding company at that time [4][5] Business Line Data and Key Metrics Changes - Specific financial data and metrics for the fourth quarter earnings were not detailed in the provided content [6] Market Data and Key Metrics Changes - No specific market data or metrics were provided in the content [6] Company Strategy and Development Direction and Industry Competition - The company is focused on ensuring a smooth leadership transition, which is critical for maintaining stability and confidence among employees, customers, and investors [4] Management's Comments on Operating Environment and Future Outlook - Management has not provided specific comments on the operating environment or future outlook in the available content [6] Other Important Information - The Chief Financial Officer was unable to attend the call due to health reasons, and the Chief Accounting Officer participated in their place [3] Q&A Session All Questions and Answers - No questions or answers from the Q&A session were included in the provided content [6]

INVESTOR PRESENTATION Q4 2024 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 $60.96 million for the quarter ended December 2024, reflecting a year-over-year increase of 20.2% [1] - The earnings per share (EPS) for the quarter was $0.51, up from $0.47 in the same quarter last year, surpassing the consensus estimate of $0.46 by 10.87% [1] Financial Performance Metrics - The efficiency ratio was reported at 69.3%, higher than the average estimate of 66.7% from three analysts [4] - The net interest margin stood at 3.4%, slightly above the average estimate of 3.3% from three analysts [4] - Total nonperforming assets were $5.27 million, significantly lower than the average estimate of $8.88 million from two analysts [4] - Total nonaccrual loans were reported at $4.08 million, compared to the average estimate of $6.13 million from two analysts [4] - The average balance of total interest-earning assets was $6.31 billion, close to the estimated $6.33 billion from two analysts [4] - Net charge-offs on loans to average loans receivable were 0%, better than the estimated 0.1% from two analysts [4] - Total noninterest income was $3.29 million, falling short of the average estimate of $7.40 million from three analysts [4] - Net interest income was reported at $53.76 million, exceeding the average estimate of $53.17 million from three analysts [4] Stock Performance - Heritage Financial's shares returned +0.6% over the past month, underperforming the Zacks S&P 500 composite's +2.7% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Company Performance - Heritage Financial (HFWA) reported quarterly earnings of $0.51 per share, exceeding the Zacks Consensus Estimate of $0.46 per share, and up from $0.47 per share a year ago, representing an earnings surprise of 10.87% [1] - The company posted revenues of $60.96 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.75%, and an increase from year-ago revenues of $50.72 million [2] - Over the last four quarters, Heritage Financial has surpassed consensus EPS estimates two times and topped consensus revenue estimates once [2] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and the company's earnings outlook [3][4] - The current consensus EPS estimate for the coming quarter is $0.42 on revenues of $60.13 million, and for the current fiscal year, it is $1.92 on revenues of $248.67 million [7] - The estimate revisions trend for Heritage Financial is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Financial - Savings and Loan industry, to which Heritage Financial belongs, is currently in the top 11% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8]

Fourth Quarter 2024 Highlights Net income was $11.9 million, or $0.34 per diluted share, compared to $11.4 million, or $0.33 per diluted share, for the third quarter of 2024. Results included a pre-tax loss on sale of securities of $3.9 million and $2.9 million in total after-tax costs related to BOLI restructuring, resulting in an aggregate negative impact of $0.17 per diluted share. Loans receivable increased $122.6 million, or 2.6% (10.5% annualized). Net interest margin increased to 3.39%, from 3.33% f ...

Wall Street analysts forecast that Heritage Financial (HFWA) will report quarterly earnings of $0.46 per share in its upcoming release, pointing to a year-over-year decline of 2.1%. It is anticipated that revenues will amount to $59.73 million, exhibiting an increase of 17.8% compared to the year-ago quarter.The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during th ...