Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 or HERITAGE FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Washington 91-1857900 (State or other jurisdiction of incorporation or organization) 201 Fifth Avenue SW, Olympia WA 98501 (Address of principal executive offices) (Zip Code) (I.R.S. Empl ...

Financial Performance - Net income for Q1 2024 was $5.7 million, or $0.16 per diluted share, down from $6.2 million, or $0.18 per diluted share in Q4 2023, and $20.5 million, or $0.58 per diluted share in Q1 2023[2][5] - Income before income taxes for the quarter ended March 31, 2024, was $6,868,000, an increase of 4.4% from $6,577,000 in the previous quarter[43] - Net income for the quarter ended March 31, 2024, was $5,748,000, a decrease of 7.8% from $6,233,000 in the previous quarter[44] - Net interest income for Q1 2024 was $51.53 million, a decrease of 4.3% from $53.87 million in Q4 2023 and a decrease of 13.9% from $59.84 million in Q1 2023[23] - Noninterest income improved by $247,000 to a loss of $2.9 million in Q1 2024 from a loss of $3.1 million in Q4 2023, primarily due to a $10 million loss on the sale of investment securities in both periods[24][25] Asset and Deposit Management - Total assets as of March 31, 2024, were $7.09 billion, a slight decrease from $7.14 billion at the end of Q4 2023[23] - Total deposits decreased by $67.5 million, or 1.2%, to $5.53 billion at March 31, 2024, from $5.60 billion at December 31, 2023[9] - Total deposits decreased to $5,532,327,000 as of March 31, 2024, from $5,599,872,000 as of December 31, 2023[42] - The loans to deposits ratio increased to 80.0% from 77.4% in the previous quarter, suggesting a more aggressive lending strategy[51] Investment and Securities - The company incurred a pre-tax loss of $10.0 million on the sale of investment securities, impacting diluted earnings per share by $0.22 for the quarter[3][5] - Total investment securities decreased by $143.3 million, or 7.6%, to $1.73 billion at March 31, 2024, from $1.87 billion at December 31, 2023[7] - The loss on the sale of investment securities was $9.97 million in Q1 2024, compared to a loss of $10.00 million in Q4 2023[27] Expenses and Cost Management - Noninterest expense decreased by $2.4 million, or 5.5%, in Q1 2024 compared to Q4 2023, driven by reductions in data processing, professional services, and marketing expenses[28] - Approximately $1.1 million in severance costs were incurred in Q1 2024 as part of expense management initiatives, affecting diluted earnings per share by $0.02[3][5] - Compensation and employee benefits increased by $718,000, or 2.9%, in Q1 2024 compared to Q4 2023, largely due to $1.1 million in severance costs[30] Equity and Dividends - The company declared a regular cash dividend of $0.23 per share on April 24, 2024[5] - Total stockholders' equity decreased by $5.7 million, or 0.7%, to $847.6 million at March 31, 2024, primarily due to $8.1 million in dividends and $6.1 million in stock repurchases[12] - Stockholders' equity increased to $847,580,000 from $853,261,000 in the previous quarter, reflecting a stable capital position[51] Credit Quality - The allowance for credit losses on loans increased to 1.12% at March 31, 2024, from 1.11% at December 31, 2023, with a provision for credit losses of $1.7 million recorded in both quarters[14] - Total nonperforming loans rose to $7,420,000, an increase of 28.7% from $5,761,000 in the previous quarter[48] - Nonaccrual loans to loans receivable were 0.11% at March 31, 2024, compared to 0.10% at December 31, 2023[17] Interest Income and Margin - The net interest margin was 3.32% for Q1 2024, down from 3.41% in Q4 2023[5][6] - Total interest income for the quarter ended March 31, 2024, was $74,353,000, slightly up from $74,262,000 in the previous quarter[44] - The cost of interest-bearing deposits increased by 22 basis points to 1.70% in Q1 2024 from 1.48% in Q4 2023[20] Taxation - The effective income tax rate for the year ended December 31, 2023, was 15.3%, with an increase in income tax expense in Q1 2024 compared to Q4 2023 due to a higher effective tax rate[32] - Income tax expense for the quarter ended March 31, 2024, was $1,120,000, up 225.6% from $344,000 in the previous quarter[43] - The effective income tax rate increased to 16.3% for the quarter ended March 31, 2024, compared to 5.2% in the previous quarter[43]

For the quarter ended March 2024, Heritage Financial (HFWA) reported revenue of $48.63 million, down 28.6% over the same period last year. EPS came in at $0.40, compared to $0.58 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $59.87 million, representing a surprise of -18.77%. The company delivered an EPS surprise of -2.44%, with the consensus EPS estimate being $0.41.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- ...

OLYMPIA, Wash., April 2, 2024 /PRNewswire/ -- Heritage Financial Corporation ("Company" or "Heritage") (Nasdaq: HFWA) anticipates issuing its first quarter earnings release on Thursday, April 25, 2024 before the market opens. The Company has scheduled a telephone conference call to discuss the first quarter earnings on Thursday, April 25, 2024 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time). To access the conference call, call the numbers listed below:Live Conference Call                      (833) 470- ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 000-29480 HERITAGE FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Washington 9 ...

Average Interest Earning Assets Composition 37 ROAE (GAAP) and ROATCE (non-GAAP) Net Income (GAAP) and PTPP Income (nonGAAP), in millions 38 14% Tier 1 Leverage Ratio LIQUIDITY POSITION Liquidity Sources – At fair value – Includes FHLB borrowing availability of $1.42 billion at December 31, 2023 based on pledged assets, however, maximum credit capacity is 45% of the Bank's total assets one quarter in arrears or $3.22 billion Ticker HFWA Exchange NASDAQ Stock price $20.63 Market capitalization (in millions) ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 000-29480 HERITAGE FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Was ...

FORWARD LOOKING STATEMENTS Non-GAAP Financial Information 2 Heritage Branch OVERVIEW Eugene-Springfield, OR Boise–Nampa, Idaho Allocate capital to organically grow our core banking business Improve operational efficiencies and rationalize branch network Closed/Consolidated 36 branches since the beginning of 2010, including 12 branches in 2021 and one branch in 2023. 5 Objective: Invest in technologies that enable Community Banking @ Scale TECHNOLOGY INNOVATION Build Commercial Loans 360 (CL360) • Streamline ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Heritage Financial Corporation's unaudited condensed consolidated financial statements as of June 30, 2023, including statements of financial condition, income, comprehensive income, stockholders' equity, and cash flows, with detailed notes on accounting policies and financial specifics [Condensed Consolidated Statements of Financial Condition](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20FINANCIAL%20CONDITION) Total assets increased to **$7.12 billion** from **$6.98 billion** at year-end 2022, driven by a **$197.1 million** rise in net loans receivable, funded by **$450 million** in new borrowings and a **$329.3 million** decrease in deposits, with total stockholders' equity reaching **$819.7 million** Condensed Consolidated Statements of Financial Condition (Unaudited) | (In thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$7,115,410** | **$6,980,100** | | Cash and cash equivalents | $108,378 | $103,590 | | Total investment securities | $2,030,826 | $2,097,839 | | Loans receivable, net | $4,204,936 | $4,007,872 | | **Total Liabilities** | **$6,295,677** | **$6,182,207** | | Total deposits | $5,595,543 | $5,924,840 | | Borrowings | $450,000 | $0 | | **Total Stockholders' Equity** | **$819,733** | **$797,893** | [Condensed Consolidated Statements of Income](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Net income for Q2 2023 decreased to **$16.8 million** from **$18.6 million** in Q2 2022, primarily due to a **$1.9 million** provision for credit losses and higher noninterest expenses, despite a **$5.8 million** increase in net interest income, with diluted EPS at **$0.48** Key Income Statement Data (Unaudited) | (In thousands, except per share amounts) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $55,824 | $50,048 | $115,666 | $96,992 | | Provision for (reversal of) credit losses | $1,909 | $(1,204) | $3,734 | $(4,781) | | Noninterest income | $7,281 | $7,016 | $15,539 | $15,554 | | Noninterest expense | $41,325 | $35,707 | $82,930 | $71,427 | | **Net income** | **$16,846** | **$18,584** | **$37,303** | **$38,341** | | **Diluted earnings per share** | **$0.48** | **$0.52** | **$1.06** | **$1.08** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) These notes provide detailed disclosures on accounting policies and specific financial statement items, covering investment securities, loan portfolios, allowance for credit losses, goodwill impairment, derivative instruments, stockholders' equity, and fair value measurements - The company adopted ASU 2022-02 on January 1, 2023, eliminating TDR guidance and enhancing loan modification disclosures, with no material impact[38](index=38&type=chunk)[40](index=40&type=chunk) - No allowance for credit losses was recorded on investment securities as of June 30, 2023, as fair value declines were due to interest rate changes, not credit deterioration, and the company intends to hold them until recovery[48](index=48&type=chunk)[50](index=50&type=chunk) - A goodwill impairment triggering event occurred in Q2 2023 due to a sustained stock price decline, but a subsequent assessment confirmed no impairment as the reporting unit's fair value exceeded its carrying value[86](index=86&type=chunk) Allowance for Credit Losses on Loans Roll-Forward (Six Months Ended June 30, 2023) | (In thousands) | Amount | | :--- | :--- | | Beginning Balance (Dec 31, 2022) | $42,986 | | Charge-offs | $(458) | | Recoveries | $179 | | Provision for Credit Losses | $3,701 | | **Ending Balance (June 30, 2023)** | **$46,408** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's financial performance and condition, noting a Q2 2023 net income decrease due to higher credit loss provisions and increased operating expenses, despite strong net interest income growth, covering interest rate impacts, loan/deposit trends, credit quality, liquidity, and capital adequacy [Results of Operations](index=35&type=section&id=RESULTS%20OF%20OPERATIONS) Net income for Q2 2023 was **$16.8 million**, a **9.4%** decrease from Q2 2022, primarily due to a **$3.1 million** swing in credit loss provision and a **$5.6 million** rise in noninterest expense, partially offset by a **$5.8 million** (11.5%) increase in net interest income Net Income Comparison | Period | Net Income (in millions) | Diluted EPS | YoY Change (Net Income) | | :--- | :--- | :--- | :--- | | **Q2 2023** | $16.8 | $0.48 | -9.4% | | Q2 2022 | $18.6 | $0.52 | N/A | | **H1 2023** | $37.3 | $1.06 | -2.7% | | H1 2022 | $38.3 | $1.08 | N/A | [Net Interest Income and Margin Overview](index=36&type=section&id=NET%20INTEREST%20INCOME%20AND%20MARGIN%20OVERVIEW) Net interest income for Q2 2023 increased **11.5%** to **$55.8 million**, with net interest margin expanding **52 basis points** to **3.56%**, driven by a **132 basis point** increase in earning asset yield outpacing a **119 basis point** rise in liability cost Net Interest Margin Analysis (Q2 2023 vs Q2 2022) | Metric | Q2 2023 | Q2 2022 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $55.8M | $50.0M | +11.5% | | Net Interest Margin | 3.56% | 3.04% | +52 bps | | Yield on Earning Assets | 4.46% | 3.14% | +132 bps | | Cost of Interest-Bearing Liabilities | 1.35% | 0.16% | +119 bps | [Financial Condition Overview](index=43&type=section&id=FINANCIAL%20CONDITION%20OVERVIEW) Total assets grew **1.9%** to **$7.12 billion** at June 30, 2023, with net loans receivable up **4.9%** (**$197.1 million**), total deposits down **5.6%** (**$329.3 million**), and **$450 million** in new borrowings, while stockholders' equity increased **2.7%** to **$819.7 million** - Loans receivable increased by **$200.5 million** (**4.9%**) since year-end, primarily from new commercial and multifamily construction loans, which grew by **$93.0 million** (**43.5%**)[167](index=167&type=chunk) - Total deposits decreased by **$329.3 million** (**5.6%**), mainly from demand accounts due to market liquidity reduction and rate sensitivity, partially offset by a **$133.6 million** increase in certificates of deposit, including **$44.7 million** in brokered deposits[174](index=174&type=chunk) - The company significantly increased borrowings to **$450.0 million** as of June 30, 2023, leveraging the Federal Reserve's Bank Term Funding Program for advantageous terms, with no outstanding borrowings at year-end 2022[177](index=177&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintains a strong liquidity position with **$2.75 billion** in total available sources as of June 30, 2023, including FHLB and FRB borrowing capacity, unencumbered securities, and cash, deemed adequate for all foreseeable cash requirements Available Liquidity (June 30, 2023) | Source | Amount (in thousands) | | :--- | :--- | | FRB borrowing availability | $859,730 | | FHLB borrowing availability | $1,216,990 | | Unencumbered investment securities | $872,109 | | Cash and cash equivalents | $108,378 | | Fed funds line availability | $145,000 | | **Total Sources of Liquidity** | **$3,202,207** | | Less: Borrowings outstanding | $(450,000) | | **Total Available Liquidity** | **$2,752,207** | [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risk is interest rate risk, assessed via an income simulation model, which indicates short-term asset sensitivity, projecting a **1.5%** increase in net interest income over the next year in a **+100 basis point** rate shock scenario Net Interest Income Sensitivity Analysis (June 30, 2023) | Rate Shock Scenario | % Change in NII (Year 1) | % Change in NII (Year 2) | | :--- | :--- | :--- | | +200 bps | +2.3% | +2.8% | | +100 bps | +1.5% | +1.7% | | -100 bps | +1.7% | -0.5% | | -200 bps | +1.0% | -3.5% | [Controls and Procedures](index=50&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2023[193](index=193&type=chunk) - No changes occurred during Q2 2023 that materially affected or are reasonably likely to materially affect the company's internal control over financial reporting[194](index=194&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=50&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not a party to any material pending legal proceedings beyond ordinary routine litigation incidental to its business - The Company and its subsidiary, the Bank, are not involved in any material pending legal proceedings outside of ordinary routine litigation[196](index=196&type=chunk) [Risk Factors](index=50&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes have occurred to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - No material changes have been made to the risk factors disclosed in the Company's 2022 Annual Form 10-K[197](index=197&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the company's common stock repurchases during Q2 2023, totaling **98,458** shares at an average price of **$17.78** per share, with **455,909** shares remaining available under the current plan as of June 30, 2023 Common Stock Repurchases (Q2 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2023 | 69,223 | $18.25 | | May 2023 | 24,727 | $16.51 | | June 2023 | 4,508 | $17.60 | | **Total Q2 2023** | **98,458** | **$17.78** | - As of the end of Q2 2023, **455,909** shares remain available for purchase under the company's twelfth stock repurchase plan, announced on March 12, 2020[199](index=199&type=chunk)

Heritage Financial Corporation (NASDAQ:HFWA) Q2 2023 Earnings Conference Call July 20, 2023 1:00 PM ET Company Participants Jeffrey Deuel - CEO Donald Hinson - CFO Bryan McDonald - President and COO Anthony Chalfant - Chief Credit Officer Conference Call Participants David Feaster - Raymond James Matthew Clark - Piper Sandler Jeffrey Rulis - D.A. Davidson Andrew Terrell - Stephens Inc. Kelly Motta - Keefe, Bruyette, & Woods, Inc. Timothy Coffey - Janney Montgomery Scott LLC Operator Hello, and welcome to ...