Heritage Financial (US:HFWA)2025-10-23 18:33Financial Performance - Net income for Q3 2025 was $19.2 million, a 57.4% increase from $12.2 million in Q2 2025 and a 68.1% increase from $11.4 million in Q3 2024[2] - Diluted earnings per share rose to $0.55 in Q3 2025, compared to $0.36 in Q2 2025 and $0.33 in Q3 2024[4] - Noninterest income increased by $6.8 million to $8.3 million in Q3 2025, compared to $1.5 million in Q2 2025, primarily due to a previous loss from investment securities[26] - Net income for the quarter was $19,169,000, a 57.5% increase from $12,215,000 in the previous quarter[43] - Basic earnings per share rose to $0.56 for the quarter, compared to $0.36 in the previous quarter, reflecting strong profitability growth[43] - Adjusted net income (non-GAAP) for the quarter was $19,671 thousand, compared to $18,141 thousand in the previous quarter, reflecting an increase of 8.4%[55] - Net income (GAAP) for the quarter ended September 30, 2025, was $19,169 million, an increase from $12,215 million in the previous quarter[63] Interest Income and Margin - Net interest income increased by $2.4 million, or 4.3%, during the third quarter of 2025, attributed to a $1.0 million rise in total interest income[22] - Total interest income for the third quarter of 2025 was $57,371,000, representing a net interest margin of 3.64%[25] - Net interest margin improved to 3.64%, up 13 basis points from 3.51% in Q2 2025[4] - The yield on loans receivable increased to 5.53% in the third quarter of 2025, up from 5.50% in the previous quarter[21] - Net interest income (GAAP) increased to $57,371 million from $54,983 million in the prior quarter[66] Deposits and Loans - Total deposits increased by $73.1 million, or 1.3% (5.0% annualized), reaching $5.86 billion at the end of Q3 2025[9] - New loans funded in Q3 2025 increased to $174.5 million, up from $139.9 million in Q2 2025[7] - Total deposits increased to $5,857,464 thousand as of September 30, 2025, compared to $5,784,413 thousand as of June 30, 2025, reflecting a growth of approximately 1.26%[41] - The loans to deposits ratio was 81.4%, down from 82.5% in the previous quarter, indicating a tighter lending environment[51] Expenses and Efficiency - Noninterest expense rose by $0.5 million, or 1.3%, to $41.6 million in Q3 2025, driven by increased compensation and merger-related costs[29] - The efficiency ratio improved to 63.3%, down from 71.7% in Q3 2024[5] - The efficiency ratio improved to 63.3% in Q3 2025 from 72.7% in Q2 2025, indicating better cost management[49] - The adjusted efficiency ratio (non-GAAP) was 62.4%, compared to 64.9% in the previous quarter[66] Capital and Equity - Total stockholders' equity rose by $15.9 million, or 1.8%, to $904.1 million at September 30, 2025, driven by $19.2 million in net income for the quarter[11] - The common equity tier 1 capital ratio improved to 12.4% from 12.2% in the previous quarter, indicating stronger capital adequacy[51] - Tangible common equity to tangible assets ratio increased to 9.8% from 9.4% in the previous quarter, showing enhanced capital efficiency[59] Credit Quality - The allowance for credit losses on loans increased to 1.13% at September 30, 2025, up from 1.10% at June 30, 2025, with a provision for credit losses of $1.6 million recorded in the third quarter[13] - Nonaccrual loans increased by $7.7 million during the third quarter of 2025, primarily due to two residential construction loans totaling $6.7 million[17] - Total nonperforming loans increased to $20,950,000 as of September 30, 2025, from $18,478,000 at the end of June 2025[47] - Total charge-offs for the quarter were $374,000, a decrease from $558,000 in the previous quarter[47] Future Outlook - The company announced a definitive agreement to acquire Olympic Bancorp, expected to close in Q1 2026, enhancing balance sheet strength and profitability[3] - The company cautions that actual results may differ materially from forward-looking statements due to various economic and operational factors[37]