Heritage Financial (US:HFWA)2025-11-07 18:56Financial Performance - Net income for the three months ended September 30, 2025, was $19,169 thousand, up from $11,423 thousand in 2024, indicating a significant increase of approximately 67.9%[16] - Basic earnings per share increased to $0.56 for the three months ended September 30, 2025, compared to $0.33 in 2024, representing a growth of approximately 69.7%[16] - Comprehensive income for the three months ended September 30, 2025, was $22,912 thousand, compared to $38,394 thousand in 2024, reflecting a decrease of approximately 40.0%[17] - Net income allocated to common shareholders for the three months ended September 30, 2025, was $19,169 thousand, an increase of 67.8% compared to $11,423 thousand in the same period in 2024[100] - Income before income taxes increased by $17.0 million to $52.9 million for the nine months ended September 30, 2025, compared to $35.9 million in 2024[172] Asset and Liability Management - Total assets decreased to $7,011,879 thousand as of September 30, 2025, from $7,106,278 thousand at December 31, 2024, representing a decline of approximately 1.33%[14] - Total liabilities decreased to $6,107,815 thousand as of September 30, 2025, from $6,242,751 thousand at December 31, 2024, a decline of about 2.16%[14] - Total stockholders' equity increased to $904,064 thousand as of September 30, 2025, up from $874,514 thousand a year earlier, reflecting a growth of 3.4%[19] - Cash and cash equivalents at the end of the period increased to $245,491 thousand as of September 30, 2025, from $175,572 thousand a year earlier[24] Deposits and Loans - Total deposits rose to $5,857,464 thousand as of September 30, 2025, compared to $5,684,613 thousand at December 31, 2024, marking an increase of about 3.04%[14] - Total loans originated and purchased for the nine months ended September 30, 2025, were $35,113 thousand, compared to a net outflow of $342,880 thousand in the same period of 2024[23] - Total loans receivable balance as of September 30, 2025, was $4,769,160,000, reflecting a conversion from revolving loans to non-revolving amortizing loans during the nine months ended September 30, 2025[61] - New loans funded declined to $410.2 million during the nine months ended September 30, 2025, compared to $445.3 million during the same period in 2024[178] Income and Expenses - Net interest income increased to $57,371 thousand for the three months ended September 30, 2025, compared to $52,958 thousand for the same period in 2024, reflecting a growth of about 8.3%[16] - Noninterest income for the three months ended September 30, 2025, was $8,325 thousand, compared to $1,837 thousand in 2024, showing a substantial increase of approximately 353.5%[16] - Noninterest expense increased by $2.3 million, primarily due to higher compensation and employee benefits[142] - Total interest expense decreased by $4.7 million, attributed mainly to lower borrowing costs, with a significant reduction in average borrowings from $452.4 million to $136.6 million[153] Credit Quality and Losses - The provision for credit losses decreased to $1,775 thousand for the three months ended September 30, 2025, from $2,439 thousand in 2024, a reduction of about 27.1%[16] - Nonaccrual loans totaled $17,612,000 as of September 30, 2025, with $15,227,000 classified as nonaccrual without allowance for credit losses (ACL)[63] - The allowance for credit losses (ACL) on loans increased by $2.6 million to $53.97 million at September 30, 2025, representing 1.13% of loans receivable[184] - The total gross charge-offs for the nine months ended September 30, 2025, were $1,308,000, compared to $3,395,000 for the same period in 2024, indicating a reduction in charge-offs[62] Regulatory and Compliance - The Company maintained a common equity Tier 1 capital ratio of 12.4% as of September 30, 2025, above the regulatory minimum of 4.5%[197] - The leverage ratio for the Company was 10.5% as of September 30, 2025, significantly higher than the regulatory minimum of 4.0%[197] - The Company’s total capital ratio was 13.8%, exceeding the regulatory minimum of 8.0% for "adequately capitalized" institutions[197] Strategic Initiatives and Future Outlook - Future outlook remains positive with ongoing efforts in new product development and market expansion strategies[61] - The company’s ability to execute its strategic plan for growth through organic means or acquisitions remains a critical factor for net income[139] - The proposed merger between Olympic Bancorp, Inc. and the Company may face litigation from shareholders seeking financial damages or injunctions[213]