Heritage Financial (US:HFWA)2026-01-22 18:59Financial 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]