Heritage Financial (US:HFWA) Prnewswire·2026-01-22 13:00Core Viewpoint - Heritage Financial Corporation reported strong financial performance in Q4 2025, with significant increases in net income, earnings per share, and net interest income compared to previous quarters and the same period last year [2][3][28]. Financial Performance - Net income for Q4 2025 was $22.2 million, up from $19.2 million in Q3 2025 and $11.9 million in Q4 2024 [2][5]. - Diluted earnings per share increased to $0.65 in Q4 2025 from $0.55 in Q3 2025 and $0.34 in Q4 2024 [2][4]. - Adjusted diluted earnings per share rose to $0.66 in Q4 2025, compared to $0.56 in Q3 2025 and $0.51 in Q4 2024 [2][4]. Profitability Metrics - Return on average assets improved to 1.27% in Q4 2025 from 1.09% in Q3 2025 [4][5]. - Return on average common equity increased to 9.68% in Q4 2025 from 8.52% in Q3 2025 [4]. - Net interest margin rose to 3.72%, an increase of 8 basis points from 3.64% in Q3 2025 [4][25]. Deposit and Loan Growth - Total deposits increased by $62.7 million, or 1.1%, to $5.92 billion at the end of Q4 2025 [12][13]. - Loans receivable rose by $14.1 million, or 0.3%, during Q4 2025, driven by new loan production [10][12]. Acquisition Plans - The company is set to complete the acquisition of Olympic Bancorp, Inc. and its subsidiary, Kitsap Bank, with regulatory and shareholder approvals already obtained [3][5]. Noninterest Income - Noninterest income decreased by $338,000 to $8.0 million in Q4 2025 compared to $8.3 million in Q3 2025, primarily due to declines in card revenue and other income [31]. - However, noninterest income increased by $4.7 million compared to the same period in 2024, largely due to a prior year loss from the sale of investment securities [32]. Credit Quality - The allowance for credit losses on loans as a percentage of loans receivable was 1.10% at the end of Q4 2025, down from 1.13% at the end of Q3 2025 [18]. - Classified loans increased by $22.4 million, raising the percentage of classified loans to 2.4% of loans receivable [22]. Liquidity Position - Total liquidity sources available were $2.62 billion at the end of Q4 2025, representing a coverage ratio of 44.2% of total deposits [23][24].