Heritage Financial (HFWA) Q3 2025 earnings summary

Executive summary

• Net income for Q3 2025 was $19.2 million ($0.55 per diluted share), up 67.8% year-over-year and 57% sequentially, with ROA improving to 1.11% and ROE to 8.52%.

• Net interest margin increased to 3.64%, supporting higher net interest income and profitability.

• Announced a definitive agreement to acquire Olympic Bancorp, Inc. (implied deal value $176.6 million, $1.7 billion in assets), expected to close in Q1 2026, supporting long-term regional growth.

• Maintained a disciplined approach to risk, with low net charge-offs (0.03% annualized) and strong capital ratios.

• Declared a regular cash dividend of $0.24 per share, payable November 19, 2025.

Financial highlights

• Net interest income for Q3 2025 was $57.4 million, up $2.4 million (4.3%) sequentially and $4.4 million (8.3%) year-over-year.

• Noninterest income for Q3 2025 was $8.3 million, up $6.5 million year-over-year due to lower securities losses.

• Noninterest expense was $41.6 million, up 5.9% year-over-year, mainly from higher compensation and merger-related costs.

• Total assets at September 30, 2025 were $7.01 billion; loans receivable $4.77 billion; deposits $5.86 billion.

• Tangible book value per share reached $19.46 at quarter end.

Outlook and guidance

• Management anticipates the Olympic Bancorp acquisition will enhance balance sheet strength, profitability, and market position, with closing expected in Q1 2026.

• EPS guidance for 2025 is $2.08 and for 2026 is $2.49.

• Organic loan growth is projected to return to mid-to-high single digits in 2026.

• NIM improvement is expected to continue but at a slower pace, with deposit costs declining and loan yields remaining flat.

• Expense run rate is expected in the low-to-mid $41 million range, with some variability from acquisition-related costs and a new state tax.