Heritage Financial (NASDAQ: HFWA) posts $67.5M 2025 net income, closes Olympic deal

Rhea-AI Filing Summary

Heritage Financial Corporation reported full-year 2025 net income of $67.5 million, or $1.96 per diluted share, reflecting year-over-year growth from $43.3 million in 2024. The company declared $0.96 in total dividends for 2025 and announced a $0.24 dividend in Q1 2026.

Heritage completed acquisitions of Olympic, Bancorp, Inc. and Kitsap Bank on January 31, 2026, and expects the core systems conversion to finish during the third quarter of 2026. Net interest margin improved to 3.58% for 2025 and capital remained strong with a 14.1% total risk-based capital ratio as of December 31, 2025.

Insights

Banking Financial Analyst

Profitability improved materially in 2025 driven by margin expansion and acquisitions.

Heritage reported $67.5 million net income and a 3.58% net interest margin for 2025, with a fourth-quarter margin of 3.72%. The bank cites balance-sheet restructuring and merger activity; pre-tax net income was reduced by $10.7 million for investment securities losses and $1.0 million of merger costs.

Key dependencies include successful integration of Olympic and Kitsap Bank (closed January 31, 2026) and completion of core systems conversion in Q3 2026. Subsequent filings should show post-acquisition loan/deposit balances and cost-save realization.

Corporate Governance / Capital Markets Expert

Capital and shareholder returns remained consistent while board composition changed.

Heritage reported a 14.1% total risk-based capital ratio as of December 31, 2025 and declared $0.96 in dividends for 2025 plus a $0.24 Q1 2026 dividend. Effective January 1, 2026, Scott Allan joined the board.

Material items to watch in subsequent disclosures include pro forma capital metrics after the acquisitions and any changes to the dividend policy tied to integration outcomes and capital consumption from merger-related items.

2025 ANNUAL REPORT

March 20, 2026 Dear Fellow Shareholders, On behalf of the entire Board of Directors of Heritage Financial Corporation (“Heritage” or “we”) and Heritage Bank (“Bank”), thank you for your investment in Heritage. We continue to focus on shareholder value and were pleased with the overall 2025 performance. Following the Heritage fourth quarter 2025 earnings announcement, the stock price closed at $28.14 on January 22, 2026, compared to $24.50 on December 31, 2024. Heritage declared total dividends of $0.96 per common share in 2025 compared to $0.92 per common share in 2024, and during the first quarter of 2026, we also declared a dividend of $0.24 per common share. Net income was $67.5 million, or $1.96 per diluted share, for the year ended December 31, 2025, compared to $43.3 million, or $1.24 per diluted share, for the year ended December 31, 2024. During 2025, we continued to restructure the balance sheet to improve profitability and announced the acquisition of Olympic, Bancorp, Inc. (“Olympic”) and Kitsap Bank. As a result, pre-tax net income was reduced by $10.7 million related to investment securities losses and merger-related costs of $1.0 million. Adjusted diluted earnings per share for the year ended 2025 were $2.23 per diluted share and the adjusted overhead ratio was 2.34%. Although total loans remained flat, deposits grew 4.1% during 2025. We continue to maintain solid credit quality with net charge-offs to average loans of 0.03% for the year ended December 31, 2025, compared to 0.06% for the year ended December 31, 2024. Capital remained strong with a 14.1% total risk-based capital ratio as of December 31, 2025. Our net interest margin increased 27 basis points to 3.58% for the year ended December 31, 2025, compared to 3.31% for the year ended December 31, 2024. The net interest margin improved to 3.72% for the fourth quarter of 2025. Effective January 1, 2026, we welcomed a new director, Scott Allan, to the Board of Directors. Scott is an experienced business leader and board member with a diverse background spanning engineering, consulting, venture-backed startups, and consumer branding. The acquisition of Olympic and Kitsap Bank was completed January 31, 2026. We welcome the employees and customers to the Heritage family and expect the core systems conversion to be completed during the third quarter of 2026. We are focused on Heritage’s mission of being the leading commercial community bank in the Pacific Northwest by continuously improving customer satisfaction, employee empowerment, community investment, and shareholder value. As we look forward, we remain focused on executing our strategic initiatives, providing our employees with a collaborative and constructive culture, our customers with enhanced services and increasing satisfaction, and our shareholders with improved shareholder value. On behalf of the Board of Directors and management team, we thank you for your confidence in Heritage as we continue to execute our long-term strategies. Sincerely, Brian L. Vance Bryan D. McDonald Board Chair President and Chief Executive Officer Brian L. Vance Bryan D. McDonald

2025 FORM 10-K

BOARD OF DIRECTORS Scott Allan Partner, Cascade Growth Partners Brian S. Charneski President, L&E Bottling Company Trevor D. Dryer Managing Partner, Cedarline Lending Kimberly T. Ellwanger Retired Senior Director of Corporate Affairs and Associate General Counsel, Microsoft Corporation Gail B. Giacobbe Vice President of Product Management, Google Bryan D. McDonald President and CEO Jeffrey S. Lyon Retired Chairman and CEO, Kidder Mathews Frederick B. Rivera CEO and Founder, The Rivera Group Karen R. Saunders Retired Partner, KPMG LLP Brian L. Vance Board Chair Retired Chief Executive Officer Ann Watson Retired Chief Operating Officer, Cascadia Capital, LLC

201 5th Avenue SW Olympia, WA 98501 360.943.1500 | 800.455.6126 NASDAQ: HFWA | www.hf-wa.com Bryan D. McDonald President and Chief Executive Officer Nicholas M. Bley Executive Vice President Donald J. Hinson Executive Vice President Chief Financial Officer Kaylene M. Lahn Senior Vice President Corporate Governance Officer and Corporate Secretary SHAREHOLDER INFORMATION The annual meeting will be held virtually Thursday, May 7, 2026 at 9:00 a.m. All shareholders are invited to attend. TRANSFER AGENT Computershare PO BOX 43006 Providence, RI 02940-3006 800.962.4284 www.computershare.com

FAQ

What were Heritage Financial (HFWA) 2025 net income and EPS figures?

Heritage reported $67.5 million in net income for 2025 and diluted earnings per share of $1.96. This compares to $43.3 million and $1.24 for 2024, reflecting year-over-year profitability improvement.

What dividends did HFWA declare for 2025 and early 2026?

Heritage declared total dividends of $0.96 per common share in 2025 and declared an additional $0.24 per common share during the first quarter of 2026.

When were the Olympic and Kitsap Bank acquisitions completed?

The acquisitions of Olympic, Bancorp, Inc. and Kitsap Bank were completed on January 31, 2026, and the company expects the core systems conversion to be completed during the third quarter of 2026.

How did Heritage’s net interest margin and capital ratios perform in 2025?

Heritage reported a full-year net interest margin of 3.58% for 2025 (Q4 at 3.72%) and a total risk-based capital ratio of 14.1% as of December 31, 2025.

Did Heritage record any notable charges in 2025 related to restructuring or mergers?

Yes. Pre-tax net income was reduced by $10.7 million for investment securities losses and by $1.0 million for merger-related costs during 2025 according to the report.