[8-K] HERITAGE INSURANCE HOLDINGS INC Reports Material Event

Rhea-AI Filing Summary

1st Source Corp. (SRCE) Q2 2025 10-Q highlights:

• Earnings: Q2 net income rose 1.4 % to $37.3 m; diluted EPS up to $1.51 from $1.49. First-half (FH) EPS climbed 12.7 % to $3.02, delivering 12.9 % YoY profit growth to $74.8 m.
• Net interest margin: Q2 net interest income expanded 15 % YoY to $85.2 m as deposit costs fell; FH growth was 13.8 % to $166.1 m. Interest expense declined 11 % despite mid-single-digit asset growth.
• Credit quality: Allowance increased 5 % YTD to $163.5 m (2.30 % of loans). Provision for credit losses surged to $7.9 m in Q2 (vs. $0.1 m LY) and $11.0 m FH (vs. $7.2 m), signalling higher expected loss content.
• Balance sheet: Total assets reached $9.09 bn (+1.7 % since YE). Net loans grew 3.5 % to $6.93 bn, led by renewable energy (+18 %) and commercial (+8 %). Deposits rose 2.9 % to $7.44 bn, while short-term borrowings fell 56 % to $110 m, reducing wholesale funding reliance.
• Capital & OCI: Shareholders’ equity rose 7.9 % to $1.20 bn; accumulated OCI loss narrowed to $56.8 m from $87.2 m on bond-market recovery. Outstanding shares: 24.54 m.
• Noninterest items: Fee income steady at $23.1 m; a $1.0 m security loss offset trust and insurance growth. Expenses rose 7 % FH, driven by compensation and tech spend.
• Liquidity: Cash & equivalents increased to $149 m; AFS securities fair value $1.46 bn with $79 m unrealized loss (5.4 % of cost).

Overall, SRCE delivered strong margin-led earnings growth and deposit inflows, partly tempered by higher credit provisioning and expense pressure.

Positive

• Net interest income up 15 % YoY in Q2 and 14 % YTD, reflecting effective deposit pricing.
• EPS increased 13 % YTD, demonstrating solid operating leverage.
• Deposit growth of 2.9 % YTD allowed a 56 % reduction in short-term borrowings, strengthening liquidity.
• Accumulated OCI loss narrowed by $30 m, boosting tangible equity.

Negative

• Provision for credit losses jumped to $7.9 m in Q2 (vs. $0.1 m LY) signalling higher expected credit risk.
• Noninterest expense rose 7 % YTD, outpacing fee income growth.
• Realized security loss of $1.0 m and remaining $79 m unrealized losses keep rate-sensitivity elevated.

Insights

Financial Analyst

TL;DR: Margin expansion and deposit growth drive double-digit YTD EPS, but rising loss provisions warrant watch.

SRCE’s 15 bp YoY improvement in net interest spread translated to a 14 % jump in FH net interest income. Deposit balances, notably low-cost DDA, expanded, allowing the bank to reduce expensive wholesale funding. Although fee revenue was flat, cost growth remained contained, producing a 52 % efficiency ratio (est.). Capital benefited from OCI recovery, pushing tangible book value higher. The main blemish is the sharp uptick in loan-loss provisioning tied to commercial credits; however, the reserve now covers 2.3 % of loans, above regional-bank peers. On balance, fundamentals lean positive.

Risk Analyst

TL;DR: Credit costs and $79 m unrealized bond losses are rising risks amid rapid loan growth.

Loan portfolio expansion in niche segments (renewable energy, aircraft, construction equipment) outpaces deposit growth, elevating concentration risk. The Q2 provision spike and 5 % reserve build suggest emerging stress; watch criticized-asset trends in upcoming quarters. Securities portfolio remains rate-sensitive: a 100 bp rate back-up could erode OCI gains and capital flexibility. Nonetheless, liquidity improved as cash balances grew and wholesale borrowings dropped. Overall risk profile is manageable but trending less favorable.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 22, 2025

HERITAGE INSURANCE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		001-36462		45-5338504
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

1401 N. Westshore Blvd Tampa, Florida		33607
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (727) 362-7200

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		HRTG		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐ Emerging growth company

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 1.01 Entry into a Material Definitive Agreement.

Amended and Restated Credit Agreement

On July 22, 2025, Heritage Insurance Holdings, Inc. and its subsidiary guarantors (together, the “Company”) entered into the Amended and Restated Credit Agreement dated as of July 22, 2025 (the “Amended and Restated Credit Agreement”) with the lenders from time to time party thereto and Regions Bank, as administrative agent and collateral agent. The Amended and Restated Credit Agreement amended and restated in its entirety the Credit Agreement dated as of December 14, 2018 (as amended to date, the “Prior Credit Agreement”).

The Amended and Restated Agreement, among other things, (i) increases the overall size of the senior secured credit facilities to an aggregate principal amount of up to $200.0 million (increased from $150.0 million), consisting of (a) a revolving credit facility that continues to have an aggregate principal amount of up to $50.0 million (inclusive of a $25.0 million sublimit for swingline loans), but with an extended maturity of July 2030 (from July 2026), (b) a term loan facility for an aggregate of $75 million principal amount outstanding as of the date of the Amended and Restated Agreement, with an extended maturity of July 2030 (from July 2026), and (c) a $75 million committed delayed draw term loan that may be advanced to finance specified permitted acquisitions and investments, subject to satisfaction of conditions to borrowing and compliance with a specified consolidated leverage ratio, in up to five separate installments during the two year period following the effective date of the Amended and Restated Agreement with a maturity of July 2030, (ii) reduces the applicable margin for loans from (a) the prior range of 2.75% to 3.25% (plus the 0.10% credit adjustment spread) to a range from 2.50% to 3.00% per annum for SOFR loans (and removes the 0.10% SOFR credit adjustment spread) and (b) the prior range of 1.75% to 2.25% per annum for base rate loans to a range from 1.50% to 2.00%, in each case based on a consolidated leverage ratio ranging from less than or equal to 1-to-1 to greater than 1.5-to-1 (previously less than 1.25-to-1 to greater than 2.25-to-1) and (iii) amend the terms of specified financial and negative covenants, which will generally allow the Company more flexibility, including to sell certain real estate assets located in Clearwater, Florida. All other material terms remain unchanged in the Amended and Restated Credit Agreement.

The net proceeds from the advance, along with cash on hand, were used to repay approximately $78 million in principal amount outstanding under the Prior Credit Agreement, including to pay accrued interest, fees, costs and expenses in connection with the closing of the Amended and Restated Agreement.

Certain Relationships

The lenders under the Credit Agreement and their affiliates may in the future engage in transactions with and perform services, including commercial banking, financial advisory and investment banking services, for the Company and its affiliates in the ordinary course of business for which they may receive customary fees and expenses.

The above summary description of the Amended and Restated Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Amended and Restated Agreement, a copy of which is filed herewith as Exhibit 10.30, and incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information contained in Item 1.01 is hereby incorporated into this Item 2.03 by reference thereto.

Item 9.01 Financial Statements and Exhibits.

No.		Exhibit
10.30		Amended and Restated Agreement to Credit Agreement, dated July 22, 2025, among Heritage Insurance Holdings, Inc., certain subsidiaries of Heritage Insurance Holdings, Inc. from time to time party as guarantors, the lenders from time to time party and Regions Bank, as Administrative Agent and Collateral Agent.
104		Cover Page Interactive Data File (the cover page tags are embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

				HERITAGE INSURANCE HOLDINGS, INC.
Date: July 24, 2025				By:		/s/ Kirk Lusk
						Kirk Lusk
						Chief Financial Officer

FAQ

How did SRCE's Q2 2025 earnings compare to last year?

Net income grew 1.4 % to $37.3 m, and diluted EPS rose to $1.51 from $1.49.

What drove the increase in net interest income for SRCE?

Lower funding costs and modest loan growth lifted net interest income 15 % YoY to $85.2 m.

How much did SRCE add to its allowance for loan losses?

Allowance increased to $163.5 m, with a Q2 provision of $7.9 m and YTD provision of $11.0 m.

What is SRCE's deposit trend in 2025?

Total deposits reached $7.44 bn, up 2.9 % since December 2024.

How large are SRCE's unrealized losses on AFS securities?

At June 30 2025, unrealized losses totaled $79 m (5.4 % of amortized cost).

What dividend did SRCE pay in Q2 2025?

The company paid a $0.38 per share common dividend, up from $0.34 a year ago.