#United States #Olympia #Heritage Financial #Heritage Bank #Olympic Bancorp

Heritage Financial Corporation Reports Strong Q4 and Annual 2025 Results

On January 22, 2026, Heritage Financial Corporation (Nasdaq: HFWA), headquartered in Olympia, Washington, disclosed its exceptional financial performance for the fourth quarter and the full year of 2025. The company, which operates Heritage Bank, achieved a net income of $22.2 million, or $0.65 per diluted share, in the fourth quarter, representing a significant increase from $19.2 million, or $0.55 per diluted share, in the previous quarter.

Key Financial Highlights

• - Net Income Growth: The net income in Q4 2025 of $22.2 million is a substantial leap from $11.9 million recorded during the same quarter of 2024.
• - Earnings Per Share: The diluted earnings per share rose to $0.65 for Q4 2025, compared to $0.34 in the same period last year.
• - Return on Assets: The return on average assets demonstrated an improvement, climbing to 1.27% from 1.09% in the preceding quarter.
• - Interest Income: The net interest income increased by $1.0 million, marking a growth of 1.7% from the third quarter of 2025, with the net interest margin also rising to 3.72%.

Bryan McDonald, President and CEO of Heritage Financial, stated, "We are extremely pleased with our operating results for the fourth quarter, which included stronger profitability, deposit growth, and lower costs of deposits. The increase in our net interest margin underscores the resilience of our banking franchise. Our adjusted diluted earnings per share soared by 29% compared to the same period last year, further emphasizing our commitment to delivering long-term results for our shareholders."

Key Developments

During this quarter, Heritage Financial also received necessary regulatory and shareholder approvals to proceed with the acquisition of Olympic Bancorp, Inc., which it anticipates closing by the end of January 2026, pending customary closing conditions. This strategic acquisition is expected to enrich Heritage's service offerings and expand its market presence.

Financial Performance Overview

1. Deposits: Total deposits stood at $5.92 billion, increasing by $62.7 million or 1.1% from the previous quarter. This growth was driven by higher customer balances in interest-bearing demand accounts.
2. Loans Receivable: The company's loan portfolio grew slightly by $14.1 million, amounting to $4.78 billion. New loan production was a contributing factor even as prepayments remained elevated.
3. Expenses: The total noninterest expense edged down to $41.5 million, reflecting a focus on efficiency as compensation and employee benefits rose due to merit increases and incentive compensation accruals.
4. Dividend Declaration: On January 16, 2026, the Board of Directors declared a cash dividend of $0.24 per share, payable February 11, 2026.

The strong performance in the fourth quarter has set a favorable tone for Heritage Financial as it embarks on further strategic initiatives in 2026. The company remains dedicated to maintaining its well-capitalized status while navigating the evolving financial landscape.

Conclusion

Heritage Financial Corporation has demonstrated resilience and growth in a competitive market environment, culminating in a successful fourth quarter and annual performance. The upcoming acquisition of Olympic Bancorp further positions the company for continued success in 2026 and beyond. Stakeholders can look forward to positive outcomes as the company implements its long-term vision.