Heritage Financial Reports Solid Earnings for Q2 2025 with Cash Dividend Declaration

Heritage Financial Corporation Reports Second Quarter 2025 Results

Heritage Financial Corporation, the parent entity of Heritage Bank, has just announced its financial results for the second quarter of 2025, highlighting a net income of $12.2 million, equating to $0.36 per diluted share. This figure marks a decline when compared to both the first quarter of 2025, where the net income was $13.9 million, or $0.40 per diluted share, and also from the same period last year, where it stood at $14.2 million, or $0.41 per diluted share.

Key Financial Highlights

During this quarter, the Company faced a pre-tax loss of $6.9 million from the sale of securities, impacting diluted earnings per share by $0.15. Despite this, the net interest margin showed an increase to 3.51% from 3.44% and the yield on loans grew slightly to 5.50% from 5.45% per previous quarter’s report. The cost of interest-bearing deposits also saw a marginal increase to 1.94%, up from 1.92%.

On July 23, 2025, the Board of Directors declared a regular cash dividend of $0.24 per share, which is set to be paid out on August 20, 2025, to shareholders on record by August 6, 2025.

Bryan McDonald, the CEO, commented on the results, expressing optimism about sustained growth despite the minor setbacks in earnings. He mentioned ongoing improvements in core earnings compared to prior quarters. The projection includes strategic actions aimed at enhancing profitability through careful reshaping of the balance sheet to be in better alignment with upcoming financial contexts. The total deposits recorded a decrease of $60.9 million, or 1.0%, down to $5.78 billion as of June 30, 2025, but still showed growth over the year-end 2024 figures, demonstrating overall deposit growth of $100 million.

Investment Securities and Loan Data

The quarter saw an overall reduction of $67.6 million in total investment securities, attributed to strategic balancing maneuvers. Moreover, the company engaged in selling $91.6 million in investment securities, aiming to restructure their portfolio, while new loans funded reached $139.9 million, reflecting a seasonal uptick in activity from $95.8 million in Q1 2025.

The analysis also revealed fluctuations in commercial loans with slight declines in commercial and industrial loans but increases in owner-occupied and non-owner-occupied commercial real estate loans. These shifts indicate an active engagement in market demands with growth potential.

Future Expectations

Looking forward, Heritage Financial remains cautiously optimistic amidst these changes. McDonald reiterated the importance of positioning the company for future gains and profitability enhancement, despite some current pressures on earnings. With plans in the pipeline to potentially invest in new production teams, they are eyeing opportunities that may arise under favorable conditions.

Heritage Financial Corporation, headquartered in Olympia, Washington, operates as a banking entity through its wholly owned subsidiary Heritage Bank, catering to the financial needs of Washington, Oregon, and Idaho with a network of 50 branches.

For more insights and detailed financial disclosures, visit Heritage Financial's official website or refer to the complete press release. Their next earnings conference call is scheduled for July 24, 2025, which will be accessible through telecommunication channels for shareholders and the general public.