HFWA · Heritage Financial Corporation

Heritage Financial Corporation released Q1 2026 results showing net income of $18.9 million ($0.48 diluted EPS), down from $22.2 million ($0.65 EPS) in Q4 2025 due to merger-related costs from the Olympic Bancorp acquisition, with adjusted EPS at $0.59. The acquisition, completed January 31, 2026 for approximately $185 million in stock, significantly expanded the balance sheet: total assets rose 22% to $8.50 billion, loans increased 19.6% to $5.72 billion (primarily commercial business loans), and deposits grew 22.4% to $7.25 billion, with noninterest-bearing deposits at 28.5%. Key margin improvements included net interest margin expanding 24 basis points to 3.96%, driven by yield on loans rising 19 bps to 5.73% and cost of interest-bearing deposits falling to 1.71% from 1.83%. Cost of total deposits was 1.25%, positioning Heritage strongly among peers. CEO Bryan McDonald highlighted the acquisition's role in strengthening Puget Sound market position, improved profitability, and ongoing system conversion by Q3 2026 for further cost savings. Capital remains robust with leverage ratio at 10.3% and total capital ratio at 13.5%, supporting the $0.24 quarterly dividend declaration. ROA was 0.97% and adjusted ROATCE 13.36%, reflecting solid returns amid integration. The investor presentation under Item 7.01 provides additional strategic context on PNW growth and M&A discipline.