Fourth Quarter 2024 Highlights
- Net income was $11.9 million, or
$0.34 per diluted share, compared to
$11.4 million, or $0.33 per diluted share, for the third quarter of
2024.
- Results included a pre-tax loss on sale of securities of
$3.9 million and $2.9 million in total after-tax costs related
to BOLI restructuring, resulting in an aggregate negative
impact of $0.17 per diluted
share.
- Loans receivable increased $122.6
million, or 2.6% (10.5% annualized).
- Net interest margin increased to 3.39%, from 3.33% for the
third quarter of 2024.
- Cost of total deposits decreased to 1.39%, from 1.42% for the
third quarter of 2024.
- Declared a regular cash dividend of $0.24 per share on January
22, 2025, an increase of 4.3% from the $0.23 regular cash dividend per share declared in
the fourth quarter of 2024.
OLYMPIA,
Wash., Jan. 23, 2025 /PRNewswire/ -- Heritage
Financial Corporation (Nasdaq GS: HFWA) (the "Company", "we," or
"us"), the parent company of Heritage Bank (the "Bank"), today
reported net income of $11.9 million
for the fourth quarter of 2024, compared to $11.4 million for the third quarter of 2024 and
$6.2 million for the fourth quarter
of 2023. Diluted earnings per share for the fourth quarter of 2024
were $0.34 compared to $0.33 for the third quarter of 2024 and
$0.18 for the fourth quarter of 2023.
Net income for the year ended 2024 totaled $43.3 million, or $1.24 per diluted share, compared to $61.8 million, or $1.75 per diluted share for the year ended
2023.
In the fourth quarter of 2024, the Company incurred a pre-tax
loss of $3.9 million on the sale of
investment securities in connection with the strategic
repositioning of its balance sheet, which decreased diluted
earnings per share by $0.09 for the
quarter. The Company sold $35.6
million of investment securities with a book yield of 1.88%.
Proceeds were used to fund higher yielding loan growth for the
quarter. For the year ended 2024, the Company incurred pre-tax
losses of $22.7 million on the sale
of investment securities in connection with the strategic balance
sheet repositioning efforts, which decreased diluted earnings per
share by $0.51 for the year.
In addition, the Company restructured its bank owned life
insurance ("BOLI") portfolio during the fourth quarter of 2024,
incurring additional tax expense related to the sale of BOLI of
$2.4 million and other costs totaling
$508,000 included in BOLI income
which decreased diluted earnings per share by $0.08 for the quarter.
Jeff Deuel, Chief Executive
Officer of the Company, commented, "We are very pleased with our
operating results for the fourth quarter, which included strong
loan growth, margin expansion and lower cost of deposits. In
addition to an increase in net interest margin, we also saw an
increase in net interest income for the second consecutive
quarter. We continue to strategically reposition our balance
sheet to improve future profitability. Although these actions
reduce reported earnings, we are seeing the benefits to our core
earnings and we are optimistic that the combination of our strong
balance sheet and prudent risk management will provide sustainable
long-term returns for our shareholders."
Financial Highlights
The following table provides financial highlights at the dates
and for the periods indicated:
|
As of or for the
Quarter Ended
|
|
December 31,
2024
|
|
September
30,
2024
|
|
December 31,
2023
|
|
(Dollars in
thousands, except per share amounts)
|
|
Net income
|
$
11,928
|
|
$
11,423
|
|
$
6,233
|
|
Pre-tax, pre-provision
income(1)
|
$
17,513
|
|
$
15,505
|
|
$
8,001
|
|
Diluted earnings per
share
|
$
0.34
|
|
$
0.33
|
|
$
0.18
|
|
Return on average
assets(2)
|
0.66 %
|
|
0.63 %
|
|
0.35 %
|
|
Pre-tax, pre-provision
return on average assets(1)(2)
|
0.97 %
|
|
0.86 %
|
|
0.44 %
|
|
Return on average
common equity(2)
|
5.46 %
|
|
5.30 %
|
|
3.04 %
|
|
Return on average
tangible common equity(1)(2)
|
7.81 %
|
|
7.62 %
|
|
4.69 %
|
|
Adjusted return on
average tangible common equity(1)(2)
|
11.59 %
|
|
10.42 %
|
|
10.21 %
|
|
Net interest
margin(2)
|
3.39 %
|
|
3.33 %
|
|
3.41 %
|
|
Cost of total
deposits(2)
|
1.39 %
|
|
1.42 %
|
|
1.01 %
|
|
Efficiency
ratio
|
69.3 %
|
|
71.7 %
|
|
84.2 %
|
|
Adjusted efficiency
ratio(1)
|
64.4 %
|
|
65.2 %
|
|
70.4 %
|
|
Noninterest expense to
average total assets(2)
|
2.20 %
|
|
2.18 %
|
|
2.37 %
|
|
Total assets
|
$ 7,106,278
|
|
$ 7,153,363
|
|
$ 7,174,957
|
|
Loans receivable,
net
|
$ 4,749,655
|
|
$ 4,628,088
|
|
$ 4,287,628
|
|
Total
deposits
|
$ 5,684,613
|
|
$ 5,708,492
|
|
$ 5,599,872
|
|
Loan to deposit
ratio(3)
|
84.5 %
|
|
82.0 %
|
|
77.4 %
|
|
Book value per
share
|
$
25.40
|
|
$
25.61
|
|
$
24.44
|
|
Tangible book value per
share(1)
|
$
18.22
|
|
$
18.45
|
|
$
17.40
|
|
(1)
|
Represents a non-GAAP
financial measure. See "Non-GAAP Financial Measures" section for a
reconciliation to the comparable GAAP financial measure.
|
|
(2)
|
Annualized.
|
|
(3)
|
Loans receivable
divided by total deposits.
|
Balance Sheet
Cash and cash equivalents decreased $58.5
million, or 33.3%, to $117.1
million at December 31, 2024
from $175.6 million at September 30, 2024 primarily due to an increase
in loans.
Total investment securities decreased $104.5 million, or 6.6%, to $1.47 billion at December
31, 2024 from $1.57 billion at
September 30, 2024. As previously
noted, the Company sold $35.6 million
of investment securities at a pre-tax loss of $3.9 million as part of its strategic balance
sheet repositioning. In addition, there were investment maturities
and repayments of $54.2 million
during the fourth quarter of 2024 and a $15.0 million increase in unrealized losses on
available for sale securities, due primarily to changes in market
rates.
The following table summarizes the composition of the Company's
investment securities portfolio at the dates indicated:
|
December 31,
2024
|
|
September 30,
2024
|
|
Change
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
|
$
|
|
%
|
|
(Dollars in
thousands)
|
|
Investment
securities available for sale, at fair value:
|
|
U.S. government and
agency securities
|
$
12,544
|
|
0.9 %
|
|
$
13,054
|
|
0.8 %
|
|
$
(510)
|
|
(3.9) %
|
|
Municipal
securities
|
50,942
|
|
3.5
|
|
61,263
|
|
3.9
|
|
(10,321)
|
|
(16.8)
|
|
Residential CMO and
MBS(1)
|
369,331
|
|
25.2
|
|
427,048
|
|
27.2
|
|
(57,717)
|
|
(13.5)
|
|
Commercial CMO and
MBS(1)
|
309,741
|
|
21.0
|
|
328,861
|
|
20.9
|
|
(19,120)
|
|
(5.8)
|
|
Corporate
obligations
|
11,770
|
|
0.8
|
|
11,706
|
|
0.7
|
|
64
|
|
0.5
|
|
Other asset-backed
securities
|
10,066
|
|
0.7
|
|
10,847
|
|
0.7
|
|
(781)
|
|
(7.2)
|
|
Total
|
$
764,394
|
|
52.1 %
|
|
$
852,779
|
|
54.2 %
|
|
$
(88,385)
|
|
(10.4) %
|
|
|
Investment
securities held to maturity, at amortized cost:
|
|
U.S. government and
agency securities
|
$
151,216
|
|
10.3 %
|
|
$
151,181
|
|
9.6 %
|
|
$
35
|
|
— %
|
|
Residential CMO and
MBS(1)
|
244,309
|
|
16.6
|
|
249,589
|
|
15.9
|
|
(5,280)
|
|
(2.1)
|
|
Commercial CMO and
MBS(1)
|
307,760
|
|
21.0
|
|
318,630
|
|
20.3
|
|
(10,870)
|
|
(3.4)
|
|
Total
|
$
703,285
|
|
47.9 %
|
|
$
719,400
|
|
45.8 %
|
|
$
(16,115)
|
|
(2.2) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment
securities
|
$
1,467,679
|
|
100.0 %
|
|
$
1,572,179
|
|
100.0 %
|
|
$ (104,500)
|
|
(6.6) %
|
|
(1) U.S. government agency and
government-sponsored enterprise CMO and MBS
|
Loans receivable increased $122.6 million, or 2.6%, to
$4.80 billion at December 31, 2024 from $4.68 billion at September
30, 2024. New loans funded in the fourth quarter and third
quarter of 2024 totaled $181.0
million and $176.9 million,
respectively. Loan prepayments were similar to the prior quarter at
$44.4 million during the fourth
quarter of 2024, compared to $44.8
million during the prior quarter.
Commercial and industrial loans increased $18.5 million, or 2.2%, due primarily to new loan
production of $56.3 million during
the quarter, offset by pay downs on outstanding balances.
Owner-occupied commercial real estate ("CRE") loans increased
$16.2 million, or 1.6%, due primarily
to new loan production of $32.0
million during the quarter, offset partially by pay downs on
outstanding balances. Non-owner occupied CRE loans increased
$73.5 million, or 4.0%, due primarily
to new loan production of $74.7
million during the quarter and the transfer of $22.3 million of commercial and multifamily
construction loans upon completion of construction. Commercial and
multifamily construction loans increased $17.2 million or 4.6% due primarily to advances
on outstanding commitments.
The following table summarizes the Company's loans receivable,
net at the dates indicated:
|
December 31,
2024
|
|
September 30,
2024
|
|
Change
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
|
$
|
|
%
|
|
(Dollars in
thousands)
|
|
Commercial
business:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$
842,672
|
|
17.5 %
|
|
$
824,134
|
|
17.6 %
|
|
$
18,538
|
|
2.2 %
|
|
Owner-occupied
CRE
|
1,003,243
|
|
20.9
|
|
987,084
|
|
21.1
|
|
16,159
|
|
1.6
|
|
Non-owner occupied
CRE
|
1,909,107
|
|
39.9
|
|
1,835,609
|
|
39.3
|
|
73,498
|
|
4.0
|
|
Total commercial
business
|
3,755,022
|
|
78.3
|
|
3,646,827
|
|
78.0
|
|
108,195
|
|
3.0
|
|
Residential real
estate
|
402,954
|
|
8.4
|
|
408,982
|
|
8.7
|
|
(6,028)
|
|
(1.5)
|
|
Real estate
construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
83,890
|
|
1.7
|
|
79,325
|
|
1.7
|
|
4,565
|
|
5.8
|
|
Commercial and
multifamily
|
395,553
|
|
8.2
|
|
378,322
|
|
8.1
|
|
17,231
|
|
4.6
|
|
Total real estate
construction and land development
|
479,443
|
|
9.9
|
|
457,647
|
|
9.8
|
|
21,796
|
|
4.8
|
|
Consumer
|
164,704
|
|
3.4
|
|
166,023
|
|
3.5
|
|
(1,319)
|
|
(0.8)
|
|
Loans
receivable
|
4,802,123
|
|
100.0 %
|
|
4,679,479
|
|
100.0 %
|
|
122,644
|
|
2.6
|
|
Allowance for credit
losses on loans
|
(52,468)
|
|
|
|
(51,391)
|
|
|
|
(1,077)
|
|
2.1
|
|
Loans receivable,
net
|
$
4,749,655
|
|
|
|
$
4,628,088
|
|
|
|
$
121,567
|
|
2.6 %
|
Total deposits decreased $23.9
million, or 0.4%, to $5.68
billion at December 31, 2024
from $5.71 billion at September 30, 2024. Non-maturity deposits
decreased by $55.6 million, or 1.2%,
from September 30, 2024 due primarily
to customers moving balances to higher yielding accounts.
Certificates of deposit increased $31.7
million, or 3.4%, to $977.3
million at December 31, 2024
from $945.6 million at September 30, 2024, primarily due to new accounts
opened during the quarter offset partially by a decrease of
$25.0 million in brokered
certificates of deposit. Average total deposits increased
$39.7 million to $5.72 billion for the fourth quarter of 2024,
from $5.68 billion for the third
quarter of 2024.
The following table summarizes the Company's total deposits at
the dates indicated:
|
December 31,
2024
|
|
September 30,
2024
|
|
Change
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
|
$
|
|
%
|
|
(Dollars in
thousands)
|
|
Noninterest demand
deposits
|
$
1,654,955
|
|
29.1 %
|
|
$
1,682,219
|
|
29.5 %
|
|
$
(27,264)
|
|
(1.6) %
|
|
Interest bearing demand
deposits
|
1,464,129
|
|
25.8
|
|
1,489,316
|
|
26.1
|
|
(25,187)
|
|
(1.7)
|
|
Money market
accounts
|
1,166,901
|
|
20.5
|
|
1,148,720
|
|
20.1
|
|
18,181
|
|
1.6
|
|
Savings
accounts
|
421,377
|
|
7.4
|
|
442,677
|
|
7.8
|
|
(21,300)
|
|
(4.8)
|
|
Total non-maturity
deposits
|
4,707,362
|
|
82.8
|
|
4,762,932
|
|
83.5
|
|
(55,570)
|
|
(1.2)
|
|
Certificates of
deposit
|
977,251
|
|
17.2
|
|
945,560
|
|
16.5
|
|
31,691
|
|
3.4
|
|
Total
deposits
|
$
5,684,613
|
|
100.0 %
|
|
$
5,708,492
|
|
100.0 %
|
|
$
(23,879)
|
|
(0.4) %
|
Total borrowings increased $1.0
million to $383.0 million at
December 31, 2024 from $382.0 million at September 30, 2024. Average borrowings decreased
$78.9 million to $373.5 million for the fourth quarter of 2024,
from $452.4 million for the third
quarter of 2024. Borrowings of $100.0
million from the Bank Term Funding Program were paid off
during the quarter. All outstanding borrowings at December 31, 2024 are with the Federal Home Loan
Bank ("FHLB") and mature within one year.
Total stockholders' equity decreased $11.0 million, or 1.3%, to $863.5 million at December
31, 2024 compared to $874.5
million at September 30, 2024
due primarily to a $11.7 million
increase in accumulated other comprehensive loss as a result
of changes in market rates, $8.0
million in dividends paid to common shareholders and
$4.4 million in common stock
repurchases, offset partially by $11.9
million of net income recognized for the quarter.
The Company and Bank continued to maintain capital levels in
excess of the applicable regulatory requirements for them both to
be categorized as "well-capitalized" at December 31, 2024.
The following table summarizes the capital ratios for the
Company at the dates indicated:
|
December 31,
2024
|
|
September
30,
2024
|
|
Stockholders' equity to
total assets
|
12.2 %
|
|
12.2 %
|
|
Tangible common equity
to tangible assets (1)
|
9.0
|
|
9.1
|
|
Common equity tier 1
capital ratio (2)
|
12.0
|
|
12.3
|
|
Leverage ratio
(2)
|
10.0
|
|
9.9
|
|
Tier 1 capital ratio
(2)
|
12.4
|
|
12.7
|
|
Total capital ratio
(2)
|
13.3
|
|
13.6
|
|
(1)
|
Represents a non-GAAP
financial measure. See "Non-GAAP Financial Measures" section for a
reconciliation to the comparable GAAP financial measure.
|
|
(2)
|
Current quarter ratios
are estimates pending completion and filing of the Company's
regulatory reports.
|
Allowance for Credit Losses and Provision for Credit
Losses
The allowance for credit losses ("ACL") on loans as a percentage
of loans receivable was 1.09% at December
31, 2024 compared to 1.10% at September 30, 2024. During the fourth quarter of
2024, the Company recorded a $1.1
million provision for credit losses on loans, compared to a
$2.7 million provision for credit
losses on loans during the third quarter of 2024. The provision for
credit losses on loans during the quarter was due primarily to loan
growth. Net charge-offs for the fourth quarter of 2024 were
$27,000.
During the fourth quarter of 2024, the Company recorded a
$79,000 provision for credit losses
on unfunded commitments compared to a $266,000 reversal of the provision for credit
losses on unfunded commitments during the third quarter of 2024.
The provision for credit losses on unfunded commitments during the
fourth quarter of 2024 was due primarily to an increase in the
unfunded exposure on loans.
The following table provides detail on the changes in the ACL on
loans and the ACL on unfunded commitments, and the related
provision for (reversal of) credit losses for the periods
indicated:
|
As of or for the
Quarter Ended
|
|
December 31,
2024
|
|
September 30,
2024
|
|
December 31,
2023
|
|
ACL on
Loans
|
|
ACL on
Unfunded
|
|
Total
|
|
ACL on
Loans
|
|
ACL on
Unfunded
|
|
Total
|
|
ACL on
Loans
|
|
ACL on
Unfunded
|
|
Total
|
|
(Dollars in
thousands)
|
|
Balance, beginning of
period
|
$ 51,391
|
|
$
508
|
|
$ 51,899
|
|
$ 51,219
|
|
$
774
|
|
$ 51,993
|
|
$ 46,947
|
|
$ 1,534
|
|
$ 48,481
|
|
Provision for (reversal
of) credit losses
|
1,104
|
|
79
|
|
1,183
|
|
2,705
|
|
(266)
|
|
2,439
|
|
1,670
|
|
(246)
|
|
1,424
|
|
Net
charge-offs
|
(27)
|
|
—
|
|
(27)
|
|
(2,533)
|
|
—
|
|
(2,533)
|
|
(618)
|
|
—
|
|
(618)
|
|
Balance, end of
period
|
$ 52,468
|
|
$
587
|
|
$ 53,055
|
|
$ 51,391
|
|
$
508
|
|
$ 51,899
|
|
$ 47,999
|
|
$ 1,288
|
|
$ 49,287
|
Credit Quality
The percentage of classified loans to loans receivable improved
to 1.4% at December 31, 2024 compared
to 1.5% at September 30, 2024.
Classified loans include loans rated substandard or worse. The
decrease was due primarily to payoffs and principal payments on
substandard loans. Total loans designated as special mention
increased by $11.6 million to
$110.7 million at December 31, 2024 compared to $99.1 million at September
30, 2024.
The following table illustrates total loans by risk rating and
their respective percentage of total loans at the dates
indicated:
|
December 31,
2024
|
|
September 30,
2024
|
|
Balance
|
|
% of
Total
|
|
Balance
|
|
% of
Total
|
|
(Dollars in
thousands)
|
|
Risk Rating:
|
|
|
|
|
|
|
|
|
Pass
|
$
4,623,080
|
|
96.3 %
|
|
$
4,508,424
|
|
96.4 %
|
|
Special
Mention
|
110,725
|
|
2.3
|
|
99,078
|
|
2.1
|
|
Substandard
|
68,318
|
|
1.4
|
|
71,977
|
|
1.5
|
|
Total
|
$
4,802,123
|
|
100.0 %
|
|
$
4,679,479
|
|
100.0 %
|
Nonaccrual loans to loans receivable were 0.08% and 0.09% at
December 31, 2024 and September 30, 2024, respectively. Changes in
nonaccrual loans during the periods indicated were as follows:
|
Quarter
Ended
|
|
December 31,
2024
|
|
September
30,
2024
|
|
December 31,
2023
|
|
(Dollars in
thousands)
|
|
Balance, beginning of
period
|
$
4,301
|
|
$
3,826
|
|
$
3,065
|
|
Additions
|
160
|
|
4,990
|
|
2,149
|
|
Net principal payments
and transfers to accruing status
|
(250)
|
|
(173)
|
|
(333)
|
|
Payoffs
|
(132)
|
|
(1,832)
|
|
(413)
|
|
Charge-offs
|
—
|
|
(2,510)
|
|
—
|
|
Balance, end of
period
|
$
4,079
|
|
$
4,301
|
|
$
4,468
|
Liquidity
Total liquidity sources available at December 31, 2024 were $2.34 billion. This includes on- and off-balance
sheet liquidity. The Company has access to FHLB advances and the
Federal Reserve Bank ("FRB") Discount Window. The Company's
available liquidity sources at December 31,
2024 represented a coverage ratio of 41.2% of total deposits
and 103.1% of estimated uninsured deposits.
The following table summarizes the Company's available
liquidity:
|
Quarter
Ended
|
|
December 31,
2024
|
|
September
30,
2024
|
|
(Dollars in
thousands)
|
|
On-balance sheet
liquidity
|
|
|
|
|
Cash and cash
equivalents
|
$
117,100
|
|
$
175,572
|
|
Unencumbered
investment securities available for sale (1)
|
746,163
|
|
848,224
|
|
Total on-balance sheet
liquidity
|
$
863,263
|
|
$
1,023,796
|
|
Off-balance sheet
liquidity
|
|
|
|
|
FRB borrowing
availability
|
$
360,104
|
|
$
287,739
|
|
FHLB borrowing
availability (2)
|
976,288
|
|
1,068,085
|
|
Fed funds line
borrowing availability with correspondent banks
|
145,000
|
|
145,000
|
|
Total off-balance
sheet liquidity
|
$
1,481,392
|
|
$
1,500,824
|
|
Total available
liquidity
|
$
2,344,655
|
|
$
2,524,620
|
|
(1)
|
Investment securities
available for sale at fair value.
|
|
(2)
|
Includes FHLB total
borrowing availability of $1.36 billion at December 31, 2024
based on pledged assets, however, maximum credit capacity is 45% of
the Bank's total assets one quarter in arrears or
$3.22 billion.
|
Net Interest Income and Net Interest Margin
Net interest income increased $0.8
million, or 1.5%, during the fourth quarter of 2024 compared
to the third quarter of 2024, due primarily to a $1.7 million decrease in interest expense, offset
partially by a $0.9 million decrease
in interest income. Net interest margin increased six basis points
to 3.39% during the fourth quarter of 2024 from 3.33% during the
third quarter of 2024.
The yield on interest earning assets decreased 5 basis points to
4.97% for the fourth quarter of 2024 compared to 5.02% for the
third quarter of 2024. The yield on loans receivable, net,
decreased 7 basis points to 5.53% during the fourth quarter of 2024
compared to 5.60% during the third quarter of 2024 as loans indexed
to Prime or SOFR repriced at lower rates due to reductions in the
federal funds rate.
The cost of interest bearing deposits decreased 4 basis points
to 1.98% for the fourth quarter of 2024 from 2.02% for the third
quarter of 2024. This decrease was primarily due to a decrease in
deposit rates during the quarter.
Net interest income decreased $0.8
million, or 0.2%, during the fourth quarter of 2024 compared
to the fourth quarter of 2023 and the net interest margin decreased
2 basis points to 3.39% from 3.41% during this same period. The
decrease was due primarily to an increase in interest expense
resulting from increased deposit rates and borrowing expense,
partially offset by an increase in yields earned on interest
earning assets following increases in market interest rates.
The following table provides relevant net interest income
information for the periods indicated:
|
Quarter
Ended
|
|
December 31,
2024
|
|
September 30,
2024
|
|
December 31,
2023
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate (1)
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate (1)
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate (1)
|
|
(Dollars in
thousands)
|
|
Interest Earning
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable, net
(2)(3)
|
$ 4,665,113
|
|
$ 64,864
|
|
5.53 %
|
|
$ 4,555,090
|
|
$ 64,138
|
|
5.60 %
|
|
$ 4,233,743
|
|
$ 57,092
|
|
5.35 %
|
|
Taxable
securities
|
1,514,210
|
|
12,510
|
|
3.29
|
|
1,604,529
|
|
13,472
|
|
3.34
|
|
1,824,205
|
|
14,488
|
|
3.15
|
|
Nontaxable securities
(3)
|
16,138
|
|
146
|
|
3.60
|
|
17,482
|
|
159
|
|
3.62
|
|
37,382
|
|
300
|
|
3.18
|
|
Interest earning
deposits
|
119,275
|
|
1,440
|
|
4.80
|
|
150,384
|
|
2,048
|
|
5.42
|
|
174,475
|
|
2,382
|
|
5.42
|
|
Total interest earning
assets
|
6,314,736
|
|
78,960
|
|
4.97 %
|
|
6,327,485
|
|
79,817
|
|
5.02 %
|
|
6,269,805
|
|
74,262
|
|
4.70 %
|
|
Noninterest earning
assets
|
834,558
|
|
|
|
|
|
855,436
|
|
|
|
|
|
871,071
|
|
|
|
|
|
Total
assets
|
$ 7,149,294
|
|
|
|
|
|
$ 7,182,921
|
|
|
|
|
|
$ 7,140,876
|
|
|
|
|
|
Interest Bearing
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of
deposit
|
$
947,929
|
|
$ 10,070
|
|
4.23 %
|
|
$
906,743
|
|
$ 10,052
|
|
4.41 %
|
|
$
638,101
|
|
$
6,261
|
|
3.89 %
|
|
Savings
accounts
|
432,287
|
|
280
|
|
0.26
|
|
445,926
|
|
220
|
|
0.20
|
|
497,484
|
|
231
|
|
0.18
|
|
Interest bearing demand
and money market accounts
|
2,631,577
|
|
9,622
|
|
1.45
|
|
2,644,827
|
|
9,984
|
|
1.50
|
|
2,713,482
|
|
7,846
|
|
1.15
|
|
Total interest bearing
deposits
|
4,011,793
|
|
19,972
|
|
1.98
|
|
3,997,496
|
|
20,256
|
|
2.02
|
|
3,849,067
|
|
14,338
|
|
1.48
|
|
Junior subordinated
debentures
|
22,019
|
|
512
|
|
9.25
|
|
21,946
|
|
541
|
|
9.81
|
|
21,729
|
|
553
|
|
10.10
|
|
Securities sold under
agreement to repurchase
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
17,511
|
|
5
|
|
0.11
|
|
Borrowings
|
373,493
|
|
4,713
|
|
5.02
|
|
452,364
|
|
6,062
|
|
5.33
|
|
459,784
|
|
5,495
|
|
4.74
|
|
Total interest bearing
liabilities
|
4,407,305
|
|
25,197
|
|
2.27 %
|
|
4,471,806
|
|
26,859
|
|
2.39 %
|
|
4,348,091
|
|
20,391
|
|
1.86 %
|
|
Noninterest demand
deposits
|
1,703,357
|
|
|
|
|
|
1,677,984
|
|
|
|
|
|
1,772,261
|
|
|
|
|
|
Other noninterest
bearing liabilities
|
170,324
|
|
|
|
|
|
175,332
|
|
|
|
|
|
207,141
|
|
|
|
|
|
Stockholders'
equity
|
868,308
|
|
|
|
|
|
857,799
|
|
|
|
|
|
813,383
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$ 7,149,294
|
|
|
|
|
|
$ 7,182,921
|
|
|
|
|
|
$ 7,140,876
|
|
|
|
|
|
Net interest income and
spread
|
|
|
$ 53,763
|
|
2.70 %
|
|
|
|
$ 52,958
|
|
2.63 %
|
|
|
|
$ 53,871
|
|
2.84 %
|
|
Net interest
margin
|
|
|
|
|
3.39 %
|
|
|
|
|
|
3.33 %
|
|
|
|
|
|
3.41 %
|
|
(1)
|
Annualized; average
balances are calculated using daily balances.
|
|
(2)
|
Average loans
receivable, net includes loans held for sale and loans classified
as nonaccrual, which carry a zero yield. Interest earned on loans
receivable, net includes the amortization of net deferred loan fees
of $878,000, $938,000 and $832,000 for the fourth quarter of 2024,
third quarter of 2024 and fourth quarter of 2023,
respectively.
|
|
(3)
|
Yields on tax-exempt
loans and securities have not been stated on a tax-equivalent
basis.
|
Noninterest Income
Noninterest income increased $1.5
million to $3.3 million during
the fourth quarter of 2024 from $1.8
million during the third quarter of 2024. The increase was
due primarily to the decrease in loss resulting from the
above-referenced sale of investment securities recognized in the
fourth quarter of 2024 as part of the strategic repositioning of
the balance sheet, compared to the loss recognized in the prior
quarter in connection with the prior balance sheet repositioning
transaction. The increase was partially offset by a decrease
in gain on sale of other assets, net which was due to the
$1.5 million gain on sale of an
administrative building recognized during the third quarter of
2024.
Noninterest income increased $6.4
million from the same period in 2023 due primarily to the
decrease in loss resulting from the above-referenced sale of
investment securities recognized in the fourth quarter of 2024 as
part of the strategic repositioning of the balance sheet, compared
to the loss recognized in the same quarter in 2023 in connection
with the prior balance sheet repositioning transaction.
The following table presents the key components of noninterest
income and the change for the periods indicated:
|
Quarter
Ended
|
|
Quarter Over Quarter
Change
|
|
Prior
Year
Quarter
Change
|
|
December 31,
2024
|
|
September
30,
2024
|
|
December 31,
2023
|
|
$
|
|
%
|
|
$
|
|
%
|
|
(Dollars in
thousands)
|
|
Service charges and
other fees
|
$
2,892
|
|
$
2,788
|
|
$
2,804
|
|
$ 104
|
|
3.7 %
|
|
$
88
|
|
3.1 %
|
|
Card revenue
|
1,849
|
|
2,134
|
|
1,944
|
|
(285)
|
|
(13.4)
|
|
(95)
|
|
(4.9)
|
|
Loss on sale of
investment securities
|
(3,903)
|
|
(6,945)
|
|
(10,005)
|
|
3,042
|
|
43.8
|
|
6,102
|
|
61.0
|
|
Gain on sale of loans,
net
|
—
|
|
—
|
|
36
|
|
—
|
|
—
|
|
(36)
|
|
(100.0)
|
|
Interest rate swap
fees
|
357
|
|
—
|
|
—
|
|
357
|
|
—
|
|
357
|
|
—
|
|
Bank owned life
insurance income
|
256
|
|
860
|
|
654
|
|
(604)
|
|
(70.2)
|
|
(398)
|
|
(60.9)
|
|
Gain on sale of other
assets, net
|
23
|
|
1,480
|
|
—
|
|
(1,457)
|
|
(98.4)
|
|
23
|
|
—
|
|
Other income
|
1,816
|
|
1,520
|
|
1,420
|
|
296
|
|
19.5
|
|
396
|
|
27.9
|
|
Total noninterest
income (loss)
|
$
3,290
|
|
$
1,837
|
|
$
(3,147)
|
|
$
1,453
|
|
79.1 %
|
|
$
6,437
|
|
204.5 %
|
Noninterest Expense
Noninterest expense increased $0.3
million, or 0.6%, during the fourth quarter of 2024 from the
third quarter of 2024. Marketing expense and professional services
expense increased compared to the prior quarter, primarily due to
timing of services performed.
Noninterest expense decreased $3.2
million, or 7.5%, during the fourth quarter of 2024 compared
to the same period in 2023. Compensation and employee benefit
expense decreased primarily to a decrease in full-time equivalent
employees to 751 at December 31, 2024
from 803 at December 31, 2023. Data
processing expense decreased due primarily to an accrual for the
early termination of a technology-related contract expensed in the
fourth quarter of 2023. Marketing expenses decreased due to the
timing of services performed. Professional services decreased due
primarily to a $1.5 million expense
related to renewal of the core vendor contract during the fourth
quarter of 2023. State/municipal business and use taxes increased
primarily due to an increase in total revenue.
The following table presents the key components of noninterest
expense and the change for the periods indicated:
|
Quarter
Ended
|
|
Quarter Over Quarter
Change
|
|
Prior Year Quarter
Change
|
|
December 31,
2024
|
|
September
30,
2024
|
|
December 31,
2023
|
|
$
|
|
%
|
|
$
|
|
%
|
|
(Dollars in
thousands)
|
|
Compensation and
employee benefits
|
$
24,236
|
|
$
24,367
|
|
$
24,758
|
|
$
(131)
|
|
(0.5) %
|
|
$
(522)
|
|
(2.1) %
|
|
Occupancy and
equipment
|
4,742
|
|
4,850
|
|
4,784
|
|
(108)
|
|
(2.2)
|
|
(42)
|
|
(0.9)
|
|
Data
processing
|
4,020
|
|
3,964
|
|
4,630
|
|
56
|
|
1.4
|
|
(610)
|
|
(13.2)
|
|
Marketing
|
405
|
|
128
|
|
698
|
|
277
|
|
216.4
|
|
(293)
|
|
(42.0)
|
|
Professional
services
|
663
|
|
490
|
|
2,266
|
|
173
|
|
35.3
|
|
(1,603)
|
|
(70.7)
|
|
State/municipal
business and use taxes
|
1,180
|
|
1,249
|
|
909
|
|
(69)
|
|
(5.5)
|
|
271
|
|
29.8
|
|
Federal deposit
insurance premium
|
829
|
|
824
|
|
847
|
|
5
|
|
0.6
|
|
(18)
|
|
(2.1)
|
|
Amortization of
intangible assets
|
399
|
|
399
|
|
593
|
|
—
|
|
—
|
|
(194)
|
|
(32.7)
|
|
Other
expense
|
3,066
|
|
3,019
|
|
3,238
|
|
47
|
|
1.6
|
|
(172)
|
|
(5.3)
|
|
Total noninterest
expense
|
$
39,540
|
|
$
39,290
|
|
$
42,723
|
|
$ 250
|
|
0.6 %
|
|
$
(3,183)
|
|
(7.5) %
|
Income Tax Expense
Income tax expense increased $2.8
million during the fourth quarter of 2024 to $4.4 million compared to $1.6 million for the third quarter of 2024. The
increase in income tax expense during the fourth quarter of 2024
compared to the prior quarter was primarily due to the
above-referenced additional tax expense of $2.4 million related to the BOLI restructuring
during the fourth quarter of 2024.
Income tax expense increased $4.1
million in the fourth quarter of 2024 compared to same
period in 2023 due to higher pre-tax income during the fourth
quarter of 2024 and the additional tax expense of $2.4 million related to the BOLI restructuring
during the fourth quarter of 2024.
The following table presents the income tax expense and related
metrics and the change for the periods indicated:
|
Quarter
Ended
|
|
Change
|
|
December 31,
2024
|
|
September
30,
2024
|
|
December 31,
2023
|
|
Quarter Over
Quarter
|
Prior Year
Quarter
|
|
(Dollars in
thousands)
|
|
Income before income
taxes
|
$
16,330
|
|
$
13,066
|
|
$
6,577
|
|
$
3,264
|
|
$
9,753
|
|
Income tax
expense
|
$
4,402
|
|
$
1,643
|
|
$
344
|
|
$
2,759
|
|
$
4,058
|
|
Effective income tax
rate
|
27.0 %
|
|
12.6 %
|
|
5.2 %
|
|
14.4 %
|
|
21.8 %
|
Dividends
On January 22, 2025, the Company's Board of Directors
declared a quarterly cash dividend of $0.24 per share. The dividend is payable on
February 20, 2025 to shareholders of record as of the close of
business on February 6, 2025.
Earnings Conference Call
The Company will hold a telephone conference call to discuss
this earnings release on Thursday, January 23, 2025 at
10:00 a.m. Pacific time. To access
the call, please dial (833) 470-1428 -- access code 817868 a few
minutes prior to 10:00 a.m. Pacific
time. The call will be available for replay through
January 30, 2025 by dialing (866)
813-9403 -- access code 202025.
About Heritage Financial Corporation
Heritage Financial Corporation is an Olympia, Washington-based bank holding company
with Heritage Bank, a full-service commercial bank, as its sole
wholly-owned banking subsidiary. Heritage Bank has a branch network
of 50 banking offices in Washington, Oregon and Idaho. Heritage Bank does business under the
Whidbey Island Bank name on Whidbey Island, Washington. The Company's stock is
traded on the Nasdaq Global Select Market under the symbol "HFWA."
More information about Heritage Financial Corporation can be found
on its website at www.hf-wa.com and more information about Heritage
Bank can be found on its website at www.heritagebanknw.com.
Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements often include words such as "believes,"
"expects," "anticipates," "estimates," "forecasts," "intends,"
"plans," "targets," "potentially," "probably," "projects,"
"outlook" or similar expressions or future or conditional verbs
such as "may," "will," "should," "would," and "could," as well as
the negative of such words. Forward-looking statements are not
historical facts but instead represent management's current
expectations and forecasts regarding future events, many of which
are inherently uncertain and outside of our control. Actual results
may differ, possibly materially, from those currently expected or
projected in these forward-looking statements. Factors that could
cause our actual results to differ materially from those described
in the forward-looking statements include, but are not limited to,
the following: potential adverse impacts to economic conditions
nationally or in our local market areas, other markets where we
have lending relationships, or other aspects of our business
operations or financial markets including, without limitation, as a
result of credit quality deterioration, pronounced and sustained
reductions in real estate market values, employment levels, and
labor shortages, a potential recession or slowed economic growth;
changes in the interest rate environment which could adversely
affect our revenues and expenses, the value of assets and
obligations, and the availability and cost of capital and
liquidity; the level and impact of inflation and the current and
future monetary policies of the Board of Governors of the Federal
Reserve System in response thereto; legislative or regulatory
changes that adversely affect our business, including changes in
banking, securities, and tax law, in regulatory policies and
principles, or the interpretation and prioritization of regulatory
capital or other rules; effects on the U.S. economy resulting from
the implementation of policies proposed by the new presidential
administration, including tariffs, mass deportations and tax
regulations; credit and interest rate risks associated with our
business, customers, borrowings, repayment, investment, and deposit
practices; fluctuations in deposits and deposit concentrations;
liquidity issues, including our ability to borrow funds or raise
additional capital, if necessary; fluctuations in the value of our
investment securities; credit risks and risks from concentrations
(by type of geographic area, collateral and industry) within our
loan portfolio; disruptions, security breaches, insider
fraud, cybersecurity incidents or other adverse
events, failures or interruptions in, or attacks on, our
information technology systems or on the third-party vendors who
perform our critical processing functions for our business,
including sophisticated attacks using artificial intelligence and
similar tools; rapid technological change in the financial services
industry; increased competition in the financial services industry
from non-banks such as credit unions and Fintech companies,
including digital asset service providers; our ability to adapt
successfully to technological changes to compete effectively in the
marketplace, including as a result of competition from other
commercial banks, mortgage banking firms, credit unions, securities
brokerage firms, insurance companies, and Fintech companies;
effects of critical accounting policies and judgments, including
the use of estimates in determining the fair value of certain of
our assets, which estimates may prove to be incorrect and result in
significant declines in valuation; the commencement, costs, effects
and outcome of litigation and other legal proceedings and
regulatory actions against us or to which we may become subject;
the effects of climate change, severe weather events, natural
disasters, pandemics, epidemics and other public health crises,
acts of war or terrorism, and other external events on our business
and the businesses of our clients; the impact of bank failures or
adverse developments at other banks and related negative publicity
about the banking industry in general on investor and depositor
sentiment regarding the stability and liquidity of banks; our
success at managing the risks involved in the foregoing items; and
other factors described in our latest Annual Report on Form 10-K
and Quarterly Reports on Form 10-Q and other documents filed with
or furnished to the Securities and Exchange Commission (the "SEC")
which are available on our website at www.hf-wa.com and on the
SEC's website at www.sec.gov. We caution readers not to place undue
reliance on any forward-looking statements. Moreover, any of the
forward-looking statements that we make in this press release or
the documents we file with or furnish to the SEC are based only on
information then actually known to us and upon management's beliefs
and assumptions at the time they are made which may turn out to be
wrong because of inaccurate assumptions we might make, because of
the factors described above or because of other factors that we
cannot foresee. We do not undertake and specifically disclaim any
obligation to revise any forward-looking statements to reflect the
occurrence of anticipated or unanticipated events or circumstances
after the date of such statements.
|
HERITAGE FINANCIAL
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in
thousands, except shares)
|
|
|
December 31,
2024
|
|
September
30,
2024
|
|
December 31,
2023
|
|
Assets
|
|
|
|
|
|
|
Cash on hand and in
banks
|
$
58,821
|
|
$
78,068
|
|
$
55,851
|
|
Interest earning
deposits
|
58,279
|
|
97,504
|
|
169,122
|
|
Cash and cash
equivalents
|
117,100
|
|
175,572
|
|
224,973
|
|
Investment securities
available for sale, at fair value (amortized cost of $835,592,
$909,023 and $1,227,787, respectively)
|
764,394
|
|
852,779
|
|
1,134,353
|
|
Investment securities
held to maturity, at amortized cost (fair value of $623,452,
$661,696 and $662,450, respectively)
|
703,285
|
|
719,400
|
|
739,442
|
|
Total investment
securities
|
1,467,679
|
|
1,572,179
|
|
1,873,795
|
|
Loans
receivable
|
4,802,123
|
|
4,679,479
|
|
4,335,627
|
|
Allowance for credit
losses on loans
|
(52,468)
|
|
(51,391)
|
|
(47,999)
|
|
Loans receivable,
net
|
4,749,655
|
|
4,628,088
|
|
4,287,628
|
|
Premises and equipment,
net
|
71,580
|
|
72,500
|
|
74,899
|
|
Federal Home Loan Bank
stock, at cost
|
21,538
|
|
16,993
|
|
4,186
|
|
Bank owned life
insurance
|
111,699
|
|
127,248
|
|
125,655
|
|
Accrued interest
receivable
|
19,483
|
|
20,102
|
|
19,518
|
|
Prepaid expenses and
other assets
|
303,452
|
|
296,190
|
|
318,571
|
|
Other intangible
assets, net
|
3,153
|
|
3,552
|
|
4,793
|
|
Goodwill
|
240,939
|
|
240,939
|
|
240,939
|
|
Total
assets
|
$
7,106,278
|
|
$
7,153,363
|
|
$
7,174,957
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
Non-interest bearing
deposits
|
$
1,654,955
|
|
$
1,682,219
|
|
$
1,715,847
|
|
Interest bearing
deposits
|
4,029,658
|
|
4,026,273
|
|
3,884,025
|
|
Total
deposits
|
5,684,613
|
|
5,708,492
|
|
5,599,872
|
|
Borrowings
|
383,000
|
|
382,000
|
|
500,000
|
|
Junior subordinated
debentures
|
22,058
|
|
21,985
|
|
21,765
|
|
Accrued expenses and
other liabilities
|
153,080
|
|
166,372
|
|
200,059
|
|
Total
liabilities
|
6,242,751
|
|
6,278,849
|
|
6,321,696
|
|
|
|
|
|
|
|
Common stock
|
531,674
|
|
534,917
|
|
549,748
|
|
Retained
earnings
|
387,097
|
|
383,127
|
|
375,989
|
|
Accumulated other
comprehensive loss, net
|
(55,244)
|
|
(43,530)
|
|
(72,476)
|
|
Total stockholders'
equity
|
863,527
|
|
874,514
|
|
853,261
|
|
Total liabilities and
stockholders' equity
|
$
7,106,278
|
|
$
7,153,363
|
|
$
7,174,957
|
|
|
|
|
|
|
|
Shares
outstanding
|
33,990,827
|
|
34,153,539
|
|
34,906,233
|
|
HERITAGE FINANCIAL
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in
thousands, except per share amounts)
|
|
Quarter
Ended
|
|
Year
Ended
|
|
December 31,
2024
|
|
September
30,
2024
|
|
December 31,
2023
|
|
December 31,
2024
|
|
December 31,
2023
|
|
Interest
Income
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on
loans
|
$
64,864
|
|
$
64,138
|
|
$
57,092
|
|
$
247,472
|
|
$
217,284
|
|
Taxable interest on
investment securities
|
12,510
|
|
13,472
|
|
14,488
|
|
54,972
|
|
58,509
|
|
Nontaxable interest on
investment securities
|
146
|
|
159
|
|
300
|
|
651
|
|
1,854
|
|
Interest on interest
earning deposits
|
1,440
|
|
2,048
|
|
2,382
|
|
6,617
|
|
6,818
|
|
Total interest
income
|
78,960
|
|
79,817
|
|
74,262
|
|
309,712
|
|
284,465
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
19,972
|
|
20,256
|
|
14,338
|
|
75,069
|
|
39,350
|
|
Junior subordinated
debentures
|
512
|
|
541
|
|
553
|
|
2,139
|
|
2,074
|
|
Securities sold under
agreement to repurchase
|
—
|
|
—
|
|
5
|
|
—
|
|
153
|
|
Borrowings
|
4,713
|
|
6,062
|
|
5,495
|
|
23,140
|
|
17,733
|
|
Total interest
expense
|
25,197
|
|
26,859
|
|
20,391
|
|
100,348
|
|
59,310
|
|
Net interest
income
|
53,763
|
|
52,958
|
|
53,871
|
|
209,364
|
|
225,155
|
|
Provision for credit
losses
|
1,183
|
|
2,439
|
|
1,424
|
|
6,282
|
|
4,280
|
|
Net interest income
after provision for credit losses
|
52,580
|
|
50,519
|
|
52,447
|
|
203,082
|
|
220,875
|
|
Noninterest
Income
|
|
|
|
|
|
|
|
|
|
|
Service charges and
other fees
|
2,892
|
|
2,788
|
|
2,804
|
|
11,285
|
|
10,966
|
|
Card revenue
|
1,849
|
|
2,134
|
|
1,944
|
|
7,752
|
|
8,340
|
|
Loss on sale of
investment securities, net
|
(3,903)
|
|
(6,945)
|
|
(10,005)
|
|
(22,742)
|
|
(12,231)
|
|
Gain on sale of loans,
net
|
—
|
|
—
|
|
36
|
|
26
|
|
343
|
|
Interest rate swap
fees
|
357
|
|
—
|
|
—
|
|
409
|
|
230
|
|
Bank owned life
insurance income
|
256
|
|
860
|
|
654
|
|
2,967
|
|
2,934
|
|
Gain on sale of other
assets, net
|
23
|
|
1,480
|
|
—
|
|
1,552
|
|
2
|
|
Other income
|
1,816
|
|
1,520
|
|
1,420
|
|
6,224
|
|
8,079
|
|
Total noninterest
income (loss)
|
3,290
|
|
1,837
|
|
(3,147)
|
|
7,473
|
|
18,663
|
|
Noninterest
Expense
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
24,236
|
|
24,367
|
|
24,758
|
|
98,527
|
|
100,083
|
|
Occupancy and
equipment
|
4,742
|
|
4,850
|
|
4,784
|
|
19,289
|
|
19,156
|
|
Data
processing
|
4,020
|
|
3,964
|
|
4,630
|
|
14,899
|
|
17,116
|
|
Marketing
|
405
|
|
128
|
|
698
|
|
988
|
|
1,930
|
|
Professional
services
|
663
|
|
490
|
|
2,266
|
|
2,515
|
|
4,227
|
|
State/municipal
business and use taxes
|
1,180
|
|
1,249
|
|
909
|
|
4,889
|
|
4,059
|
|
Federal deposit
insurance premium
|
829
|
|
824
|
|
847
|
|
3,260
|
|
3,312
|
|
Amortization of
intangible assets
|
399
|
|
399
|
|
593
|
|
1,640
|
|
2,434
|
|
Other
expense
|
3,066
|
|
3,019
|
|
3,238
|
|
12,289
|
|
14,306
|
|
Total noninterest
expense
|
39,540
|
|
39,290
|
|
42,723
|
|
158,296
|
|
166,623
|
|
Income before income
taxes
|
16,330
|
|
13,066
|
|
6,577
|
|
52,259
|
|
72,915
|
|
Income tax
expense
|
4,402
|
|
1,643
|
|
344
|
|
9,001
|
|
11,160
|
|
Net income
|
$
11,928
|
|
$
11,423
|
|
$
6,233
|
|
$
43,258
|
|
$
61,755
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
0.35
|
|
$
0.33
|
|
$
0.18
|
|
$
1.26
|
|
$
1.76
|
|
Diluted earnings per
share
|
$
0.34
|
|
$
0.33
|
|
$
0.18
|
|
$
1.24
|
|
$
1.75
|
|
Dividends declared per
share
|
$
0.23
|
|
$
0.23
|
|
$
0.22
|
|
$
0.92
|
|
$
0.88
|
|
Average shares
outstanding - basic
|
34,109,339
|
|
34,322,069
|
|
34,902,029
|
|
34,465,323
|
|
35,022,247
|
|
Average shares
outstanding - diluted
|
34,553,139
|
|
34,658,674
|
|
35,084,635
|
|
34,899,036
|
|
35,258,189
|
|
HERITAGE FINANCIAL
CORPORATION
FINANCIAL STATISTICS
(Unaudited)
(Dollars in
thousands)
|
|
Average Balances,
Yields, and Rates Paid:
|
|
Year Ended December
31,
|
|
2024
|
|
2023
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate (1)
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate (1)
|
|
Interest Earning
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable,
net(2)(3)
|
$ 4,485,531
|
|
$
247,472
|
|
5.52 %
|
|
$ 4,155,722
|
|
$
217,284
|
|
5.23 %
|
|
Taxable
securities
|
1,653,295
|
|
54,972
|
|
3.32
|
|
1,937,603
|
|
58,509
|
|
3.02
|
|
Nontaxable
securities(3)
|
18,425
|
|
651
|
|
3.53
|
|
63,051
|
|
1,854
|
|
2.94
|
|
Interest earning
deposits
|
125,036
|
|
6,617
|
|
5.29
|
|
129,807
|
|
6,818
|
|
5.25
|
|
Total interest earning
assets
|
6,282,287
|
|
309,712
|
|
4.93 %
|
|
6,286,183
|
|
284,465
|
|
4.53 %
|
|
Noninterest earning
assets
|
850,759
|
|
|
|
|
|
853,841
|
|
|
|
|
|
Total
assets
|
$ 7,133,046
|
|
|
|
|
|
$ 7,140,024
|
|
|
|
|
|
Interest Bearing
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of
deposit
|
$
857,079
|
|
$ 36,922
|
|
4.31 %
|
|
$
491,653
|
|
$ 14,554
|
|
2.96 %
|
|
Savings
accounts
|
451,528
|
|
920
|
|
0.20
|
|
543,096
|
|
701
|
|
0.13
|
|
Interest bearing demand
and money market accounts
|
2,640,487
|
|
37,227
|
|
1.41
|
|
2,771,981
|
|
24,095
|
|
0.87
|
|
Total interest bearing
deposits
|
3,949,094
|
|
75,069
|
|
1.90
|
|
3,806,730
|
|
39,350
|
|
1.03
|
|
Junior subordinated
debentures
|
21,910
|
|
2,139
|
|
9.76
|
|
21,615
|
|
2,074
|
|
9.60
|
|
Securities sold under
agreement to repurchase
|
—
|
|
—
|
|
—
|
|
32,976
|
|
153
|
|
0.46
|
|
Borrowings
|
456,448
|
|
23,140
|
|
5.07
|
|
369,665
|
|
17,733
|
|
4.80
|
|
Total interest bearing
liabilities
|
4,427,452
|
|
100,348
|
|
2.27 %
|
|
4,230,986
|
|
59,310
|
|
1.40 %
|
|
Noninterest demand
deposits
|
1,669,301
|
|
|
|
|
|
1,899,317
|
|
|
|
|
|
Other noninterest
bearing liabilities
|
182,121
|
|
|
|
|
|
191,679
|
|
|
|
|
|
Stockholders'
equity
|
854,172
|
|
|
|
|
|
818,042
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$ 7,133,046
|
|
|
|
|
|
$ 7,140,024
|
|
|
|
|
|
Net interest income and
spread
|
|
|
$
209,364
|
|
2.66 %
|
|
|
|
$
225,155
|
|
3.13 %
|
|
Net interest
margin
|
|
|
|
|
3.33 %
|
|
|
|
|
|
3.58 %
|
|
(1)
|
Average balances are
calculated using daily balances.
|
|
(2)
|
Average loans
receivable, net includes loans held for sale and loans classified
as nonaccrual, which carry a zero yield. Interest earned on loans
receivable, net includes the amortization of net deferred loan fees
of $3.6 million and $3.3 million for the year ended December 31,
2024 and 2023, respectively.
|
|
(3)
|
Yields on tax-exempt
loans and securities have not been stated on a tax-equivalent
basis.
|
|
HERITAGE FINANCIAL
CORPORATION
FINANCIAL STATISTICS
(Unaudited)
(Dollars in
thousands)
|
|
Nonperforming Assets
and Credit Quality Metrics:
|
|
Quarter
Ended
|
|
Year
Ended
|
|
December 31,
2024
|
|
September
30,
2024
|
|
December 31,
2023
|
|
December 31,
2024
|
|
December 31,
2023
|
|
Allowance for Credit
Losses on Loans:
|
|
|
|
|
|
Balance, beginning of
period
|
$
51,391
|
|
$
51,219
|
|
$
46,947
|
|
$
47,999
|
|
$
42,986
|
|
Provision for credit
losses on loans
|
1,104
|
|
2,705
|
|
1,670
|
|
6,983
|
|
4,736
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
Commercial
business
|
(4)
|
|
(2,560)
|
|
(543)
|
|
(2,953)
|
|
(719)
|
|
Consumer
|
(92)
|
|
(85)
|
|
(166)
|
|
(538)
|
|
(586)
|
|
Total
charge-offs
|
(96)
|
|
(2,645)
|
|
(709)
|
|
(3,491)
|
|
(1,305)
|
|
Recoveries:
|
|
|
|
|
|
|
|
|
|
|
Commercial
business
|
48
|
|
72
|
|
30
|
|
855
|
|
1,372
|
|
Consumer
|
21
|
|
40
|
|
61
|
|
122
|
|
210
|
|
Total
recoveries
|
69
|
|
112
|
|
91
|
|
977
|
|
1,582
|
|
Net recoveries
(charge-offs)
|
(27)
|
|
(2,533)
|
|
(618)
|
|
(2,514)
|
|
277
|
|
Balance, end of
period
|
$
52,468
|
|
$
51,391
|
|
$
47,999
|
|
$
52,468
|
|
$
47,999
|
|
Net charge-offs
(recoveries) on loans to average loans receivable, net
annualized
|
— %
|
|
0.22 %
|
|
0.06 %
|
|
0.06 %
|
|
(0.01) %
|
|
December 31,
2024
|
|
September
30,
2024
|
|
December 31,
2023
|
|
Nonperforming
Assets:
|
|
|
|
|
|
|
Nonaccrual
loans:
|
|
|
|
|
|
|
Commercial
business
|
$
3,919
|
|
$
4,301
|
|
$
4,468
|
|
Consumer
|
160
|
|
—
|
|
—
|
|
Total nonaccrual
loans
|
4,079
|
|
4,301
|
|
4,468
|
|
Accruing loans past due
90 days or more
|
1,195
|
|
5,347
|
|
1,293
|
|
Total nonperforming
loans
|
5,274
|
|
9,648
|
|
5,761
|
|
Other real estate
owned
|
—
|
|
—
|
|
—
|
|
Nonperforming
assets
|
$
5,274
|
|
$
9,648
|
|
$
5,761
|
|
|
|
|
|
|
|
ACL on loans
to:
|
|
|
|
|
|
|
Loans
receivable
|
1.09 %
|
|
1.10 %
|
|
1.11 %
|
|
Nonaccrual
loans
|
1,286.30 %
|
|
1,194.86 %
|
|
1,074.28 %
|
|
Nonaccrual loans to
loans receivable
|
0.08 %
|
|
0.09 %
|
|
0.10 %
|
|
Nonperforming loans to
loans receivable
|
0.11 %
|
|
0.21 %
|
|
0.13 %
|
|
Nonperforming assets to
total assets
|
0.07 %
|
|
0.13 %
|
|
0.08 %
|
|
HERITAGE FINANCIAL
CORPORATION
QUARTERLY FINANCIAL
STATISTICS (Unaudited)
(Dollars in
thousands, except per share amounts)
|
|
Quarter
Ended
|
|
December 31,
2024
|
|
September
30,
2024
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Earnings:
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
53,763
|
|
$
52,958
|
|
$
51,113
|
|
$
51,530
|
|
$
53,871
|
|
Provision for credit
losses
|
1,183
|
|
2,439
|
|
1,268
|
|
1,392
|
|
1,424
|
|
Noninterest income
(loss)
|
3,290
|
|
1,837
|
|
5,246
|
|
(2,900)
|
|
(3,147)
|
|
Noninterest
expense
|
39,540
|
|
39,290
|
|
39,096
|
|
40,370
|
|
42,723
|
|
Net income
|
11,928
|
|
11,423
|
|
14,159
|
|
5,748
|
|
6,233
|
|
Pre-tax, pre-provision
net income (1)
|
17,513
|
|
15,505
|
|
17,263
|
|
8,260
|
|
8,001
|
|
Basic earnings per
share
|
$
0.35
|
|
$
0.33
|
|
$
0.41
|
|
$
0.17
|
|
$
0.18
|
|
Diluted earnings per
share
|
$
0.34
|
|
$
0.33
|
|
$
0.41
|
|
$
0.16
|
|
$
0.18
|
|
Average
Balances:
|
|
|
|
|
|
|
|
|
|
|
Loans receivable, net
(2)
|
$
4,665,113
|
|
$
4,555,090
|
|
$
4,415,790
|
|
$
4,303,394
|
|
$
4,233,743
|
|
Total investment
securities
|
1,530,348
|
|
1,622,011
|
|
1,704,607
|
|
1,832,011
|
|
1,861,587
|
|
Total interest earning
assets
|
6,314,736
|
|
6,327,485
|
|
6,241,936
|
|
6,244,138
|
|
6,269,805
|
|
Total assets
|
7,149,294
|
|
7,182,921
|
|
7,106,791
|
|
7,092,452
|
|
7,140,876
|
|
Total interest bearing
deposits
|
4,011,793
|
|
3,997,496
|
|
3,916,977
|
|
3,868,890
|
|
3,849,067
|
|
Total noninterest
demand deposits
|
1,703,357
|
|
1,677,984
|
|
1,638,262
|
|
1,657,132
|
|
1,772,261
|
|
Stockholders'
equity
|
868,308
|
|
857,799
|
|
843,438
|
|
846,947
|
|
813,383
|
|
Financial
Ratios:
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets (3)
|
0.66 %
|
|
0.63 %
|
|
0.80 %
|
|
0.33 %
|
|
0.35 %
|
|
Pre-tax, pre-provision
return on average assets (1)(3)
|
0.97
|
|
0.86
|
|
0.98
|
|
0.47
|
|
0.44
|
|
Return on average
common equity (3)
|
5.46
|
|
5.30
|
|
6.75
|
|
2.73
|
|
3.04
|
|
Return on average
tangible common equity (1)(3)
|
7.81
|
|
7.62
|
|
9.74
|
|
4.07
|
|
4.69
|
|
Adjusted return on
average tangible common equity (1)(3)
|
11.59
|
|
10.42
|
|
10.74
|
|
9.34
|
|
10.21
|
|
Efficiency
ratio
|
69.3
|
|
71.7
|
|
69.4
|
|
83.0
|
|
84.2
|
|
Adjusted efficiency
ratio (1)
|
64.4
|
|
65.2
|
|
67.1
|
|
68.9
|
|
70.4
|
|
Noninterest expense to
average total assets (3)
|
2.20
|
|
2.18
|
|
2.21
|
|
2.29
|
|
2.37
|
|
Net interest spread
(3)
|
2.70
|
|
2.63
|
|
2.62
|
|
2.70
|
|
2.84
|
|
Net interest margin
(3)
|
3.39
|
|
3.33
|
|
3.29
|
|
3.32
|
|
3.41
|
|
(1)
|
Represents a non-GAAP
financial measure. See "Non-GAAP Financial Measures" section for a
reconciliation to the comparable GAAP financial measure.
|
|
(2)
|
Average loans
receivable, net includes loans held for sale.
|
|
(3)
|
Annualized.
|
|
HERITAGE FINANCIAL
CORPORATION
QUARTERLY FINANCIAL
STATISTICS (Unaudited)
(Dollars in
thousands, except per share amounts)
|
|
As of or for the
Quarter Ended
|
|
December 31,
2024
|
|
September
30,
2024
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Select Balance
Sheet:
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
7,106,278
|
|
$
7,153,363
|
|
$
7,059,857
|
|
$
7,091,283
|
|
$
7,174,957
|
|
Loans receivable,
net
|
4,749,655
|
|
4,628,088
|
|
4,481,396
|
|
4,378,429
|
|
4,287,628
|
|
Total investment
securities
|
1,467,679
|
|
1,572,179
|
|
1,658,590
|
|
1,730,516
|
|
1,873,795
|
|
Total
deposits
|
5,684,613
|
|
5,708,492
|
|
5,515,652
|
|
5,532,327
|
|
5,599,872
|
|
Noninterest demand
deposits
|
1,654,955
|
|
1,682,219
|
|
1,599,367
|
|
1,637,111
|
|
1,715,847
|
|
Stockholders'
equity
|
863,527
|
|
874,514
|
|
850,507
|
|
847,580
|
|
853,261
|
|
Financial
Measures:
|
|
|
|
|
|
|
|
|
|
|
Book value per
share
|
$
25.40
|
|
$
25.61
|
|
$
24.66
|
|
$
24.43
|
|
$
24.44
|
|
Tangible book value per
share (1)
|
18.22
|
|
18.45
|
|
17.56
|
|
17.36
|
|
17.40
|
|
Stockholders' equity to
total assets
|
12.2 %
|
|
12.2 %
|
|
12.0 %
|
|
12.0 %
|
|
11.9 %
|
|
Tangible common equity
to tangible assets (1)
|
9.0
|
|
9.1
|
|
8.9
|
|
8.8
|
|
8.8
|
|
Loans to deposits
ratio
|
84.5
|
|
82.0
|
|
82.2
|
|
80.0
|
|
77.4
|
|
Regulatory Capital
Ratios:(2)
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1
capital ratio
|
12.0 %
|
|
12.3 %
|
|
12.6 %
|
|
12.6 %
|
|
12.9 %
|
|
Leverage
ratio
|
10.0
|
|
9.9
|
|
10.1
|
|
10.0
|
|
10.0
|
|
Tier 1 capital
ratio
|
12.4
|
|
12.7
|
|
13.0
|
|
13.0
|
|
13.3
|
|
Total capital
ratio
|
13.3
|
|
13.6
|
|
13.9
|
|
13.9
|
|
14.1
|
|
Credit Quality
Metrics:
|
|
|
|
|
|
|
|
|
|
|
ACL on
loans to:
|
|
|
|
|
|
|
|
|
|
|
Loans
receivable
|
1.09 %
|
|
1.10 %
|
|
1.13 %
|
|
1.12 %
|
|
1.11 %
|
|
Nonaccrual
loans
|
1,286.3
|
|
1,194.9
|
|
1,338.7
|
|
1,037.9
|
|
1,074.3
|
|
Nonaccrual loans to
loans receivable
|
0.08
|
|
0.09
|
|
0.08
|
|
0.11
|
|
0.10
|
|
Nonperforming loans to
loans receivable
|
0.11
|
|
0.21
|
|
0.18
|
|
0.17
|
|
0.13
|
|
Nonperforming assets to
total assets
|
0.07
|
|
0.13
|
|
0.12
|
|
0.10
|
|
0.08
|
|
Net charge-offs
(recoveries) on loans to average loans receivable,
net(3)
|
0.00
|
|
0.22
|
|
0.00
|
|
0.00
|
|
0.06
|
|
Criticized Loans by
Credit Quality Rating:
|
|
Special
mention
|
$
110,725
|
|
$
99,078
|
|
$
93,694
|
|
$
102,232
|
|
$
79,977
|
|
Substandard
|
68,318
|
|
71,977
|
|
82,496
|
|
70,183
|
|
69,757
|
|
Other
Metrics:
|
|
|
|
|
|
|
|
|
|
|
Number of banking
offices
|
50
|
|
50
|
|
50
|
|
50
|
|
50
|
|
Deposits per
branch
|
$
113,692
|
|
$
114,170
|
|
$
110,313
|
|
$
110,647
|
|
$
111,997
|
|
Average number of
full-time equivalent employees
|
751
|
|
749
|
|
748
|
|
765
|
|
803
|
|
Average assets per
full-time equivalent employee
|
9,520
|
|
9,590
|
|
9,501
|
|
9,271
|
|
8,893
|
|
(1) See
Non-GAAP Financial Measures section herein.
|
|
(2) Current quarter ratios are
estimates pending completion and filing of the Company's regulatory
reports.
|
|
(3)
Annualized.
|
HERITAGE FINANCIAL
CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Dollars in thousands, except per share
amounts)
This earnings release contains certain financial measures not
presented in accordance with U.S. Generally Accepted Accounting
Principles ("GAAP") in addition to financial measures presented in
accordance with GAAP. The Company has presented these non-GAAP
financial measures in this earnings release because it believes
that they provide useful and comparative information to assess
trends in the Company's capital, performance and asset quality
reflected in the current quarter and comparable period results and
to facilitate comparison of its performance with the performance of
its peers. These non-GAAP financial measures have inherent
limitations, are not required to be uniformly applied and are not
audited. They should not be considered in isolation or as a
substitute for financial measures presented in accordance with
GAAP. These non-GAAP financial measures may not be comparable to
similarly titled measures reported by other companies.
Reconciliations of the non-GAAP financial measures used in this
earnings release to the comparable GAAP financial measures are
presented below.
The Company considers the tangible common equity to tangible
assets ratio and tangible book value per share to be useful
measurements of the adequacy of the Company's capital levels.
|
December 31,
2024
|
|
September
30,
2024
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Tangible Common
Equity to Tangible Assets and Tangible Book Value Per
Share:
|
|
Total stockholders'
equity (GAAP)
|
$
863,527
|
|
$
874,514
|
|
$
850,507
|
|
$
847,580
|
|
$
853,261
|
|
Exclude intangible
assets
|
(244,092)
|
|
(244,491)
|
|
(244,890)
|
|
(245,311)
|
|
(245,732)
|
|
Tangible common equity
(non-GAAP)
|
$
619,435
|
|
$
630,023
|
|
$
605,617
|
|
$
602,269
|
|
$
607,529
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
(GAAP)
|
$
7,106,278
|
|
$
7,153,363
|
|
$
7,059,857
|
|
$
7,091,283
|
|
$
7,174,957
|
|
Exclude intangible
assets
|
(244,092)
|
|
(244,491)
|
|
(244,890)
|
|
(245,311)
|
|
(245,732)
|
|
Tangible assets
(non-GAAP)
|
$
6,862,186
|
|
$
6,908,872
|
|
$
6,814,967
|
|
$
6,845,972
|
|
$
6,929,225
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity to
total assets (GAAP)
|
12.2 %
|
|
12.2 %
|
|
12.0 %
|
|
12.0 %
|
|
11.9 %
|
|
Tangible common equity
to tangible assets (non-GAAP)
|
9.0 %
|
|
9.1 %
|
|
8.9 %
|
|
8.8 %
|
|
8.8 %
|
|
|
|
|
|
|
|
|
|
|
|
Shares
outstanding
|
33,990,827
|
|
34,153,539
|
|
34,496,197
|
|
34,689,843
|
|
34,906,233
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share
(GAAP)
|
$
25.40
|
|
$
25.61
|
|
$
24.66
|
|
$
24.43
|
|
$
24.44
|
|
Tangible book value per
share (non-GAAP)
|
$
18.22
|
|
$
18.45
|
|
$
17.56
|
|
$
17.36
|
|
$
17.40
|
HERITAGE FINANCIAL
CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Dollars in thousands, except per share
amounts)
The Company considers the return on average tangible common
equity ratio to be a useful measurement of the Company's ability to
generate returns for its common shareholders. By removing the
impact of intangible assets and their related amortization and tax
effects, the performance of the Company's ongoing business
operations can be evaluated. The Company believes that presenting
an adjusted return on tangible common equity ratio, which excludes
certain non-recurring items is useful in measuring performance of
the Company's ongoing business operations by removing the
volatility of these non-recurring items.
|
Quarter
Ended
|
|
December 31,
2024
|
|
September
30,
2024
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Return on Average
Tangible Common Equity, annualized:
|
|
Net income
(GAAP)
|
$
11,928
|
|
$
11,423
|
|
$
14,159
|
|
$
5,748
|
|
$
6,233
|
|
Add amortization of
intangible assets
|
399
|
|
399
|
|
421
|
|
421
|
|
593
|
|
Exclude tax effect of
adjustment
|
(84)
|
|
(84)
|
|
(88)
|
|
(88)
|
|
(125)
|
|
Tangible net income
(non-GAAP)
|
$
12,243
|
|
$
11,738
|
|
$
14,492
|
|
$
6,081
|
|
$
6,701
|
|
|
|
|
|
|
|
|
|
|
|
Tangible net income
(non-GAAP)
|
$
12,243
|
|
$
11,738
|
|
$
14,492
|
|
$
6,081
|
|
$
6,701
|
|
Exclude loss on sale
of investment securities, net
|
3,903
|
|
6,945
|
|
1,921
|
|
9,973
|
|
10,005
|
|
Exclude gain on sale
of premises and equipment
|
(23)
|
|
(1,480)
|
|
(49)
|
|
—
|
|
—
|
|
Exclude tax effect of
adjustment
|
(815)
|
|
(1,148)
|
|
(393)
|
|
(2,094)
|
|
(2,101)
|
|
Exclude BOLI
restructuring costs included in BOLI Income
|
508
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Exclude tax expense
related to BOLI restructuring
|
$
2,371
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
Adjusted tangible net
income (non-GAAP)
|
$
18,187
|
|
$
16,055
|
|
$
15,971
|
|
$
13,960
|
|
$
14,605
|
|
|
|
|
|
|
|
|
|
|
|
Average stockholders'
equity (GAAP)
|
$
868,308
|
|
$
857,799
|
|
$
843,438
|
|
$
846,947
|
|
$
813,383
|
|
Exclude average
intangible assets
|
(244,302)
|
|
(244,706)
|
|
(245,106)
|
|
(245,536)
|
|
(246,022)
|
|
Average tangible common
stockholders' equity (non-GAAP)
|
$
624,006
|
|
$
613,093
|
|
$
598,332
|
|
$
601,411
|
|
$
567,361
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
common equity, annualized (GAAP)
|
5.46 %
|
|
5.30 %
|
|
6.75 %
|
|
2.73 %
|
|
3.04 %
|
|
Return on average
tangible common equity, annualized (non-GAAP)
|
7.81 %
|
|
7.62 %
|
|
9.74 %
|
|
4.07 %
|
|
4.69 %
|
|
Adjusted return on
average tangible common equity, annualized (non-GAAP)
|
11.59 %
|
|
10.42 %
|
|
10.74 %
|
|
9.34 %
|
|
10.21 %
|
The Company believes that presenting pre-tax pre-provision
income, which reflects its profitability before income taxes and
provision for credit losses, and the pre-tax, pre-provision return
on average assets are useful measurements in assessing its
operating income and expenses by removing the volatility that may
be associated with credit loss provisions.
|
Quarter
Ended
|
|
December 31,
2024
|
|
September
30,
2024
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Pre-tax,
Pre-provision Income and Pre-tax, Pre-provision Return on Average
Assets, annualized:
|
|
Net income
(GAAP)
|
$
11,928
|
|
$
11,423
|
|
$
14,159
|
|
$
5,748
|
|
$
6,233
|
|
Add income tax
expense
|
4,402
|
|
1,643
|
|
1,836
|
|
1,120
|
|
344
|
|
Add (subtract)
provision for (reversal of) credit losses
|
1,183
|
|
2,439
|
|
1,268
|
|
1,392
|
|
1,424
|
|
Pre-tax, pre-provision
income (non-GAAP)
|
$
17,513
|
|
$
15,505
|
|
$
17,263
|
|
$
8,260
|
|
$
8,001
|
|
|
|
|
|
|
|
|
|
|
|
Average total assets
(GAAP)
|
$
7,149,294
|
|
$
7,182,921
|
|
$
7,106,791
|
|
$
7,092,452
|
|
$
7,140,876
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets, annualized (GAAP)
|
0.66 %
|
|
0.63 %
|
|
0.80 %
|
|
0.33 %
|
|
0.35 %
|
|
Pre-tax, pre-provision
return on average assets (non-GAAP)
|
0.97 %
|
|
0.86 %
|
|
0.98 %
|
|
0.47 %
|
|
0.44 %
|
The Company believes that presenting an adjusted efficiency
ratio, which excludes certain non-recurring items is useful in
measuring operating income and expenses by removing the volatility
of these non-recurring items.
|
Quarter
Ended
|
|
December 31,
2024
|
|
September
30,
2024
|
|
June 30,
2024
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Adjusted Efficiency
Ratio :
|
|
Total noninterest
expense (GAAP)
|
$
39,540
|
|
$
39,290
|
|
$
39,096
|
|
$
40,370
|
|
$
42,723
|
|
Net interest income
(GAAP)
|
$
53,763
|
|
$
52,958
|
|
$
51,113
|
|
$
51,530
|
|
$
53,871
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest
income (GAAP)
|
$
3,290
|
|
$
1,837
|
|
$
5,246
|
|
$
(2,900)
|
|
$
(3,147)
|
|
Exclude (gain) loss on
sale of investment securities, net
|
3,903
|
|
6,945
|
|
1,921
|
|
9,973
|
|
10,005
|
|
Exclude gain on sale
of premises and equipment
|
(23)
|
|
(1,480)
|
|
(49)
|
|
—
|
|
—
|
|
Exclude BOLI
restructuring costs included in BOLI Income
|
508
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Adjusted total
noninterest income (non-GAAP)
|
$
7,678
|
|
$
7,302
|
|
$
7,118
|
|
$
7,073
|
|
$
6,858
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio
(GAAP)
|
69.3 %
|
|
71.7 %
|
|
69.4 %
|
|
83.0 %
|
|
84.2 %
|
|
Adjusted efficiency
ratio (non-GAAP)
|
64.4 %
|
|
65.2 %
|
|
67.1 %
|
|
68.9 %
|
|
70.4 %
|
View original
content:https://www.prnewswire.com/news-releases/heritage-financial-announces-fourth-quarter-and-annual-2024-results-and-declares-regular-cash-dividend-of-0-24-per-share-302358088.html
SOURCE Heritage Financial Corporation