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Jun 30
Heritage Financial Q2 2025 Earnings Report
Heritage Financial announced its second quarter 2025 results, reporting a decrease in net income and diluted EPS compared to the previous quarter and prior year, primarily due to strategic balance sheet repositioning efforts and related losses on securities sales and BOLI surrender.
Key Takeaways
Heritage Financial reported a net income of $12.2 million for the second quarter of 2025, down from $13.9 million in the previous quarter and $14.2 million in the same period last year. Diluted earnings per share were $0.36, compared to $0.40 in Q1 2025 and $0.41 in Q2 2024. The results were significantly impacted by a pre-tax loss of $6.9 million on the sale of investment securities and a tax expense of $515,000 related to the surrender of bank-owned life insurance.
Net income for Q2 2025 was $12.2 million, a decrease from $13.9 million in Q1 2025 and $14.2 million in Q2 2024.
Diluted earnings per share for Q2 2025 were $0.36, down from $0.40 in the prior quarter and $0.41 in the same quarter last year.
The company incurred a pre-tax loss of $6.9 million on the sale of investment securities, negatively impacting diluted EPS by $0.15.
Net interest margin increased to 3.51% from 3.44% in the first quarter of 2025, driven by higher yields on loans and investment securities.
Heritage Financial
Heritage Financial
Heritage Financial Revenue by Segment
Revenue by Segment
Commercial and Industrial Revenue
CapyFin.comOwner-Occupied CRE Revenue
CapyFin.comNon-Owner Occupied CRE Revenue
CapyFin.comResidential Real Estate Revenue
CapyFin.comResidential Construction Revenue
CapyFin.comCommercial and Multifamily Construction Revenue
CapyFin.comConsumer Revenue
CapyFin.com Forward Guidance
Heritage Financial is focused on continued growth in core earnings and strategic balance sheet repositioning to enhance future profitability, while maintaining strong capital levels and prudent risk management.
Positive Outlook
- Continued growth in core earnings compared to prior quarter and prior year.
- Ongoing expansion of net interest margin due to increases in yields on loans and investment securities.
- Total deposits increased by $100 million since year-end 2024, despite a seasonal decline in Q2.
- Strategic repositioning of the balance sheet is expected to improve future profitability.
- Maintenance of capital levels in excess of regulatory requirements, categorized as 'well-capitalized'.
Challenges Ahead
- Current earnings impacted by pre-tax loss on sale of investment securities.
- Tax expense incurred related to the surrender of bank-owned life insurance.
- Classified loans increased by $35.3 million from the prior quarter, with the percentage of classified loans to loans receivable increasing to 2.1%.
- Nonaccrual loans increased by $5.4 million during the quarter.
- Loan prepayments decreased and loan payoffs increased compared to the prior quarter.