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Sep 30, 2024
Heritage Financial Q3 2024 Earnings Report
Heritage Financial's performance declined due to a pre-tax loss on the sale of securities, while experiencing growth in loans and deposits.
Key Takeaways
Heritage Financial Corporation reported a net income of $11.4 million for the third quarter of 2024, a decrease compared to $14.2 million for the second quarter of 2024 and $18.2 million for the third quarter of 2023. The results include a pre-tax loss on the sale of securities of $6.9 million. However, the company saw positive growth in loans and deposits, with a net interest margin of 3.33%.
Net income was $11.4 million, or $0.33 per diluted share, down from $14.2 million, or $0.41 per diluted share in Q2 2024.
Loans receivable increased by $146.9 million, representing a 3.2% increase (12.9% annualized).
Deposits increased by $192.8 million, a 3.5% increase (13.9% annualized).
Net interest margin was 3.33%, an increase from 3.29% in the prior quarter.
Heritage Financial
Heritage Financial
Heritage Financial Revenue by Segment
Revenue by Segment
Commercial and Industrial Revenue
CapyFin.com Forward Guidance
Heritage Financial Corporation is optimistic about future core profitability through balance sheet growth and prudent risk management.
Positive Outlook
- Strong loan and deposit growth.
- Net interest margin expansion.
- Continued benefits from expense management measures.
- Increase in average earning assets and net interest margin resulted in an improvement in net interest income of $1.8 million, or 3.6%, from the prior quarter.
- Overall credit quality remains very strong.
Challenges Ahead
- Experienced a charge-off during the quarter related to an owner-occupied commercial real estate loan previously downgraded to Substandard.
- Net interest income decreased $2.7 million, or 4.8%, during the third quarter of 2024 compared to the third quarter of 2023 and the net interest margin decreased 14 basis points to 3.33% from 3.47% during this same period.
- Noninterest income decreased $4.4 million from the same period in 2023 due primarily to a $6.9 million pre-tax loss on the sale of investment securities during the third quarter of 2024
- The effective tax rate declined due to lower pre-tax income which increased the impact of favorable permanent tax items such as tax-exempt investments, investments in bank owned life insurance and tax credits.
- Results include a pre-tax loss on sale of securities of $6.9 million, or $0.16 per diluted share on an after-tax basis.