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Sep 30, 2025
Heritage Financial Q3 2025 Earnings Report
Heritage Financial reported strong third quarter 2025 results, with significant increases in net income and diluted EPS, driven by margin expansion and decreasing deposit costs.
Key Takeaways
Heritage Financial Corporation announced a robust third quarter for 2025, with net income rising to $19.2 million, or $0.55 per diluted share, a substantial increase from the previous quarter and the same period last year. The company experienced margin expansion due to higher loan yields and lower deposit costs, leading to a 4.3% increase in net interest income quarter-over-quarter. Total deposits grew by 1.3%, and the company successfully reduced borrowings by 64% year-to-date.
Net income for Q3 2025 was $19.2 million, a significant increase from $12.2 million in Q2 2025 and $11.4 million in Q3 2024.
Diluted earnings per share rose to $0.55, up from $0.36 in the previous quarter and $0.33 in the prior year's third quarter.
Net interest margin expanded to 3.64%, an increase of 13 basis points from 3.51% in Q2 2025, driven by higher loan yields and lower interest-bearing deposit costs.
Total deposits increased by $73.1 million, or 1.3%, during the quarter, with noninterest demand deposits growing by 2.1%.
Revenue by Segment
Forward Guidance
Heritage Financial is optimistic about future growth and profitability, particularly with the pending acquisition of Olympic Bancorp, Inc. The company expects this acquisition to strengthen its balance sheet and improve profitability, with the transaction anticipated to close in the first quarter of 2026.
Positive Outlook
- Pending acquisition of Olympic Bancorp, Inc. is expected to enhance balance sheet strength.
- Acquisition is anticipated to improve overall profitability.
- Continued growth in core earnings is expected, driven by margin expansion.
- Loan yields are projected to continue expanding.
- Deposit costs are expected to continue decreasing.
Challenges Ahead
- Potential adverse impacts to economic conditions nationally or in local market areas.
- Credit quality deterioration and sustained reductions in real estate market values.
- Changes in the interest rate environment could adversely affect revenues and expenses.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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