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Dec 31, 2023
Heritage Financial Q4 2023 Earnings Report
Reported a decrease in net income due to a loss on sale of securities and costs related to expense management measures, but saw strong loan growth and repositioning of the investment portfolio.
Key Takeaways
Heritage Financial Corporation reported a net income of $6.2 million for Q4 2023, a decrease compared to $18.2 million in the previous quarter and $22.5 million in Q4 2022. The results were affected by a loss on sale of securities and expense management costs, but the company saw strong loan growth and repositioned its investment portfolio. The company declared a regular cash dividend of $0.23 per share.
Net income was $6.2 million, or $0.18 per diluted share, for the fourth quarter of 2023, compared to $18.2 million, or $0.51 per diluted share, for the third quarter of 2023.
Significant items in the fourth quarter of 2023 results include a loss on sale of securities totaling $10.0 million, or $0.22 per diluted share, and costs relating to expense management measures totaling $2.0 million, or $0.04 per diluted share.
Loans receivable increased $68.8 million, or 1.6%, during the fourth quarter of 2023.
Declared a regular cash dividend of $0.23 per share on January 24, 2024, an increase of 4.5% from the $0.22 regular cash dividend per share declared in the fourth quarter of 2023.
Heritage Financial
Heritage Financial
Forward Guidance
Heritage Financial anticipates enhanced earnings in future periods due to actions taken in Q4, coupled with a strong balance sheet, which will provide sustainable long-term returns for shareholders.
Positive Outlook
- Strong loan growth
- Expense management measures
- Repositioning of investment portfolio
- Strategic repositioning of its investment portfolio is expected to improve annualized interest income by an estimated $5.3 million.
- Annualized cost savings of approximately $5.3 million are expected in future periods due to expense management measures, including contract renewals, cancellations, and severance payments.
Challenges Ahead
- Costs related to expense management activities are impacting current earnings.
- The company incurred a pre-tax loss of $10.0 million on the sale of investment securities due to the strategic repositioning of its investment portfolio.
- Card revenue decreased due to annual incentives recognized in the third quarter of 2023 as well as general declines in income due to lower transaction account volume.
- Other income decreased due to a $610,000 gain on sale of the Ellensburg branch which was recognized in the third quarter of 2023.
- Total deposits decreased $35.3 million, or 0.6%, to $5.60 billion at December 31, 2023 from $5.64 billion at September 30, 2023.