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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
Date of Report (Dated of earliest event reported): October 24, 2024
HERITAGE FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter) 
 
Commission File Number 000-29480
Washington 91-1857900
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
201 Fifth Avenue SW,OlympiaWA 98501
(Address of principal executive offices) (Zip Code)
(360) 943-1500
(Registrant’s telephone number, including area code) 

Not applicable
(Former name or former address, if changed since last report) 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12 (b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common stock, no par valueHFWAThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1934 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02    Results of Operations and Financial Condition
On October 24, 2024, Heritage Financial Corporation (“Heritage”) issued a press release announcing its third quarter 2024 financial results.
A copy of the release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The information furnished pursuant to this Item and the related exhibit is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by Heritage for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Item 7.01    Regulation FD Disclosure
Heritage is filing an investor presentation that it reviewed in conjunction with its earnings release conference call on October 24, 2024.
A copy of the presentation materials is attached hereto as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference. The information furnished pursuant to this Item and the related exhibit is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by Heritage for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Item 8.01    Other Events
On October 24, 2024, Heritage issued a press release announcing a regular quarterly cash dividend of $0.23 per common share. The dividend will be paid on November 20, 2024 to shareholders of record at the close of business on November 6, 2024.
A copy of the release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01     Financial Statements and Exhibits
(d) Exhibits
Exhibit 99.1 
Exhibit 99.2
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
HERITAGE FINANCIAL CORPORATION
Date:
October 24, 2024
/S/ JEFFREY J. DEUEL
Jeffrey J. Deuel
Chief Executive Officer
(Duly Authorized Officer)



hfwarevisedlogoa01a02a.jpg
FOR IMMEDIATE RELEASE
DATE: October 24, 2024

HERITAGE FINANCIAL ANNOUNCES THIRD QUARTER 2024 RESULTS AND DECLARES REGULAR CASH DIVIDEND OF $0.23 PER SHARE

Third Quarter 2024 Highlights
•Net income was $11.4 million, or $0.33 per diluted share, compared to $14.2 million, or $0.41 per diluted share, for the second quarter of 2024.
•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.
•Loans receivable increased $146.9 million, or 3.2% (12.9% annualized).
•Deposits increased $192.8 million, or 3.5% (13.9% annualized).
•Non-interest bearing deposits increased $82.9 million, or 5.2% (20.6% annualized).
•Net interest margin was 3.33%, compared to 3.29% for the second quarter of 2024.
•Cost of total deposits was 1.42%, compared to 1.34% for the second quarter of 2024.
•Noninterest expense to average total assets was 2.18%, compared to 2.21% for the second quarter of 2024.
•Declared a regular cash dividend of $0.23 per share on October 23, 2024.

Olympia, WA - Heritage Financial Corporation (Nasdaq GS: HFWA) (the “Company", ”we," or "us"), the parent company of Heritage Bank (the "Bank"), today reported net income of $11.4 million for the third quarter of 2024 compared to $14.2 million for the second quarter of 2024 and $18.2 million for the third quarter of 2023. Diluted earnings per share for the third quarter of 2024 were $0.33 compared to $0.41 for the second quarter of 2024 and $0.51 for the third quarter of 2023.
In the third quarter of 2024, the Company incurred a pre-tax loss of $6.9 million on the sale of investment securities due to the strategic repositioning of its balance sheet, which decreased diluted earnings per share by $0.16 for the quarter. The Company sold $78.0 million of investment securities with an estimated weighted average book yield of 1.88%. Proceeds were used to fund higher yielding loan growth for the quarter.
Jeff Deuel, Chief Executive Officer of the Company, commented, "We are very pleased with our operating results for the third quarter, which included strong loan and deposit growth, margin expansion, and continued benefits from expense management measures. The increases 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. Although we experienced a charge-off during the quarter related to an owner-occupied commercial real estate loan previously downgraded to Substandard, we believe our overall credit quality remains very strong. We are optimistic that the combination of core balance sheet growth and prudent risk management will continue to benefit our core profitability."
1

Financial Highlights
The following table provides financial highlights at the dates and for the periods indicated:
As of or for the Quarter Ended
September 30,
2024		June 30,
2024		September 30,
2023
(Dollars in thousands, except per share amounts)
Net income$11,423 $14,159 $18,219 
Pre-tax, pre-provision income(1)
$15,505 $17,263 $20,919 
Diluted earnings per share$0.33 $0.41 $0.51 
Return on average assets(2)
0.63 %0.80 %1.00 %
Pre-tax, pre-provision return on average assets(1)(2)
0.86 %0.98 %1.15 %
Return on average common equity(2)
5.30 %6.75 %8.80 %
Return on average tangible common equity(1)(2)
7.62 %9.74 %12.90 %
Adjusted return on average tangible common equity(1)(2)
10.42 %10.74 %13.62 %
Net interest margin(2)
3.33 %3.29 %3.47 %
Cost of total deposits(2)
1.42 %1.34 %0.83 %
Efficiency ratio71.7 %69.4 %66.2 %
Adjusted efficiency ratio(1)
65.2 %67.1 %64.8 %
Noninterest expense to average total assets(2)
2.18 %2.21 %2.25 %
Total assets$7,153,363 $7,059,857 $7,150,588 
Loans receivable, net$4,628,088 $4,481,396 $4,219,911 
Total deposits$5,708,492 $5,515,652 $5,635,187 
Loan to deposit ratio(3)
82.0 %82.2 %75.7 %
Book value per share$25.61 $24.66 $23.31 
Tangible book value per share(1)
$18.45 $17.56 $16.25 
(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 increased $61.8 million, or 54.3%, to $175.6 million at September 30, 2024 from $113.8 million at June 30, 2024 primarily due to an increase in deposits.
Total investment securities decreased $86.4 million, or 5.2%, to $1.57 billion at September 30, 2024 from $1.66 billion at June 30, 2024. As previously noted, the Company sold $78.0 million of investment securities at a pre-tax loss of $6.9 million as part of its strategic balance sheet repositioning. In addition, there were investment maturities and repayments of $43.3 million during the third quarter of 2024. These impacts were offset partially by a $34.7 million decrease 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:
 September 30, 2024June 30, 2024Change
 Balance% of
Total		Balance% of
Total		$%
 (Dollars in thousands)
Investment securities available for sale, at fair value:
U.S. government and agency securities$13,054 0.8 %$12,474 0.8 %$580 4.6 %
Municipal securities61,263 3.9 69,720 4.2 (8,457)(12.1)
Residential CMO and MBS(1)
427,048 27.2 446,468 26.9 (19,420)(4.3)
Commercial CMO and MBS(1)
328,861 20.9 378,768 22.8 (49,907)(13.2)
Corporate obligations11,706 0.7 11,384 0.7 322 2.8 
Other asset-backed securities10,847 0.7 12,434 0.7 (1,587)(12.8)
Total$852,779 54.2 %$931,248 56.1 %$(78,469)(8.4)%
2

 September 30, 2024June 30, 2024Change
 Balance% of
Total		Balance% of
Total		$%
 (Dollars in thousands)
Investment securities held to maturity, at amortized cost:
U.S. government and agency securities$151,181 9.6 %$151,146 9.1 %$35 — %
Residential CMO and MBS(1)
249,589 15.9 256,742 15.5 (7,153)(2.8)
Commercial CMO and MBS(1)
318,630 20.3 319,454 19.3 (824)(0.3)
Total$719,400 45.8 %$727,342 43.9 %$(7,942)(1.1)%
Total investment securities$1,572,179 100.0 %$1,658,590 100.0 %$(86,411)(5.2)%
    (1) U.S. government agency and government-sponsored enterprise CMO and MBS

Loans receivable increased $146.9 million, or 3.2%, to $4.68 billion at September 30, 2024 from $4.53 billion at June 30, 2024. New loans funded in the third quarter and second quarter of 2024 totaled $176.9 million and $166.7 million, respectively. Loan prepayments decreased slightly during the third quarter of 2024 to $44.8 million, compared to $48.5 million during the prior quarter.
Commercial and industrial loans increased $44.6 million, or 5.7%, due primarily to new loan production of $76.0 million during the quarter, offset by pay downs on outstanding balances. Owner-occupied commercial real estate ("CRE") loans increased $33.6 million, or 3.5%, due primarily to new loan production of $41.8 million during the third quarter of 2024 offset partially by pay downs on outstanding balances. Non-owner occupied CRE loans increased $76.0 million, or 4.3%, due primarily to new loan production of $44.2 million during the third quarter of 2024 and advances on outstanding commitments.
The following table summarizes the Company's loans receivable, net at the dates indicated:
September 30, 2024June 30, 2024Change
Balance% of TotalBalance% of Total$%
(Dollars in thousands)
Commercial business:
Commercial and industrial$824,134 17.6 %$779,495 17.2 %$44,639 5.7 %
Owner-occupied CRE
987,084 21.1 953,518 21.0 33,566 3.5 
Non-owner occupied CRE1,835,609 39.3 1,759,605 38.8 76,004 4.3 
Total commercial business3,646,827 78.0 3,492,618 77.0 154,209 4.4 
Residential real estate
408,982 8.7 413,358 9.1 (4,376)(1.1)
Real estate construction and land development:
Residential
79,325 1.7 80,451 1.8 (1,126)(1.4)
Commercial and multifamily
378,322 8.1 378,695 8.4 (373)(0.1)
Total real estate construction and land development457,647 9.8 459,146 10.2 (1,499)(0.3)
Consumer166,023 3.5 167,493 3.7 (1,470)(0.9)
Loans receivable4,679,479 100.0 %4,532,615 100.0 %146,864 3.2 
Allowance for credit losses on loans(51,391)(51,219)(172)0.3 
Loans receivable, net$4,628,088 $4,481,396 $146,692 3.3 %

Total deposits increased $192.8 million, or 3.5%, to $5.71 billion at September 30, 2024 from $5.52 billion at June 30, 2024. Noninterest bearing demand deposits increased by $82.9 million, or 5.2%, due to new accounts of $30.0 million and an increase in existing deposit balances primarily to business customers. Money market accounts increased $49.9 million primarily due to new accounts of $47.3 million opened during the quarter. Certificates of deposit increased $62.3 million, or 7.1%, to $945.6 million at September 30, 2024 from $883.2 million at June 30, 2024, primarily due to new accounts opened during the quarter. Brokered deposits declined by $10 million.
3

The following table summarizes the Company's total deposits at the dates indicated:
September 30, 2024June 30, 2024Change
Balance
% of TotalBalance% of Total$%
(Dollars in thousands)
Noninterest demand deposits$1,682,219 29.5 %$1,599,367 29.0 %$82,852 5.2 %
Interest bearing demand deposits1,489,316 26.1 1,487,670 27.0 1,646 0.1 
Money market accounts1,148,720 20.1 1,098,821 19.9 49,899 4.5 
Savings accounts442,677 7.8 446,583 8.1 (3,906)(0.9)
Total non-maturity deposits4,762,932 83.5 4,632,441 84.0 130,491 2.8 
Certificates of deposit945,560 16.5 883,211 16.0 62,349 7.1 
Total deposits$5,708,492 100.0 %$5,515,652 100.0 %$192,840 3.5 %
Total borrowings decreased $118.0 million to $382.0 million at September 30, 2024 from $500.0 million at June 30, 2024 due to pay downs during the quarter. All outstanding borrowings mature within one year.
Total stockholders' equity increased $24.0 million, or 2.8%, to $874.5 million at September 30, 2024 compared to $850.5 million at June 30, 2024 due primarily to a $27.0 million decrease in other comprehensive loss as a result of changes in market rates and $11.4 million of net income recognized for the quarter, partially offset by $8.0 million in dividends paid to common shareholders and $7.5 million in common stock repurchases.
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 September 30, 2024.
The following table summarizes the capital ratios for the Company at the dates indicated:
September 30,
2024		June 30,
2024
Stockholders' equity to total assets12.2%12.0%
Tangible common equity to tangible assets (1)
9.18.9
Common equity tier 1 capital ratio (2)
12.312.6
Leverage ratio (2)
9.910.1
Tier 1 capital ratio (2)
12.713.0
Total capital ratio (2)
13.613.9
(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 1.10% at September 30, 2024 compared to 1.13% at June 30, 2024. During the third quarter of 2024, the Company recorded a $2.7 million provision for credit losses on loans, compared to a $1.5 million provision for credit losses on loans during the second quarter of 2024. The company recorded net charge-offs of $2.5 million during the quarter primarily from one owner-occupied CRE loan that was added to nonaccrual loans during the quarter. This loan was rated Substandard at the time of the charge-off and has been managed by our Special Assets Departments since December 2022.
During the third quarter of 2024, the Company recorded a $266,000 reversal of provision for credit losses on unfunded commitments compared to a $202,000 reversal of provision for credit losses on unfunded commitments during the second quarter of 2024. The reversal of provision for credit losses on unfunded commitments during the third quarter of 2024 was due primarily to a decrease in the unfunded exposure on construction 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
September 30, 2024June 30, 2024September 30, 2023
ACL on LoansACL on UnfundedTotalACL on LoansACL on UnfundedTotalACL on LoansACL on UnfundedTotal
(Dollars in thousands)
Balance, beginning of period$51,219 $774 $51,993 $49,736 $976 $50,712 $46,408 $1,777 $48,185 
Provision for (reversal of) credit losses2,705 (266)2,439 1,470 (202)1,268 (635)(243)(878)
4

As of or for the Quarter Ended
September 30, 2024June 30, 2024September 30, 2023
ACL on LoansACL on UnfundedTotalACL on LoansACL on UnfundedTotalACL on LoansACL on UnfundedTotal
(Dollars in thousands)
Net recoveries (net charge-offs)(2,533)— (2,533)13 — — 13 1,174 — 1,174 
Balance, end of period$51,391 $508 $51,899 $51,219 $774 $51,993 $46,947 $1,534 $48,481 

Credit Quality
The percentage of classified loans to loans receivable decreased to 1.5% at September 30, 2024, compared to 1.8% at June 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 $5.4 million to $99.1 million at September 30, 2024, compared to $93.7 million at June 30, 2024.
The following table illustrates total loans by risk rating and their respective percentage of total loans at the dates indicated:
September 30, 2024June 30, 2024
Balance% of TotalBalance% of Total
(Dollars in thousands)
Risk Rating:
Pass$4,508,424 96.4 %$4,356,425 96.1 %
Special Mention99,078 2.1 93,694 2.1 
Substandard71,977 1.5 82,496 1.8 
Total$4,679,479 100.0 %$4,532,615 100.0 %
Nonaccrual loans to loans receivable were 0.09% and 0.08% at September 30, 2024 and June 30, 2024, respectively. The increase in nonaccrual loans was primarily due to the addition of one owner-occupied CRE loan moving to nonaccrual, a portion of which was charged-off during the quarter. This increase was partially offset by the payoff of two commercial and industrial loans. Changes in nonaccrual loans during the periods indicated were as follows:
Quarter Ended
September 30,
2024		June 30,
2024		September 30,
2023
(Dollars in thousands)
Balance, beginning of period$3,826 $4,792 $4,630 
Additions4,990 549 440 
Net principal payments and transfers to accruing status(173)(483)(81)
Payoffs(1,832)(769)(1,924)
Charge-offs(2,510)(263)— 
Balance, end of period$4,301 $3,826 $3,065 

Liquidity
Total liquidity sources available at September 30, 2024 were $2.52 billion. This includes on- and off-balance sheet liquidity. The Company has access to Federal Home Loan Bank ("FHLB") advances and the Federal Reserve Bank ("FRB") Discount Window. The Company's available liquidity sources at September 30, 2024 represented a coverage ratio of 44.2% of total deposits and 112.6% of estimated uninsured deposits.
5

The following table summarizes the Company's available liquidity:
Quarter Ended
September 30,
2024		June 30,
2024
(Dollars in thousands)
On-balance sheet liquidity
Cash and cash equivalents$175,572 $113,757 
Unencumbered investment securities available for sale (1)
848,224 926,822 
Total on-balance sheet liquidity
$1,023,796 $1,040,579 
Off-balance sheet liquidity
FRB borrowing availability$287,739 $278,632 
FHLB borrowing availability (2)
1,068,085 943,492 
Fed funds line borrowing availability with correspondent banks145,000 145,000 
Total off-balance sheet liquidity
$1,500,824 $1,367,124 
Total available liquidity$2,524,620 $2,407,703 
(1) Investment securities available for sale at fair value.
(2) Includes FHLB total borrowing availability of $1.35 billion at September 30, 2024 based on pledged assets, however, maximum credit capacity is 45% of the Bank's total assets one quarter in arrears or $3.17 billion.

Net Interest Income and Net Interest Margin
Net interest income increased $1.8 million, or 3.6%, during the third quarter of 2024 compared to the second quarter of 2024, due primarily to a $3.2 million increase in interest income offset partially by a $1.4 million increase in interest expense. Net interest margin increased four basis points to 3.33% during the third quarter of 2024 from 3.29% during the second quarter of 2024.
The yield on interest earning assets increased 9 basis points to 5.02% for the third quarter of 2024, compared to 4.93% for the second quarter of 2024. The yield on loans receivable, net, increased 8 basis points to 5.60% during the third quarter of 2024 compared to 5.52% during the second quarter of 2024 due primarily to higher rates on new and renewed loans.
The cost of interest bearing deposits increased 13 basis points to 2.02% for the third quarter of 2024 from 1.89% for the second quarter of 2024. This increase was primarily due to an increase in deposit rates during the quarter and an increase in certificate of deposit average balances of $68.5 million which carry higher rates than other interest bearing deposits.
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. 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
 September 30, 2024June 30, 2024September 30, 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)
$4,555,090 $64,138 5.60 %$4,415,790 $60,608 5.52 %$4,201,554 $56,119 5.30 %
Taxable securities1,604,529 13,472 3.34 1,685,795 14,156 3.38 1,931,649 14,590 3.00 
Nontaxable securities (3)
17,482 159 3.62 18,812 165 3.53 60,654 448 2.93 
Interest earning deposits150,384 2,048 5.42 121,539 1,653 5.47 169,186 2,310 5.42 
Total interest earning assets6,327,485 79,817 5.02 %6,241,936 76,582 4.93 %6,363,043 73,467 4.58 %
Noninterest earning assets855,436 864,855 849,689 
Total assets$7,182,921 $7,106,791 $7,212,732 
Interest Bearing Liabilities:
Certificates of deposit$906,743 $10,052 4.41 %$838,285 $9,128 4.38 %$553,015 $4,585 3.29 %
Savings accounts445,926 220 0.20 453,099 190 0.17 523,882 172 0.13 
Interest bearing demand and money market accounts2,644,827 9,984 1.50 2,625,593 9,135 1.40 2,764,251 7,120 1.02 
Total interest bearing deposits3,997,496 20,256 2.02 3,916,977 18,453 1.89 3,841,148 11,877 1.23 
6

 Quarter Ended
 September 30, 2024June 30, 2024September 30, 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)
Junior subordinated debentures21,946 541 9.81 21,874 539 9.91 21,649 540 9.90 
Securities sold under agreement to repurchase— — — — — — 31,729 38 0.48 
Borrowings452,364 6,062 5.33 500,230 6,477 5.21 451,032 5,394 4.74 
Total interest bearing liabilities4,471,806 26,859 2.39 %4,439,081 25,469 2.31 %4,345,558 17,849 1.63 %
Noninterest demand deposits1,677,984 1,638,262 1,859,374 
Other noninterest bearing liabilities175,332 186,010 186,306 
Stockholders’ equity857,799 843,438 821,494 
Total liabilities and stockholders’ equity$7,182,921 $7,106,791 $7,212,732 
Net interest income and spread$52,958 2.63 %$51,113 2.62 %$55,618 2.95 %
Net interest margin3.33 %3.29 %3.47 %
(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 $938,000, $971,000 and $940,000 for the third quarter of 2024, second quarter of 2024 and third 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 decreased $3.4 million to $1.8 million during the third quarter of 2024 from $5.2 million during the second quarter of 2024. The decrease was due primarily to the increase in loss resulting from the above-referenced sale of investment securities recognized in the third quarter of 2024 as part of the strategic repositioning of the balance sheet, compared to the prior quarter. The decrease was partially offset by an increase 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 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, offset partially by the gain on sale of other assets, net as discussed previously.
The following table presents the key components of noninterest income and the change for the periods indicated:
Quarter EndedQuarter Over Quarter Change
Prior Year
Quarter Change
September 30,
2024		June 30,
2024		September 30,
2023		$% $%
(Dollars in thousands)
Service charges and other fees$2,788 $2,817 $2,856 $(29)(1.0)%$(68)(2.4)%
Card revenue2,134 1,930 2,273 204 10.6 (139)(6.1)
Loss on sale of investment securities(6,945)(1,921)(1,940)(5,024)261.5 (5,005)258.0 
Gain on sale of loans, net— — 157 — — (157)(100.0)
Interest rate swap fees— 52 62 (52)(100.0)(62)(100.0)
Bank owned life insurance income860 931 734 (71)(7.6)126 17.2 
Gain on sale of other assets, net1,480 49 — 1,431 2,920.4 1,480 100.0 
Other income1,520 1,388 2,129 132 9.5 (609)(28.6)
Total noninterest income
$1,837 $5,246 $6,271 $(3,409)(65.0)%$(4,434)(70.7)%

Noninterest Expense
Noninterest expense increased $0.2 million, or 0.5%, during the third quarter of 2024 from the second quarter of 2024. Data processing expense increased during the quarter due primarily to timing of expenses and annual rate increases; however, data processing expense continued to be lower than the same period in 2023. Professional services expense decreased compared to the prior quarter, primarily due to timing of services performed.

7

Noninterest expense decreased $1.7 million, or 4.1%, during the third quarter of 2024 compared to the same period in 2023. Compensation and employee benefits expense decreased due to a reduction in full-time equivalent employees to 749 at September 30, 2024 from 821 at September 30, 2023. Data processing expense decreased primarily due to a decline in ongoing costs resulting from prior technology-related contract renewals and terminations. Marketing expense decreased due to expense management efforts to reduce spending. Other expense decreased due to a decrease in customer account loss expense and a reduction in employee related expense.
The following table presents the key components of noninterest expense and the change for the periods indicated:
Quarter EndedQuarter Over Quarter ChangePrior Year Quarter Change
September 30,
2024		June 30,
2024		September 30,
2023		$%$%
(Dollars in thousands)
Compensation and employee benefits$24,367 $24,448 $25,008 $(81)(0.3)%$(641)(2.6)%
Occupancy and equipment4,850 4,765 4,814 85 1.8 36 0.7 
Data processing3,915 3,535 4,116 380 10.7 (201)(4.9)
Marketing128 244 389 (116)(47.5)(261)(67.1)
Professional services490 795 582 (305)(38.4)(92)(15.8)
State/municipal business and use taxes
1,249 1,160 1,088 89 7.7 161 14.8 
Federal deposit insurance premium824 812 818 12 1.5 6 0.7 
Amortization of intangible assets399 421 595 (22)(5.2)(196)(32.9)
Other expense3,068 2,916 3,560 152 5.2 (492)(13.8)
Total noninterest expense$39,290 $39,096 $40,970 $194 0.5 %$(1,680)(4.1)%

Income Tax Expense
Income tax expense decreased $193,000 during the third quarter of 2024 to $1.6 million compared to $1.8 million for the second quarter of 2024. The decrease in income tax expense during the current quarter compared to the prior quarter was primarily due to a decrease in pre-tax income during the third quarter of 2024.
Income tax expense decreased during the third quarter of 2024 compared to same period in 2023 due to lower pre-tax income 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.
The following table presents the income tax expense and related metrics and the change for the periods indicated:
Quarter EndedChange
September 30,
2024		June 30,
2024		September 30,
2023
Quarter Over Quarter
Prior Year Quarter
(Dollars in thousands)
Income before income taxes$13,066 $15,995 $21,797 $(2,929)$(8,731)
Income tax expense$1,643 $1,836 $3,578 $(193)$(1,935)
Effective income tax rate12.6 %11.5 %16.4 %1.1 %(3.8)%

Dividends
On October 23, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.23 per share. The dividend is payable on November 20, 2024 to shareholders of record as of the close of business on November 6, 2024.

Earnings Conference Call
The Company will hold a telephone conference call to discuss this earnings release on Thursday, October 24, 2024 at 10:00 a.m. Pacific time. To access the call, please dial (833) 470-1428 -- access code 493684 a few minutes prior to 10:00 a.m. Pacific time. The call will be available for replay through October 31, 2024 by dialing (866) 813-9403 -- access code 423520.




8

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.
Contact
Jeff Deuel, Chief Executive Officer, (360) 943-1500
Don Hinson, Executive Vice President and Chief Financial Officer, (360) 943-1500

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, labor shortages and the effects of inflation, 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; 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; legislative or regulatory changes that adversely affect our business, including changes in banking, securities, and tax law, regulatory policies and principles, or the interpretation of regulatory capital or other rules, including as a result of the upcoming 2024 presidential election; 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 and industry) within our loan portfolio; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions for our business, including as a result of 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 financial technology companies; effects of critical accounting policies and judgments, including the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; the commencement 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; 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.heritagebanknw.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.
9

HERITAGE FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(Dollars in thousands, except shares)
September 30,
2024		June 30,
2024		December 31,
2023
Assets
Cash on hand and in banks$78,068 $55,469 $55,851 
Interest earning deposits 97,504 58,288 169,122 
Cash and cash equivalents175,572 113,757 224,973 
Investment securities available for sale, at fair value (amortized cost of $909,023, $1,022,211 and $1,227,787, respectively)
852,779 931,248 1,134,353 
Investment securities held to maturity, at amortized cost (fair value of $661,696, $642,051 and $662,450, respectively)
719,400 727,342 739,442 
Total investment securities1,572,179 1,658,590 1,873,795 
Loans receivable4,679,479 4,532,615 4,335,627 
Allowance for credit losses on loans(51,391)(51,219)(47,999)
Loans receivable, net4,628,088 4,481,396 4,287,628 
Premises and equipment, net72,500 73,218 74,899 
Federal Home Loan Bank stock, at cost16,993 22,303 4,186 
Bank owned life insurance127,248 126,420 125,655 
Accrued interest receivable20,102 19,855 19,518 
Prepaid expenses and other assets296,190 319,428 318,571 
Other intangible assets, net3,552 3,951 4,793 
Goodwill 240,939 240,939 240,939 
Total assets$7,153,363 $7,059,857 $7,174,957 
Liabilities and Stockholders' Equity
Non-interest bearing deposits
$1,682,219 $1,599,367 $1,715,847 
Interest bearing deposits
4,026,273 3,916,285 3,884,025 
Total deposits5,708,492 5,515,652 5,599,872 
Borrowings382,000 500,000 500,000 
Junior subordinated debentures21,985 21,912 21,765 
Accrued expenses and other liabilities166,372 171,786 200,059 
Total liabilities6,278,849 6,209,350 6,321,696 
Common stock534,917 541,294 549,748 
Retained earnings383,127 379,714 375,989 
Accumulated other comprehensive loss, net(43,530)(70,501)(72,476)
Total stockholders' equity874,514 850,507 853,261 
Total liabilities and stockholders' equity$7,153,363 $7,059,857 $7,174,957 
Shares outstanding34,153,539 34,496,197 34,906,233 

10

HERITAGE FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share amounts)
Quarter EndedNine Months Ended
September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Interest Income
Interest and fees on loans$64,138 $60,608 $56,119 $182,608 $160,192 
Taxable interest on investment securities13,472 14,156 14,590 42,462 44,021 
Nontaxable interest on investment securities159 165 448 505 1,554 
Interest on interest earning deposits2,048 1,653 2,310 5,177 4,436 
Total interest income79,817 76,582 73,467 230,752 210,203 
Interest Expense
Deposits20,256 18,453 11,877 55,097 25,012 
Junior subordinated debentures541 539 540 1,627 1,521 
Securities sold under agreement to repurchase— — 38 — 148 
Borrowings6,062 6,477 5,394 18,427 12,238 
Total interest expense26,859 25,469 17,849 75,151 38,919 
Net interest income52,958 51,113 55,618 155,601 171,284 
Provision for (reversal of) credit losses2,439 1,268 (878)5,099 2,856 
Net interest income after provision for (reversal of) credit losses50,519 49,845 56,496 150,502 168,428 
Noninterest Income
Service charges and other fees2,788 2,817 2,856 8,393 8,162 
Card revenue2,134 1,930 2,273 5,903 6,396 
Loss on sale of investment securities, net(6,945)(1,921)(1,940)(18,839)(2,226)
Gain on sale of loans, net— — 157 26 307 
Interest rate swap fees— 52 62 52 230 
Bank owned life insurance income860 931 734 2,711 2,280 
Gain on sale of other assets, net1,480 49 — 1,529 2 
Other income1,520 1,388 2,129 4,408 6,659 
Total noninterest income1,837 5,246 6,271 4,183 21,810 
Noninterest Expense
Compensation and employee benefits24,367 24,448 25,008 74,291 75,325 
Occupancy and equipment4,850 4,765 4,814 14,547 14,372 
Data processing3,915 3,535 4,116 10,732 12,427 
Marketing128 244 389 583 1,232 
Professional services490 795 582 1,852 1,961 
State/municipal business and use taxes1,249 1,160 1,088 3,709 3,150 
Federal deposit insurance premium824 812 818 2,431 2,465 
Amortization of intangible assets399 421 595 1,241 1,841 
Other expense3,068 2,916 3,560 9,370 11,127 
Total noninterest expense39,290 39,096 40,970 118,756 123,900 
Income before income taxes13,066 15,995 21,797 35,929 66,338 
Income tax expense1,643 1,836 3,578 4,599 10,816 
Net income$11,423 $14,159 $18,219 $31,330 $55,522 
11

Quarter EndedNine Months Ended
September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Basic earnings per share$0.33 $0.41 $0.52 $0.91 $1.58 
Diluted earnings per share$0.33 $0.41 $0.51 $0.90 $1.57 
Dividends declared per share$0.23 $0.23 $0.22 $0.69 $0.66 
Average shares outstanding - basic34,322,06934,609,90035,022,67634,584,85135,062,760
Average shares outstanding - diluted34,658,67434,919,39535,115,16535,002,37535,305,456
12

HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS (Unaudited)
(Dollars in thousands)
Average Balances, Yields, and Rates Paid:
Nine Months Ended September 30,
20242023
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)
$4,425,234 $182,608 5.51 %$4,129,429 $160,192 5.19 %
Taxable securities1,699,995 42,462 3.34 1,975,818 44,021 2.98 
Nontaxable securities(3)
19,193 505 3.51 71,702 1,554 2.90 
Interest earning deposits126,970 5,177 5.45 114,753 4,436 5.17 
Total interest earning assets6,271,392 230,752 4.91 %6,291,702 210,203 4.47 %
Noninterest earning assets856,198 848,035 
Total assets$7,127,590 $7,139,737 
Interest Bearing Liabilities:
Certificates of deposit$826,575 $26,852 4.34 %$442,301 $8,292 2.51 %
Savings accounts457,989 640 0.19 558,467 471 0.11 
Interest bearing demand and money market accounts2,643,478 27,605 1.39 2,791,695 16,249 0.78 
Total interest bearing deposits3,928,042 55,097 1.87 3,792,463 25,012 0.88 
Junior subordinated debentures21,874 1,627 9.94 21,576 1,521 9.43 
Securities sold under agreement to repurchase— — — 38,187 148 0.52 
Borrowings484,300 18,427 5.08 339,296 12,238 4.82 
Total interest bearing liabilities4,434,216 75,151 2.26 %4,191,522 38,919 1.24 %
Noninterest demand deposits1,657,867 1,942,134 
Other noninterest bearing liabilities186,081 186,469 
Stockholders’ equity849,426 819,612 
Total liabilities and stockholders’ equity$7,127,590 $7,139,737 
Net interest income and spread$155,601 2.65 %$171,284 3.23 %
Net interest margin3.31 %3.64 %
(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 $2.7 million and $2.4 million for the nine months ended September 30, 2024 and 2023, respectively.
(3) Yields on tax-exempt loans and securities have not been stated on a tax-equivalent basis.
13

HERITAGE FINANCIAL CORPORATION
FINANCIAL STATISTICS (Unaudited)
(Dollars in thousands)
Nonperforming Assets and Credit Quality Metrics:
Quarter EndedNine Months Ended
September 30,
2024		June 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Allowance for Credit Losses on Loans:
Balance, beginning of period$51,219 $49,736 $46,408 $47,999 $42,986 
Provision for credit losses on loans
2,705 1,470 (635)5,879 3,066 
Charge-offs:
Commercial business(2,560)(312)(15)(2,949)(176)
Consumer(85)(238)(123)(446)(420)
Total charge-offs(2,645)(550)(138)(3,395)(596)
Recoveries:
Commercial business72 518 1,253 807 1,342 
Consumer40 45 59 101 149 
Total recoveries112 563 1,312 908 1,491 
Net recoveries (charge-offs)(2,533)13 1,174 (2,487)895 
Balance, end of period$51,391 $51,219 $46,947 $51,391 $46,947 
Net charge-offs (recoveries) on loans to average loans receivable, net annualized
0.22 %— %(0.11)%0.08 %(0.03)%


September 30,
2024		June 30,
2024		December 31,
2023
Nonperforming Assets:
Nonaccrual loans:
Commercial business$4,301 $3,826 $4,468 
Total nonaccrual loans4,301 3,826 4,468 
Accruing loans past due 90 days or more
5,347 4,296 1,293 
Total nonperforming loans
9,648 8,122 5,761 
Other real estate owned— — — 
Nonperforming assets$9,648 $8,122 $5,761 
ACL on loans to:
Loans receivable1.10 %1.13 %1.11 %
Nonaccrual loans1,194.86 %1,338.71 %1,074.28 %
Nonaccrual loans to loans receivable
0.09 %0.08 %0.10 %
Nonperforming loans to loans receivable
0.21 %0.18 %0.13 %
Nonperforming assets to total assets0.13 %0.12 %0.08 %

14

HERITAGE FINANCIAL CORPORATION
QUARTERLY FINANCIAL STATISTICS (Unaudited)
(Dollars in thousands, except per share amounts)
 Quarter Ended
 September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023		September 30,
2023
Earnings:    
Net interest income$52,958 $51,113 $51,530 $53,871 $55,618 
Provision for (reversal of) credit losses2,439 1,268 1,392 1,424 (878)
Noninterest income (loss)
1,837 5,246 (2,900)(3,147)6,271 
Noninterest expense39,290 39,096 40,370 42,723 40,970 
Net income11,423 14,159 5,748 6,233 18,219 
Pre-tax, pre-provision net income (1)
15,505 17,263 8,260 8,001 20,919 
Basic earnings per share$0.33 $0.41 $0.17 $0.18 $0.52 
Diluted earnings per share$0.33 $0.41 $0.16 $0.18 $0.51 
Average Balances:  
Loans receivable, net (2)
$4,555,090 $4,415,790 $4,303,394 $4,233,743 $4,201,554 
Total investment securities1,622,011 1,704,607 1,832,011 1,861,587 1,992,303 
Total interest earning assets6,327,485 6,241,936 6,244,138 6,269,805 6,363,043 
Total assets7,182,921 7,106,791 7,092,452 7,140,876 7,212,732 
Total interest bearing deposits3,997,496 3,916,977 3,868,890 3,849,067 3,841,148 
Total noninterest demand deposits1,677,984 1,638,262 1,657,132 1,772,261 1,859,374 
Stockholders' equity857,799 843,438 846,947 813,383 821,494 
Financial Ratios:  
Return on average assets (3)
0.63 %0.80 %0.33 %0.35 %1.00 %
Pre-tax, pre-provision return on average assets (1)(3)
0.86 0.98 0.47 0.44 1.15 
Return on average common equity (3)
5.30 6.75 2.73 3.04 8.80 
Return on average tangible common equity (1)(3)
7.62 9.74 4.07 4.69 12.90 
Adjusted return on average tangible common equity (1)(3)
10.42 10.74 9.34 10.21 13.62 
Efficiency ratio71.7 69.4 83.0 84.2 66.2 
Adjusted efficiency ratio (1)
65.2 67.1 68.9 70.4 64.8 
Noninterest expense to average total assets (3)
2.18 2.21 2.29 2.37 2.25 
Net interest spread (3)
2.63 2.62 2.70 2.84 2.95 
Net interest margin (3)
3.33 3.29 3.32 3.41 3.47 
(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.










15

HERITAGE FINANCIAL CORPORATION
QUARTERLY FINANCIAL STATISTICS (Unaudited)
(Dollars in thousands, except per share amounts)
 As of or for the Quarter Ended
 September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023		September 30,
2023
Select Balance Sheet:   
Total assets$7,153,363 $7,059,857 $7,091,283 $7,174,957 $7,150,588 
Loans receivable, net4,628,088 4,481,396 4,378,429 4,287,628 4,219,911 
Total investment securities1,572,179 1,658,590 1,730,516 1,873,795 1,894,392 
Total deposits5,708,492 5,515,652 5,532,327 5,599,872 5,635,187 
Noninterest demand deposits1,682,219 1,599,367 1,637,111 1,715,847 1,789,293 
Stockholders' equity874,514 850,507 847,580 853,261 813,546 
Financial Measures: 
Book value per share$25.61 $24.66 $24.43 $24.44 $23.31 
Tangible book value per share (1)
18.45 17.56 17.36 17.40 16.25 
Stockholders' equity to total assets12.2 %12.0 %12.0 %11.9 %11.4 %
Tangible common equity to tangible assets (1)
9.1 8.9 8.8 8.8 8.2 
Loans to deposits ratio82.0 82.2 80.0 77.4 75.7 
Regulatory Capital Ratios:(2)
Common equity tier 1 capital ratio
12.3 %12.6 %12.6 %12.9 %12.9 %
Leverage ratio
9.9 10.1 10.0 10.0 9.9 
Tier 1 capital ratio
12.7 13.0 13.0 13.3 13.3 
Total capital ratio
13.6 13.9 13.9 14.1 14.1 
Credit Quality Metrics: 
ACL on loans to:
Loans receivable1.10 %1.13 %1.12 %1.11 %1.10 %
Nonperforming loans1,194.9 1,338.7 1,037.9 1,074.3 1,531.7 
Nonaccrual loans to loans receivable
0.09 0.08 0.11 0.10 0.07 
Nonperforming loans to loans receivable0.21 0.18 0.17 0.13 0.12 
Nonperforming assets to total assets0.13 0.12 0.10 0.08 0.07 
Net charge-offs (recoveries) on loans to average loans receivable, net(3)
0.22 0.00 0.00 0.06 (0.11)
Criticized Loans by Credit Quality Rating:
Special mention$99,078 $93,694 $102,232 $79,977 $72,152 
Substandard71,977 82,496 70,183 69,757 62,653 
Other Metrics:
Number of banking offices50 50 50 50 50 
Deposits per branch$114,170 $110,313 $110,647 $111,997 $112,704 
Average number of full-time equivalent employees749 748 765 803 821 
Average assets per full-time equivalent employee9,590 9,501 9,271 8,893 8,785 
(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.
16

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.
September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023		September 30,
2023
Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share:
Total stockholders' equity (GAAP)$874,514 $850,507 $847,580 $853,261 $813,546 
Exclude intangible assets(244,491)(244,890)(245,311)(245,732)(246,325)
Tangible common equity (non-GAAP)$630,023 $605,617 $602,269 $607,529 $567,221 
Total assets (GAAP)$7,153,363 $7,059,857 $7,091,283 $7,174,957 $7,150,588 
Exclude intangible assets(244,491)(244,890)(245,311)(245,732)(246,325)
Tangible assets (non-GAAP)$6,908,872 $6,814,967 $6,845,972 $6,929,225 $6,904,263 
Stockholders' equity to total assets (GAAP)12.2 %12.0 %12.0 %11.9 %11.4 %
Tangible common equity to tangible assets (non-GAAP)
9.1 %8.9 %8.8 %8.8 %8.2 %
Shares outstanding34,153,539 34,496,197 34,689,843 34,906,233 34,901,076 
Book value per share (GAAP)$25.61 $24.66 $24.43 $24.44 $23.31 
Tangible book value per share (non-GAAP)$18.45 $17.56 $17.36 $17.40 $16.25 























17

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
September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023		September 30,
2023
Return on Average Tangible Common Equity, annualized:
Net income (GAAP)$11,423 $14,159 $5,748 $6,233 $18,219 
Add amortization of intangible assets399 421 421 593 595 
Exclude tax effect of adjustment(84)(88)(88)(125)(125)
Tangible net income (non-GAAP)$11,738 $14,492 $6,081 $6,701 $18,689 
Tangible net income (non-GAAP)$11,738 $14,492 $6,081 $6,701 $18,689 
Exclude loss on sale of investment securities, net
6,945 1,921 9,973 10,005 1,940 
Exclude gain on sale of branch including related deposits, net— — — — (610)
Exclude gain on sale of premises and equipment(1,480)(49)— — — 
Exclude tax effect of adjustment(1,148)(393)(2,094)(2,101)(279)
Adjusted tangible net income (non-GAAP)$16,055 $15,971 $13,960 $14,605 $19,740 
Average stockholders' equity (GAAP)$857,799 $843,438 $846,947 $813,383 $821,494 
Exclude average intangible assets(244,706)(245,106)(245,536)(246,022)(246,663)
Average tangible common stockholders' equity (non-GAAP)$613,093 $598,332 $601,411 $567,361 $574,831 
Return on average common equity, annualized (GAAP)5.30 %6.75 %2.73 %3.04 %8.80 %
Return on average tangible common equity, annualized (non-GAAP)7.62 %9.74 %4.07 %4.69 %12.90 %
Adjusted return on average tangible common equity, annualized (non-GAAP)10.42 %10.74 %9.34 %10.21 %13.62 %
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
September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023		September 30,
2023
Pre-tax, Pre-provision Income and Pre-tax, Pre-provision Return on Average Assets, annualized:
Net income (GAAP)$11,423 $14,159 $5,748 $6,233 $18,219 
Add income tax expense1,643 1,836 1,120 344 3,578 
Add (subtract) provision for (reversal of) credit losses2,439 1,268 1,392 1,424 (878)
Pre-tax, pre-provision income (non-GAAP)$15,505 $17,263 $8,260 $8,001 $20,919 
18

Quarter Ended
September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023		September 30,
2023
Pre-tax, Pre-provision Income and Pre-tax, Pre-provision Return on Average Assets, annualized:
Average total assets (GAAP)$7,182,921 $7,106,791 $7,092,452 $7,140,876 $7,212,732 
Return on average assets, annualized (GAAP)0.63 %0.80 %0.33 %0.35 %1.00 %
Pre-tax, pre-provision return on average assets (non-GAAP)0.86 %0.98 %0.47 %0.44 %1.15 %
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
September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023		September 30,
2023
Adjusted Efficiency Ratio :
Total noninterest expense (GAAP)$39,290 $39,096 $40,370 $42,723 $40,970 
Net interest income (GAAP)$52,958 $51,113 $51,530 $53,871 $55,618 
Total noninterest income (GAAP)$1,837 $5,246 $(2,900)$(3,147)$6,271 
Exclude (gain) loss on sale of investment securities, net6,945 1,921 9,973 10,005 1,940 
Exclude gain on sale of branch including related deposits, net— — — — (610)
Exclude gain on sale of premises and equipment
(1,480)(49)— — — 
Adjusted total noninterest income (non-GAAP)$7,302 $7,118 $7,073 $6,858 $7,601 
Efficiency ratio (GAAP)71.7 %69.4 %83.0 %84.2 %66.2 %
Adjusted efficiency ratio (non-GAAP)65.2 %67.1 %68.9 %70.4 %64.8 %

19
INVESTOR PRESENTATION Q3 2024

 
2 This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, are based on certain assumptions and often include the words “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 negative of such words. These statements relate to Heritage Financial Corporation’s (“we”, “us”, “our”, or the “Company”) financial condition, results of operations, beliefs, plans, objectives, goals, expectations, assumptions and statements about future performance or business. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results for future periods to differ materially from those expressed in any forward-looking statements by, or on behalf of, the Company and could negatively affect the Company’s operating results and stock price performance. Factors that may cause such a difference include, but are not limited to: • potential adverse impacts to economic conditions nationally or in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s 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, labor shortages and the effects of inflation, 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; • 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; • 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 of regulatory capital or other rules, including as a result of the upcoming 2024 presidential election; • credit and interest rate risks associated with the Company’s businesses, 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 and industry) within our loan portfolio; • disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions for our business; • 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 financial technology companies; • the costs, effects and outcomes of existing or future litigation; • effects of critical accounting policies and judgments, including the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; and • 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. You should also consider the risks, assumptions and uncertainties set forth in the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2023, as well as those set forth in other reports we file with or furnish to the Securities and Exchange Commission. These risks, assumptions and uncertainties should be considered in evaluating any forward-looking statements, and undue reliance should not be placed on such statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise. Except as otherwise indicated, this presentation speaks as of September 30, 2024. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of the Company after such date. Certain of the information contained herein may be derived from information provided by industry sources. We believe that such information is accurate and that the sources from which it has been obtained are reliable. We cannot guarantee the accuracy of such information, however, and we have not independently verified such information. Non-GAAP Financial Information The Company reports its results in accordance with United States generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP performance measures used in managing the business may provide meaningful information about underlying trends in its business. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. Slides containing a discussion and reconciliation of non-GAAP financial measures are contained in the Appendix - Reconciliation of Non-GAAP Financial Measures and Quarterly Financial Statistics hereto. All dollars throughout the entire presentation are in millions unless otherwise noted, except per share amounts. Percentages presented may not total 100% due to rounding. All tables and charts are as of September 30, 2024 unless otherwise noted. FORWARD LOOKING STATEMENTS

 
HERITAGE FINANCIAL CORPORATION OVERVIEW

 
4 OVERVIEW General Overview Nasdaq symbol HFWA Stock price(2) $21.72 Market capitalization(2) $749 million Institutional ownership(2) 81.9% Headquarters Olympia, WA # of branches 50 Year established 1927 Q3 2024 Financial Highlights Assets $7.2 billion Deposits $5.7 billion Loans receivable $4.7 billion Net income $11.4 million Net interest margin 3.33% ROAE(3) 5.30% ROATCE(1)(4) 7.62% Adjusted ROATCE(1)(4) 10.42% Efficiency ratio 71.7% Adjusted efficiency ratio(1) 65.2% Leverage ratio 9.9% Total capital ratio 13.6% Map obtained from S&P Global Market Intelligence; certain locations of branches overlap on the map. (1) Represents a non-GAAP financial measure (2) Market information as of October 22, 2024. (3) Return on average equity (4) Return on average tangible common equity Metropolitan Statistical Areas Seattle-Tacoma-Bellevue, WA Portland-Vancouver-Hillsboro, OR-WA Eugene-Springfield, OR Boise–Nampa, ID Heritage Branch

 
5 COMPANY STRATEGY Allocate capital to organically grow our core banking business Ÿ Recent successful hiring of individuals and teams of bankers in high-growth and dynamic Seattle and Portland markets as well as other key markets in and adjacent to our current footprint including our recent branch openings in Eugene, Oregon and Boise, Idaho Ÿ Disciplined approach to concentration risk and active portfolio management Improve operational efficiencies and rationalize branch network Ÿ Focused on achieving increased efficiencies with operational scale, internal focus on improving processes and technology solutions Ÿ Closed/Consolidated 36 branches since the beginning of 2010, including 12 branches in 2021 and one branch in 2023 Ÿ Full-time equivalent employee decreased to 749 at September 30, 2024 compared to 821 at September 30, 2023 Ÿ Reduced noninterest expense to average assets to 2.18% in Q3 2024 as compared to 2.25% in Q3 2023 Generate stable profitability and risk adjusted returns Ÿ Return on average tangible common equity(1) ("ROATCE") averaged 14.1% from 2021 to 2023. Ÿ Five-year growth in tangible book value(1) of $3.55, or 23.8%, to $18.45 at September 30, 2024 from $14.90 at September 30, 2019 Remain active and disciplined in M&A Ÿ Five acquisitions in Washington and Oregon since 2013 Ÿ Target metrics = IRR of >15% with earnbacks < 3 years Maintain conservative underwriting standards and actively manage the loan portfolio Ÿ Long track record of strong underwriting with conservative risk profile Ÿ Disciplined approach to concentration risk Ÿ Nonaccrual loans to loans receivable at 0.09% at September 30, 2024 Focus on core deposits to increase franchise value over the long term Ÿ 29.5% noninterest demand deposits to total deposits at September 30, 2024 Ÿ 1.42% cost of total deposits; top 10% performance among US publicly traded banks in Q2 2024 Engage in proactive capital management Ÿ History of increasing regular dividends and utilizing special dividends to manage capital Ÿ In April 2024, approved a new stock repurchase plan up to 5% of the Company's outstanding common shares or approximately 1.7 million shares Ÿ Strong capital ratios: leverage ratio(3) = 9.9%; total capital ratio(3) = 13.6% (1) Represents a non-GAAP financial measure (2) Comparable cost of total deposits provided by S&P Global Market Intelligence for the second quarter of 2024 and includes banks nationwide with shares on Nasdaq or NYSE with total assets less than $100 billion excluding pending merger targets (3) Current quarter capital ratios are estimates pending completion and filing of the Company's regulatory reports

 
6 PROFITABILITY IMPROVEMENT MEASURES Q4 2023 Q1 2024 Q2 2024 Q3 2024 TOTAL Quarterly Impact Investments Sold (Book Value) $161.8 $144.0 $38.8 $78.0 $422.6 Weighted Average Book Yield of Sales 2.41% 2.37% 2.73% 1.88% 2.33% Investments Purchased $140.7 $33.1 $— $— $173.8 Weighted Average Book Yield of Purchases 6.08% 6.05% —% —% 6.07% Loss on Sale of Investments $10.0 $10.0 $1.9 $6.9 $28.8 Quarterly Estimated EPS Impact $(0.22) $(0.22) $(0.04) $(0.16) $(0.64) Estimated Annualized Profitability Improvement Estimated Annualized Pre-Tax Financial Impact $5.4 $5.8 $1.5 $3.2 $15.9 Estimated Annualized EPS Impact $0.12 $0.13 $0.03 $0.07 $0.35 Balance Sheet Repositioning The Company has completed investment sales over the past several quarters as part of strategic repositioning of the balance sheet. Estimated annualized profitabilty improvements assumes all proceeds invested in loan growth. Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Noninterest expense 40,970 42,723 40,370 39,096 39,290 FTE 821 803 765 748 749 Overhead ratio 2.25 % 2.37 % 2.29 % 2.21 % 2.18 % Expense Management Measures We continue to focus on expense management and maintaining a lower expense base. We have taken actions in previous quarters in support of this effort. Costs relating to long-term expense management measures totaled $2.0 million in Q4 2023 relating to contract renewal negotiations, contract cancellations and severance payments. In the Q1 2024, an additional $1.1 million of severance costs were recognized due to staff reductions. This has resulted in a decrease in noninterest expense which has been sustained through Q3 2024. See below for additional details. 41,325 40,970 42,723 40,370 39,096 30.9% —% 2.32% 2.25% 2.37% 2.29% 2.21% 31.5% —% Overhead ratio Noninterest expense Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024

 
7 $106,526 $88,444 $75,384 $73,503 Median household income 4.8% 4.0% 16.2% 4.1% 3.9% 12.9% 3.6% 7.2% 18.9% 4.2% 2.1% 13.4% Seattle MSA Portland MSA Boise MSA USA Unemployment rate 2023-2028 Projected Population Growth 2023-2028 Projected Median Household Income Growth STRONG AND DIVERSE ECONOMIC LANDSCAPE Major Employers in the Pacific Northwest Data obtained from www.bls.gov, www.bea.gov and S&P Global Market Intelligence Unemployment data reflects the BLS's latest monthly Economic New Release - Employment & Unemployment Economic data as of August 2024 MSA Tie-out of websites used: https://www.bls.gov/web/metro/laulrgma.htm https://www.bls.gov/web/laus/laumstcm.htm https://data.bls.gov/timeseries/LNS14000000 https://www.zippia.com/advice/largest-companies-in-washington/https://www.zippia.com/advice/largest-companies-in-oregon/

 
8 LOANS AND DEPOSITS BY LOCATION MSA = Metropolitan or Micropolitan Statistical Area Location based upon branch or office location Loans by MSA Seattle WA $2,304 49.2% Portland OR-WA $687 14.7% Mount Vernon WA $258 5.5% Olympia WA $192 4.1% Yakima WA $108 2.3% Bellingham WA $193 4.1% Other $937 20.0% Deposits by MSA Seattle WA $2,540 44.5% Portland OR-WA $826 14.5% Mount Vernon WA $300 5.3% Olympia WA $501 8.8% Oak Harbor WA $159 2.8% Longview WA $540 9.5% Yakima WA $225 3.9% Bellingham WA $174 3.0% Other $443 7.8%

 
9 POTENTIAL GROWTH OPPORTUNITIES Map obtained from S&P Global Market Intelligence Certain locations of bank headquarters overlap on the map Financial information as of the most recent quarter publicly available • Long-term goal to build a Pacific Northwest ("PNW") regional commercial community bank; potential opportunities for M&A and production team lift-outs in WA, OR and ID. • Significant number of banks remaining in HFWA footprint; further consolidation is expected. – 11 banks between $200 million and $500 million in assets – 15 banks between $500 million and $1.0 billion in assets – 16 banks between $1.0 billion and $3.5 billion in assets • Target metrics include 15% IRR and earnback of < 3 years. Bank headquarters

 
10 $1,712 $3,651 $3,879 $4,113 $4,238 $5,553 $6,615 $7,432 $6,980 $7,175 $7,091 $7,060 $7,153 $1,747 $1,079 $15.02 $15.68 $16.08 $16.88 $20.63 $22.10 $22.85 $24.34 $22.73 $24.44 $24.43 $24.66 $25.61 $10.73 $11.41 $11.86 $12.70 $13.54 $15.07 $15.77 $17.19 $15.66 $17.40 $17.36 $17.56 $18.45 Organic Assets Acquired Assets Book value per share Tangible book value per share (1) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q1 2024 Q2 2024 Q3 2024 Acquired Puget Sound Bancorp $639MM in assets Premier Commercial Bancorp $440MM in assets HISTORICAL GROWTH ORGANIC AND ACQUISITIVE Merged with Washington Banking Company $1.7B in assets (1) Represents a non-GAAP financial measure

 
11 GROWTH STRATEGY YEAR ACTIVITY 2013 • Acquired Valley Community Bancshares - $254MM in assets • Acquired Northwest Commercial Bank - $65MM in assets 2014 • Merged with Washington Banking Company - $1.7B in assets 2015 • Added a commercial banking team in Seattle, Washington • Formed Capital Markets Group as result of the added expertise 2017 • Added commercial banking team in the greater Portland, Oregon area • Expanded expertise in non-profit lending and added a commercial position focused on deposit production 2018 • Acquired Puget Sound Bancorp - $639MM in assets • Acquired Premier Commercial Bancorp - $440MM in assets 2019 • Added commercial banking team in the greater Portland, Oregon area • Expanded expertise in the dental and healthcare fields 2022 • Added new commercial banking team in Vancouver, Washington • Added new commercial banking team in Portland, Oregon • Expanded into a new market with addition of commercial banking team and full service branch in Eugene, Oregon (branch opened August 2022) 2023 • Expanded into a new market with addition of commercial banking team and full service branch in Boise, Idaho (branch opened January 2023) 2024 • Expanded Builder Banking team with hiring of new SVP, Director of Builder Banking. Future plans include addition of sales positions in greater Seattle, Washington and Boise, Idaho areas. Bank Acquisitions and Team Additions Bank Acquisition Team Addition

 
FINANCIAL UPDATE

 
13 LOAN PORTFOLIO Loan Portfolio Composition $232 $196 $171 $171 $167 $166$165 $344 $375 $386 $413 $409 $227 $294 $414 $457 $459 $458 $768 $693 $718 $760 $779 $824 $2,424 $2,524 $2,657 $2,655 $2,714 $2,823 Consumer Residential real estate Construction & land development Commercial and Industrial (C&I) Commercial real estate (CRE) 2021 2022 2023 Q1 2024 Q2 2024 Q3 2024 New Loan Commitments $17 $18 $20 $25 $24 $11 $3 $14 $27 $2 $91 $57 $39 $63 $35$42 $81 $60 $87 $128 $84 $49 $34 $68 $90 Consumer Residential real estate Construction & land development Commercial and Industrial (C&I) Commercial Real Estate (CRE) Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024

 
14 Construction Commitments $488 $686 $769 $762 $730 $657 $227 $294 $414 $457 $459 $458 $261 $392 $355 $305 $271 $199 Outstanding Balance Available Credit 2021 2022 2023 Q1 2024 Q2 2024 Q3 2024 LOC Utilization Rates 25.2% 29.8% 28.2% 31.9% 30.4% 30.9% 46.5% 42.9% 53.8% 60.0% 62.9% 69.7% 31.4% 31.1% 31.1% 31.7% 31.6% 31.5% Utilization Rate - Consumer LOCs Utilization Rate - Construction LOCs Utilization Rate - C&I LOCs 2021 2022 2023 Q1 2024 Q2 2024 Q3 2024 LINE OF CREDIT ("LOC") UTILIZATION

 
15 COMMERCIAL LOAN EXPOSURE Commercial Business Loans by Industry Exposure Industry Amount WARR at 9/30/24 Real estate, rental and leasing $1,998 4.4 Health care and social assistance 347 4.4 Accommodation and food services 194 5.0 Retail trade 146 4.6 Construction 149 4.8 Other services (except Public administration) 109 4.7 Manufacturing 94 4.7 All other industries 610 4.3 Total $3,647 4.5 CRE Loans only by Collateral Type Collateral Type Amount WARR at 9/30/24 Office $554 4.3 Industrial 468 4.5 Retail store / shopping center 298 4.6 Multi-family 412 4.5 Mixed use property 156 4.5 Motel / hotel 154 4.9 Single purpose 116 4.6 Warehouse 140 4.6 Mini-storage 162 4.1 Recreational / school 69 5.0 Other 293 Total $2,823 4.5 WARR = Weighted average risk rating Categorized by NAICS code. Office - Owner-occupied CRE 10.0% Office - Non-owner occupied CRE 9.6% Industrial 16.6% Retail store / shopping center 10.6% Multi-family 14.6% Mixed use property 5.5% Motel / hotel 5.5% Single purpose 4.1% Warehouse 4.9% Mini-storage 5.7% Recreational / school 2.4% Other 10.5% Real estate, rental and leasing 54.8% Health care and social assistance 9.5% Accommodation and food services 5.3% Retail trade 4.0% Construction 4.1% Other Services (except Public administration) 3.0% Manufacturing 2.6% All other industries 16.7%

 
16 CHANGES IN LOANS RECEIVABLE $4,533 $177 $(45) $(21) $35 $4,679 Loans receivable at June 30, 2024 Loans originated Prepayments Maturities / Payoffs Net advances/ payments Loans receivable at September 30, 2024 $4,336 $445 $(132) $(112) $142 $4,679 Loans receivable at December 31, 2023 Loans originated Prepayments Payoffs Net advances/ payments Loans receivable at September 30, 2024 Change in loans - Q3 2024 Change in loans - YTD 2024

 
17 CRE OFFICE CRE Office Loans by Size Size WARR(2) # of Loans Total Balance(1) Average Balance Per Loan(1) >$10 Million 3.3 5 $ 75,998 $ 15,200 $5-$10 Million 4.0 15 95,243 6,350 $2-$5 Million 4.6 44 130,300 2,961 <$2 Million 4.6 451 252,908 561 TOTAL 4.3 515 $ 554,449 $ 1,077 Quality of CRE Office Portfolio: • 82.0% of loans have recourse to owner • 50.9% of loans are owner occupied which are considered to have a lower risk profile • 25.3% of loans are borrowers in the health care and social assistance sectors, who are less likely to reduce office space CRE Office Loans by Industry Type Health Care and Social Assistance 25.3% Professional, Scientific, and Technical Services 2.9% Finance and Insurance 2.9% Other Services (except Public Administration) 2.4% Accommodation and Food Services 1.1% All Other 65.4% (1) Dollars in thousands (2) Weighted average risk rating

 
18 Net charge-offs (recoveries) on loans to average loans, annualized 0.01% (0.03)% (0.01)% 0.08% (0.11)% 0.06% 0.00% 0.00% 0.22% 2021 2022 2023 2024 YTD Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 (0.20)% (0.10)% 0.00% 0.10% 0.20% 0.30% Nonaccrual Loans $24 $6 $4 $5 $4 $4 Nonaccrual loans Nonaccrual loans to loans receivable 2021 2022 2023 Q1 2024 Q2 2024 Q3 2024 0.62% 0.15% 0.10% 0.11% 0.08% 0.09% NONACCRUAL LOANS AND NET CHARGE-OFFS

 
19 CRITICIZED LOANS $183 $135 $150 $172 $176 $171 $24 $89 $60 $65 $65 $79 $68 $71 $69 $80 $102 $94 $99 Substandard - nonaccrual Substandard - accrual Special mention 2021 2022 2023 Q1 2024 Q2 2024 Q3 2024 Criticized Loans by Loan Segment Commercial & industrial 31.8% Owner- occupied CRE 16.9% Non-owner occupied CRE 29.7% Residential real estate 0.6% Construction & land development 20.1% Consumer 0.9% Criticized Loans by Collateral Type Motel/Hotel 11.7% Office 9.3% Multi-Family 11.8% Retail Store/Shopping Center 6.0% Mixed Use Property 8.8% Elder Care 7.8% Farm-Bldgs/Land 4.1% Industrial 3.5% Duplex/Tri-Plex/4-Plex 3.4% Other CRE 14.1% Non-CRE 19.5% $6 $4 $5 $4 $4

 
20 ACL on Loans $42,361 $42,986 $47,999 $49,736 $51,219 $51,391 1.11% 1.06% 1.11% 1.12% 1.13% 1.10% ACL on loans ($) ACL on loans / Loans (%) 2021 2022 2023 Q1 2024 Q2 2024 Q3 2024 ALLOWANCE FOR CREDIT LOSSES ("ACL") ON LOANS $51,219 $829 $(488) $(155) $(14) $51,391 June 30, 2024 Change in loan balance Change in collective rate Change in rate and balance Individually evaluated loans September 30, 2024 Change in ACL on Loans - Q3 2024 Dollars in thousands

 
21 CRITICIZED LOANS AND NET CHARGE-OFF HISTORY Criticized Loans to Total Loans 3.63% 3.79% 6.50% 4.81% 3.34% 3.45% 3.89% 2.19% 2.05% 3.47% 2.63% 1.96% 2.32% 2.75% Heritage Peer Median 2018 2019 2020 2021 2022 2023 Q2 2024 YTD Net Chargeoffs to Average Loans 0.06% 0.09% 0.07% 0.01% (0.03)% (0.01)% 0.00% 0.07% 0.11% 0.05% 0.03% 0.02% 0.07% 0.07% Heritage Peer Median 2018 2019 2020 2021 2022 2023 Q2 2024 YTD (1) Criticized loans includes loans graded special mention or worse (2) Peer Median is the median of 17 identified peer banks ranging in asset size from $4 billion to $15 billion and is as of June 30, 2024 Proactive Credit Management • Heritage proactively downgrades loans that are experiencing financial difficulty. • Criticized loans(1) to total loans higher than peer median(2) since 2018 • NCOs recognized during the same period were lower than peer median.

 
22 Average Deposit Balances and Cost of Total Deposits $6,090 $6,322 $5,706 $5,586 $5,701 $5,621 $5,526 $5,555 $5,675 0.10% 0.11% 0.69% 1.32% 0.83% 1.01% 1.19% 1.34% 1.42% 1.23% 1.48% 1.70% 1.89% 2.02% 0.16% 0.17% 1.03% 1.87% Average deposits Cost of total deposits Cost of int-bearing deposits 2021 2022 2023 2024 YTD Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 DEPOSITS Deposit Composition 36.7% 35.5% 30.6% 29.6% 29.0% 29.5% 30.4% 30.9% 28.7% 28.1% 27.0% 26.1% 17.5% 17.9% 19.5% 19.9% 19.9% 20.1% 10.0% 10.5% 8.7% 8.4% 8.1% 7.8% 5.4% 5.2% 12.4% 14.0% 16.0% 16.5% Noninterest demand deposits Interest bearing demand deposits Money market accounts Savings accounts Certificates of deposit 2021 2022 2023 Q1 2024 Q2 2024 Q3 2024

 
23 DEPOSIT COMPOSITION Customer Deposits by Relationship Size $696 $301 $1,361 $1,505 $1,845 Over $10MM $5MM-$10MM $1MM-5MM $250K-$1MM Less than $250K Consumer Accounts vs. Business Accounts 26% 57% 17% Consumer Commercial CDs Insured vs. Uninsured 39% 61% Insured Uninsured Deposit portfolio as of September 30, 2024: • Majority of deposits are to customers with relationships of $1 million or less. • Uninsured deposits at 39% of total deposits. 12% of uninsured deposits are public deposits that are 100% pledged. • Mix of commercial and consumer accounts.

 
24 Investment Balances and Investment Yield $1,278 $2,098 $1,874 $1,572 $1,894 $1,874 $1,731 $1,659 $1,572 $757 $1,203 $178 $33 $141 $33 2.13% 2.48% 3.02% 3.34% 2.99% 3.15% 3.30% 3.38% 3.34% Portfolio yield New purchases 2021 2022 2023 2024 YTD Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 INVESTMENT PORTFOLIO Portfolio Duration 4.85 4.93 4.85 4.56 6.76 4.08 3.37 2.33 4.82 4.85 4.80 4.81 4.56 3.10 3.48 2.33 Duration - total portfolio Duration - new purchases only (1) 2021 2022 2023 2024 YTD Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 (1) No investments were purchased during Q2 2024 and Q3 2024

 
25 $50 $54 $43 $46 $45 $59 $60 $57 $45 $59 $43 $35 $37 $42 $31 $34 $33 $48 $49 $47 $35 $49 $34 $26 $13 $12 $12 $12 $12 $11 $11 $10 $10 $10 $9 $9 Interest Principal Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Q4 2026 Q1 2027 Q2 2027 Q3 2027 INVESTMENT CASHFLOWS Investment cashflows(1) are estimated to be $596 million through Q3 of 2027. (1) Cashflow estimates based on third-party bond accounting service

 
26 INVESTMENT PORTFOLIO HTM Investment by Type US government and agencies 19.4% Residential CMO and MBS 36.4% Commercial CMO and MBS 44.2% Available for sale ("AFS") and held to maturity ("HTM") investment securities percentages are based on fair value as of September 30, 2024 unless otherwise noted Strong Credit Quality of Portfolio: AFS Securities • 90.3% of AFS in U.S. government and agency securities • Only 1.4% of AFS are rated less than AA HTM Securities • All HTM investments are U.S. government and agency securities • 100% HTM portfolio pledged for public deposits and Federal Reserve Bank borrowings AFS Investments Pledged 0.5% 99.5% Pledged Not pledged AFS Investment by Type US government and agencies 1.5% Municipal securities 7.2% Residential CMO and MBS 50.1% Commercial CMO and MBS 38.5% Corporate obligations 1.4% Other asset-backed securities 1.3%

 
27 Net Interest Margin 3.23% 3.35% 3.58% 3.31% 3.47% 3.41% 3.32% 3.29% 3.33% 2021 2022 2023 2024 YTD Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 NET INTEREST MARGIN Quarterly Change in Net Interest Margin 3.29% 0.12% (0.05)% 0.02% (0.08)% 0.03% 3.33% QTD Q2 2024 Loans Investments Interest earning deposits Deposits Borrowings QTD Q3 2024 Net Interest Income $205,789 $219,385 $225,155 $155,601 $55,618 $53,871 $51,530 $51,113 $52,958 2021 2022 2023 2024 YTD Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024

 
28 Adjustable Rate Loans - Repricing Schedule $1,003 $135 $232 $175 $213 $313 $139 7.48% 4.11% 3.89% 4.52% 5.88% 6.27% 4.94% 7.43% 6.19% 6.17% 6.12% 6.04% 6.26% 6.58% Floating and Adjustable Rate Loans Wtd Avg Rate (1) Wtd Avg Rate if Repriced (2) < 3 Months 3 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years > 5 Years LOAN MATURITY AND REPRICING (1) Weighted Average Rate as of September 30, 2024 and repricing period signifies the sooner of the next scheduled reprice date or maturity (2) Weighted Average Rate if Repriced as of September 30, 2024 and assumes same index and margin Adjustable Rate Loans • $2.2 billion in total • 53% tied to FHLB index, 22% tied to Prime, 25% tied to SOFR Fixed Rate Loans - Maturity Schedule $60 $166 $121 $174 $258 $241 $1,441 4.93% 5.09% 4.58% 4.36% 4.98% 5.22% 4.31% Fixed Rate Loans Wtd Avg Rate (1) < 3 Months 3 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years > 5 Years Fixed Rate Loans • $2.5 billion in total

 
29 PROFITABILITY TRENDS ROAA and PTPP ROAA(1) 1.38% 1.12% 0.86% 0.59% 1.00% 0.35% 0.33% 0.80% 0.63% 1.28% 1.34% 1.08% 0.77% 1.15% 0.44% 0.47% 0.98% 0.86% ROAA PTPP ROAA (1) 2021 2022 2023 2024 YTD Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Noninterest Expense/Avg. Assets 2.09% 2.06% 2.33% 2.23% 2.25% 2.37% 2.29% 2.21% 2.18% 2021 2022 2023 2024 YTD Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 ROAA = Return on average assets PTPP = Pre-tax, pre-provision (1) Represents a non-GAAP financial measure

 
30 $98.0 $81.9 $61.8 $31.3 $91.1 $98.0 $77.2 $41.0 $86.7 $97.9 $88.8 $58.3 Net income PTPP income (1) Adjusted PTPP income (1) 2021 2022 2023 2024 YTD Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 $18.2 $6.2 $5.7 $14.2 $11.4 $20.9 $8.0 $8.3 $17.3 $15.5 $22.2 $18.0 $18.2 $19.1 $21.0 PROFITABILITY TRENDS ROAE, ROATCE(1) and Adjusted ROATCE(1) Net Income, PTPP Income(1) and Adjusted PTPP Income(1), in millions 16.45% 14.92% 12.76% 10.16% 13.62% 10.21% 9.34% 10.76% 10.42% 17.05% 14.94% 11.15% 7.14% 12.90% 4.69% 4.07% 9.74% 7.62%11.64% 10.08% 7.55% 4.93% 8.80% 3.04% 2.73% 6.75% 5.30% ROAE ROATCE (1) Adjusted ROATCE (1) 2021 2022 2023 2024 YTD Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 PTPP = Pre-tax, pre-provision ROAE = Return on average equity ROATCE = Return on average tangible common equity (1) Represents a non-GAAP financial measure

 
31(1) Represents a non-GAAP financial measure (2) Current quarter ratios are estimates pending completion and filing of the Company's regulatory reports CAPITAL RATIOS Equity Ratios 11.5% 11.4% 11.9% 12.0% 12.0% 12.2% 8.4% 8.2% 8.8% 8.8% 8.9% 9.1% Stockholders' equity to total assets (GAAP) Tangible common equity to tangible assets(1) 2021 2022 2023 Q1 2024 Q2 2024 Q3 2024 13.5% 12.8% 12.9% 12.6% 12.6% 12.3% 8.7% 9.7% 10.0% 10.0% 10.1% 9.9% 14.8% 14.0% 14.1% 13.9% 13.9% 13.6% Total Risk Based Capital Tier 1 Leverage Ratio Common Equity Tier 1 2021 2022 2023 Q1 2024 Q2 2024 Q3 2024 Regulatory Capital Ratios(2)

 
32 LIQUIDITY POSITION (1) Includes FHLB borrowing availability of $1.35 billion at September 30, 2024 based on pledged assets, however, maximum credit capacity is 45% of the Bank's total assets one quarter in arrears or $3.17 billion Liquidity position at September 30, 2024: • Sufficient liquidity to cover estimated uninsured deposits of $2.2 billion. • Access to brokered deposits of $721 million per internal company policy. Liquidity Sources $2,721 $2,863 $2,499 $2,408 $2,525 $1,202 $1,418 $1,385 $943 $1,068 $373 $319 $71 $279 $288 $780 $756 $708 $927 $848 $221 $225 $190 $114 $176 $145 $145 $145 $145 $145 131.9% 136.3% 122.3% 116.2% 112.6% FHLB borrowing availability (1) FRB borrowing availability Unencumbered investment securities available for sale at fair value Cash and cash equivalents Fed funds lines % of uninsured deposits covered by liquidity sources Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024

 
SHAREHOLDER RETURN

 
34 TOTAL SHAREHOLDER RETURN Stock Summary(2) Ticker HFWA Exchange Nasdaq Stock price $21.72 Market capitalization (in millions) $749.3 Dividend yield (regular dividend only) 4.24 % Average Daily Volume (3 month) Average daily volume (shares) 183,701 Average daily volume ($000s) $3,990 52-Week High and Low Price 52-week high (July 31, 2024) $23.82 52-week low (October 25, 2023) $15.50 Per Share Tangible book value per share(1) $18.45 EPS - 2024E $1.61 EPS - 2025E $1.81 Number of research analysts 6 Valuation Ratios Price / Tangible book value(1) 117.7 % Price / 2024E EPS 13.5 Price / 2025E EPS 12.0 Dividends Per Share Declared(3) $0.53 $0.72 $0.61 $0.72 $0.84 $0.80 $0.81 $0.84 $0.88 $0.92 $0.10 $0.11 $0.12 $0.15 $0.18 $0.20 $0.20 $0.21 $0.22 $0.23 $0.11 $0.12 $0.13 $0.15 $0.18 $0.20 $0.20 $0.21 $0.22 $0.23 $0.11 $0.12 $0.13 $0.15 $0.19 $0.20 $0.20 $0.21 $0.22 $0.23 $0.11 $0.12 $0.13 $0.17 $0.19 $0.20 $0.21 $0.21 $0.22 $0.23 $0.10 $0.25 $0.10 $0.10 $0.10 Q1 Q2 Q3 Q4 Special dividends 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024(1) Represents a non-GAAP financial measure (2) Market information as of October 22, 2024 and earnings per share and valuation ratios are based on analysts consensus (3) Dividend information as of October 23, 2024 $2.63 $2.31 $2.01 $1.29 $2.73 $2.31 $1.75 $0.90 $0.55 $0.40 $0.39 $0.45 $0.45 $0.51 $0.18 $0.16 $0.41 $0.33 Diluted EPS Adjusted Diluted EPS(1) 2021 2022 2023 2024 YTD Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Diluted EPS and Adjusted Diluted EPS(1)

 
APPENDIX - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND QUARTERLY FINANCIAL STATISTICS

 
36 NON-GAAP FINANCIAL MEASURES Dollars in thousands 2021 2022 2023 YTD 2024 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Pretax Preprovision ("PTPP") Income and PTPP Return on Average Assets ("ROAA"): Net income (GAAP) $ 98,035 $ 81,875 $ 61,755 $ 31,330 $ 18,219 $ 6,233 $ 5,748 $ 14,159 $ 11,423 Exclude income tax expense 22,472 17,561 11,160 4,599 3,578 344 1,120 1,836 1,643 Exclude provision for (reversal of provision for) credit losses (29,372) (1,426) 4,280 5,099 (878) 1,424 1,392 1,268 2,439 PTPP income (non-GAAP) $ 91,135 $ 98,010 $ 77,195 $ 41,028 $ 20,919 $ 8,001 $ 8,260 $ 17,263 $ 15,505 PTPP income (non-GAAP) $ 91,135 $ 98,010 $ 77,195 $ 41,028 $ 20,919 $ 8,001 $ 8,260 $ 17,263 $ 15,505 Exclude (gain) loss on sale of investment securities, net (29) 256 12,231 18,839 1,940 10,005 9,973 1,921 6,945 Exclude gain on sale of branch including related deposits, net — — (610) — (610) — — — — Exclude gain on sale of premise and equipment (4,440) (403) — (1,529) — — — (49) (1,480) Adjusted PTPP income (non-GAAP) $ 86,666 $ 97,863 $ 88,816 $ 58,338 $ 22,249 $ 18,006 $ 18,233 $ 19,135 $ 20,970 Average total assets $ 7,126,250 $ 7,321,455 $ 7,140,024 $ 7,127,590 $7,212,732 $7,140,876 $7,092,452 $7,106,791 $7,182,921 ROAA, annualized (GAAP) 1.38 % 1.12 % 0.86 % 0.59 % 1.00 % 0.35 % 0.33 % 0.80 % 0.63 % PTPP ROAA, annualized (non-GAAP) 1.28 % 1.34 % 1.08 % 0.77 % 1.15 % 0.44 % 0.47 % 0.98 % 0.86 %

 
37 NON-GAAP FINANCIAL MEASURES 2021 2022 2023 YTD 2024 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Return on Average Tangible Common Equity ("ROATCE") and Adjusted ROATCE: Net income (GAAP) $ 98,035 $ 81,875 $ 61,755 $ 31,330 $ 18,219 $ 6,233 $ 5,748 $ 14,159 $ 11,423 Add amortization of intangible assets 3,111 2,750 2,434 1,241 595 593 421 421 399 Exclude tax effect of adjustment (653) (578) (511) (261) (125) (125) (88) (88) (84) Tangible net income (non-GAAP) $ 100,493 $ 84,047 $ 63,678 $ 32,310 $ 18,689 $ 6,701 $ 6,081 $ 14,492 $ 11,738 Tangible net income (non-GAAP) $ 100,493 $ 84,047 $ 63,678 $ 32,310 $ 18,689 $ 6,701 $ 6,081 $ 14,492 $ 11,738 Exclude (gain) loss on sale of investment securities, net (29) 256 12,231 18,839 1,940 10,005 9,973 1,921 6,945 Exclude gain on sale of branch including related deposits, net — — (610) — (610) — — — — Exclude gain on sale of premise and equipment (4,440) (403) — (1,529) — — — (49) (1,480) Exclude tax effect of adjustment 938 31 (2,440) (3,635) (279) (2,101) (2,094) (393) (1,148) Adjusted tangible net income (non-GAAP) $ 96,962 $ 83,931 $ 72,859 $ 45,985 $ 19,740 $ 14,605 $ 13,960 $ 15,971 $ 16,055 Average stockholders' equity (GAAP) $ 842,067 $ 811,942 $ 818,042 $ 849,426 $ 821,494 $ 813,383 $ 846,947 $ 843,438 $ 857,799 Exclude average intangible assets (252,540) (249,566) (246,965) (245,114) (246,663) (246,022) (245,536) (245,106) (244,706) Average tangible common stockholders' equity (non-GAAP) $ 589,527 $ 562,376 $ 571,077 $ 604,312 $ 574,831 $ 567,361 $ 601,411 $ 598,332 $ 613,093 ROAE, annualized (GAAP) 11.64 % 10.08 % 7.55 % 4.93 % 8.80 % 3.04 % 2.73 % 6.75 % 5.30 % ROATCE, annualized (non-GAAP) 17.05 % 14.94 % 11.15 % 7.14 % 12.90 % 4.69 % 4.07 % 9.74 % 7.62 % Adjusted ROATCE, annualized (non- GAAP) 16.45 % 14.92 % 12.76 % 10.16 % 13.62 % 10.21 % 9.34 % 10.74 % 10.42 % Dollars in thousands

 
38 NON-GAAP FINANCIAL MEASURES 2021 2022 2023 YTD 2024 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Diluted Earnings per Share and Adjusted Diluted Earnings per Share: Net income (GAAP) $ 98,035 $ 81,875 $ 61,755 $ 31,330 $ 18,219 $ 6,233 $ 5,748 $ 14,159 $ 11,423 Exclude (gain) loss on sale of investment securities, net (29) 256 12,231 18,839 1,940 10,005 9,973 1,921 6,945 Exclude gain on sale of branch including related deposits, net — — (610) — (610) — — — — Exclude gain on sale of premise and equipment (4,440) (403) — (1,529) — — — (49) (1,480) Exclude tax effect of adjustment 938 31 (2,440) (3,635) (279) (2,101) (2,094) (393) (1,148) Adjusted net income (non-GAAP) $ 94,504 $ 81,759 $ 70,936 $ 45,005 $ 19,270 $ 14,137 $ 13,627 $ 15,638 $ 15,740 Average number of diluted shares outstanding 35,973,386 35,463,896 35,258,189 35,002,375 35,115,165 35,084,635 35,227,138 34,919,395 34,658,674 Diluted earnings per share (GAAP) $ 2.73 $ 2.31 $ 1.75 $ 0.90 $ 0.51 $ 0.18 $ 0.16 $ 0.41 $ 0.33 Adjusted diluted earnings per share (non- GAAP) $ 2.63 $ 2.31 $ 2.01 $ 1.29 $ 0.55 $ 0.40 $ 0.39 $ 0.45 $ 0.45 Dollars in thousands

 
39 2014 2015 2016 2017 2018 2019 2020 2022 2023 Tangible Book Value Per Share: Total stockholders' equity (GAAP) $ 454,506 $ 469,970 $ 481,763 $ 505,305 $ 760,723 $ 809,311 $ 820,439 $ 797,893 $ 853,261 Exclude intangible assets (129,918) (127,818) (126,403) (125,117) (261,553) (257,552) (254,027) (248,166) (245,732) Tangible common equity (non-GAAP) $ 324,588 $ 342,152 $ 355,360 $ 380,188 $ 499,170 $ 551,759 $ 566,412 $ 549,727 $ 607,529 Shares outstanding 30,259,838 29,975,439 29,954,931 29,927,746 36,874,055 36,618,729 35,912,243 35,106,697 34,906,233 Book value per share (GAAP) $ 15.02 $ 15.68 $ 16.08 $ 16.88 $ 20.63 $ 22.10 $ 22.85 $ 22.73 $ 24.44 Tangible book value per share (non-GAAP) $ 10.73 $ 11.41 $ 11.86 $ 12.70 $ 13.54 $ 15.07 $ 15.77 $ 15.66 $ 17.40 Moved to 2nd slide Tangible Book Value Per Share (cont'd): 2024 Q1 Q2 Q3 Total stockholders' equity (GAAP) $ 847,580 $ 850,507 $ 874,514 Exclude intangible assets (245,311) (244,890) (244,491) Tangible common equity (non-GAAP) $ 602,269 $ 605,617 $ 630,023 Shares outstanding 34,689,843 34,496,197 34,153,539 Book value per share (GAAP) $ 24.43 $ 24.66 $ 25.61 Tangible book value per share (non-GAAP) $ 17.36 $ 17.56 $ 18.45 NON-GAAP FINANCIAL MEASURES Dollars in thousands

 
40 NON-GAAP FINANCIAL MEASURES Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Efficiency Ratio and Adjusted Efficiency Ratio Total noninterest expense (GAAP) $ 40,970 $ 42,723 $ 40,370 $ 39,096 $ 39,290 Net interest income (GAAP) $ 55,618 $ 53,871 $ 51,530 $ 51,113 $ 52,958 Total noninterest income (GAAP) $ 6,271 $ (3,147) $ (2,900) $ 5,246 $ 1,837 Exclude (gain) loss on sale of investment securities, net 1,940 10,005 9,973 1,921 6,945 Exclude gain on sale of branch including related deposits, net (610) — — — — Exclude gain on sale of premise and equipment — — — (49) (1,480) Adjusted total non interest income (non-GAAP) $ 7,601 $ 6,858 $ 7,073 $ 7,118 $ 7,302 Efficiency ratio (GAAP) 66.20 % 84.23 % 83.01 % 69.37 % 71.70 % Adjusted efficiency ratio (non-GAAP) 64.81 % 70.35 % 68.89 % 67.14 % 65.20 % Dollars in thousands

 
41 As of Period End or for the Three Months Ended September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 Profitability: Net income $ 18,219 $ 6,233 $ 5,748 $ 14,159 $ 11,423 Pre-tax, pre-provision net income(1) $ 20,919 $ 8,001 $ 8,260 $ 17,263 $ 15,505 Diluted earnings per share $ 0.51 $ 0.18 $ 0.16 $ 0.41 $ 0.33 Return on average assets 1.00 % 0.35 % 0.33 % 0.80 % 0.63 % Pre-tax, pre-provision return on average assets(1) 1.15 % 0.44 % 0.47 % 0.98 % 0.86 % Return on average common equity 8.80 % 3.04 % 2.73 % 6.75 % 5.30 % Return on average tangible common equity(1) 12.90 % 4.69 % 4.07 % 9.74 % 7.62 % Adjusted return on average tangible common equity(1) 13.62 % 10.21 % 9.34 % 10.74 % 10.42 % Net interest margin 3.47 % 3.41 % 3.32 % 3.29 % 3.33 % Efficiency ratio 66.2 % 84.2 % 83.0 % 69.4 % 71.7 % Adjusted efficiency ratio(1) 64.8 % 70.4 % 68.9 % 67.1 % 65.2 % Noninterest expense to average total assets 2.25 % 2.37 % 2.29 % 2.21 % 2.18 % Balance Sheet: Total assets $ 7,150,588 $ 7,174,957 $ 7,091,283 $ 7,059,857 $ 7,153,363 Loans receivable, net $ 4,219,911 $ 4,287,628 $ 4,378,429 $ 4,481,396 $ 4,628,088 Total deposits $ 5,635,187 $ 5,599,872 $ 5,532,327 $ 5,515,652 $ 5,708,492 Loan to deposit ratio 75.7 % 77.4 % 80.0 % 82.2 % 82.0 % Capital: Book value per share $ 23.31 $ 24.44 $ 24.43 $ 24.66 $ 25.61 Tangible book value per share(1) $ 16.25 $ 17.40 $ 17.36 $ 17.56 $ 18.45 Leverage ratio 9.9 % 10.0 % 10.0 % 10.1 % 9.9 % Total capital ratio 14.1 % 14.1 % 13.9 % 13.9 % 13.6 % Credit Quality: Nonperforming assets to total assets 0.07 % 0.08 % 0.10 % 0.12 % 0.13 % ACL on loans to loans receivable 1.10 % 1.11 % 1.12 % 1.13 % 1.10 % Dollars in thousands (1) Represents a non-GAAP financial measure QUARTERLY FINANCIAL STATISTICS

 
v3.24.3
Cover Page Cover Page
Oct. 24, 2024
Document Information [Line Items]  
Document Type 8-K
Document Period End Date Oct. 24, 2024
Entity Registrant Name HERITAGE FINANCIAL CORP
Entity File Number 000-29480
Entity Incorporation, State or Country Code WA
Entity Tax Identification Number 91-1857900
Entity Address, Address Line One 201 Fifth Avenue SW,
Entity Address, City or Town Olympia
Entity Address, State or Province WA
Entity Address, Postal Zip Code 98501
City Area Code (360)
Local Phone Number 943-1500
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common stock, no par value
Trading Symbol HFWA
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001046025
Amendment Flag false
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