Heritage Financial (NASDAQ:HFWA) Releases Earnings Results, Beats Expectations By $0.09 EPS

Heritage Financial (NASDAQ:HFWA) issued its quarterly earnings data on Thursday. The financial services provider reported $0.66 earnings per share for the quarter, beating the consensus estimate of $0.57 by $0.09, Zacks reports. Heritage Financial had a net margin of 20.10% and a return on equity of 8.61%. The firm had revenue of $66.35 million for the quarter, compared to the consensus estimate of $65.95 million.

Here are the key takeaways from Heritage Financial’s conference call:

• Heritage reported stronger Q4 results with an improving net interest margin (3.7%), adjusted diluted EPS up 18% sequentially (29% YoY), and ROA rising to 1.29%, driving net interest income up $1.0M Q/Q and $4.6M YoY.
• The board and regulators approved the pending merger with Olympic Bancorp/Kitsap Bank, expected to close end of January and provide low-cost deposits and margin accretion that management says could push consolidated margin toward the ~4% range over time.
• Liquidity and funding improved: total deposits rose (driven by a $100M increase in interest-bearing demand), deposit costs continued to decline, and borrowings were reduced to $20M from $138M at Q3-end, easing funding pressure.
• Credit quality remains broadly healthy with low net charge-offs (0.03% for 2025) and no OREO, but non-accruals rose to $21M (0.44%) and substandard loans increased—notably two C&I downgrades near $30M—warranting monitoring.
• Loan production saw $254M of commercial commitments (down from prior quarter) and elevated payoffs/prepayments pushed net advances negative in 2025, but management expects payoffs to moderate and loan growth to resume in 2026 as the pipeline improves.

Heritage Financial Stock Performance

Shares of NASDAQ HFWA opened at $26.58 on Friday. The company has a debt-to-equity ratio of 0.05, a current ratio of 0.83 and a quick ratio of 0.84. Heritage Financial has a one year low of $19.84 and a one year high of $28.35. The business’s 50-day moving average price is $24.42 and its two-hundred day moving average price is $23.97. The company has a market capitalization of $902.66 million, a P/E ratio of 13.56 and a beta of 0.52.

Heritage Financial Announces Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Wednesday, February 11th. Investors of record on Wednesday, January 28th will be given a dividend of $0.24 per share. The ex-dividend date of this dividend is Wednesday, January 28th. This represents a $0.96 dividend on an annualized basis and a yield of 3.6%. Heritage Financial’s dividend payout ratio (DPR) is presently 58.18%.

Analyst Ratings Changes

HFWA has been the topic of a number of recent analyst reports. Keefe, Bruyette & Woods lifted their price target on Heritage Financial from $26.00 to $28.00 and gave the company a “market perform” rating in a report on Monday, September 29th. Weiss Ratings restated a “hold (c)” rating on shares of Heritage Financial in a research report on Thursday. Wall Street Zen upgraded Heritage Financial from a “sell” rating to a “hold” rating in a research report on Saturday, November 15th. Zacks Research cut Heritage Financial from a “strong-buy” rating to a “hold” rating in a research note on Tuesday, November 25th. Finally, DA Davidson raised their price target on Heritage Financial from $29.00 to $32.00 and gave the company a “buy” rating in a report on Friday. Two equities research analysts have rated the stock with a Buy rating and three have given a Hold rating to the company. According to data from MarketBeat.com, the stock has a consensus rating of “Hold” and an average target price of $30.33.

Insider Activity at Heritage Financial

In other news, President Bryan Mcdonald purchased 19,106 shares of the stock in a transaction that occurred on Thursday, November 20th. The stock was acquired at an average price of $22.32 per share, with a total value of $426,445.92. Following the purchase, the president owned 31,363 shares in the company, valued at $700,022.16. This represents a 155.88% increase in their position. The purchase was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. Insiders own 1.80% of the company’s stock.

Institutional Inflows and Outflows

Several hedge funds have recently modified their holdings of HFWA. Gabelli Funds LLC bought a new stake in Heritage Financial in the second quarter worth $446,000. Lazard Asset Management LLC lifted its position in shares of Heritage Financial by 8.7% in the second quarter. Lazard Asset Management LLC now owns 33,129 shares of the financial services provider’s stock worth $789,000 after buying an additional 2,663 shares during the last quarter. JPMorgan Chase & Co. boosted its stake in shares of Heritage Financial by 4.9% during the 3rd quarter. JPMorgan Chase & Co. now owns 36,996 shares of the financial services provider’s stock worth $895,000 after acquiring an additional 1,734 shares in the last quarter. Rafferty Asset Management LLC increased its holdings in shares of Heritage Financial by 33.6% during the 2nd quarter. Rafferty Asset Management LLC now owns 38,104 shares of the financial services provider’s stock valued at $908,000 after acquiring an additional 9,587 shares during the last quarter. Finally, First Trust Advisors LP increased its holdings in shares of Heritage Financial by 70.9% during the 2nd quarter. First Trust Advisors LP now owns 39,535 shares of the financial services provider’s stock valued at $943,000 after acquiring an additional 16,401 shares during the last quarter. Institutional investors and hedge funds own 78.30% of the company’s stock.

Key Heritage Financial News

Here are the key news stories impacting Heritage Financial this week:

• Positive Sentiment: Q4 results topped expectations: Heritage reported $0.66 EPS (vs. $0.57 consensus) and revenue modestly beat, with improved ROA and net margin — a fundamental beat that supports earnings momentum. PR Newswire: Q4 Results
• Positive Sentiment: Analyst upgrade: DA Davidson raised its price target to $32 and assigned a “buy” rating, implying ~20% upside from current levels — a bullish signal from a large regional-bank analyst. The Fly: Price Target Raised
• Positive Sentiment: Merger synergy potential: Management outlined near-4% margin improvement potential from integrating Olympic, which, if realized, could materially lift profitability over time. Seeking Alpha: Margin Improvement
• Neutral Sentiment: Full disclosure available: The earnings call transcript, slide deck and detailed Q4 presentation are published for deeper review of guidance, loan/deposit trends and expense assumptions. Use these to vet the merger and margin assumptions. Seeking Alpha: Earnings Transcript
• Neutral Sentiment: Market coverage: Multiple outlets highlight the “strong quarter and acquisition prep” narrative; useful for context but not new company-specific data. TipRanks: Strong Quarter & Acquisition
• Negative Sentiment: Shareholder-approved stock issuance for the merger raises near-term dilution concerns — investors may be weighing dilution vs. long-term synergies, pressuring the share price. TipRanks: Shareholder Approval
• Negative Sentiment: Market reaction and volume: Despite beats and an analyst upgrade, shares are trading lower on elevated volume — likely a mix of profit-taking after recent gains, merger/dilution uncertainty, and short-term positioning. Benzinga: Market Note

About Heritage Financial

Heritage Financial Corporation (NASDAQ:HFWA) is a bank holding company headquartered in Spokane, Washington. Through its primary subsidiary, Heritage Bank, the company provides a comprehensive range of banking and financial services to both individual and commercial clients. Heritage Bank’s offerings encompass deposit products, lending solutions, treasury and cash management services, mortgage banking, and wealth management, positioning the organization as a full-service community bank.

The company’s lending portfolio includes commercial real estate loans, agricultural loans, small business administration (SBA) loans, construction and development financing, and a variety of consumer mortgage products.