Heritage Financial Corporation · NASDAQ:HFWA
Heritage Financial — Q1 2026 Earnings Presentation
40 slides from Heritage Financial's earnings presentation, Apr 23, 2026
Slide 1: Investor Presentation Q1 2026
INVESTOR PRESENTATION Q1 2026
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Heritage Financial Corporation (the" Company") intends such forward-loo
Slide 3: Heritage Financial Corporation Overview
HERITAGE FINANCIAL CORPORATION OVERVIEW
Slide 4: Overview
OVERVIEW Heritage Location General Overview Heritage Branch Nasdaq symbol HFWA Metropolitan Statistical Area Stock price(2) $27.41 Market capitalization(2) $1,127 million Boise City, ID Institutional ownership(2) 71.9% Bremerton-Silverdale-Port Orchard, WA Headquarters Olympia, WA Eugene-Springfield
Slide 5: Company Strategy
COMPANY STRATEGY Successful hiring of individuals and teams of bankers in high-growth and dynamic Seattle and Allocate capital to organically grow Portland markets as well as other key markets including branch openings in Eugene, Oregon and our core banking business Boise, Idaho and loan productio
Slide 6: Strong and Diverse Economic Landscape
STRONG AND DIVERSE ECONOMIC LANDSCAPE $124,630 14.3% $109,374 13.1% 12.9% 12.7% $104,949 $92,508 Seattle MSA 11.3% $86,867 Portland MSA 7.8% Boise MSA 5.0% 4.9% 5.0% 4.4% Bremerton MSA 3.2% 3.5% 2.6% 2.6% 1.1% USA Unemployment rate 2026-2031 Projected 2026-2031 Projected Median Median Population Gro
Slide 7: Loans and Deposits by Location
LOANS AND DEPOSITS BY LOCATION Deposit by MSA Seattle-Tacoma-Bellevue WA $2,810 Portland-Vancouver-Hillsboro OR-WA $929 Bremerton-Silverdale-Port Orchard WA $863 Oak Harbor WA $528 Olympia-Lacey-Tumwater WA $462 Mount Vernon-Anacortes WA $337 Yakima WA $231 Port Townsend WA $166 Bellingham WA $159 L
Slide 8: Potential Growth Opportunities
POTENTIAL GROWTH OPPORTUNITIES • 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. – 10
Slide 9: Historical Growth Organic and Acquisitive
HISTORICAL GROWTH ORGANIC AND ACQUISITIVE Acquired Merged with Acquired Puget Sound Bancorp $639MM in assets Washington Banking Company $1.7B in assets Olympic Bancorp $1.6B in assets Premier Commercial Bancorp $440MM in assets $27.13 $27.05 $25.40 $24.34 $24.44 $22.85 $22.73 $22.10 $20.63 $19.98 $1
Slide 10: Growth Strategy
GROWTH STRATEGY Bank Acquisitions and Team Additions YEAR ACTIVITY • Acquired Valley Community Bancshares - $254MM in assets 2013 • Acquired Northwest Commercial Bank - $65MM in assets 2014 • Merged with Washington Banking Company - $1.7B in assets • Added a commercial banking team in Seattle, Washi
Slide 11: Financial Update
FINANCIAL UPDATE
Slide 12: Loan Portfolio
LOAN PORTFOLIO Loan Portfolio Composition $2,466 $2,058 $1,909 $1,698 $1,214 $1,003 $1,035 $1,059 $959 $843 $818 $718 $479 $375 $414 $403 $359 $361 $412 $343 $171 $165 $170 $209 2023 2024 2025 Q1 2026 Consumer Residential real estate Construction & land development Commercial and Industrial (C&I) Ow
Slide 13: Line of Credit (LOC) Utilization
LINE OF CREDIT ("LOC") UTILIZATION LOC Utilization Rates 70.2% 57.3% 58.4% 53.8% 34.4% 34.1% 31.1% 31.6% 29.7% 30.7% 28.2% 28.8% 2023 2024 2025 Q1 2026 Utilization Rate - Consumer LOCs Utilization Rate - Construction LOCs Utilization Rate - C&I LOCs Construction Commitments $769 $682 $706 $599 $355
Slide 14: Commercial Loan Exposure
COMMERCIAL LOAN EXPOSURE Health care and social assistance Commercial Business Loans by Industry Exposure 9.9% Accommodation and food services Industry Amount WARR at 4.1% 03/31/26 Retail trade Real estate, rental and leasing $2,676 4.4 3.0% Health care and social Construction 469 4.3 assistance 4.0
Slide 15: Changes in Loans Receivable
CHANGES IN LOANS RECEIVABLE Change in loans - Q1 2026 $954 $7 $5,723 $(72) $(47) $97 $4,783 Loans receivable at Loans originated Loans acquired Prepayments Maturities / Payoffs Net advances/ Loans receivable at December 31, 2025 payments March 31, 2026 Change in loans - 2025 $583 $— $(292) $4,802 $4
Slide 16: Nonaccrual Loans and Net Charge-offs
NONACCRUAL LOANS AND NET CHARGE-OFFS Nonaccrual Loans 0.44% 0.26% 0.10% 0.08% $21 $15 $4 $4 2023 2024 2025 Q1 2026 Nonaccrual loans Nonaccrual loans to loans receivable Net charge-offs (recoveries) on loans to average loans, annualized 0.08% 0.06% 0.05% 0.04% 0.04% 0.04% 0.03% 0.03% 0.03% 0.01% 0.00
Slide 17: Criticized Loans
CRITICIZED LOANS $225 $179 $188 $150 $104 $71 $111 $80 $96 $106 $65 $64 $4 $4 $21 $15 2023 2024 2025 Q1 2026 Substandard - nonaccrual Substandard - accrual Special mention Criticized Loans by Loan Segment Criticized Loans by Collateral Type Construction Consumer & land 0.6% development Commercial Ot
Slide 18: Criticized Loans and Net Charge-off History
CRITICIZED LOANS AND NET CHARGE-OFF HISTORY Criticized Loans to Total Loans 6.50% Proactive Credit 4.81% Management 3.79% 3.73% 3.93% • Heritage proactively 3.34% 3.45% downgrades loans that 3.47% 3.38% are experiencing financial 2.63% 2.32% 2.66% 2.05% 1.96% difficulty. • Criticized loans(1) to tot
Slide 19: Allowance for Credit Losses (ACL) on Loans
ALLOWANCE FOR CREDIT LOSSES ("ACL") ON LOANS Change in ACL on Loans - Q1 2026 $9,339 $70 $— $60,551 $(274) $(1,168) $52,584 December 31, 2025 Initial ACL recorded Change in loan Change in collective Change in rate and Individually March 31, 2026 for acquisition balance rate balance evaluated loans A
Slide 20: Deposits
DEPOSITS Average Deposit Balances and Cost of Total Deposits $6,741 $5,706 $5,813 $5,744 $5,779 $5,843 $5,886 $5,618 1.90% 1.89% 1.92% 1.94% 1.89% 1.83% 1.71% 1.03% 1.34% 1.36% 1.38% 1.40% 1.37% 1.32% 1.25% 0.69% 2023 2024 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Average deposits Cost of total d
Slide 21: Deposit Composition
DEPOSIT COMPOSITION Deposit portfolio as of March 31, 2026: Consumer Accounts vs. Business • Majority of deposits are to customers with relationships of Accounts $1 million or less. • Uninsured deposits at 39% of total deposits. • 13% of uninsured deposits are public deposits that are 16% 100% pledg
Slide 22: Investment Portfolio
INVESTMENT PORTFOLIO Investment Balances and Investment Yield $1,874 $178 $1,669 $1,468 $1,414 $1,346 $1,313 $316 $1,282 $1,282 $33 $28 $88 $57 $3 3.33% 3.33% 3.34% 3.38% 3.35% 3.43% 3.26% 3.02% 2023 2024 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Portfolio yield New purchases Portfolio Duration 4
Slide 23: Investment Cashflows
INVESTMENT CASHFLOWS Investment cashflows(1) are estimated to be $681 million through Q1 of 2029. Q2 2026 $35 $14 $49 Q3 2026 $35 $14 $49 Q4 2026 $34 $13 $47 Q1 2027 $56 $13 $69 Q2 2027 $43 $13 $56 Q3 2027 $32 $12 $44 Q4 2027 $26 $12 $38 Q1 2028 $58 $12 $70 Q2 2028 $85 $11 $96 Q3 2028 $52 $11 $63 Q4
Slide 24: Investment Portfolio
INVESTMENT PORTFOLIO Strong Credit Quality of Portfolio: AFS Securities • 91.5% of AFS in U.S. government and agency securities • Only 1.2% of AFS are rated less than AA • 97.7% of AFS portfolio are unpledged HTM Securities • All HTM investments are U.S. government and agency securities • 100% HTM p
Slide 25: Net Interest Margin
NET INTEREST MARGIN Quarterly Change in Net Interest Margin 0.06% 0.02% 3.96% 0.05% 0.09% 3.72% 0.03% (0.01)% QTD Q4 2025 Loans Accretion on Investments Interest earning Deposits Borrowings QTD Q1 2026 purchased loans deposits Net Interest Income $225,155 $224,405 $209,364 $57,371 $58,361 $69,219 $5
Slide 26: Loan Maturity and Repricing
LOAN MATURITY AND REPRICING Adjustable Rate Loans - Repricing Schedule Fixed Rate Loans - Maturity Schedule 6.48% 6.55% 6.45% 6.54% 6.38% 6.33% 6.19% 5.34% 5.38% 5.41% 5.18% 5.26% 6.40% 4.78% 6.20% 6.11% 6.08% 4.46% 5.59% 5.24% $1,473 4.41% $1,197 $397 $445 $377 $323 $314 $259 $225 $160 $186 $177 $9
Slide 27: Profitability Trends
PROFITABILITY TRENDS ROAA and Adjusted ROAA(1) 1.29% 1.18% 1.10% 1.11% 0.99% 1.03% 0.97% 0.88% 1.27% 0.96% 1.09% 0.97% 0.86% 0.79% 0.61% 0.70% 2023 2024 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 ROAA Adjusted ROAA (1) Noninterest Expense/Avg. Assets 2.89% 2.33% 2.36% 2.36% 2.34% 2.36% 2.37% 2.22%
Slide 28: Profitability Trends
PROFITABILITY TRENDS ROAE, ROATCE(1) and Adjusted ROATCE(1) 13.51% 13.36% 12.76% 12.15% 12.16% 11.21% 11.59% 10.53% 13.33% 7.85% 11.86% 11.15% 7.31% 10.63% 11.14% 9.22% 9.68% 8.52% 7.55% 7.61% 7.32% 6.51% 5.06% 5.57% 2023 2024 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 ROAE ROATCE (1) Adjusted ROA
Slide 29: Capital Ratios
CAPITAL RATIOS Equity Ratios 13.2% 13.1% 11.9% 12.2% 10.1% 9.6% 8.8% 9.0% 2023 2024 2025 Q1 2026 Stockholders' equity to total assets (GAAP) Tangible common equity to tangible assets(1) Regulatory Capital Ratios(2) 14.1% 14.1% 13.3% 13.5% 12.9% 12.7% 12.0% 12.2% 10.8% 10.0% 10.0% 10.3% 2023 2024 202
Slide 30: Liquidity Position
LIQUIDITY POSITION Liquidity position at March 31, 2026: • Sufficient liquidity to cover estimated uninsured deposits of $2.8 billion. • Access to brokered deposits of $1.0 billion per internal company policy. Liquidity Sources 109.3% 107.7% 113.0% 100.4% 100.6% $3,202 $145 $268 $2,617 $2,542 $2,509
Slide 31: Shareholder Return
SHAREHOLDER RETURN
Slide 32: Total Shareholder Return
TOTAL SHAREHOLDER RETURN Diluted EPS and Adjusted Diluted EPS(1) Stock Summary(2) $0.66 Ticker HFWA Exchange Nasdaq $2.24 $0.59 $2.01 $0.56 $0.65 Stock price $27.41 $1.80 $0.53 Market capitalization (in millions) $1,127.4 $0.49 $1.96 $0.55 Dividend yield (regular dividend only) 3.5 % $1.75 $0.48 $1.
Slide 33: Appendix - Reconciliation of Non-GAAP Financial Measures and Quarterly Financial Statistics
APPENDIX - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND QUARTERLY FINANCIAL STATISTICS
Slide 34: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 2023 2024 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Adjusted Net Income and Adjusted Return on Average Assets ("ROAA"): Net income (GAAP) $ 61,755 $ 43,258 $ 67,532 $ 13,911 $ 12,215 $ 19,169 $ 22,237 $ 18,947 Exclude (gain) loss on sale of investment securities, net 1
Slide 35: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 2023 2024 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Return on Average Tangible Common Equity ("ROATCE") and Adjusted ROATCE: Net income (GAAP) $ 61,755 $ 43,258 $ 67,532 $ 13,911 $ 12,215 $ 19,169 $ 22,237 $ 18,947 Add amortization of intangible assets 2,434 1,640 1,17
Slide 36: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 2023 2024 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Diluted Earnings per Share and Adjusted Diluted Earnings per Share: Net income (GAAP) $ 61,755 $ 43,258 $ 67,532 $ 13,911 $ 12,215 $ 19,169 $ 22,237 $ 18,947 Exclude (gain) loss on sale of investment securities, net 1
Slide 37: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 2017 2018 2019 2020 2021 2022 2023 2024 2025 Tangible Book Value Per Share: Total stockholders' equity (GAAP) $ 505,305 $ 760,723 $ 809,311 $ 820,439 $ 854,432 $ 797,893 $ 853,261 $ 863,527 $ 921,504 Exclude intangible assets (125,117) (261,553) (257,552) (254,027) (250,9
Slide 38: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Efficiency Ratio and Adjusted Efficiency Ratio Total noninterest expense (GAAP) $ 41,383 $ 41,085 $ 41,615 $ 41,483 $ 56,551 Exclude merger related costs — — 635 385 5,178 Exclude amortization of intangible assets $ 303 $ 302 $ 284
Slide 39: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 2023 2024 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Net Interest Margin, excluding incremental accretion on purchased loans, annualized: Net interest income before provision (GAAP) $ 225,155 $ 209,364 $ 224,405 $ 53,690 $ 54,983 $ 57,371 $ 58,361 $ 69,219 Exclude incre
Slide 40: Quarterly Financial Statistics
QUARTERLY FINANCIAL STATISTICS As of Period End or for the Three Months Ended March 31, June 30, September 30, December 31, March 31, 2025 2025 2025 2025 2026 Profitability: Net income $ 13,911 $ 12,215 $ 19,169 $ 22,237 $ 18,947 Adjusted net income(1) $ 16,979 $ 18,141 $ 19,671 $ 22,541 $ 23,038 Di