Heritage Financial : Investor Presentation Q2 2026

About this update from Heritage Financial Corporation

INVESTOR PRESENTATION Q2 2026 HERITAGE FINANCIAL CORPORATION OVERVIEW Certain locations of branches overlap on the map. Represents a non-GAAP financial measure Market information as of July 6, 2026. Return on average equity Return on average tangible common equity OVERVIEW General Overview Nasdaq symbol HFWA Stock price (2) $29.81 Market capitalization (2) $1.2 billion Institutional ownership (2) 85.9% Headquarters Olympia, WA # of branches 66 Year established 1927 Q2 2026 Financial Highlights Assets $8.4 billion Deposits $7.0 billion Loans receivable $5.7 billion Net income $17.5 million Net interest margin 3.99% ROAE (3) 6.33% ROATCE (1)(4) 10.17% Adjusted ROATCE (1)(4) 13.29% Efficiency ratio 76.5% Adjusted efficiency ratio (1) 63.9% Leverage ratio 10.4% Total capital ratio 13.4% Heritage Location Heritage Branch Metropolitan Statistical Area Boise City, ID Bremerton-Silverdale-Port Orchard, WA Eugene-Springfield, OR Portland-Vancouver-Hillsboro, OR-WA Seattle-Tacoma-Bellevue, WA Spokane-Spokane Valley, WA 4 COMPANY STRATEGY Allocate capital to organically grow our core banking business Successful hiring of individuals and teams of bankers in high-growth and dynamic Seattle and Portland markets as well as other key markets including branch openings in Eugene, Oregon and Boise, Idaho and Spokane, Washington Disciplined approach to concentration risk and active portfolio management Improve operational efficiencies and rationalize branch network Focused on achieving increased efficiencies with operational scale, internal focus on improving processes and technology solutions Closed/Consolidated 36 branches since the beginning of 2010, including 12 branches in 2021 and one branch in 2023 Generate stable profitability and risk adjusted returns Adjusted return on average tangible common equity (1) ("ROATCE") averaged 12.0% from 2023 to 2025. Five-year growth in tangible book value (1) of $2.39, or 14.3%, to $19.15 at June 30, 2026 from $16.76 at June 30, 2021 Remain active and disciplined in M&A On January 31, 2026, completed the acquisition of Olympic Bancorp, Inc. - $1.6B in assets. Six completed acquisitions in Washington and Oregon since 2013 Target metrics = IRR of >15% with earnbacks < 3 years Maintain conservative underwriting standards and actively manage the loan portfolio Long track record of strong underwriting with conservative risk profile Disciplined approach to concentration risk Net charge-offs on loans to average loans remains low at 0.03% for the quarter ended June 30, 2026 Focus on core deposits to increase franchise value over the long term 28.0% noninterest demand deposits to total deposits at June 30, 2026 1.21% cost of total deposits; top 12% performance among US publicly traded banks in Q1 2026 Engage in proactive capital management History of increasing regular dividends and utilizing special dividends to manage capital Strong capital ratios: leverage ratio (3) = 10.4%; total capital ratio (3) = 13.4% Represents a non-GAAP financial measure 5 Comparable cost of total deposits provided by S&P Global Market Intelligence for the first quarter of 2026 and includes banks nationwide with shares on Nasdaq or NYSE with total assets less than $100 billion excluding pending merger targets Current quarter capital ratios are estimates pending completion and filing of the Company's regulatory reports STRONG AND DIVERSE ECONOMIC LANDSCAPE 13.1% 12.9% 12.7% 11.3% 14.3% Seattle MSA Portland MSA Boise MSA Bremerton MSA USA 4.8% 4.7% 4.5% 3.3% 4.3% 3.5% 2.6% 2.6% 1.1% 7.8% $124.6 $104.9 $109.4 $92.5 $86.9 Unemployment rate 2026-2031 Projected Population Growth 2026-2031 Projected Median Household Income Growth Median household income (dollars in thousands) Major Employers in the Pacific Northwest Data obtained from https://www.bls.gov , https://www.bea.gov and S&P Global Market Intelligence Unemployment data reflects the BLS's latest monthly Economic New Release - Employment & Unemployment 6 Economic data as of January 2026 LOANS AND DEPOSITS BY LOCATION Deposit by MSA Seattle-Tacoma-Bellevue WA Portland-Vancouver-Hillsboro OR-WA Bremerton-Silverdale-Port Orchard WA Oak Harbor WA Olympia-Lacey-Tumwater WA Mount Vernon-Anacortes WA Yakima WA Port Townsend WA Bellingham WA Longview-Kelso WA Shelton WA Port Angeles WA Other $515 $459 $336 $224 $163 $160 $147 $114 $93 $354 $933 $837 $2,704 Loans by MSA Seattle-Tacoma-Bellevue WA Portland-Vancouver-Hillsboro OR-WA Bremerton-Silverdale-Port Orchard WA Mount Vernon-Anacortes WA Olympia-Lacey-Tumwater WA Bellingham WA Boise City ID Yakima WA Eugene-Springfield OR Other $335 $237 $186 $181 $125 $102 $91 $776 $948 $2,767 7 MSA = Metropolitan or Micropolitan Statistical Area Location based upon branch or office location POTENTIAL GROWTH OPPORTUNITIES Bank headquarters 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 banks between $200 million and $500 million in assets 9 banks between $500 million and $1.0 billion in assets 12 banks between $1.0 billion and $3.5 billion in assets Target metrics include 15% IRR and earnback of < 3 years. Map obtained from S&P Global Market Intelligence Certain locations of bank headquarters overlap on the map 8 Financial information as of the most recent quarter publicly available Excluding banks with pending mergers and acquisitions HISTORICAL GROWTH ORGANIC AND ACQUISITIVE Merged with Washington Banking Company $1.7B in assets Acquired Puget Sound Bancorp $639MM in assets Premier Commercial Bancorp $440MM in assets Acquired Olympic Bancorp $1.6B in assets $15.02 $15.68 $16.08 $16.88 $20.63 $22.85 $22.10 $15.07 $15.77 $24.34 $17.19 $22.73 $15.66 $24.44 $17.40 $25.40 $18.22 $27.13 $19.98 $27.05 $27.13 $19.07 $19.15 $8,431 $11.41 $10.73 $12.70 $11.86 $13.54 $6,615 $7,432 $6,980 $7,175 $7,106 $6,967 $1,591 $6,907 $5,553 $1,079 $3,879 $4,113 $4,238 $3,651 $1,747 $1,712 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Q1 2026 Q2 2026 Organic Assets Acquired Assets Book value per share Tangible book value per share (1) (1) Represents a non-GAAP financial measure 9 GROWTH STRATEGY Bank Acquisitions and Team Additions 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 and sales position in greater Seattle, Washington area. 2025 Expanded into a new market with addition of commercial banking team and loan production office in Spokane, Washington in January 2025 (branch opened May 2026) 2026 Acquired Olympic Bancorp, Inc. - $1.6B in assets Bank Acquisition Team Addition 10 FINANCIAL UPDATE LOAN PORTFOLIO Loan Portfolio Composition $2,466 $2,509 $2,058 $1,909 $1,698 $959 $1,003 $1,035 $1,214 $1,059 $1,228 $1,051 $843 $818 $718 $375 $414 $403 $479 $359 $343 $361 $412 $349 $397 $171 $165 $170 $209 $214 2023 2024 2025 Q1 2026 Q2 2026 Consumer Residential real estate Construction & land development Commercial and Industrial (C&I) Owner-occupied CRE Non-owner occupied CRE $141 New Loan Commitments* $141 $111 $117 $88 $94 $98 $100 $81 $75 $63 $71 $49 $58 $37 $20 $24 $33 $17 $19 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Consumer Construction & land development Commercial and Industrial (C&I) Commercial Real Estate (CRE) *New loan commitments in Q1 2026 do not include Olympic activity prior to acquisition date of January 31, 2026. 12 LINE OF CREDIT ("LOC") UTILIZATION LOC Utilization Rates 70.2% 57.3% 58.4% 53.8% 54.3% 34.4% 34.1% 34.5% 31.1% 31.6% 28.2% 29.7% 28.8% 30.7% 29.8% 2023 2024 2025 Q1 2026 Q2 2026 Utilization Rate - Consumer LOCs Utilization Rate - Construction LOCs Utilization Rate - C&I LOCs Construction Commitments $769 $682 $706 $731 $599 $355 $203 $294 $334 $256 $414 $479 $343 $412 $397 2023 2024 2025 Q1 2026 Q2 2026 Outstanding Balance Available Credit 13 Commercial Business Loans by Industry Exposure COMMERCIAL LOAN EXPOSURE Health care and social assistance 9.5% Industry Amount WARR at 06/30/26 Real estate, rental and leasing $2,719 4.5 Health care and social assistance 455 4.3 Accommodation and food services 189 5.2 Retail trade 134 4.6 Construction 196 5.0 Other services (except Public administration) 157 4.8 Manufacturing 110 4.8 All other industries 828 4.5 Total $4,788 4.5 Accommodation and food services 3.9% Real estate, rental and leasing 56.8% Retail trade 2.8% Construction 4.1% Other Services (except Public administration) 3.3% Manufacturing 2.3% All other industries 17.3% CRE Loans only by Collateral Type Retail store / shopping center Multi-family 16.4% Mixed use property 4.2% Collateral Type Amount WARR at 06/30/26 Office $685 4.3 Industrial 669 4.6 Retail store / shopping center 439 4.5 Multi-family 615 4.6 Mixed use property 157 4.7 Motel / hotel 111 5.1 Single purpose 136 4.7 Warehouse 128 4.6 Mini-storage 275 3.9 Recreational / school 90 4.8 Other 432 4.6 Total $3,737 4.5 11.7% Industrial 17.9% Motel / hotel 3.0% Single purpose 3.6% Warehouse 3.4% Mini-storage 7.4% WARR = Weighted average risk rating Categorized by NAICS code. Office - Non-owner occupied CRE 9.8% Office - Owner-occupied CRE 8.5% Recreational / school 2.4% Other 11.7% 14 CHANGES IN LOANS RECEIVABLE Change in loans - Q2 2026 $162 $5,723 $16 $5,748 $(103) $(50) Loans receivable at March 31, 2026 Loans originated Prepayments Maturities / Payoffs Net advances/ payments Loans receivable at June 30, 2026 Change in loans - YTD 2026 $259 $954 $23 $5,748 $(175) $(96) $4,783 Loans receivable at Loans acquired Loans originated Prepayments Payoffs Net advances/ Loans receivable at December 31, 2025 payments June 30, 2026 15 NONACCRUAL LOANS AND NET CHARGE-OFFS Nonaccrual Loans 0.44% 0.26% 0.27% 0.10% 0.08% $21 $15 $16 2023 2024 2025 Q1 2026 Q2 2026 $4 $4 Nonaccrual loans Nonaccrual loans to loans receivable Net charge-offs (recoveries) on loans to average loans, annualized 0.06% 0.04% 0.04% 0.04% 0.03% 0.03% 0.02% 0.01% (0.01)% 2023 2024 2025 2026 YTD Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 0.08% 0.05% 0.03% 0.00% (0.03)% 16 CRITICIZED LOANS $225 $231 $179 $188 $150 $71 $80 $111 $96 $65 $64 $4 $4 $21 $15 $16 2023 2024 2025 Q1 2026 Q2 2026 $106 $104 $90 $125 Substandard - nonaccrual Substandard - accrual Special mention Criticized Loans by Loan Segment Criticized Loans by Collateral Type Construction & land development 7.5% Consumer 0.5% Commercial & industrial 32.9% Other CRE 19.5% Non-CRE 26.6% Duplex/Tri-Plex/4-Plex 0.4% Residential real estate 1.0% Industrial 6.0% Motel/Hotel 8.0% Non-owner occupied CRE 37.5% Owner-occupied CRE 20.6% Farm-Bldgs/Land 4.5% Elder Care 3.9% Mixed Use Property 6.3% Office 8.3% Multi-Family 4.8% Retail Store/Shopping Center 11.7% 17 CRITICIZED LOANS AND NET CHARGE-OFF HISTORY Criticized Loans to Total Loans Proactive Credit Management Heritage proactively downgrades loans that are experiencing financial difficulty. Criticized loans (1) to total loans higher than peer median (2) since 2019 NCOs recognized during the same period were generally lower than peer median. 6.50% 4.81% 3.79% 3.93% 3.93% 3.34% 3.45% 3.73% 3.37% 3.22% 3.25% 2.63% 2.66% 2.05% 1.96% 2.27% 2019 2020 2021 2022 2023 2024 2025 Q1 2026 Heritage Peer Median Net Charge-offs to Average Loans 0.08% 0.05% 0.06% 0.06% 0.07% 0.07% 0.09% 0.07% 0.02% 0.01% 0.01% 0.06% 0.03% 0.04% (0.03)% (0.01)% 2019 2020 2021 2022 2023 2024 2025 Q1 2026 Heritage Peer Median 18 Criticized loans includes loans graded special mention or worse Peer Median is the median of 20 identified peer banks and is as of March 31, 2026 ALLOWANCE FOR CREDIT LOSSES ("ACL") ON LOANS Change in ACL on Loans - Q2 2026 $60,551 $46 $- $59,473 $(79) $(1,045) March 31, 2026 Change in loan balance Change in collective rate Change in rate and balance Individually evaluated loans June 30, 2026 ACL on Loans 1.11% 1.09% 1.10% 1.06% 1.03% 2023 2024 2025 Q1 2026 Q2 2026 $47,999 $52,584 $52,468 $59,473 $60,551 ACL on loans ($) ACL on loans / Loans (%) Dollars in thousands 19 DEPOSITS Average Deposit Balances and Cost of Total Deposits $6,922 $7,100 $6,741 $5,706 $5,618 1.90% $5,813 $5,779 $5,843 $5,886 1.89% 1.94% 1.69% 1.89% 1.83% 1.71% 1.67% 1.03% 1.34% 1.36% 1.23% 1.40% 1.37% 1.32% 1.25% 1.21% 0.69% 2023 2024 2025 2026 YTD Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Average deposits Cost of total deposits Cost of int-bearing deposits Deposit Composition 12.4% 8.7% 17.2% 7.4% 15.9% 7.1% 15.5% 8.4% 15.0% 8.3% 19.5% 20.5% 22.5% 21.9% 22.4% 28.7% 25.8% 27.5% 25.7% 26.3% 30.6% 29.1% 27.0% 28.5% 28.0% 2023 2024 2025 Q1 2026 Q2 2026 Noninterest demand deposits Interest bearing demand deposits Money market accounts Savings accounts Certificates of deposit 20 Attention : This is an excerpt of the original content. 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