Heritage Financial CorporationNASDAQ: HFWA

Investor Presentation Q2 2026

· Issued by Heritage Financial Corporation
Watch Heritage Financial explain itHeritage Financial Corporation (HFWA) Q2 2026 Earnings Call · Replay · Jul 23

INVESTOR PRESENTATION Q2 2026



HERITAGE FINANCIAL CORPORATION OVERVIEW



Certain locations of branches overlap on the map.

  1. Represents a non-GAAP financial measure

  2. Market information as of July 6, 2026.

  3. Return on average equity

  4. 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%

  1. Represents a non-GAAP financial measure

    5

  2. 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

  3. 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

  1. Criticized loans includes loans graded special mention or worse

  2. 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



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