HERITAGE FINANCIAL CORP WA

Net Income Overview

Net income decreased $14.7 million, or 71.9%, to $5.7 million, or $0.16 per diluted common share, for the three months ended March 31, 2024, compared to $20.5 million, or $0.58 per diluted common share, for the same period in 2023.

The decrease in net income was due primarily to a pre-tax loss of $10.0 million on the sale of investment securities due to management's strategic repositioning of the Company's balance sheet during the three months ended March 31, 2024. The Company sold investment securities at an amortized cost of $144.0 million and an estimated weighted average book yield of 2.37% and purchased $33.1 million of investment securities with an estimated weighted average book yield of 6.05%. The remaining proceeds from sales were used to fund loan growth and invested in interest earning deposits with a current yield of 5.40%.

The decline in net income was also due to an $8.3 million decrease in net interest income due primarily to an increase in interest expense from higher funding costs, partially offset by an increase in yields earned on interest earning assets due to higher market interest rates.