HERITAGE FINANCIAL CORP /WA/
For the period ended Sep 30, 2025. Filed Nov 7, 2025.
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Sep 30, 2025 · Filed Nov 7, 2025
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INVESTMENT ACTIVITIES OVERVIEW
Investment Activities
Our investment policy is established by the Board and monitored by the Risk Committee of the Board. It is designed primarily to provide and maintain liquidity, generate a favorable return on investments without incurring undue interest rate and credit risk, and complement the Company's lending activities. The policy permits investment in various types of liquid assets permissible under applicable regulations. Investment in sub-investment grade bonds is not permitted under the policy.
The following table provides information regarding our investment securities at the dates indicated:
| September 30, 2025 · December 31, 2024 · Change | ||||||
|---|---|---|---|---|---|---|
| Balance | % ofTotal | Balance | % ofTotal | $ | % | |
| (Dollars in thousands) | ||||||
| Investment securities available for sale, at fair value: | ||||||
| U.S. government and agency securities | $11,642 | 0.9% | $12,544 | 0.9% | $(902) | (7.2)% |
| Municipal securities | 51,197 | 3.9 | 50,942 | 3.5 | 255 | 0.5 |
| Residential CMO and MBS(1) | 298,737 | 22.8 | 369,331 | 25.2 | (70,594) | (19.1) |
| Commercial CMO and MBS(1) | 255,995 | 19.5 | 309,741 | 21.0 | (53,746) | (17.4) |
| Corporate obligations | 7,019 | 0.5 | 11,770 | 0.8 | (4,751) | (40.4) |
| Other asset-backed securities | 6,641 | 0.5 | 10,066 | 0.7 | (3,425) | (34.0) |
| Total | $631,231 | 48.1% | $764,394 | 52.1% | $(133,163) | (17.4)% |
| Investment securities held to maturity, at amortized cost: | ||||||
| U.S. government and agency securities | $151,297 | 11.5% | $151,216 | 10.3% | $81 | 0.1% |
| Residential CMO and MBS(1) | 224,654 | 17.1 | 244,309 | 16.6 | (19,655) | (8.0) |
| Commercial CMO and MBS(1) | 305,675 | 23.3 | 307,760 | 21.0 | (2,085) | (0.7) |
| Total | $681,626 | 51.9% | $703,285 | 47.9% | $(21,659) | (3.1)% |
| Total investment securities | $1,312,857 | 100.0% | $1,467,679 | 100.0% | $(154,822) | (10.5)% |
(1)U.S. government agency and government-sponsored enterprise CMO and MBS obligations.
Total investment securities decreased $154.8 million, or 10.5%, to $1.31 billion at September 30, 2025 from $1.47 billion at December 31, 2024. The Company sold $152.4 million of investment securities at a pre-tax loss of $10.7 million as part of its strategic balance sheet repositioning during the nine months ended September 30, 2025. In addition, there were investment maturities and repayments of $116.1 million during the nine months ended September 30, 2025. The decrease was partially offset by investment securities purchases of $84.7 million and a $28.3 million decrease in unrealized losses on available for sale securities during the nine months ended September 30, 2025.
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