HERITAGE FINANCIAL CORP /WA/

Net Income

Net income increased $7.7 million, or 67.8%, to $19.2 million, or $0.55 per diluted common share, for the three months ended September 30, 2025, compared to $11.4 million, or $0.33 per diluted common share, for the same period in 2024.

The increase in net income was primarily due to a $6.5 million increase in noninterest income and a $4.7 million decrease in total interest expense. Noninterest income increased due to a $6.9 million pre-tax loss on the sale of investment securities recognized during the three months ended September 30, 2024 while no loss was recognized during the three months ended September 30, 2025. Total interest expense decreased due primarily to a decrease in borrowing costs.

These improvements were partially offset by a $2.3 million increase in noninterest expense due primarily to increase in compensation and employee benefits and professional services expense.

Comparison of the nine months ended September 30, 2025 to the comparable period in the prior year.

Net income increased$14.0 million, or 44.6%, to$45.3 million, or $1.31 per diluted common share, for the nine months ended September 30, 2025, compared to $31.3 million, or $0.90 per diluted common share, for the same period in 2024.

The increase in net income was due primarily toa $4.6 million increase in total interest income due to increased yields earned on interest earning assets as a result of higher market interest rates, a $5.8 million decrease in total interest expense due to lower funding costs and a$9.6 million increase in noninterest income due to lower losses on sales of investment securities.

These improvements were partially offset by an increase in noninterest expense of$5.3 million due primarily to increase in compensation and employee benefits and professional services expense.