HERITAGE FINANCIAL CORP /WA/
For the period ended Dec 31, 2025. Filed Feb 27, 2026.
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FY2025 · Filed Feb 27, 2026
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ALLOWANCE FOR CREDIT LOSSES ON LOANS OVERVIEW
The following table provides information regarding changes in our ACL on loans for the years indicated:
| At or For the Years Ended December 31, | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| (Dollars in thousands) | |||
| ACL on loans at the beginning of the period | $52,468 | $47,999 | $42,986 |
| Charge-offs: | |||
| Commercial business | (1,436) | (2,953) | (719) |
| Residential real estate | (27) | — | — |
| Consumer | (485) | (538) | (586) |
| Total charge-offs | (1,948) | (3,491) | (1,305) |
| Recoveries: | |||
| Commercial business | 403 | 855 | 1,372 |
| Residential real estate | 1 | — | — |
| Consumer | 152 | 122 | 210 |
| Total recoveries | 556 | 977 | 1,582 |
| Net (charge-offs) recoveries | (1,392) | (2,514) | 277 |
| Provision for credit losses on loans | 1,508 | 6,983 | 4,736 |
| ACL on loans at the end of period | $52,584 | $52,468 | $47,999 |
| Credit quality ratios: | |||
| ACL on loans to: | |||
| Loans receivable | 1.10% | 1.09% | 1.11% |
| Nonaccrual loans | 250.69 | 1286.30 | 1074.28 |
| Nonaccrual loans to loans receivable | 0.44% | 0.08% | 0.10% |
| Balances at the end of the period: | |||
| Loans receivable | $4,783,266 | $4,802,123 | $4,335,627 |
| Nonaccrual loans | 20,976 | 4,079 | 4,468 |
| Average balances outstanding during the period:(1) | |||
| Commercial business | $3,788,025 | $3,522,065 | $3,289,564 |
| Residential real estate | 382,502 | 399,857 | 369,297 |
| At or For the Years Ended December 31, | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| (Dollars in thousands) | |||
| Real estate construction and land development | 433,049 | 446,713 | 362,919 |
| Consumer | 170,184 | 167,830 | 179,454 |
| Total | $4,773,760 | $4,536,465 | $4,201,234 |
| Net charge-offs (recoveries) during the period to average balances outstanding during the period: | |||
| 2025 | 2024 | 2023 | |
| Commercial business | 0.03% | 0.06% | (0.02)% |
| Residential real estate | 0.01 | — | — |
| Real estate construction and land development | — | — | — |
| Consumer | 0.20 | 0.25 | 0.21 |
| Total | 0.03% | 0.06% | (0.01)% |
(1) Average balances exclude the ACL on loans and loans held for sale, but include loans classified as nonaccrual.
The ACL on loans to loans receivable increased to 1.10% at December 31, 2025, compared to 1.09% at December 31, 2024 primarily to an increase in the weighted average life of residential real estate and real estate construction and land development loans which increased the ACL as a percentage of loans in these segments.
The following table presents the ACL on loans by loan portfolio segment at the indicated dates:
| December 31, 2025 | December 31, 2024 | |||||
|---|---|---|---|---|---|---|
| ACL on Loans | ACL as a % of Loans in Loan Category | % of Loans in Loan Category toTotal Loans | ACL on Loans | ACL as a % of Loans in Loan Category | % of Loans in Loan Category toTotal Loans | |
| (Dollars in thousands) | ||||||
| Commercial business | $39,412 | 1.01% | 81.7% | $38,293 | 1.02% | 78.3% |
| Residential real estate | 3,708 | 1.03 | 7.5 | 3,464 | 0.86 | 8.4 |
| Real estate construction and land development | 7,624 | 2.22 | 7.2 | 8,656 | 1.81 | 9.9 |
| Consumer | 1,840 | 1.08 | 3.6 | 2,055 | 1.25 | 3.4 |
| Total ACL on loans | $52,584 | 1.10% | 100.0% | $52,468 | 1.09% | 100.0% |
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