HERITAGE FINANCIAL CORP /WA/
For the period ended Dec 31, 2025. Filed Feb 27, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 27, 2026
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
NET INTEREST INCOME AND MARGIN OVERVIEW
One of the Company's key sources of revenue is net interest income. Several factors affect net interest income, including, but not limited to: the volume, pricing, mix and maturity of interest earning assets and interest bearing liabilities; the volume of noninterest earning assets, noninterest bearing demand deposits, other noninterest bearing liabilities and stockholders' equity; market interest rate fluctuations; and asset quality.
Market rates impact the results of the Company's net interest income, including the changes in the federal funds target rate that have been made by the Federal Reserve. The following table provides the federal funds target rate history and changes since December 15, 2022:
| Change Date | Rate (%) | Rate Change (%) |
|---|---|---|
| December 15, 2022 | 4.25% - 4.50% | 0.50% |
| February 2, 2023 | 4.50% - 4.75% | 0.25% |
| March 23, 2023 | 4.75% - 5.00% | 0.25% |
| May 4, 2023 | 5.00% - 5.25% | 0.25% |
| July 27, 2023 | 5.25% - 5.50% | 0.25% |
| September 19, 2024 | 4.75% - 5.00% | (0.50)% |
| November 8, 2024 | 4.50% - 4.75% | (0.25)% |
| December 19, 2024 | 4.25% - 4.50% | (0.25)% |
| September 18, 2025 | 4.00% - 4.25% | (0.25)% |
| October 30, 2025 | 3.75% - 4.00% | (0.25)% |
| December 11, 2025 | 3.50% - 3.75% | (0.25)% |
Average Balances, Yields and Rates Paid
The following table provides relevant net interest income information for the periods indicated:
| Year Ended December 31, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 · 2024 · 2023 | |||||||||||||||||
| AverageBalance(1) · InterestEarned/Paid · AverageYield/Rate · AverageBalance(1) · InterestEarned/Paid · AverageYield/Rate · AverageBalance(1) · InterestEarned/Paid · AverageYield/Rate | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Interest Earning Assets: | |||||||||||||||||
| Loans receivable (2)(3) | $4,773,760 | $262,900 | 5.51% | $4,536,499 | $247,472 | 5.46% | $4,201,737 | $217,284 | 5.17% | ||||||||
| Taxable securities | 1,350,278 | 44,966 | 3.33 | 1,653,295 | 54,972 | 3.32 | 1,937,603 | 58,509 | 3.02 | ||||||||
| Nontaxable securities (3) | 15,449 | 549 | 3.55 | 18,425 | 651 | 3.53 | 63,051 | 1,854 | 2.94 | ||||||||
| Interest earning deposits | 135,603 | 5,821 | 4.29 | 125,036 | 6,617 | 5.29 | 129,807 | 6,818 | 5.25 | ||||||||
| Total interest earning assets | 6,275,090 | 314,236 | 5.01% | 6,333,255 | 309,712 | 4.89% | 6,332,198 | 284,465 | 4.49% | ||||||||
| Noninterest earning assets | 752,048 | 799,791 | 807,826 | ||||||||||||||
| Total assets | $7,027,138 | $7,133,046 | $7,140,024 | ||||||||||||||
| Interest Bearing Liabilities: | |||||||||||||||||
| Certificates of Deposit | $966,429 | $36,266 | 3.75% | $857,079 | $36,922 | 4.31% | $491,653 | $14,554 | 2.96% | ||||||||
| Savings accounts | 426,124 | 1,154 | 0.27 | 451,528 | 920 | 0.20 | 543,096 | 701 | 0.13 | ||||||||
| Interest bearing demand and money market accounts | 2,796,909 | 41,916 | 1.50 | 2,640,487 | 37,227 | 1.41 | 2,771,981 | 24,095 | 0.87 | ||||||||
| Total interest bearing deposits | 4,189,462 | 79,336 | 1.89 | 3,949,094 | 75,069 | 1.90 | 3,806,730 | 39,350 | 1.03 | ||||||||
| Junior subordinated debentures | 22,201 | 1,872 | 8.43 | 21,910 | 2,139 | 9.76 | 21,615 | 2,074 | 9.60 | ||||||||
| Securities sold under agreement to repurchase | — | — | — | — | — | — | 32,976 | 153 | 0.46 | ||||||||
| Borrowings | 185,544 | 8,623 | 4.65 | 456,448 | 23,140 | 5.07 | 369,665 | 17,733 | 4.80 | ||||||||
| Total interest bearing liabilities | 4,397,207 | 89,831 | 2.04% | 4,427,452 | 100,348 | 2.27% | 4,230,986 | 59,310 | 1.40% | ||||||||
| Noninterest bearing demand deposits | 1,623,952 | 1,669,301 | 1,899,317 | ||||||||||||||
| Other noninterest bearing liabilities | 118,300 | 182,121 | 191,679 | ||||||||||||||
| Stockholders’ equity | 887,679 | 854,172 | 818,042 | ||||||||||||||
| Total liabilities and stock-holders’ equity | $7,027,138 | $7,133,046 | $7,140,024 | ||||||||||||||
| Net interest income and spread | $224,405 | 2.97% | $209,364 | 2.62% | $225,155 | 3.09% | |||||||||||
| Net interest margin | 3.58% | 3.31% | 3.56% | ||||||||||||||
(1) Average balances are calculated using daily balances.
(2) Average loans receivable, includes loans held for sale and loans classified as nonaccrual, which carry a zero yield. Interest earned on loans receivable, includes the amortization of net deferred loan fees of $3.7 million, $3.6 million and $3.3 million for the years ended December 31, 2025, 2024 and 2023, respectively.
(3) Yields on tax-exempt loans and securities have not been stated on a tax-equivalent basis.
The following tables provide the changes in net interest income for the periods indicated due to changes in average asset and liability balances (volume), changes in average yields/rates (rate) and changes attributable to the combined effect of volume and rates allocated proportionately to the absolute value of changes due to volume and changes due to rates:
| Year Ended December 31,2025 Compared to 2024 | |||
|---|---|---|---|
| Increase (Decrease) Due to changes in | |||
| Volume | Yield/Rate | Total | |
| (Dollars in thousands) | |||
| Interest Earning Assets: | |||
| Loans receivable, net | $13,045 | $2,383 | $15,428 |
| Taxable securities | (10,090) | 84 | (10,006) |
| Nontaxable securities | (106) | 4 | (102) |
| Interest earning deposits | 527 | (1,323) | (796) |
| Total interest income | 3,376 | 1,148 | 4,524 |
| Interest Bearing Liabilities: | |||
| Certificates of deposit | 4,409 | (5,065) | (656) |
| Savings accounts | (54) | 288 | 234 |
| Interest bearing demand and money market accounts | 2,272 | 2,417 | 4,689 |
| Total interest bearing deposits | 6,627 | (2,360) | 4,267 |
| Junior subordinated debentures | 28 | (295) | (267) |
| Borrowings | (12,731) | (1,786) | (14,517) |
| Total interest expense | (6,076) | (4,441) | (10,517) |
| Net interest income | $9,452 | $5,589 | $15,041 |
| Year Ended December 31,2024 Compared to 2023 | |||
|---|---|---|---|
| Increase (Decrease) Due to changes in | |||
| Volume | Yield/Rate | Total | |
| (Dollars in thousands) | |||
| Interest Earning Assets: | |||
| Loans receivable, net | $17,806 | $12,382 | $30,188 |
| Taxable securities | (9,099) | 5,562 | (3,537) |
| Nontaxable securities | (1,518) | 315 | (1,203) |
| Interest earning deposits | (252) | 51 | (201) |
| Total interest income | 6,937 | 18,310 | 25,247 |
| Interest Bearing Liabilities: | |||
| Certificates of deposit | 13,871 | 8,497 | 22,368 |
| Savings accounts | (134) | 353 | 219 |
| Interest bearing demand and money market accounts | (1,193) | 14,325 | 13,132 |
| Total interest bearing deposits | 12,544 | 23,175 | 35,719 |
| Junior subordinated debentures | 28 | 37 | 65 |
| Securities sold under agreement to repurchase | (77) | (76) | (153) |
| Borrowings | 4,354 | 1,053 | 5,407 |
| Total interest expense | 16,849 | 24,189 | 41,038 |
| Net interest income | $(9,912) | $(5,879) | $(15,791) |
Total interest income increased $4.5 million, or 1.5%, to $314.2 million for the year ended December 31, 2025 compared to $309.7 million for the year ended December 31, 2024. The increase was primarily due to a 12 basis point increase in the yield on interest earning assets to 5.01% for the year ended December 31, 2025, compared to 4.89% for the year ended December 31, 2024 due primarily to a change in the mix of earning assets to higher yielding loan balances.
Total interest expense decreased $10.5 million, or 10.5%, to $89.8 million for the year ended December 31, 2025 compared to $100.3 million for the year ended December 31, 2024 due primarily to a decrease in borrowing rates and average balances, offset partially by an increase in average balances of interest bearing deposits. The total cost of interest bearing liabilities decreased 23 basis points to 2.04% for the year ended December 31, 2025, compared to 2.27% for the year ended December 31, 2024.
Net interest margin increased 27 basis points to 3.58% for the year ended December 31, 2025 compared to 3.31% for the year ended December 31, 2024. The increase in net interest margin was due primarily to an increase in average yields on total interest earning assets, including a change in mix of assets to higher yielding loans from lower yielding investments and interest earning deposits and a decrease in the average cost of interest bearing liabilities.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.