HERITAGE FINANCIAL CORP /WA/
For the period ended Mar 31, 2026. Filed May 8, 2026.
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Mar 31, 2026 · Filed May 8, 2026
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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. Purchase of investments in sub-investment grade bonds is not permitted under the policy.
The following table provides information regarding our investment securities at the dates indicated:
| March 31, 2026 · December 31, 2025 · Change | ||||||
|---|---|---|---|---|---|---|
| Balance | % ofTotal | Balance | % ofTotal | $ | % | |
| (Dollars in thousands) | ||||||
| Investment securities available for sale, at fair value: | ||||||
| U.S. government and agency securities | $11,861 | 0.7% | $11,702 | 0.9% | $159 | 1.4% |
| Municipal securities | 63,972 | 3.8 | 51,423 | 4.0 | 12,549 | 24.4 |
| Residential CMO and MBS(1) | 497,228 | 29.8 | 275,268 | 21.5 | 221,960 | 80.6 |
| Commercial CMO and MBS(1) | 396,816 | 23.7 | 252,164 | 19.7 | 144,652 | 57.4 |
| Corporate obligations | 11,580 | 0.7 | 10,532 | 0.8 | 1,048 | 10.0 |
| Other asset-backed securities | 19,691 | 1.2 | 6,433 | 0.5 | 13,258 | 206.1 |
| Total | $1,001,148 | 59.9% | $607,522 | 47.4% | $393,626 | 64.8% |
| Investment securities held to maturity, at amortized cost: | ||||||
| U.S. government and agency securities | $151,341 | 9.1% | $151,319 | 11.8% | $22 | —% |
| Residential CMO and MBS(1) | 213,096 | 12.8 | 217,707 | 17.0 | (4,611) | (2.1) |
| Commercial CMO and MBS(1) | 303,826 | 18.2 | 305,081 | 23.8 | (1,255) | (0.4) |
| Total | $668,263 | 40.1% | $674,107 | 52.6% | $(5,844) | (0.9)% |
| Total investment securities | $1,669,411 | 100.0% | $1,281,629 | 100.0% | $387,782 | 30.3% |
(1)U.S. government agency and government-sponsored enterprise CMO and MBS obligations.
Total investment securities increased $387.8 million, or 30.3%, to $1.67 billion at March 31, 2026 from $1.28 billion at December 31, 2025. The increase was primarily due to the Merger with acquired investment securities balances of $312.0 million. The Company repositioned a portion of the acquired portfolio during the three months ended March 31, 2026, with sales of $193.5 million and purchases of $315.9 million. No gains or losses were recognized on the investment sales due to the repositioning occurring immediately after close of the Merger. Purchases exceeded sales in the repositioning due to the investment of excess cash acquired in the Merger, which was a result of the sale of investment securities by Olympic during the month preceding the Merger. Investment maturities and repayments totaled $44.5 million during the three months ended March 31, 2026.
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