HERITAGE FINANCIAL CORP /WA/
For the period ended Sep 30, 2026. Filed Nov 6, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 6, 2026
Extracted filing text, with the paragraph anchors used by the comparison.
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NONINTEREST EXPENSE OVERVIEW
Noninterest Expense
Comparison of three months ended September 30, 2026 to the comparable period in the prior year
The following table presents changes in the key components of noninterest expense for the periods indicated:
| Three Months EndedSeptember 30, · Change | ||||
|---|---|---|---|---|
| 2026 | 2025 | $ | % | |
| (Dollars in thousands) | ||||
| Compensation and employee benefits | $34,135 | $26,082 | $8,053 | 30.9% |
| Occupancy and equipment | 6,326 | 4,665 | 1,661 | 35.6 |
| Data processing | 8,337 | 3,754 | 4,583 | 122.1 |
| Marketing | 675 | 284 | 391 | 137.7 |
| Professional services | 1,109 | 1,332 | (223) | (16.7) |
| State/municipal business and use taxes | 1,799 | 1,235 | 564 | 45.7 |
| Federal deposit insurance premium | 947 | 796 | 151 | 19.0 |
| Other real estate owned, net | (55) | — | (55) | (100.0) |
| Amortization of intangible assets | 2,941 | 284 | 2,657 | 935.6 |
| Other expense | 5,744 | 3,183 | 2,561 | 80.5 |
| Total noninterest expense | $61,958 | $41,615 | $20,343 | 48.9% |
Noninterest expense increased $20.3 million, to $62.0 million during the three months ended September 30, 2026, compared to $41.6 million during the same period in 2025. The increase was primarily due to expenses related to the Merger, including increases related to compensation and employee benefits due to increased headcount, severance expense, occupancy and equipment expense primarily due to additional rent expense, additional data processing expense due to an increase in transactional accounts and balances, as well as conversion costs related to the conversion of Olympic's core and online banking systems and exit costs related to the consolidation of two branches, closure of one loan production office and one administration location. Noninterest expense also increased due to an increase in the amortization of intangible assets of $2.7 million, relating to the Merger.
Total Merger-related expenses incurred during the three months ended September 30, 2026 and 2025 were $5.2 million and $635,000, respectively, and consisted of severance expense, professional fees, core conversion costs and contract termination costs and location consolidation costs.
The following table presents the merger costs included in noninterest expense for the periods indicated:
| Three Months EndedSeptember 30, · Change | |||
|---|---|---|---|
| 2026 | 2025 | $ | |
| (Dollars in thousands) | |||
| Compensation and employee benefits | $669 | $— | $669 |
| Occupancy and equipment | 152 | — | $152 |
| Data processing | 2,524 | — | $2,524 |
| Marketing | 126 | — | $126 |
| Professional services | 294 | 630 | $(336) |
| Other expense | 1,420 | 5 | $1,415 |
| Total noninterest expense | $5,185 | $635 | $4,550 |
Comparison of the nine months ended September 30, 2026 to the comparable period in the prior year
The following table presents changes in the key components of noninterest expense for the periods indicated:
| Nine Months EndedSeptember 30, · Change | ||||
|---|---|---|---|---|
| 2026 | 2025 | $ | % | |
| (Dollars in thousands) | ||||
| Compensation and employee benefits | $103,876 | $77,348 | $26,528 | 34.3% |
| Occupancy and equipment | 17,670 | 14,431 | 3,239 | 22.4 |
| Data processing | 23,648 | 11,317 | 12,331 | 109.0 |
| Marketing | 1,495 | 955 | 540 | 56.5 |
| Professional services | 4,890 | 3,188 | 1,702 | 53.4 |
| State/municipal business and use taxes | 5,274 | 3,660 | 1,614 | 44.1 |
| Federal deposit insurance premium | 2,865 | 2,418 | 447 | 18.5 |
| Other real estate owned, net | (7) | — | (7) | (100.0) |
| Amortization of intangible assets | 7,956 | 889 | 7,067 | 794.9 |
| Other expense | 15,166 | 9,877 | 5,289 | 53.5 |
| Total noninterest expense | $182,833 | $124,083 | $58,750 | 47.3% |
Noninterest expense increased $58.8 million, to $182.8 million during the nine months ended September 30, 2026, compared to $124.1 million during the same period in 2025. The increase was primarily due to expenses related to the Merger, including increases related to compensation and employee benefits due to increased headcount, severance expense, occupancy and equipment expense primarily due to additional rent expense, additional data processing expense due to an increase in transactional accounts and balances, as well as conversion costs related to the conversion of Olympic's core and online banking systems and exit costs related to the consolidation of two branches, closure of one loan production office and one administration location. Noninterest expense also increased due to an increase in the amortization of intangible assets of $7.1 million, relating to the Merger.
Total Merger-related expenses incurred during the nine months ended September 30, 2026 and 2025 were $17.9 million and $635,000, respectively, and consisted of severance expense, professional fees, core conversion costs and contract termination costs and location consolidation costs.
The following table presents the merger costs included in noninterest expense for the periods indicated:
| Nine Months EndedSeptember 30, · Change | |||
|---|---|---|---|
| 2026 | 2025 | $ | |
| (Dollars in thousands) | |||
| Compensation and employee benefits | $4,883 | $— | $4,883 |
| Occupancy and equipment | 152 | — | $152 |
| Data processing | 7,939 | — | $7,939 |
| Marketing | 126 | — | $126 |
| Professional services | 2,290 | 630 | $1,660 |
| Other expense | 2,466 | 5 | $2,461 |
| Total noninterest expense | $17,856 | $635 | $17,221 |
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