hfwa-20250724

FOR IMMEDIATE RELEASE

DATE: July 24, 2025

HERITAGE FINANCIAL ANNOUNCES SECOND QUARTER 2025 RESULTS AND DECLARES REGULAR CASH DIVIDEND OF $0.24 PER SHARE

Second Quarter 2025 Highlights

•Net income was $12.2 million, or $0.36 per diluted share, compared to $13.9 million, or $0.40 per diluted share, for the first quarter of 2025.

•Results included a pre-tax loss on sale of securities of $6.9 million resulting in a negative impact of $0.15 per diluted share.

•Net interest margin increased to 3.51%, from 3.44% for the first quarter of 2025.

•Yield on loans increased to 5.50%, from 5.45% for the first quarter of 2025.

•Cost of interest bearing deposits increased to 1.94%, from 1.92% for the first quarter of 2025.

•Declared a regular cash dividend of $0.24 per share on July 23, 2025.

Olympia, WA - Heritage Financial Corporation (Nasdaq GS: HFWA) (the “Company", ”we," or "us"), the parent company of Heritage Bank (the "Bank"), today reported net income of $12.2 million for the second quarter of 2025, compared to $13.9 million for the first quarter of 2025 and $14.2 million for the second quarter of 2024. Diluted earnings per share for the second quarter of 2025 were $0.36 compared to $0.40 for the first quarter of 2025 and $0.41 for the second quarter of 2024.

In the second quarter of 2025, the Company incurred a pre-tax loss of $6.9 million on the sale of investment securities in connection with the strategic repositioning of its balance sheet, which decreased diluted earnings per share by $0.15 for the quarter. The Company sold $91.6 million of investment securities with an average book yield of 2.63%. Net proceeds from the sale were used to purchase $56.4 million in investment securities with an average book yield of 5.06% and fund new loans originated during the quarter. The Company also incurred pre-tax losses on the sale of investment securities in connection with balance sheet repositioning during the first quarter of 2025 and second quarter of 2024 in the amounts of $3.9 million and $1.9 million, respectively, which decreased diluted earnings per share by $0.09 and $0.04, respectively, for such quarters.

In addition, the Company surrendered $8.5 million of its bank owned life insurance ("BOLI") portfolio during the second quarter of 2025, incurring tax expense related to the surrender of BOLI of $515,000 which decreased diluted earnings per share by $0.02 for the quarter.

Bryan McDonald, Chief Executive Officer of the Company, commented, "We are pleased with the continued growth in core earnings, both compared to the prior quarter and to the same quarter in the prior year. This is partly due to the ongoing expansion of our net interest margin, due mostly to increases in yields on loans and investment securities. Despite a seasonal decline in deposit balances in the second quarter, our total deposits have increased $100 million since year-end 2024. We continue to strategically reposition our balance sheet to improve future profitability and will consider investment in new production teams when favorable opportunities are presented. Although these actions may impact current earnings, we believe future earnings will be enhanced and we are optimistic that the combination of our strong balance sheet and prudent risk management will provide sustainable long-term returns for our shareholders."

Financial Highlights

The following table provides financial highlights at the dates and for the periods indicated:


	As of or for the Quarter Ended
	June 30, 2025			March 31, 2025			June 30, 2024
	(Dollars in thousands, except per share amounts)
Net income	$	12,215		$	13,911		$	14,159
Diluted earnings per share	$	0.36		$	0.40		$	0.41
Adjusted diluted earnings per share (1)	$	0.53		$	0.49		$	0.45
Return on average assets(2)	0.70		%	0.79		%	0.80		%
Return on average common equity(2)	5.57			6.51			6.75
Return on average tangible common equity(1)(2)	7.85			9.22			9.74
Adjusted return on average tangible common equity(1)(2)	11.59			11.21			10.74
Net interest margin(2)	3.51			3.44			3.27
Cost of total deposits(2)	1.40			1.38			1.34
Efficiency ratio	72.7			71.9			69.4
Adjusted efficiency ratio(1)	64.9			67.3			67.1
Noninterest expense to average total assets(2)	2.34			2.36			2.21
Total assets	$	7,070,641		$	7,129,862		$	7,059,857
Loans receivable	4,774,855			4,764,848			4,532,615
Total deposits	5,784,413			5,845,335			5,515,652
Loan to deposit ratio(3)	82.5		%	81.5		%	82.2		%
Book value per share	$	26.16		$	25.85		$	24.66
Tangible book value per share(1)	18.99			18.70			17.56

(1) Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” section for a reconciliation to the comparable GAAP financial measure.

(2) Annualized.

(3) Loans receivable divided by total deposits.

Balance Sheet

Total investment securities decreased $67.6 million, or 4.8%, to $1.35 billion at June 30, 2025 from $1.41 billion at March 31, 2025. As previously noted, the Company sold $91.6 million of investment securities at a pre-tax loss of $6.9 million during the quarter as part of its strategic balance sheet repositioning. In addition, there were investment maturities and repayments of $40.8 million during the second quarter of 2025. The decrease was partially offset by investment security purchases of $56.4 million during the second quarter of 2025 and an $8.0 million decrease in unrealized losses on available for sale securities.

The following table summarizes the composition of the Company's investment securities portfolio at the dates indicated:


	June 30, 2025				March 31, 2025				Change
	Balance		% of Total		Balance		% of Total		$		%
	(Dollars in thousands)
Investment securities available for sale, at fair value:
U.S. government and agency securities	$	11,510	0.9	%	$	11,436	0.8	%	$	74	0.6	%
Municipal securities	50,215		3.7		50,725		3.6		(510)		(1.0)
Residential CMO and MBS(1)	317,214		23.6		356,860		25.2		(39,646)		(11.1)
Commercial CMO and MBS(1)	260,720		19.3		275,840		19.6		(15,120)		(5.5)
Corporate obligations	10,010		0.7		11,830		0.8		(1,820)		(15.4)
Other asset-backed securities	6,783		0.5		9,651		0.7		(2,868)		(29.7)
Total	$	656,452	48.7	%	$	716,342	50.7	%	$	(59,890)	(8.4)	%


	June 30, 2025				March 31, 2025				Change
	Balance		% of Total		Balance		% of Total		$		%
	(Dollars in thousands)
Investment securities held to maturity, at amortized cost:
U.S. government and agency securities	$	151,274	11.2	%	$	151,246	10.7	%	$	28	—	%

Residential CMO and MBS(1)	232,244		17.3		239,351		16.9		(7,107)		(3.0)
Commercial CMO and MBS(1)	306,304		22.8		306,964		21.7		(660)		(0.2)


Total	$	689,822	51.3	%	$	697,561	49.3	%	$	(7,739)	(1.1)	%

Total investment securities	$	1,346,274	100.0	%	$	1,413,903	100.0	%	$	(67,629)	(4.8)	%

(1) U.S. government agency and government-sponsored enterprise CMO and MBS

Loans receivable increased $10.0 million, or 0.2%, to $4.77 billion at June 30, 2025 from $4.76 billion at March 31, 2025. New loans funded increased during the second quarter of 2025 to $139.9 million, compared to $95.8 million during the first quarter of 2025. New loan commitments increased during the second quarter of 2025 to $267.6 million compared to $201.0 million during the first quarter of 2025, reflecting the seasonality of loan originations. Loan prepayments decreased to $58.9 million during the quarter, compared to $79.9 million during the prior quarter. Loan payoffs increased to $51.0 million, compared to $47.5 million in the prior quarter.

Commercial and industrial loans decreased $19.7 million, or 2.3%, during the second quarter, due primarily to pay downs on outstanding balances, partially offset by new loan production of $18.7 million. Owner-occupied commercial real estate ("CRE") loans increased $29.6 million, or 3.0%, during the second quarter, due primarily to new loan production of $49.1 million, offset by pay downs on outstanding balances. Non-owner occupied CRE loans increased $24.0 million, or 1.3%, during the quarter, due primarily to new loan production of $57.8 million, offset by pay downs on outstanding balances. Residential construction and commercial and multifamily construction loans decreased $19.9 million or 4.4%, due primarily to pay downs on outstanding balances.

The following table summarizes the Company's loans receivable at the dates indicated:


	June 30, 2025				March 31, 2025				Change
	Balance		% of Total		Balance		% of Total		$		%
	(Dollars in thousands)
Commercial business:
Commercial and industrial	$	831,096	17.4	%	$	850,764	17.9	%	$	(19,668)	(2.3)	%
Owner-occupied CRE	1,014,891		21.3		985,272		20.7		29,619		3.0
Non-owner occupied CRE	1,939,752		40.7		1,915,788		40.1		23,964		1.3
Total commercial business	3,785,739		79.4		3,751,824		78.7		33,915		0.9
Residential real estate	383,927		8.0		393,301		8.3		(9,374)		(2.4)
Real estate construction and land development:
Residential	78,070		1.6		76,108		1.6		1,962		2.6
Commercial and multifamily	355,268		7.4		377,100		7.9		(21,832)		(5.8)
Total real estate construction and land development	433,338		9.0		453,208		9.5		(19,870)		(4.4)
Consumer	171,851		3.6		166,515		3.5		5,336		3.2
Loans receivable	$	4,774,855	100.0	%	$	4,764,848	100.0	%	$	10,007	0.2

Total deposits decreased $60.9 million, or 1.0%, to $5.78 billion at June 30, 2025 from $5.85 billion at March 31, 2025. Non-maturity deposits decreased by $57.3 million, or 1.2%, from March 31, 2025 due primarily to a decline in customer balances in noninterest bearing demand and interest bearing demand accounts. The decrease in non-maturity deposits was partially offset by an increase of $27.1 million in money market accounts as customers transferred balances into these higher yielding accounts. Although total deposits at June 30, 2025 decreased from March 31, 2025, average total deposits increased $35.4 million during the second quarter of 2025.

The following table summarizes the Company's total deposits at the dates indicated:


	June 30, 2025				March 31, 2025				Change
	Balance		% of Total		Balance		% of Total		$		%
	(Dollars in thousands)
Noninterest demand deposits	$	1,584,231	27.4	%	$	1,621,890	27.7	%	$	(37,659)	(2.3)	%
Interest bearing demand deposits	1,487,208		25.7		1,525,522		26.1		(38,314)		(2.5)
Money market accounts	1,308,952		22.6		1,281,891		21.9		27,061		2.1
Savings accounts	422,372		7.3		430,749		7.4		(8,377)		(1.9)
Total non-maturity deposits	4,802,763		83.0		4,860,052		83.1		(57,289)		(1.2)
Certificates of deposit	981,650		17.0		985,283		16.9		(3,633)		(0.4)
Total deposits	$	5,784,413	100.0	%	$	5,845,335	100.0	%	$	(60,922)	(1.0)	%

Total borrowings decreased $1.2 million to $263.2 million at June 30, 2025 from $264.4 million at March 31, 2025. All outstanding borrowings at June 30, 2025 were with the Federal Home Loan Bank ("FHLB") and mature within one year.

Total stockholders' equity increased $6.7 million, or 0.8%, to $888.2 million at June 30, 2025 compared to $881.5 million at March 31, 2025 due primarily to $12.2 million of net income recognized for the quarter. The increase in total stockholders' equity was also due to a $6.2 million decrease in accumulated other comprehensive loss as a result of losses recognized on sales of investment securities in connection with balance sheet repositioning efforts. These increases were partially offset by $8.3 million in dividends paid to common shareholders and $4.6 million of stock repurchases.

The Company and Bank continued to maintain capital levels in excess of the applicable regulatory requirements for them both to be categorized as “well-capitalized” at June 30, 2025.

The following table summarizes the capital ratios for the Company at the dates indicated:


	June 30, 2025	March 31, 2025
Stockholders' equity to total assets	12.6%	12.4%
Tangible common equity to tangible assets (1)	9.4	9.3
Common equity tier 1 capital ratio (2)	12.2	12.2
Leverage ratio (2)	10.3	10.2
Tier 1 capital ratio (2)	12.6	12.6
Total capital ratio (2)	13.6	13.6

(1) Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” section for a reconciliation to the comparable GAAP financial measure.

(2) Current quarter ratios are estimates pending completion and filing of the Company’s regulatory reports.

Allowance for Credit Losses and Provision for Credit Losses

The allowance for credit losses ("ACL") on loans as a percentage of loans receivable was 1.10% at June 30, 2025 compared to 1.09% at March 31, 2025. The increase in the ACL as a percentage of loans was due primarily to changes in the weighted average life of the loans in the real estate construction and land development segment. During the second quarter of 2025, the Company recorded an $863,000 provision for credit losses on loans, compared to a $9,000 reversal of provision for credit losses on loans during the first quarter of 2025. The provision for credit losses on loans recognized during the second quarter of 2025 was due primarily to charge-offs of $494,000 and secondarily to growth in balances of collectively evaluated loans.

During the second quarter of 2025, the Company recorded a $93,000 provision for credit losses on unfunded commitments compared to a $60,000 provision during the first quarter of 2025. The provision for credit losses on unfunded commitments during the second quarter of 2025 was due primarily to an increase in the unfunded exposure on construction loans.

The following table provides detail on the changes in the ACL on loans and the ACL on unfunded commitments, and the related provision for (reversal of) credit losses for the periods indicated:


	As of or for the Quarter Ended
	June 30, 2025						March 31, 2025						June 30, 2024
	ACL on Loans		ACL on Unfunded		Total		ACL on Loans		ACL on Unfunded		Total		ACL on Loans		ACL on Unfunded		Total
	(Dollars in thousands)
Balance, beginning of period	$	52,160	$	647	$	52,807	$	52,468	$	587	$	53,055	$	49,736	$	976	$	50,712
Provision for (reversal of) credit losses	863		93		956		(9)		60		51		1,470		(202)		1,268
(Net charge-offs) / recoveries	(494)		—		(494)		(299)		—		(299)		13		—		13
Balance, end of period	$	52,529	$	740	$	53,269	$	52,160	$	647	$	52,807	$	51,219	$	774	$	51,993

Credit Quality

Classified loans (loans rated substandard or worse) increased $35.3 million from the prior quarter, resulting in the percentage of classified loans to loans receivable increasing to 2.1% at June 30, 2025 compared to 1.4% at March 31, 2025. The Company downgraded $38.2 million of loans to substandard during the second quarter of 2025, including, non-owner occupied CRE loans of $16.3 million, commercial and industrial loans of $9.7 million, commercial and multifamily construction loans of $6.0 million, and owner occupied CRE loans of $5.7 million.

The following table illustrates total loans by risk rating and their respective percentage of total loans at the dates indicated:


	June 30, 2025				March 31, 2025
	Balance		% of Total		Balance		% of Total
	(Dollars in thousands)
Risk Rating:
Pass	$	4,560,994	95.5	%	$	4,586,757	96.2	%
Special Mention	114,146		2.4		113,704		2.4
Substandard	99,715		2.1		64,387		1.4
Total	$	4,774,855	100.0	%	$	4,764,848	100.0	%

Nonaccrual loans increased by $5.4 million during the second quarter of 2025 due primarily to the migration of a $6.0 million commercial and multifamily construction loan and a $1.7 million commercial and industrial loan. These increases were partially offset by a $2.0 million pay down on a commercial real estate loan. The following table illustrates changes in nonaccrual loans during the periods indicated:


	Quarter Ended
	June 30, 2025			March 31, 2025			June 30, 2024
	(Dollars in thousands)
Balance, beginning of period	$	4,438		$	4,079		$	4,792
Additions	7,922			832			549
Net principal payments and transfers to accruing status	(2,041)			(214)			(483)
Payoffs	—			(38)			(769)
Charge-offs	(454)			(221)			(263)

Balance, end of period	$	9,865		$	4,438		$	3,826
Nonaccrual loans to loans receivable	0.21		%	0.09		%	0.08		%

Liquidity

Total liquidity sources available at June 30, 2025 were $2.38 billion. This includes on- and off-balance sheet liquidity. The Company has access to FHLB advances and the Federal Reserve Bank ("FRB") Discount Window. The Company's available liquidity sources at June 30, 2025 represented a coverage ratio of 41.1% of total deposits and 100.4% of estimated uninsured deposits.

The following table summarizes the Company's available liquidity:


	Quarter Ended
	June 30, 2025		March 31, 2025
	(Dollars in thousands)
On-balance sheet liquidity
Cash and cash equivalents	$	254,096	$	248,660
Unencumbered investment securities available for sale (1)	655,876		698,132
Total on-balance sheet liquidity	$	909,972	$	946,792
Off-balance sheet liquidity
FRB borrowing availability	$	346,307	$	365,624
FHLB borrowing availability (2)	977,805		1,084,304
Fed funds line borrowing availability with correspondent banks	145,000		145,000
Total off-balance sheet liquidity	$	1,469,112	$	1,594,928
Total available liquidity	$	2,379,084	$	2,541,720

(1) Investment securities available for sale at fair value.

(2) Includes FHLB total borrowing availability of $1.24 billion at June 30, 2025 based on pledged assets, however, maximum credit capacity is 45% of the Bank's total assets one quarter in arrears or $3.21 billion.

Net Interest Margin and Net Interest Income

The net interest margin increased seven basis points to 3.51% during the second quarter of 2025 from 3.44% during the first quarter of 2025.

The yield on interest earning assets increased six basis points to 5.01% for the second quarter of 2025, compared to 4.95% for the first quarter of 2025. The yield on loans receivable increased five basis points to 5.50% during the second quarter of 2025, compared to 5.45% during the first quarter of 2025 as new loans were booked and adjustable rate loans repriced at higher rates.

The cost of interest bearing deposits increased two basis points to 1.94% for the second quarter of 2025 from 1.92% for the first quarter of 2025. This increase was primarily due to an increase in rates on interest bearing demand and money market accounts during the quarter, offset partially by a decrease in certificate of deposit rates.

Net interest income increased $1.3 million, or 2.4%, during the second quarter of 2025 compared to the first quarter of 2025 due to a $1.1 million increase in total interest income and a decrease in interest expense of $0.2 million.

The net interest margin increased 24 basis points to 3.51% from 3.27% compared to the same period in the prior year. Net interest income increased $3.9 million, or 7.6%, during the second quarter of 2025 compared to the second quarter of 2024. The increase was due to a change in the mix of earning assets to higher yielding loan balances and a decrease in borrowing interest expense due to lower average balances, partially offset by an increase in deposit interest expense resulting from increased average balances and rates.

The following table provides relevant net interest income information for the periods indicated:


	Quarter Ended
	June 30, 2025						March 31, 2025						June 30, 2024
	Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)
	(Dollars in thousands)
Interest Earning Assets:
Loans receivable (2)(3)	$	4,768,558	$	65,373	5.50	%	$	4,793,917	$	64,436	5.45	%	$	4,466,499	$	60,608	5.46	%
Taxable securities	1,374,770		11,579		3.38		1,427,976		11,739		3.33		1,685,795		14,156		3.38
Nontaxable securities (3)	15,294		137		3.59		15,686		139		3.59		18,812		165		3.53
Interest earning deposits	127,687		1,411		4.43		96,118		1,052		4.44		121,539		1,653		5.47
Total interest earning assets	6,286,309		78,500		5.01	%	6,333,697		77,366		4.95	%	6,292,645		76,582		4.89	%
Noninterest earning assets	760,634						769,530						814,146
Total assets	$	7,046,943					$	7,103,227					$	7,106,791
Interest Bearing Liabilities:
Certificates of deposit	$	979,997	$	9,349	3.83	%	$	980,336	$	9,670	4.00	%	$	838,285	$	9,128	4.38	%
Savings accounts	425,703		288		0.27		426,321		293		0.28		453,099		190		0.17


	Quarter Ended
	June 30, 2025						March 31, 2025						June 30, 2024
	Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)
	(Dollars in thousands)
Interest bearing demand and money market accounts	2,770,352		10,513		1.52		2,705,686		9,526		1.43		2,625,593		9,135		1.40
Total interest bearing deposits	4,176,052		20,150		1.94		4,112,343		19,489		1.92		3,916,977		18,453		1.89
Junior subordinated debentures	22,165		472		8.54		22,086		471		8.65		21,874		539		9.91

Borrowings	245,663		2,895		4.73		320,286		3,716		4.71		500,230		6,477		5.21
Total interest bearing liabilities	4,443,880		23,517		2.12	%	4,454,715		23,676		2.16	%	4,439,081		25,469		2.31	%
Noninterest demand deposits	1,602,987						1,631,268						1,638,262
Other noninterest bearing liabilities	120,268						150,615						186,010
Stockholders’ equity	879,808						866,629						843,438
Total liabilities and stockholders’ equity	$	7,046,943					$	7,103,227					$	7,106,791
Net interest income and spread			$	54,983	2.89	%			$	53,690	2.79	%			$	51,113	2.58	%
Net interest margin					3.51	%					3.44	%					3.27	%

(1) Annualized; 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 $903,000, $753,000 and $971,000 for the second quarter of 2025, first quarter of 2025 and second quarter of 2024, respectively.

(3) Yields on tax-exempt loans and securities have not been stated on a tax-equivalent basis.

Noninterest Income

Noninterest income decreased $2.4 million to $1.5 million during the second quarter of 2025 from $3.9 million during the first quarter of 2025. The decrease was due primarily to higher losses resulting from the above-referenced sale of investment securities recognized in the second quarter of 2025 as part of the strategic repositioning of the balance sheet, compared to losses recognized in the prior quarter. The decrease was partially offset by an increase in BOLI income due to death benefit proceeds and an increase in card revenue due to increased card activity.

Noninterest income decreased $3.7 million from the same period in 2024 due primarily to higher losses resulting from the above-referenced sale of investment securities recognized in the second quarter of 2025 as part of the strategic repositioning of the balance sheet, compared to losses recognized in the same quarter in 2024. The decrease was partially offset by an increase in BOLI income as a result of BOLI restructuring which occurred in the fourth quarter of 2024 and an increase in other income primarily due to an increase in FHLB dividend income.

The following table presents the key components of noninterest income and the change for the periods indicated:


	Quarter Ended						Quarter Over Quarter Change				Prior Year Quarter Change
	June 30, 2025		March 31, 2025		June 30, 2024		$		%		$		%
	(Dollars in thousands)
Service charges and other fees	$	2,932	$	2,975	$	2,817	$	(43)	(1.4)	%	$	115	4.1	%
Card revenue	2,008		1,733		1,930		275		15.9		78		4.0
Loss on sale of investment securities	(6,854)		(3,887)		(1,921)		(2,967)		(76.3)		(4,933)		(256.8)

Interest rate swap fees	19		—		52		19		—		(33)		(63.5)
Bank owned life insurance income	1,280		918		931		362		39.4		349		37.5
Gain on sale of other assets, net	5		3		49		2		66.7		(44)		(89.8)
Other income	2,127		2,161		1,388		(34)		(1.6)		739		53.2
Total noninterest income (loss)	$	1,517	$	3,903	$	5,246	$	(2,386)	(61.1)	%	$	(3,729)	(71.1)	%

Noninterest Expense

Noninterest expense decreased $0.3 million, or 0.7%, to $41.1 million during the second quarter of 2025, compared to $41.4 million in the first quarter of 2025, due primarily to a decrease in compensation and employee benefits resulting from a decrease in payroll taxes, offset partially by an increase in salary expense due to annual merit increases in base pay. Data processing

expense decreased primarily due to a decline in ongoing costs resulting from technology-related contract renewals. Professional fees increased due primarily to consulting costs related to technology-related contract renewals.

Noninterest expense increased $2.0 million, or 5.1%, during the second quarter of 2025 compared to the same period in 2024 due primarily to an increase in compensation and employee benefits due to annual merit increases in base pay. Professional fees increased due primarily to consulting costs related to technology-related contract renewals recognized in the second quarter of 2025.

The following table presents the key components of noninterest expense and the change for the periods indicated:


	Quarter Ended						Quarter Over Quarter Change				Prior Year Quarter Change
	June 30, 2025		March 31, 2025		June 30, 2024		$		%		$		%
	(Dollars in thousands)
Compensation and employee benefits	$	25,467	$	25,799	$	24,448	$	(332)	(1.3)	%	$	1,019	4.2	%
Occupancy and equipment	4,840		4,926		4,765		(86)		(1.7)		75		1.6
Data processing	3,666		3,897		3,584		(231)		(5.9)		82		2.3
Marketing	336		335		244		1		0.3		92		37.7
Professional services	1,122		734		795		388		52.9		327		41.1
State/municipal business and use taxes	1,205		1,220		1,160		(15)		(1.2)		45		3.9
Federal deposit insurance premium	810		812		812		(2)		(0.2)		(2)		(0.2)

Amortization of intangible assets	302		303		421		(1)		(0.3)		(119)		(28.3)
Other expense	3,337		3,357		2,867		(20)		(0.6)		470		16.4
Total noninterest expense	$	41,085	$	41,383	$	39,096	$	(298)	(0.7)	%	$	1,989	5.1	%

Income Tax Expense

Income tax expense was $2.2 million during the second quarter of 2025 and first quarter of 2025. The Company recognized $515,000 in income tax expense related to the surrender of $8.5 million in BOLI policies during the second quarter of 2025.

Income tax expense increased $0.4 million in the second quarter of 2025 compared to same period in 2024 due primarily to a higher effective tax rate during the second quarter of 2025.

The following table presents the income tax expense and related metrics and the change for the periods indicated:


	Quarter Ended									Change
	June 30, 2025			March 31, 2025			June 30, 2024			Quarter Over Quarter			Prior Year Quarter
	(Dollars in thousands)
Income before income taxes	$	14,459		$	16,159		$	15,995		$	(1,700)		$	(1,536)
Income tax expense	$	2,244		$	2,248		$	1,836		$	(4)		$	408
Effective income tax rate	15.5		%	13.9		%	11.5		%	1.6		%	4.0		%

Dividends

On July 23, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.24 per share. The dividend is payable on August 20, 2025 to shareholders of record as of the close of business on August 6, 2025.

Earnings Conference Call

The Company will hold a telephone conference call to discuss this earnings release on Thursday, July 24, 2025 at 10:00 a.m. Pacific time. To access the call, please dial (833) 470-1428 -- access code 464904 a few minutes prior to 10:00 a.m. Pacific time. The call will be available for replay through July 31, 2025 by dialing (866) 813-9403 -- access code 276171.

About Heritage Financial Corporation

Heritage Financial Corporation is an Olympia, Washington-based bank holding company with Heritage Bank, a full-service commercial bank, as its sole wholly-owned banking subsidiary. Heritage Bank has a network of 50 branches and one loan production office in Washington, Oregon and Idaho. Heritage Bank does business under the Whidbey Island Bank name on Whidbey Island, Washington. The Company's stock is traded on the Nasdaq Global Select Market under the symbol “HFWA.” More information about Heritage Financial Corporation can be found on its website at www.hf-wa.com and more information about Heritage Bank can be found on its website at www.heritagebanknw.com.

Contact

Bryan McDonald, President and Chief Executive Officer, (360) 943-1500

Don Hinson, Executive Vice President and Chief Financial Officer, (360) 943-1500

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believes," "expects," "anticipates," "estimates," “forecasts,” "intends," “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” "will," “should,” "would," and "could," as well as the negative of such words. Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements include, but are not limited to, the following: potential adverse impacts to economic conditions nationally or in our local market areas, other markets where we have lending relationships, or other aspects of our business operations or financial markets including, without limitation, as a result of credit quality deterioration, pronounced and sustained reductions in real estate market values, employment levels, labor shortages, and potential recession or slowed economic growth; effects on the U.S. economy resulting from the threat or implementation of, or changes to existing, policies and executive orders, including the imposition of tariffs, changes to immigration policy, regulatory and other governmental agencies, DEI and ESG initiatives, consumer protection, foreign policy, and tax regulations; changes in the interest rate environment which could adversely affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; the level and impact of inflation and the current and future monetary policies of the Board of Governors of the Federal Reserve System in response thereto; legislative or regulatory changes that adversely affect our business, including changes in banking, securities, and tax law, in regulatory policies and principles, or the interpretation and prioritization of such rules and regulations; credit and interest rate risks associated with our business, customers, borrowings, repayment, investment, and deposit practices; fluctuations in deposits and deposit concentrations; liquidity issues, including our ability to borrow funds or raise additional capital, if necessary; fluctuations in the value of our investment securities; credit risks and risks from concentrations (by type of geographic area, collateral and industry) within our loan portfolio; disruptions, security breaches, insider fraud, cybersecurity incidents or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform critical processing functions for our business, including sophisticated attacks using artificial intelligence and similar tools; rapid technological changes implemented by us and other parties in the financial services industry; including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequence to us and our customers, including the development and implementation of tools incorporating artificial intelligence; increased competition in the financial services industry from non-banks such as credit unions and financial technology companies, including digital asset service providers; our ability to adapt successfully to technological changes to compete effectively in the marketplace, including as a result of competition from other commercial banks, mortgage banking firms, credit unions, securities brokerage firms, insurance companies, and Fintech companies; effects of critical accounting policies and judgments, including the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; the commencement, costs, effects and outcome of litigation and other legal proceedings and regulatory actions against us or to which we may become subject; loss of, or inability to attract, key personnel; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business and the businesses of our clients; the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks; our success at managing and responding to the risks involved in the foregoing items; and other factors described in our latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”) which are available on our website at www.hf-wa.com and on the SEC's website at www.sec.gov. We caution readers not to place undue reliance on any forward-looking statements. Moreover, any of the forward-looking statements that we make in this press release or the documents we file with or furnish to the SEC are based only on information then actually known to us and upon management's beliefs and assumptions at the time they are made which may turn out to be wrong because of inaccurate assumptions we might make, because of the factors described above or because of other factors that we cannot foresee. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

HERITAGE FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(Dollars in thousands, except shares)


	June 30, 2025		March 31, 2025		December 31, 2024
Assets
Cash on hand and in banks	$	90,754	$	89,072	$	58,821
Interest earning deposits	163,342		159,588		58,279
Cash and cash equivalents	254,096		248,660		117,100
Investment securities available for sale, at fair value (amortized cost of $704,207, $772,086 and $835,592, respectively)	656,452		716,342		764,394
Investment securities held to maturity, at amortized cost (fair value of $629,658, $632,648 and $623,452, respectively)	689,822		697,561		703,285
Total investment securities	1,346,274		1,413,903		1,467,679

Loans receivable	4,774,855		4,764,848		4,802,123
Allowance for credit losses on loans	(52,529)		(52,160)		(52,468)
Loans receivable, net	4,722,326		4,712,688		4,749,655

Premises and equipment, net	71,111		71,079		71,580
Federal Home Loan Bank stock, at cost	16,107		16,160		21,538
Bank owned life insurance	104,456		112,656		111,699
Accrued interest receivable	18,559		19,651		19,483
Prepaid expenses and other assets	294,225		291,276		303,452
Other intangible assets, net	2,548		2,850		3,153
Goodwill	240,939		240,939		240,939
Total assets	$	7,070,641	$	7,129,862	$	7,106,278

Liabilities and Stockholders' Equity
Non-interest bearing deposits	$	1,584,231	$	1,621,890	$	1,654,955
Interest bearing deposits	4,200,182		4,223,445		4,029,658
Total deposits	5,784,413		5,845,335		5,684,613
Borrowings	263,200		264,400		383,000
Junior subordinated debentures	22,204		22,131		22,058

Accrued expenses and other liabilities	112,612		116,481		153,080
Total liabilities	6,182,429		6,248,347		6,242,751

Common stock	528,758		532,124		531,674
Retained earnings	396,643		392,737		387,097
Accumulated other comprehensive loss, net	(37,189)		(43,346)		(55,244)
Total stockholders' equity	888,212		881,515		863,527
Total liabilities and stockholders' equity	$	7,070,641	$	7,129,862	$	7,106,278

Shares outstanding	33,953,194		34,105,516		33,990,827

HERITAGE FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollars in thousands, except per share amounts)


	Quarter Ended						Six Months Ended
	June 30, 2025		March 31, 2025		June 30, 2024		June 30, 2025		June 30, 2024
Interest Income
Interest and fees on loans	$	65,373	$	64,436	$	60,608	$	129,809	$	118,470
Taxable interest on investment securities	11,579		11,739		14,156		23,318		28,990
Nontaxable interest on investment securities	137		139		165		276		346
Interest on interest earning deposits	1,411		1,052		1,653		2,463		3,129
Total interest income	78,500		77,366		76,582		155,866		150,935
Interest Expense
Deposits	20,150		19,489		18,453		39,639		34,841
Junior subordinated debentures	472		471		539		943		1,086

Borrowings	2,895		3,716		6,477		6,611		12,365
Total interest expense	23,517		23,676		25,469		47,193		48,292
Net interest income	54,983		53,690		51,113		108,673		102,643
Provision for credit losses	956		51		1,268		1,007		2,660
Net interest income after provision for credit losses	54,027		53,639		49,845		107,666		99,983
Noninterest Income
Service charges and other fees	2,932		2,975		2,817		5,907		5,605
Card revenue	2,008		1,733		1,930		3,741		3,769
Loss on sale of investment securities, net	(6,854)		(3,887)		(1,921)		(10,741)		(11,894)
Gain on sale of loans, net	—		—		—		—		26
Interest rate swap fees	19		—		52		19		52
Bank owned life insurance income	1,280		918		931		2,198		1,851
Gain on sale of other assets, net	5		3		49		8		49
Other income	2,127		2,161		1,388		4,288		2,888
Total noninterest income (loss)	1,517		3,903		5,246		5,420		2,346
Noninterest Expense
Compensation and employee benefits	25,467		25,799		24,448		51,266		49,924
Occupancy and equipment	4,840		4,926		4,765		9,766		9,697
Data processing	3,666		3,897		3,584		7,563		6,915
Marketing	336		335		244		671		455
Professional services	1,122		734		795		1,856		1,362
State/municipal business and use taxes	1,205		1,220		1,160		2,425		2,460
Federal deposit insurance premium	810		812		812		1,622		1,607

Amortization of intangible assets	302		303		421		605		842
Other expense	3,337		3,357		2,867		6,694		6,204
Total noninterest expense	41,085		41,383		39,096		82,468		79,466
Income before income taxes	14,459		16,159		15,995		30,618		22,863
Income tax expense	2,244		2,248		1,836		4,492		2,956
Net income	$	12,215	$	13,911	$	14,159	$	26,126	$	19,907

Basic earnings per share	$	0.36	$	0.41	$	0.41	$	0.77	$	0.58
Diluted earnings per share	$	0.36	$	0.40	$	0.41	$	0.76	$	0.57
Dividends declared per share	$	0.24	$	0.24	$	0.23	$	0.48	$	0.46
Average shares outstanding - basic	34,028,592		34,012,490		34,609,900		34,037,067		34,717,685
Average shares outstanding - diluted	34,446,710		34,506,238		34,919,395		34,512,260		35,127,407

HERITAGE FINANCIAL CORPORATION

FINANCIAL STATISTICS (Unaudited)

(Dollars in thousands)

Average Balances, Yields, and Rates Paid:


	Six Months Ended June 30,
	2025						2024
	Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)
Interest Earning Assets:
Loans receivable(2)(3)	$	4,781,167	$	129,809	5.48	%	$	4,409,315	$	118,470	5.40	%
Taxable securities	1,401,226		23,318		3.36		1,748,252		28,990		3.33
Nontaxable securities(3)	15,489		276		3.59		20,057		346		3.47
Interest earning deposits	111,990		2,463		4.44		115,136		3,129		5.47
Total interest earning assets	6,309,872		155,866		4.98	%	6,292,760		150,935		4.82	%
Noninterest earning assets	765,058						806,861
Total assets	$	7,074,930					$	7,099,621
Interest Bearing Liabilities:
Certificates of deposit	$	980,166	$	19,019	3.91	%	$	786,050	$	16,799	4.30	%
Savings accounts	426,010		581		0.28		464,087		420		0.18
Interest bearing demand and money market accounts	2,738,197		20,039		1.48		2,642,796		17,622		1.34
Total interest bearing deposits	4,144,373		39,639		1.93		3,892,933		34,841		1.80
Junior subordinated debentures	22,126		943		8.59		21,837		1,086		10.00

Borrowings	282,768		6,611		4.71		500,445		12,365		4.97
Total interest bearing liabilities	4,449,267		47,193		2.14	%	4,415,215		48,292		2.20	%
Noninterest demand deposits	1,617,050						1,647,697
Other noninterest bearing liabilities	135,358						191,516
Stockholders’ equity	873,255						845,193
Total liabilities and stockholders’ equity	$	7,074,930					$	7,099,621
Net interest income and spread			$	108,673	2.84	%			$	102,643	2.62	%
Net interest margin					3.47	%					3.28	%

(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 $1.7 million and $1.8 million for the six months ended June 30, 2025 and 2024, respectively.

(3) Yields on tax-exempt loans and securities have not been stated on a tax-equivalent basis.

HERITAGE FINANCIAL CORPORATION

FINANCIAL STATISTICS (Unaudited)

(Dollars in thousands)

Nonperforming Assets and Credit Quality Metrics:


	Quarter Ended									Six Months Ended
	June 30, 2025			March 31, 2025			June 30, 2024			June 30, 2025			June 30, 2024
Allowance for Credit Losses on Loans:
Balance, beginning of period	$	52,160		$	52,468		$	49,736		$	52,468		$	47,999
Provision for credit losses on loans	863			(9)			1,470			854			3,174
Charge-offs:
Commercial business	(454)			(222)			(312)			(676)			(389)


Consumer	(104)			(154)			(238)			(258)			(361)
Total charge-offs	(558)			(376)			(550)			(934)			(750)
Recoveries:
Commercial business	18			26			518			44			735


Consumer	46			51			45			97			61
Total recoveries	64			77			563			141			796
Net (charge-offs) recoveries	(494)			(299)			13			(793)			46
Balance, end of period	$	52,529		$	52,160		$	51,219		$	52,529		$	51,219
Net charge-offs on loans to average loans receivable annualized	0.04		%	0.03		%	—		%	0.03		%	—		%


	June 30, 2025			March 31, 2025			December 31, 2024
Nonperforming Assets:
Nonaccrual loans:
Commercial business	$	2,916		$	3,455		$	3,919
Residential real estate	832			832			—
Real estate construction and land development	5,969			—			—
Consumer	148			151			160
Total nonaccrual loans	9,865			4,438			4,079
Accruing loans past due 90 days or more	8,613			—			1,195
Total nonperforming loans	18,478			4,438			5,274
Other real estate owned	—			—			—
Nonperforming assets	$	18,478		$	4,438		$	5,274

ACL on loans to:
Loans receivable	1.10		%	1.09		%	1.09		%
Nonaccrual loans	532.48		%	1,175.30		%	1,286.30		%
Nonaccrual loans to loans receivable	0.21		%	0.09		%	0.08		%
Nonperforming loans to loans receivable	0.39		%	0.09		%	0.11		%
Nonperforming assets to total assets	0.26		%	0.06		%	0.07		%

HERITAGE FINANCIAL CORPORATION

QUARTERLY FINANCIAL STATISTICS (Unaudited)

(Dollars in thousands, except per share amounts)


	Quarter Ended
	June 30, 2025			March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024
Earnings:
Net interest income	$	54,983		$	53,690		$	53,763		$	52,958		$	51,113
Provision for credit losses	956			51			1,183			2,439			1,268
Noninterest income	1,517			3,903			3,290			1,837			5,246
Noninterest expense	41,085			41,383			39,540			39,290			39,096
Net income	12,215			13,911			11,928			11,423			14,159
Basic earnings per share	$	0.36		$	0.41		$	0.35		$	0.33		$	0.41
Diluted earnings per share	$	0.36		$	0.40		$	0.34		$	0.33		$	0.41
Adjusted diluted earnings per share (1)	$	0.53		$	0.49		$	0.51		$	0.45		$	0.45
Average Balances:
Loans receivable	$	4,768,558		$	4,793,917		$	4,717,748		$	4,606,856		$	4,466,499
Total investment securities	1,390,064			1,443,662			1,530,348			1,622,011			1,704,607
Total interest earning assets	6,286,309			6,333,697			6,367,371			6,379,251			6,292,645
Total assets	7,046,943			7,103,227			7,149,294			7,182,921			7,106,791
Total interest bearing deposits	4,176,052			4,112,343			4,011,793			3,997,496			3,916,977
Total noninterest demand deposits	1,602,987			1,631,268			1,703,357			1,677,984			1,638,262
Stockholders' equity	879,808			866,629			868,308			857,799			843,438
Financial Ratios:
Return on average assets (2)	0.70		%	0.79		%	0.66		%	0.63		%	0.80		%
Return on average common equity (2)	5.57			6.51			5.46			5.30			6.75
Return on average tangible common equity (1)(2)	7.85			9.22			7.81			7.62			9.74
Adjusted return on average tangible common equity (1)(2)	11.59			11.21			11.59			10.42			10.74
Efficiency ratio	72.7			71.9			69.3			71.7			69.4
Adjusted efficiency ratio (1)	64.9			67.3			64.4			65.2			67.1
Noninterest expense to average total assets (2)	2.34			2.36			2.20			2.18			2.21
Net interest spread (2)	2.89			2.79			2.66			2.59			2.58
Net interest margin (2)	3.51			3.44			3.36			3.30			3.27

(1) Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” section for a reconciliation to the comparable GAAP financial measure.

(2) Annualized.

HERITAGE FINANCIAL CORPORATION

QUARTERLY FINANCIAL STATISTICS (Unaudited)

(Dollars in thousands, except per share amounts)


	As of or for the Quarter Ended
	June 30, 2025			March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024
Select Balance Sheet:
Total assets	$	7,070,641		$	7,129,862		$	7,106,278		$	7,153,363		$	7,059,857
Loans receivable	4,774,855			4,764,848			4,802,123			4,679,479			4,532,615
Total investment securities	1,346,274			1,413,903			1,467,679			1,572,179			1,658,590
Total deposits	5,784,413			5,845,335			5,684,613			5,708,492			5,515,652
Noninterest demand deposits	1,584,231			1,621,890			1,654,955			1,682,219			1,599,367
Stockholders' equity	888,212			881,515			863,527			874,514			850,507
Financial Measures:
Book value per share	$	26.16		$	25.85		$	25.40		$	25.61		$	24.66
Tangible book value per share (1)	18.99			18.70			18.22			18.45			17.56
Stockholders' equity to total assets	12.6		%	12.4		%	12.2		%	12.2		%	12.0		%
Tangible common equity to tangible assets (1)	9.4			9.3			9.0			9.1			8.9
Loans to deposits ratio	82.5			81.5			84.5			82.0			82.2
Regulatory Capital Ratios:(2)
Common equity tier 1 capital ratio	12.2		%	12.2		%	12.0		%	12.3		%	12.6		%
Leverage ratio	10.3			10.2			10.0			9.9			10.1
Tier 1 capital ratio	12.6			12.6			12.4			12.7			13.0
Total capital ratio	13.6			13.6			13.3			13.6			13.9
Credit Quality Metrics:
ACL on loans to:
Loans receivable	1.10		%	1.09		%	1.09		%	1.10		%	1.13		%
Nonaccrual loans	532.5			1,175.3			1,286.3			1,194.9			1,338.7
Nonaccrual loans to loans receivable	0.21			0.09			0.08			0.09			0.08
Nonperforming loans to loans receivable	0.39			0.09			0.11			0.21			0.18
Nonperforming assets to total assets	0.26			0.06			0.07			0.13			0.12
Net charge-offs on loans to average loans receivable (3)	0.04			0.03			0.00			0.22			0.00
Criticized Loans by Credit Quality Rating:
Special mention	$	114,146		$	113,704		$	110,725		$	99,078		$	93,694
Substandard	99,715			64,387			68,318			71,977			82,496
Other Metrics:
Number of branches	50			50			50			50			50
Deposits per branch	$	115,688		$	116,907		$	113,692		$	114,170		$	110,313
Average number of full-time equivalent employees	747			757			751			749			748
Average assets per full-time equivalent employee	9,434			9,383			9,520			9,590			9,501

(1) See Non-GAAP Financial Measures section herein.

(2) Current quarter ratios are estimates pending completion and filing of the Company’s regulatory reports.

(3) Annualized.

HERITAGE FINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES (Unaudited)

(Dollars in thousands, except per share amounts)

This earnings release contains certain financial measures not presented in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") in addition to financial measures presented in accordance with GAAP. The Company has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in the Company’s capital, performance and asset quality reflected in the current quarter and comparable period results and to facilitate comparison of its performance with the performance of its peers. These non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for financial measures presented in accordance with GAAP. These non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of the non-GAAP financial measures used in this earnings release to the comparable GAAP financial measures are presented below.

The Company believes that presenting the adjusted diluted earnings per share provides useful and comparative information to assess trends in the Company's core operations reflected in the current quarter’s results and facilitate the comparison of our performance with the performance of our peers.


	June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024		June 30, 2024
Diluted Earnings per Share and Adjusted Diluted Earnings per Share:
Net income (GAAP)	$	12,215	$	13,911	$	11,928	$	11,423	$	14,159
Exclude loss on sale of investment securities, net	6,854		3,887		3,903		6,945		1,921

Exclude gain on sale of premises and equipment	(5)		(3)		(23)		(1,480)		(49)
Exclude tax effect of adjustment	(1,438)		(816)		(815)		(1,148)		(393)
Exclude BOLI restructuring costs included in BOLI Income	—		—		508		—		—
Exclude tax expense related to BOLI restructuring	515		—		2,371		—		—
Adjusted net income (non-GAAP)	$	18,141	$	16,979	$	17,872	$	15,740	$	15,638

Average number of diluted shares outstanding	34,446,710		34,506,238		34,553,139		34,658,674		34,919,395

Diluted earnings per share (GAAP)	$	0.36	$	0.40	$	0.34	$	0.33	$	0.41
Adjusted diluted earnings per share (non-GAAP)	$	0.53	$	0.49	$	0.51	$	0.45	$	0.45

HERITAGE FINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES (Unaudited)

(Dollars in thousands, except per share amounts)

The Company considers the tangible common equity to tangible assets ratio and tangible book value per share to be useful measurements of the adequacy of the Company’s capital levels.


	June 30, 2025			March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024
Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share:
Total stockholders' equity (GAAP)	$	888,212		$	881,515		$	863,527		$	874,514		$	850,507
Exclude intangible assets	(243,487)			(243,789)			(244,092)			(244,491)			(244,890)
Tangible common equity (non-GAAP)	$	644,725		$	637,726		$	619,435		$	630,023		$	605,617

Total assets (GAAP)	$	7,070,641		$	7,129,862		$	7,106,278		$	7,153,363		$	7,059,857
Exclude intangible assets	(243,487)			(243,789)			(244,092)			(244,491)			(244,890)
Tangible assets (non-GAAP)	$	6,827,154		$	6,886,073		$	6,862,186		$	6,908,872		$	6,814,967

Stockholders' equity to total assets (GAAP)	12.6		%	12.4		%	12.2		%	12.2		%	12.0		%
Tangible common equity to tangible assets (non-GAAP)	9.4		%	9.3		%	9.0		%	9.1		%	8.9		%

Shares outstanding	33,953,194			34,105,516			33,990,827			34,153,539			34,496,197

Book value per share (GAAP)	$	26.16		$	25.85		$	25.40		$	25.61		$	24.66
Tangible book value per share (non-GAAP)	$	18.99		$	18.70		$	18.22		$	18.45		$	17.56

HERITAGE FINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES (Unaudited)

(Dollars in thousands, except per share amounts)

The Company considers the return on average tangible common equity ratio to be a useful measurement of the Company’s ability to generate returns for its common shareholders. By removing the impact of intangible assets and their related amortization and tax effects, the performance of the Company's ongoing business operations can be evaluated. The Company believes that presenting an adjusted return on tangible common equity ratio provides useful and comparative information to assess trends in the Company's core operations reflected in the current quarter’s results and facilitate the comparison of our performance with the performance of our peers.


	Quarter Ended
	June 30, 2025			March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024
Return on Average Tangible Common Equity, annualized:
Net income (GAAP)	$	12,215		$	13,911		$	11,928		$	11,423		$	14,159
Add amortization of intangible assets	302			303			399			399			421
Exclude tax effect of adjustment	(63)			(64)			(84)			(84)			(88)
Tangible net income (non-GAAP)	$	12,454		$	14,150		$	12,243		$	11,738		$	14,492

Tangible net income (non-GAAP)	$	12,454		$	14,150		$	12,243		$	11,738		$	14,492
Exclude loss on sale of investment securities, net	6,854			3,887			3,903			6,945			1,921

Exclude gain on sale of premises and equipment	(5)			(3)			(23)			(1,480)			(49)
Exclude tax effect of adjustment	(1,438)			(816)			(815)			(1,148)			(393)
Exclude BOLI restructuring costs included in BOLI Income	—			—			508			—			—
Exclude tax expense related to BOLI restructuring	515			—			2,371			—			—
Adjusted tangible net income (non-GAAP)	$	18,380		$	17,218		$	18,187		$	16,055		$	15,971

Average stockholders' equity (GAAP)	$	879,808		$	866,629		$	868,308		$	857,799		$	843,438
Exclude average intangible assets	(243,651)			(243,945)			(244,302)			(244,706)			(245,106)
Average tangible common stockholders' equity (non-GAAP)	$	636,157		$	622,684		$	624,006		$	613,093		$	598,332

Return on average common equity, annualized (GAAP)	5.57		%	6.51		%	5.46		%	5.30		%	6.75		%
Return on average tangible common equity, annualized (non-GAAP)	7.85		%	9.22		%	7.81		%	7.62		%	9.74		%
Adjusted return on average tangible common equity, annualized (non-GAAP)	11.59		%	11.21		%	11.59		%	10.42		%	10.74		%

HERITAGE FINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES (Unaudited)

(Dollars in thousands, except per share amounts)

The Company believes that presenting an adjusted efficiency ratio provides useful and comparative information to assess trends in the Company's core operations reflected in the current quarter’s results and facilitate the comparison of our performance with the performance of our peers.


	Quarter Ended
	June 30, 2025			March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024
Adjusted Efficiency Ratio :
Total noninterest expense (GAAP)	$	41,085		$	41,383		$	39,540		$	39,290		$	39,096
Net interest income (GAAP)	$	54,983		$	53,690		$	53,763		$	52,958		$	51,113

Total noninterest income (GAAP)	$	1,517		$	3,903		$	3,290		$	1,837		$	5,246
Exclude loss on sale of investment securities, net	6,854			3,887			3,903			6,945			1,921

Exclude gain on sale of premises and equipment	(5)			(3)			(23)			(1,480)			(49)
Exclude BOLI restructuring costs included in BOLI Income	—			—			508			—			—
Adjusted total noninterest income (non-GAAP)	$	8,366		$	7,787		$	7,678		$	7,302		$	7,118

Efficiency ratio (GAAP)	72.7		%	71.9		%	69.3		%	71.7		%	69.4		%
Adjusted efficiency ratio (non-GAAP)	64.9		%	67.3		%	64.4		%	65.2		%	67.1		%

INVESTOR PRESENTATION Q2 2025

2 This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believes," "expects," "anticipates," "estimates," “forecasts,” "intends," “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” "will," “should,” "would," and "could," as well as the negative of such words. Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements include, but are not limited to, the following: • potential adverse impacts to economic conditions nationally or in our local market areas, other markets where Heritage Financial Corporation (the "Company") has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of credit quality deterioration, pronounced and sustained reductions in real estate market values, employment levels, labor shortages and a potential recession or slowed economic growth; • changes in the interest rate environment, which could adversely affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; • the level and impact of inflation and the current and future monetary policies of the Board of Governors of the Federal Reserve System in response thereto; • legislative or regulatory changes that adversely affect our business, including changes in banking, securities, and tax law, in regulatory policies and principles, or the interpretation and prioritization of such rules and regulations; • effects on the U.S. economy resulting from the threat or implementation of, or changes to existing, policies and executive orders, including tariffs, immigration policy, regulatory and other governmental agencies, DEI and ESG initiatives, consumer protection, foreign policy, and tax regulations; • credit and interest rate risks associated with the Company’s businesses, customers, borrowings, repayment, investment, and deposit practices; • fluctuations in deposits and deposit concentrations; • liquidity issues, including our ability to borrow funds or raise additional capital, if necessary; • fluctuations in the value of our investment securities; • credit risks and risks from concentrations (by type of geographic area, collateral and industry) within our loan portfolio; • disruptions, security breaches, insider fraud, cybersecurity incidents or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform critical processing functions for our business, including sophisticated attacks using artificial intelligence and similar tools; • technological changes implemented by us and other parties, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequences to us and our customers, including the development and implementation of tools incorporating artificial intelligence; • increased competition in the financial services industry from non-banks such as credit unions and Fintech companies, including digital asset service providers; • our ability to adapt successfully to technological changes to compete effectively in the marketplace, including as a result of competition from other commercial banks, mortgage banking firms, credit unions, securities brokerage firms, insurance companies, and financial technology companies; • effects of critical accounting policies and judgments, including the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; • the commencement, costs, effects and outcome of litigation and other legal proceedings and regulatory actions against us or to which the Company may become subject; • loss of, or inability to attract, key personnel; • the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business and the businesses of our clients; • the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks; and • our success at managing and responding to the risks involved in the foregoing items. You should also consider the risks, assumptions and uncertainties set forth in the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2024, as well as those set forth in other reports we file with or furnish to the Securities and Exchange Commission (the “SEC”) which are available on our website at www.hf-wa.com and on the SEC's website at www.sec.gov. These risks, assumptions and uncertainties should be considered in evaluating any forward-looking statements, and undue reliance should not be placed on such statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise. Except as otherwise indicated, this presentation speaks as of June 30, 2025. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of the Company after such date. Certain of the information contained herein may be derived from information provided by industry sources. We believe that such information is accurate and that the sources from which it has been obtained are reliable. We cannot guarantee the accuracy of such information, however, and we have not independently verified such information. Non-GAAP Financial Information The Company reports its results in accordance with United States generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP performance measures used in managing the business may provide meaningful information about underlying trends in its business. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. Slides containing a discussion and reconciliation of non-GAAP financial measures are contained in the Appendix - Reconciliation of Non-GAAP Financial Measures and Quarterly Financial Statistics hereto. All dollars amounts presented throughout the entire presentation are in millions unless otherwise noted, except per share amounts. Percentages presented may not total 100% due to rounding. All tables and charts are as of June 30, 2025 unless otherwise indicated. FORWARD LOOKING STATEMENTS

HERITAGE FINANCIAL CORPORATION OVERVIEW

4 OVERVIEW General Overview Nasdaq symbol HFWA Stock price(2) $25.31 Market capitalization(2) $863 million Institutional ownership(2) 83.9% Headquarters Olympia, WA # of branches 50 Year established 1927 Q2 2025 Financial Highlights Assets $7.1 billion Deposits $5.8 billion Loans receivable $4.8 billion Net income $12.2 million Net interest margin 3.51% ROAE(3) 5.57% ROATCE(1)(4) 7.85% Adjusted ROATCE(1)(4) 11.59% Efficiency ratio 72.7% Adjusted efficiency ratio(1) 64.9% Leverage ratio 10.3% Total capital ratio 13.6% Map obtained from S&P Global Market Intelligence; certain locations of branches overlap on the map. (1) Represents a non-GAAP financial measure (2) Market information as of July 7, 2025. (3) Return on average equity (4) Return on average tangible common equity Metropolitan Statistical Areas Seattle-Tacoma-Bellevue, WA Portland-Vancouver-Hillsboro, OR-WA Eugene-Springfield, OR Boise–Nampa, ID Heritage Location Spokane

5 COMPANY STRATEGY Allocate capital to organically grow our core banking business Ÿ Successful hiring of individuals and teams of bankers in high-growth and dynamic Seattle and Portland markets as well as other key markets including our recent branch openings in Eugene, Oregon and Boise, Idaho and loan production office in Spokane, Washington Ÿ Disciplined approach to concentration risk and active portfolio management Improve operational efficiencies and rationalize branch network Ÿ Focused on achieving increased efficiencies with operational scale, internal focus on improving processes and technology solutions Ÿ Closed/Consolidated 36 branches since the beginning of 2010, including 12 branches in 2021 and one branch in 2023 Ÿ Full-time equivalent employee decreased to 747 at June 30, 2025 compared to 803 at December 31, 2023 Generate stable profitability and risk adjusted returns Ÿ Adjusted return on average tangible common equity(1) ("ROATCE") averaged 12.7% from 2022 to 2024. Ÿ Five-year growth in tangible book value(1) of $4.01, or 26.8%, to $18.99 at June 30, 2025 from $14.98 at June 30, 2020 Remain active and disciplined in M&A Ÿ Five acquisitions in Washington and Oregon since 2013 Ÿ Target metrics = IRR of >15% with earnbacks < 3 years Maintain conservative underwriting standards and actively manage the loan portfolio Ÿ Long track record of strong underwriting with conservative risk profile Ÿ Disciplined approach to concentration risk Ÿ Net charge-offs on loans to average loans remains low at 0.03%, annualized through June 30, 2025 Focus on core deposits to increase franchise value over the long term Ÿ 27.4% noninterest demand deposits to total deposits at June 30, 2025 Ÿ 1.40% cost of total deposits; top 11% performance among US publicly traded banks in Q1 2025 Engage in proactive capital management Ÿ History of increasing regular dividends and utilizing special dividends to manage capital Ÿ In April 2024, approved a stock repurchase plan up to 5% of the Company's outstanding common shares or approximately 1.7 million shares Ÿ Strong capital ratios: leverage ratio(3) = 10.3%; total capital ratio(3) = 13.6% (1) Represents a non-GAAP financial measure (2) Comparable cost of total deposits provided by S&P Global Market Intelligence for the first quarter of 2025 and includes banks nationwide with shares on Nasdaq or NYSE with total assets less than $100 billion excluding pending merger targets (3) Current quarter capital ratios are estimates pending completion and filing of the Company's regulatory reports

6 PROFITABILITY IMPROVEMENT MEASURES 2023 TOTAL 2024 TOTAL Q1 2025 Q2 2025 2025 YTD TOTAL GRAND TOTAL Quarterly Impact Investments Sold (Book Value) $161.8 $296.4 $60.9 $91.6 $152.5 $610.7 Weighted Average Book Yield of Sales 2.41% 2.23% 2.60% 2.63% 2.62% 2.38% Investments Purchased $140.7 $33.1 $28.2 $56.4 $84.6 $258.4 Weighted Average Book Yield of Purchases 6.08% 6.05% 4.55% 5.06% 4.89% 5.68% Loss on Sale of Investments $10.0 $22.7 $3.9 $6.9 $10.8 $43.5 Quarterly Estimated EPS Impact $(0.22) $(0.51) $(0.09) $(0.15) $(0.24) $(0.97) Estimated Annualized Profitability Improvement Estimated Annualized Pre-Tax Financial Impact $5.4 $11.9 $1.7 $2.3 $4.0 $21.3 Estimated Annualized EPS Impact $0.12 $0.26 $0.04 $0.05 $0.09 $0.47 Balance Sheet Repositioning The Company has completed investment sales over the past several quarters as part of strategic repositioning of the balance sheet. Estimated annualized profitability improvements assumes all proceeds invested to fund new loans or investment purchases.

7 $113,456 $94,748 $86,463 $78,770 Median household income 4.3% 3.5% 9.9% 4.4% 0.3% 9.7% 3.2% 7.3% 13.3% 4.2% 2.4% 8.8% Seattle MSA Portland MSA Boise MSA USA Unemployment rate 2025-2030 Projected Population Growth 2025-2030 Projected Median Household Income Growth STRONG AND DIVERSE ECONOMIC LANDSCAPE Major Employers in the Pacific Northwest Data obtained from www.bls.gov, www.bea.gov and S&P Global Market Intelligence Unemployment data reflects the BLS's latest monthly Economic New Release - Employment & Unemployment Economic data as of January 2025 MSA Tie-out of websites used: https://www.bls.gov/web/metro/laulrgma.htm https://www.bls.gov/web/laus/laumstcm.htm https://data.bls.gov/timeseries/LNS14000000 https://www.zippia.com/advice/largest-companies-in-washington/https://www.zippia.com/advice/largest-companies-in-oregon/

8 LOANS AND DEPOSITS BY LOCATION MSA = Metropolitan or Micropolitan Statistical Area Location based upon branch or office location Loans by MSA Seattle WA $2,319 48.6% Portland OR-WA $728 15.2% Mount Vernon WA $258 5.4% Olympia WA $187 3.9% Yakima WA $102 2.1% Bellingham WA $183 3.8% Eugene OR $80 1.7% Boise ID $80 1.7% Other $838 17.6% Deposits by MSA Seattle WA $2,545 44.0% Portland OR-WA $841 14.6% Mount Vernon WA $332 5.7% Olympia WA $499 8.6% Longview WA $152 2.6% Oak Harbor WA $554 9.6% Yakima WA $226 3.9% Bellingham WA $169 2.9% Other $466 8.1%

9 POTENTIAL GROWTH OPPORTUNITIES Map obtained from S&P Global Market Intelligence Certain locations of bank headquarters overlap on the map Financial information as of the most recent quarter publicly available Excluding banks with pending mergers and acquisitions • Long-term goal to build a Pacific Northwest ("PNW") regional commercial community bank; potential opportunities for M&A and production team lift-outs in WA, OR and ID. • Significant number of banks remaining in HFWA footprint; further consolidation is expected. – 12 banks between $200 million and $500 million in assets – 11 banks between $500 million and $1.0 billion in assets – 13 banks between $1.0 billion and $3.5 billion in assets • Target metrics include 15% IRR and earnback of < 3 years. Bank headquarters

10 $1,712 $3,651 $3,879 $4,113 $4,238 $5,553 $6,615 $7,432 $6,980 $7,175 $7,106 $7,130 $7,071 $1,747 $1,079 $15.02 $15.68 $16.08 $16.88 $20.63 $22.10 $22.85 $24.34 $22.73 $24.44 $25.40 $25.85 $26.16 $10.73 $11.41 $11.86 $12.70 $13.54 $15.07 $15.77 $17.19 $15.66 $17.40 $18.22 $18.70 $18.99 Organic Assets Acquired Assets Book value per share Tangible book value per share (1) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Q1 2025 Q2 2025 Acquired Puget Sound Bancorp $639MM in assets Premier Commercial Bancorp $440MM in assets HISTORICAL GROWTH ORGANIC AND ACQUISITIVE Merged with Washington Banking Company $1.7B in assets (1) Represents a non-GAAP financial measure

11 GROWTH STRATEGY YEAR ACTIVITY 2013 • Acquired Valley Community Bancshares - $254MM in assets • Acquired Northwest Commercial Bank - $65MM in assets 2014 • Merged with Washington Banking Company - $1.7B in assets 2015 • Added a commercial banking team in Seattle, Washington • Formed Capital Markets Group as result of the added expertise 2017 • Added commercial banking team in the greater Portland, Oregon area • Expanded expertise in non-profit lending and added a commercial position focused on deposit production 2018 • Acquired Puget Sound Bancorp - $639MM in assets • Acquired Premier Commercial Bancorp - $440MM in assets 2019 • Added commercial banking team in the greater Portland, Oregon area • Expanded expertise in the dental and healthcare fields 2022 • Added new commercial banking team in Vancouver, Washington • Added new commercial banking team in Portland, Oregon • Expanded into a new market with addition of commercial banking team and full service branch in Eugene, Oregon (branch opened August 2022) 2023 • Expanded into a new market with addition of commercial banking team and full service branch in Boise, Idaho (branch opened January 2023) 2024 • Expanded Builder Banking team with hiring of new SVP, Director of Builder Banking and sales position in greater Seattle, Washington area. 2025 • Expanded into a new market with addition of commercial banking team and loan production office in Spokane, Washington in January 2025 Bank Acquisitions and Team Additions Bank Acquisition Team Addition

FINANCIAL UPDATE

13 LOAN PORTFOLIO Loan Portfolio Composition $196 $171 $165 $167 $172 $344 $375 $403 $393 $384$294 $414 $479 $453 $433 $693 $718 $843 $851 $831 $937 $959 $1,003 $985 $1,015 $1,587 $1,698 $1,909 $1,916 $1,940 Consumer Residential real estate Construction & land development Commercial and Industrial (C&I) Owner-occupied CRE Non-owner occupied CRE 2022 2023 2024 Q1 2025 Q2 2025 New Loan Commitments $25 $24 $21 $18 $20$27 $2 $— $— $— $63 $35 $85 $64 $88$87 $128 $101 $59 $49 $68 $90 $130 $60 $111 Consumer Residential real estate Construction & land development Commercial and Industrial (C&I) Commercial Real Estate (CRE) Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025

14 LOC Utilization Rates 29.8% 28.2% 29.7% 30.7% 32.5% 42.9% 53.8% 70.2% 68.0% 64.7% 31.1% 31.1% 31.6% 32.3% 33.9% Utilization Rate - Consumer LOCs Utilization Rate - Construction LOCs Utilization Rate - C&I LOCs 2022 2023 2024 Q1 2025 Q2 2025 Construction Commitments $686 $769 $682 $666 $669 $294 $414 $479 $453 $433 $392 $355 $203 $213 $236 Outstanding Balance Available Credit 2022 2023 2024 Q1 2025 Q2 2025 LINE OF CREDIT ("LOC") UTILIZATION

15 COMMERCIAL LOAN EXPOSURE Commercial Business Loans by Industry Exposure Industry Amount WARR at 06/30/25 Real estate, rental and leasing $2,106 4.5 Health care and social assistance 342 4.3 Accommodation and food services 184 5.1 Retail trade 150 4.7 Construction 163 4.9 Other services (except Public administration) 119 4.6 Manufacturing 90 5.0 All other industries 632 4.4 Total $3,786 4.5 CRE Loans only by Collateral Type Collateral Type Amount WARR at 06/30/25 Office $576 4.3 Industrial 508 4.5 Retail store / shopping center 314 4.7 Multi-family 449 4.6 Mixed use property 165 4.6 Motel / hotel 144 5.0 Single purpose 124 4.7 Warehouse 129 4.5 Mini-storage 162 4.2 Recreational / school 82 5.0 Other 302 4.6 Total $2,955 4.5 WARR = Weighted average risk rating Categorized by NAICS code. Office - Owner-occupied CRE 10.0% Office - Non-owner occupied CRE 9.5% Industrial 17.2% Retail store / shopping center 10.6% Multi-family 15.2% Mixed use property 5.6% Motel / hotel 4.9% Single purpose 4.2% Warehouse 4.4% Mini-storage 5.5% Recreational / school 2.8% Other 10.1% Real estate, rental and leasing 55.6% Health care and social assistance 9.0% Accommodation and food services 4.9% Retail trade 4.0% Construction 4.3% Other Services (except Public administration) 3.1% Manufacturing 2.4% All other industries 16.7%

16 CHANGES IN LOANS RECEIVABLE $4,765 $140 $(59) $(51) $(20) $4,775 Loans receivable at March 31, 2025 Loans originated Prepayments Maturities / Payoffs Net advances/ payments Loans receivable at June 30, 2025 $4,802 $96 $(80) $(47) $(6) $4,765 Loans receivable at December 31, 2024 Loans originated Prepayments Maturities / Payoffs Net advances/ payments Loans receivable at March 31, 2025 Change in loans - Q2 2025 Change in loans - Q1 2025

17 CRE OFFICE CRE Office Loans by Size Size WARR(2) # of Loans Total Balance(1) Average Balance Per Loan(1) >$10 Million 3.3 5 $ 74,780 $ 14,956 $5-$10 Million 4.0 14 88,424 6,316 $2-$5 Million 4.4 47 143,181 3,046 <$2 Million 4.6 460 270,046 587 TOTAL 4.3 526 $ 576,431 $ 1,096 Quality of CRE Office Portfolio: • 81.0% of loans have recourse to owner • 51.3% of loans are owner occupied which are considered to have a lower risk profile • 24.7% of loans are borrowers in the health care and social assistance sectors, who are less likely to reduce office space CRE Office Loans by Industry Type Health Care and Social Assistance 24.7% Professional, Scientific, and Technical Services 3.3% Finance and Insurance 2.7% Other Services (except Public Administration) 3.1% Accommodation and Food Services 1.0% All Other 65.2% (1) Dollars in thousands (2) Weighted average risk rating

18 Net charge-offs (recoveries) on loans to average loans, annualized (0.03)% (0.01)% 0.06% 0.03% 0.00% 0.22% 0.00% 0.03% 0.04% 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 (0.10)% 0.00% 0.10% 0.20% 0.30% Nonaccrual Loans $6 $4 $4 $4 $10 Nonaccrual loans Nonaccrual loans to loans receivable 2022 2023 2024 Q1 2025 Q2 2025 0.15% 0.10% 0.08% 0.09% 0.21% NONACCRUAL LOANS AND NET CHARGE-OFFS

19 CRITICIZED LOANS $135 $150 $179 $178 $213 $60 $65 $64 $60 $89 $69 $80 $111 $114 $114 Substandard - nonaccrual Substandard - accrual Special mention 2022 2023 2024 Q1 2025 Q2 2025 Criticized Loans by Loan Segment Commercial & industrial 36.1% Owner- occupied CRE 15.5% Non-owner occupied CRE 29.9% Residential real estate 1.0% Construction & land development 16.8% Consumer 0.7% Criticized Loans by Collateral Type Motel/Hotel 7.5% Office 6.0% Multi-Family 12.0% Retail Store/Shopping Center 7.4% Mixed Use Property 6.7% Elder Care 4.9% Farm-Bldgs/Land 5.4% Industrial 2.5% Duplex/Tri-Plex/4-Plex 2.7% Other CRE 17.7% Non-CRE 27.2% $6 $4 $4 $4 $10

20 ACL on Loans $42,986 $47,999 $52,468 $52,160 $52,529 1.06% 1.11% 1.09% 1.09% 1.10% ACL on loans ($) ACL on loans / Loans (%) 2022 2023 2024 Q1 2025 Q2 2025 ALLOWANCE FOR CREDIT LOSSES ("ACL") ON LOANS $52,160 $(429) $814 $(36) $20 $52,529 March 31, 2025 Change in loan balance Change in collective rate Change in rate and balance Individually evaluated loans June 30, 2025 Change in ACL on Loans - Q2 2025 Dollars in thousands

21 CRITICIZED LOANS AND NET CHARGE-OFF HISTORY Criticized Loans to Total Loans 3.63% 3.79% 6.50% 4.81% 3.34% 3.45% 3.73% 3.74% 2.19% 2.05% 3.47% 2.63% 1.96% 2.32% 2.66% 2.82% Heritage Peer Median 2018 2019 2020 2021 2022 2023 2024 Q1 2025 Net Charge-offs to Average Loans 0.06% 0.09% 0.07% 0.01% (0.03)% (0.01)% 0.06% 0.02% 0.07% 0.11% 0.05% 0.03% 0.02% 0.07% 0.05% 0.04% Heritage Peer Median 2018 2019 2020 2021 2022 2023 2024 Q1 2025 (1) Criticized loans includes loans graded special mention or worse (2) Peer Median is the median of 17 identified peer banks and is as of March 31, 2025 Proactive Credit Management • Heritage proactively downgrades loans that are experiencing financial difficulty. • Criticized loans(1) to total loans higher than peer median(2) since 2018 • NCOs recognized during the same period were generally lower than peer median.

22 Average Deposit Balances and Cost of Total Deposits $6,322 $5,706 $5,618 $5,761 $5,555 $5,675 $5,715 $5,744 $5,779 0.11% 0.69% 1.34% 1.39% 1.34% 1.42% 1.39% 1.38% 1.40% 1.89% 2.02% 1.98% 1.92% 1.94% 0.17% 1.03% 1.90% 1.93% Average deposits Cost of total deposits Cost of int-bearing deposits 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 DEPOSITS Deposit Composition 35.5% 30.6% 29.1% 27.7% 27.4% 30.9% 28.7% 25.8% 26.1% 25.7% 17.9% 19.5% 20.5% 21.9% 22.6% 10.5% 8.7% 7.4% 7.4% 7.3% 5.2% 12.4% 17.2% 16.9% 17.0% Noninterest demand deposits Interest bearing demand deposits Money market accounts Savings accounts Certificates of deposit 2022 2023 2024 Q1 2025 Q2 2025

23 DEPOSIT COMPOSITION Customer Deposits by Relationship Size $749 $377 $1,419 $1,453 $1,786 Over $10MM $5MM-$10MM $1MM-5MM $250K-$1MM Less than $250K Consumer Accounts vs. Business Accounts 25% 58% 17% Consumer Commercial CDs Insured vs. Uninsured 41% 59% Insured Uninsured Deposit portfolio as of June 30, 2025: • Majority of deposits are to customers with relationships of $1 million or less. • Uninsured deposits at 41% of total deposits. 12% of uninsured deposits are public deposits that are 100% pledged. • Mix of commercial and consumer accounts.

24 Investment Balances and Investment Yield $2,098 $1,874 $1,468 $1,346 $1,659 $1,572 $1,468 $1,414 $1,346 $1,203 $178 $33 $85 $28 $56 2.48% 3.02% 3.33% 3.36% 3.38% 3.34% 3.29% 3.34% 3.38% Portfolio yield New purchases 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 INVESTMENT PORTFOLIO Portfolio Duration 4.93 4.85 4.55 4.68 4.08 3.37 2.33 3.85 4.81 4.56 4.55 4.59 4.68 4.04 3.76 Duration - total portfolio Duration - new purchases only (1) 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 (1) No investments were purchased during Q2 2024, Q3 2024 or Q4 2024

25 $42 $41 $49 $37 $37 $33 $56 $43 $34 $28 $56 $87 $31 $30 $38 $27 $27 $23 $47 $34 $25 $20 $48 $79 $11 $11 $11 $10 $10 $10 $9 $9 $9 $8 $8 $8 Interest Principal Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Q4 2026 Q1 2027 Q2 2027 Q3 2027 Q4 2027 Q1 2028 Q2 2028 INVESTMENT CASHFLOWS Investment cashflows(1) are estimated to be $543 million through Q2 of 2028. (1) Cashflow estimates based on third-party bond accounting service

26 INVESTMENT PORTFOLIO HTM Investment by Type US government and agencies 20.2% Residential CMO and MBS 34.9% Commercial CMO and MBS 44.9% Available for sale ("AFS") and held to maturity ("HTM") investment securities percentages are based on fair value as of June 30, 2025 unless otherwise noted Strong Credit Quality of Portfolio: AFS Securities • 89.9% of AFS in U.S. government and agency securities • Only 1.5% of AFS are rated less than AA HTM Securities • All HTM investments are U.S. government and agency securities • 100% HTM portfolio pledged for public deposits and Federal Reserve Bank borrowings AFS Investments Pledged 0.1% 99.9% Pledged Not pledged AFS Investment by Type US government and agencies 1.8% Municipal securities 7.6% Residential CMO and MBS 48.3% Commercial CMO and MBS 39.8% Corporate obligations 1.5% Other asset-backed securities 1.0%

27 Net Interest Margin 3.33% 3.56% 3.31% 3.47% 3.27% 3.30% 3.36% 3.44% 3.51% 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 NET INTEREST MARGIN Quarterly Change in Net Interest Margin 3.44% 0.05% (0.01)% 0.02% (0.05)% 0.06% 3.51% QTD Q1 2025 Loans Investments Interest earning deposits Deposits Borrowings QTD Q2 2025 Net Interest Income $219,385 $225,155 $209,364 $108,673 $51,113 $52,958 $53,763 $53,690 $54,983 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025

28 Adjustable Rate Loans - Repricing Schedule $1,055 $166 $179 $194 $245 $382 $106 6.88% 4.30% 4.26% 5.93% 6.13% 6.17% 5.06% 6.93% 6.52% 6.35% 6.17% 6.44% 6.31% 6.70% Floating and Adjustable Rate Loans Wtd Avg Rate (1) Wtd Avg Rate if Repriced (2) < 3 Months 3 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years > 5 Years LOAN MATURITY AND REPRICING (1) Weighted Average Rate as of June 30, 2025 and repricing period signifies the sooner of the next scheduled reprice date or maturity (2) Weighted Average Rate if Repriced as of June 30, 2025 and assumes same index and margin Adjustable Rate Loans • $2.3 billion in total • 53% tied to FHLB index, 20% tied to Prime, 26% tied to SOFR Fixed Rate Loans - Maturity Schedule $97 $137 $148 $215 $197 $341 $1,306 5.13% 5.37% 4.70% 5.09% 5.21% 4.99% 4.43% Fixed Rate Loans Wtd Avg Rate (1) < 3 Months 3 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years > 5 Years Fixed Rate Loans • $2.4 billion in total

29 PROFITABILITY TRENDS ROAA and Adjusted ROAA(1) 1.12% 0.86% 0.61% 0.74% 0.80% 0.63% 0.66% 0.79% 0.70% 1.12% 0.99% 0.88% 1.00% 0.89% 0.87% 0.99% 0.97% 1.03% ROAA Adjusted ROAA (1) 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Noninterest Expense/Avg. Assets 2.06% 2.33% 2.22% 2.35% 2.21% 2.18% 2.20% 2.36% 2.34% 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 ROAA = Return on average assets (1) Represents a non-GAAP financial measure

30 $81.9 $61.8 $43.3 $26.1 $81.8 $70.9 $62.9 $35.1 Net income Adjusted Net income (1) 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 $14.2 $11.4 $11.9 $13.9 $12.2 $15.6 $15.7 $17.9 $17.0 $18.1 PROFITABILITY TRENDS ROAE, ROATCE(1) and Adjusted ROATCE(1) Net Income and Adjusted Net Income(1), in millions 14.92% 12.76% 10.53% 11.40% 10.74% 10.42% 11.59% 11.21% 11.59%14.94% 11.15% 7.31% 8.52% 9.74% 7.62% 7.81% 9.22% 7.85% 10.08% 7.55% 5.06% 6.03% 6.75% 5.30% 5.46% 6.51% 5.57% ROAE ROATCE (1) Adjusted ROATCE (1) 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 ROAE = Return on average equity ROATCE = Return on average tangible common equity (1) Represents a non-GAAP financial measure

31(1) Represents a non-GAAP financial measure (2) Current quarter ratios are estimates pending completion and filing of the Company's regulatory reports CAPITAL RATIOS Equity Ratios 11.4% 11.9% 12.2% 12.4% 12.6% 8.2% 8.8% 9.0% 9.3% 9.4% Stockholders' equity to total assets (GAAP) Tangible common equity to tangible assets(1) 2022 2023 2024 Q1 2025 Q2 2025 12.8% 12.9% 12.0% 12.2% 12.2% 9.7% 10.0% 10.0% 10.2% 10.3% 14.0% 14.1% 13.3% 13.6% 13.6% Total Risk Based Capital Tier 1 Leverage Ratio Common Equity Tier 1 2022 2023 2024 Q1 2025 Q2 2025 Regulatory Capital Ratios(2)

32 LIQUIDITY POSITION (1) Includes FHLB borrowing availability of $1.24 billion at June 30, 2025 based on pledged assets, however, maximum credit capacity is 45% of the Bank's total assets one quarter in arrears or $3.21 billion Liquidity position at June 30, 2025: • Sufficient liquidity to cover estimated uninsured deposits of $2.4 billion. • Access to brokered deposits of $765 million per internal company policy. Liquidity Sources $2,408 $2,525 $2,345 $2,542 $2,379 $943 $1,068 $976 $1,084 $978 $279 $288 $360 $366 $346 $927 $848 $746 $698 $656 $114 $176 $117 $249 $254 $145 $145 $145 $145 $145 116.2% 112.6% 103.1% 109.3% 100.4% FHLB borrowing availability (1) FRB borrowing availability Unencumbered investment securities available for sale at fair value Cash and cash equivalents Fed funds lines % of uninsured deposits covered by liquidity sources Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025

SHAREHOLDER RETURN

34 TOTAL SHAREHOLDER RETURN Stock Summary(2) Ticker HFWA Exchange Nasdaq Stock price $25.31 Market capitalization (in millions) $863.2 Dividend yield (regular dividend only) 3.79 % Average Daily Volume (3 month) Average daily volume (shares) 210,966 Average daily volume ($000s) $5,340 52-Week High and Low Price 52-week high (November 25, 2024) $27.58 52-week low (July 5, 2024) $17.04 Per Share Tangible book value per share(1) $18.99 EPS - 2025E $2.03 EPS - 2026E $2.26 Number of research analysts 6 Valuation Ratios Price / Tangible book value(1) 133.3 % Price / 2025E EPS 12.5 Price / 2026E EPS 11.2 Dividends Per Share Declared(3) 0.72 0.61 0.72 0.84 0.80 0.81 0.84 0.88 0.92 0.72 $0.11 $0.12 $0.15 $0.18 $0.20 $0.20 $0.21 $0.22 $0.23 $0.24 $0.12 $0.13 $0.15 $0.18 $0.20 $0.20 $0.21 $0.22 $0.23 $0.24 $0.12 $0.13 $0.15 $0.19 $0.20 $0.20 $0.21 $0.22 $0.23 $0.24 $0.12 $0.13 $0.17 $0.19 $0.20 $0.21 $0.21 $0.22 $0.23 $0.25 $0.10 $0.10 $0.10 Q1 Q2 Q3 Q4 Special dividends 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025(1) Represents a non-GAAP financial measure (2) Market information as of July 7, 2025 and earnings per share and valuation ratios are based on analysts consensus (3) Dividend information as of July 23, 2025 $2.31 $2.01 $1.80$2.31 $1.75 $1.24 $0.45 $0.45 $0.51 $0.49 $0.53 $0.41 $0.33 $0.34 $0.40 $0.36 Diluted EPS Adjusted Diluted EPS(1) 2022 2023 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Diluted EPS and Adjusted Diluted EPS(1)

APPENDIX - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND QUARTERLY FINANCIAL STATISTICS

36 NON-GAAP FINANCIAL MEASURES Dollars in thousands 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Adjusted Net Income and Adjusted Return on Average Assets ("ROAA"): Net income (GAAP) $ 81,875 $ 61,755 $ 43,258 $ 26,126 $ 14,159 $ 11,423 $ 11,928 $ 13,911 $ 12,215 Exclude (gain) loss on sale of investment securities, net 256 12,231 22,742 10,741 1,921 6,945 3,903 3,887 6,854 Exclude gain on sale of branch including related deposits, net — (610) — — — — — — — Exclude gain on sale of premise and equipment (403) — (1,552) (8) (49) (1,480) (23) (3) (5) Exclude tax effect of adjustments 31 (2,440) (4,450) (2,254) (393) (1,148) (815) (816) (1,438) Exclude BOLI restructuring costs included in BOLI Income — — 508 — — — 508 — — Exclude tax expense related to BOLI restructuring — — 2,371 515 — — 2,371 — 515 Adjusted net income (non-GAAP) $ 81,759 $ 70,936 $ 62,877 $ 35,120 $ 15,638 $ 15,740 $ 17,872 $ 16,979 $ 18,141 Average total assets $ 7,321,455 $ 7,140,024 $ 7,133,046 $ 7,074,930 $7,106,791 $7,182,921 $7,149,294 $7,103,227 $7,046,943 ROAA, annualized (GAAP) 1.12 % 0.86 % 0.61 % 0.74 % 0.80 % 0.63 % 0.66 % 0.79 % 0.70 % Adjusted ROAA, annualized (non-GAAP) 1.12 % 0.99 % 0.88 % 1.00 % 0.89 % 0.87 % 0.99 % 0.97 % 1.03 %

37 NON-GAAP FINANCIAL MEASURES 2022 2023 2024 2025 YTD Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Return on Average Tangible Common Equity ("ROATCE") and Adjusted ROATCE: Net income (GAAP) $ 81,875 $ 61,755 $ 43,258 $ 26,126 $ 14,159 $ 11,423 $ 11,928 $ 13,911 $ 12,215 Add amortization of intangible assets 2,750 2,434 1,640 605 421 399 399 303 302 Exclude tax effect of adjustment (578) (511) (344) (127) (88) (84) (84) (64) (63) Tangible net income (non-GAAP) $ 84,047 $ 63,678 $ 44,554 $ 26,604 $ 14,492 $ 11,738 $ 12,243 $ 14,150 $ 12,454 Tangible net income (non-GAAP) $ 84,047 $ 63,678 $ 44,554 $ 26,604 $ 14,492 $ 11,738 $ 12,243 $ 14,150 $ 12,454 Exclude (gain) loss on sale of investment securities, net 256 12,231 22,742 10,741 1,921 6,945 3,903 3,887 6,854 Exclude gain on sale of branch including related deposits, net — (610) — — — — — — — Exclude gain on sale of premise and equipment (403) — (1,552) (8) (49) (1,480) (23) (3) (5) Exclude tax effect of adjustments 31 (2,440) (4,450) (2,254) (393) (1,148) (815) (816) (1,438) Exclude BOLI restructuring costs included in BOLI Income — — 508 — — — 508 — — Exclude tax expense related to BOLI restructuring — — 2,371 515 — — 2,371 — 515 Adjusted tangible net income (non-GAAP) $ 83,931 $ 72,859 $ 64,173 $ 35,598 $ 15,971 $ 16,055 $ 18,187 $ 17,218 $ 18,380 Average stockholders' equity (GAAP) $ 811,942 $ 818,042 $ 854,172 $ 873,255 $ 843,438 $ 857,799 $ 868,308 $ 866,629 $ 879,808 Exclude average intangible assets (249,566) (246,965) (244,910) (243,797) (245,106) (244,706) (244,302) (243,945) (243,651) Average tangible common stockholders' equity (non-GAAP) $ 562,376 $ 571,077 $ 609,262 $ 629,458 $ 598,332 $ 613,093 $ 624,006 $ 622,684 $ 636,157 ROAE, annualized (GAAP) 10.08 % 7.55 % 5.06 % 6.03 % 6.75 % 5.30 % 5.46 % 6.51 % 5.57 % ROATCE, annualized (non-GAAP) 14.94 % 11.15 % 7.31 % 8.52 % 9.74 % 7.62 % 7.81 % 9.22 % 7.85 % Adjusted ROATCE, annualized (non- GAAP) 14.92 % 12.76 % 10.53 % 11.40 % 10.74 % 10.42 % 11.59 % 11.21 % 11.59 % Dollars in thousands

38 NON-GAAP FINANCIAL MEASURES 2022 2023 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Diluted Earnings per Share and Adjusted Diluted Earnings per Share: Net income (GAAP) $ 81,875 $ 61,755 $ 43,258 $ 14,159 $ 11,423 $ 11,928 $ 13,911 $ 12,215 Exclude (gain) loss on sale of investment securities, net 256 12,231 22,742 1,921 6,945 3,903 3,887 6,854 Exclude gain on sale of branch including related deposits, net — (610) — — — — — — Exclude gain on sale of premise and equipment (403) — (1,552) (49) (1,480) (23) (3) (5) Exclude tax effect of adjustments 31 (2,440) (4,450) (393) (1,148) (815) (816) (1,438) Exclude BOLI restructuring costs included in BOLI Income — — 508 — — 508 — — Exclude tax expense related to BOLI restructuring — — 2,371 — — 2,371 — 515 Adjusted net income (non-GAAP) $ 81,759 $ 70,936 $ 62,877 $ 15,638 $ 15,740 $ 17,872 $ 16,979 $ 18,141 Average number of diluted shares outstanding 35,463,896 35,258,189 34,899,036 34,919,395 34,658,674 34,553,139 34,506,238 34,446,710 Diluted earnings per share (GAAP) $ 2.31 $ 1.75 $ 1.24 $ 0.41 $ 0.33 $ 0.34 $ 0.40 $ 0.36 Adjusted diluted earnings per share (non-GAAP) $ 2.31 $ 2.01 $ 1.80 $ 0.45 $ 0.45 $ 0.51 $ 0.49 $ 0.53 Dollars in thousands

39 2016 2017 2018 2019 2020 2021 2022 2023 2024 Tangible Book Value Per Share: Total stockholders' equity (GAAP) $ 481,763 $ 505,305 $ 760,723 $ 809,311 $ 820,439 $ 854,432 $ 797,893 $ 853,261 $ 863,527 Exclude intangible assets (126,403) (125,117) (261,553) (257,552) (254,027) (250,916) (248,166) (245,732) (244,092) Tangible common equity (non-GAAP) $ 355,360 $ 380,188 $ 499,170 $ 551,759 $ 566,412 $ 603,516 $ 549,727 $ 607,529 $ 619,435 Shares outstanding 29,954,931 29,927,746 36,874,055 36,618,729 35,912,243 35,105,779 35,106,697 34,906,233 33,990,827 Book value per share (GAAP) $ 16.08 $ 16.88 $ 20.63 $ 22.10 $ 22.85 $ 24.34 $ 22.73 $ 24.44 $ 25.40 Tangible book value per share (non-GAAP) $ 11.86 $ 12.70 $ 13.54 $ 15.07 $ 15.77 $ 17.19 $ 15.66 $ 17.40 $ 18.22 Moved to 2nd slide Tangible Book Value Per Share (cont'd): 2025 2025 Q1 Q2 Total stockholders' equity (GAAP) $ 881,515 $ 888,212 Exclude intangible assets (243,789) (243,487) Tangible common equity (non-GAAP) $ 637,726 $ 644,725 Shares outstanding 34,105,516 33,953,194 Book value per share (GAAP) $ 25.85 $ 26.16 Tangible book value per share (non-GAAP) $ 18.70 $ 18.99 NON-GAAP FINANCIAL MEASURES Dollars in thousands

40 NON-GAAP FINANCIAL MEASURES Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Efficiency Ratio and Adjusted Efficiency Ratio Total noninterest expense (GAAP) $ 39,096 $ 39,290 $ 39,540 $ 41,383 $ 41,085 Net interest income (GAAP) $ 51,113 $ 52,958 $ 53,763 $ 53,690 $ 54,983 Total noninterest income (GAAP) $ 5,246 $ 1,837 $ 3,290 $ 3,903 $ 1,517 Exclude (gain) loss on sale of investment securities, net 1,921 6,945 3,903 3,887 6,854 Exclude gain on sale of premise and equipment (49) (1,480) (23) (3) (5) Exclude BOLI restructuring costs included in BOLI Income — — 508 — — Adjusted total non interest income (non-GAAP) $ 7,118 $ 7,302 $ 7,678 $ 7,787 $ 8,366 Efficiency ratio (GAAP) 69.37 % 71.70 % 69.30 % 71.85 % 72.72 % Adjusted efficiency ratio (non-GAAP) 67.14 % 65.20 % 64.35 % 67.31 % 64.86 % Dollars in thousands

41 As of Period End or for the Three Months Ended June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 Profitability: Net income $ 14,159 $ 11,423 $ 11,928 $ 13,911 $ 12,215 Adjusted net income(1) $ 15,638 $ 15,740 $ 17,872 $ 16,979 $ 18,141 Diluted earnings per share $ 0.41 $ 0.33 $ 0.34 $ 0.40 $ 0.36 Adjusted diluted earnings per share (1) $ 0.45 $ 0.45 $ 0.51 $ 0.49 $ 0.53 Return on average assets 0.80 % 0.63 % 0.66 % 0.79 % 0.70 % Adjusted return on average assets(1) 0.89 % 0.87 % 0.99 % 0.97 % 1.03 % Return on average common equity 6.75 % 5.30 % 5.46 % 6.51 % 5.57 % Return on average tangible common equity(1) 9.74 % 7.62 % 7.81 % 9.22 % 7.85 % Adjusted return on average tangible common equity(1) 10.74 % 10.42 % 11.59 % 11.21 % 11.59 % Net interest margin 3.27 % 3.30 % 3.36 % 3.44 % 3.51 % Efficiency ratio 69.4 % 71.7 % 69.3 % 71.9 % 72.7 % Adjusted efficiency ratio(1) 67.1 % 65.2 % 64.4 % 67.3 % 64.9 % Noninterest expense to average total assets 2.21 % 2.18 % 2.20 % 2.36 % 2.34 % Balance Sheet: Total assets $ 7,059,857 $ 7,153,363 $ 7,106,278 $ 7,129,862 $ 7,070,641 Loans receivable $ 4,532,615 $ 4,679,479 $ 4,802,123 $ 4,764,848 $ 4,774,855 Total deposits $ 5,515,652 $ 5,708,492 $ 5,684,613 $ 5,845,335 $ 5,784,413 Loan to deposit ratio 82.2 % 82.0 % 84.5 % 81.5 % 82.5 % Capital: Book value per share $ 24.66 $ 25.61 $ 25.40 $ 25.85 $ 26.16 Tangible book value per share(1) $ 17.56 $ 18.45 $ 18.22 $ 18.70 $ 18.99 Leverage ratio 10.1 % 9.9 % 10.0 % 10.2 % 10.3 % Total capital ratio 13.9 % 13.6 % 13.3 % 13.6 % 13.6 % Credit Quality: Nonperforming assets to total assets 0.12 % 0.13 % 0.07 % 0.06 % 0.26 % ACL on loans to loans receivable 1.13 % 1.10 % 1.09 % 1.09 % 1.10 % Dollars in thousands (1) Represents a non-GAAP financial measure QUARTERLY FINANCIAL STATISTICS


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, no par value	HFWA	The Nasdaq Stock Market LLC


Exhibit 99.1						Press Release announcing second quarter 2025 results and declares regular cash dividend of $0.24 per share dated July 24, 2025

Exhibit 99.2						Second Quarter 2025 Investor Presentation

104						Cover Page Interactive Data File (embedded within the Inline XBRL document)


						HERITAGE FINANCIAL CORPORATION

Date:
July 24, 2025						/S/ BRYAN MCDONALD
						Bryan McDonald
						Chief Executive Officer
						(Duly Authorized Officer)