Heritage Financial Corporation · NASDAQ:HFWA
Heritage Financial — Q3 2026 Earnings Presentation
39 slides from Heritage Financial's earnings presentation, Oct 22, 2026
Slide 1: Investor Presentation Q3 2026
INVESTOR PRESENTATION Q3 2026
Slide 2: Forward Looking Statements
2 FORWARD LOOKING STATEMENTS This presentation may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Heritage Financial Corporation (the "Company") intends such forward
Slide 3: Heritage Financial Corporation Overview
HERITAGE FINANCIAL CORPORATION OVERVIEW
Slide 4: Overview
4 OVERVIEW General Overview Nasdaq symbol HFWA Stock price(2) $27.88 Market capitalization(2) $1.1 billion Headquarters Olympia, WA # of branches 64 Year established 1927 Q3 2026 Financial Highlights Assets $8.5 billion Deposits $7.2 billion Loans receivable $5.9 billion Net income $18.7 million Net
Slide 5: Company Strategy
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 branch openings in Eugene, Oregon, Boise, Idaho, and Spokane, Washi
Slide 6: Strong and Diverse Economic Landscape
6 $124.6 $104.9 $92.5 $109.4 $86.9 Median household income (dollars in thousands) 4.8% 3.5% 14.3% 4.9% 1.1% 13.1% 3.3% 7.8% 12.9% 4.3% 2.6% 12.7% 4.2% 2.6% 11.3%Seattle MSA Portland MSA Boise MSA Bremerton MSA USA Unemployment rate 2026-2031 Projected Population Growth 2026-2031 Projected Median Hou
Slide 7: Loans and Deposits by Location
7 LOANS AND DEPOSITS BY LOCATION MSA = Metropolitan or Micropolitan Statistical Area Location based upon branch or office location Deposits by MSA $2,758 $972 $832 $517 $472 $377 $230 $163 $176 $148 $120 $97 $325 Seattle-Tacoma-Bellevue WA Portland-Vancouver-Hillsboro OR-WA Bremerton-Silverdale-Port
Slide 8: Potential Growth Opportunities
8 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
Slide 9: Historical Growth Organic and Acquisitive
9 $1,712 $3,651 $3,879 $4,113 $4,238 $5,553 $6,615 $7,432 $6,980 $7,175 $7,106 $6,967 $6,907 $8,431 $8,518 $1,747 $1,079 $1,591 $15.02 $15.68 $16.08 $16.88 $20.63 $22.10 $22.85 $24.34 $22.73 $24.44 $25.40 $27.13 $27.05 $27.13 $26.71 $10.73 $11.41 $11.86 $12.70 $13.54 $15.07 $15.77 $17.19 $15.66 $17.
Slide 10: Growth Strategy
10 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 Market
Slide 11: Financial Update
FINANCIAL UPDATE
Slide 12: Loan Portfolio
12 LOAN PORTFOLIO Loan Portfolio Composition $165 $170 $209 $214 $219 $403 $359 $361 $349 $361 $479 $343 $412 $397 $462 $843 $818 $1,059 $1,051 $1,062$1,003 $1,035 $1,214 $1,228 $1,212 $1,909 $2,058 $2,466 $2,509 $2,566 Consumer Residential real estate Construction & land development Commercial and
Slide 13: Line of Credit Utilization
13 LOC Utilization Rates 28.2% 29.7% 28.8% 30.7% 29.8% 31.0% 53.8% 70.2% 57.3% 58.4% 54.3% 56.1% 31.1% 31.6% 34.4% 34.1% 34.5% 34.9% Utilization Rate - Consumer LOCs Utilization Rate - Construction LOCs Utilization Rate - C&I LOCs 2023 2024 2025 Q1 2026 Q2 2026 Q3 2026 Construction Commitments $769
Slide 14: Commercial Loan Exposure
14 COMMERCIAL LOAN EXPOSURE Commercial Business Loans by Industry Exposure Industry Amount WARR at 09/30/26 Real estate, rental and leasing $2,765 4.5 Health care and social assistance 449 4.4 Accommodation and food services 198 5.2 Retail trade 131 4.6 Construction 195 5.2 Other services (except Pu
Slide 15: Changes in Loans Receivable
15 CHANGES IN LOANS RECEIVABLE $5,748 $255 $(134) $(73) $85 $5,881 Loans receivable at June 30, 2026 Loans originated Prepayments Maturities / Payoffs Net advances/ payments Loans receivable at September 30, 2026 $4,783 $954 $515 $(309) $(170) $108 $5,881 Loans receivable at December 31, 2025 Loans
Slide 16: Nonaccrual Loans and Net Charge-offs
16 Net charge-offs (recoveries) on loans to average loans, annualized (0.01)% 0.06% 0.03% 0.03% 0.01% 0.04% 0.04% 0.02% 0.03% 2023 2024 2025 2026 YTD Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 (0.03)% 0.00% 0.03% 0.05% 0.08% Nonaccrual Loans $4 $4 $21 $15 $16 $32 Nonaccrual loans Nonaccrual loans to lo
Slide 17: Criticized Loans
17 CRITICIZED LOANS $150 $179 $188 $225 $231 $246 $65 $64 $96 $106 $90 $76 $80 $111 $71 $104 $125 $138 Substandard - nonaccrual Substandard - accrual Special mention 2023 2024 2025 Q1 2026 Q2 2026 Q3 2026 Criticized Loans by Loan Segment Commercial & industrial 38.8% Owner- occupied CRE 14.0% Non-ow
Slide 18: Criticized Loans and Net Charge-off History
18 CRITICIZED LOANS AND NET CHARGE-OFF HISTORY Criticized Loans to Total Loans 3.79% 6.50% 4.81% 3.34% 3.45% 3.73% 3.93% 4.01% 2.05% 3.37% 2.63% 1.96% 2.27% 2.66% 3.22% 3.05% Heritage Peer Median 2019 2020 2021 2022 2023 2024 2025 Q2 2026 YTD Net Charge-offs to Average Loans 0.09% 0.07% 0.01% (0.03)
Slide 19: Allowance for Credit Losses on Loans
19 ACL on Loans $47,999 $52,468 $52,584 $60,551 $59,473 $61,343 1.11% 1.09% 1.10% 1.06% 1.03% 1.04% ACL on loans ($) ACL on loans / Loans (%) 2023 2024 2025 Q1 2026 Q2 2026 Q3 2026 ALLOWANCE FOR CREDIT LOSSES ("ACL") ON LOANS $59,473 $1,519 $(547) $(100) $998 $61,343 June 30, 2026 Change in loan bal
Slide 20: Deposits
20 Average Deposit Balances and Cost of Total Deposits $5,706 $5,618 $5,813 $6,994 $5,843 $5,886 $6,741 $7,100 $7,138 0.69% 1.34% 1.36% 1.21% 1.37% 1.32% 1.25% 1.21% 1.19% 1.89% 1.83% 1.71% 1.67% 1.65% 1.03% 1.90% 1.89% 1.68% Average deposits Cost of total deposits Cost of int-bearing deposits 2023
Slide 21: Deposit Composition
21 DEPOSIT COMPOSITION Customer Deposits by Relationship Size $1,059 $484 $1,594 $1,825 $2,225 Over $10MM $5MM-$10MM $1MM-5MM $250K-$1MM Less than $250K Consumer Accounts vs. Business Accounts 27% 59% 14% Consumer Commercial CDs Insured vs. Uninsured 40% 60% Insured Uninsured Deposit portfolio as of
Slide 22: Investment Portfolio
22 Investment Balances and Investment Yield $1,874 $1,468 $1,282 $1,601 $1,313 $1,282 $1,669 $1,633 $1,601$178 $33 $88 $406 $0 $3 $316 $44 $46 3.02% 3.33% 3.33% 3.51% 3.35% 3.26% 3.43% 3.54% 3.56% Portfolio yield New purchases 2023 2024 2025 2026 YTD Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 INVESTMEN
Slide 23: Investment Cashflows
23 $47 $46 $43 $49 $43 $76 $101 $69 $69 $40 $41 $58 $33 $32 $30 $35 $30 $63 $89 $57 $58 $29 $31 $48 $14 $14 $13 $14 $13 $13 $12 $12 $11 $11 $10 $10 Interest Principal Q4 2026 Q1 2027 Q2 2027 Q3 2027 Q4 2027 Q1 2028 Q2 2028 Q3 2028 Q4 2028 Q1 2029 Q2 2029 Q3 2029 INVESTMENT CASHFLOWS Investment cashf
Slide 24: Investment Portfolio
24 INVESTMENT PORTFOLIO HTM Investment by Type US government and agencies 21.3% Residential CMO and MBS 30.9% Commercial CMO and MBS 47.8% Available for sale ("AFS") and held to maturity ("HTM") investment securities percentages are based on fair value as of September 30, 2026 unless otherwise noted
Slide 25: Net Interest Margin
25 Net Interest Margin 3.56% 3.31% 3.58% 4.00% 3.64% 3.72% 3.96% 3.99% 4.05% 2023 2024 2025 2026 YTD Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 NET INTEREST MARGIN Quarterly Change in Net Interest Margin 3.99% 0.06% (0.01)% —% 0.01% —% 4.05% QTD Q2 2026 Loans Investments Interest earning deposits Depos
Slide 26: Loan Maturity and Repricing
26 Fixed Rate Loans • $3.0 billion in total Adjustable Rate Loans - Repricing Schedule $1,285 $144 $189 $349 $357 $457 $91 6.67% 5.09% 6.09% 6.17% 6.11% 6.15% 5.36% 6.77% 7.40% 7.27% 7.31% 7.39% 7.28% 7.36% Floating and Adjustable Rate Loans Wtd Avg Rate (1) Wtd Avg Rate if Repriced (2) < 3 Months 3
Slide 27: Profitability Trends
27 PROFITABILITY TRENDS ROAA and Adjusted ROAA(1) 0.86% 0.61% 0.96% 0.89% 1.09% 1.27% 0.97% 0.83% 0.88% 0.99% 0.88% 1.10% 1.12% 1.11% 1.29% 1.18% 1.12% 1.07% ROAA Adjusted ROAA (1) 2023 2024 2025 2026 YTD Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Noninterest Expense/Avg. Assets 2.30% 2.20% 2.32% 2.53%
Slide 28: Profitability Trends
28 $61.8 $43.3 $67.5 $55.2 $70.9 $62.9 $77.3 $69.5 Net income Adjusted Net income (1) 2023 2024 2025 2026 YTD Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 $19.2 $22.2 $18.9 $17.5 $18.7 $19.7 $22.5 $23.0 $23.6 $22.8 PROFITABILITY TRENDS ROAE, ROATCE(1) and Adjusted ROATCE(1) Net Income and Adjusted Net In
Slide 29: Capital Ratios
29(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 11.9% 12.2% 13.2% 13.1% 13.2% 12.7% 8.8% 9.0% 10.1% 9.6% 9.7% 9.3% Stockholders' equity to total assets (GAAP) Tangibl
Slide 30: Liquidity Position
30 LIQUIDITY POSITION (1) Includes FHLB borrowing availability of $1.79 billion at September 30, 2026 based on pledged assets, however, maximum credit capacity is 45% of the Bank's total assets one quarter in arrears or $3.79 billion Liquidity position at September 30, 2026: • Sufficient liquidity t
Slide 31: Shareholder Return
SHAREHOLDER RETURN
Slide 32: Total Shareholder Return
32 TOTAL SHAREHOLDER RETURN Stock Summary(2) Ticker HFWA Exchange Nasdaq Stock price $27.88 Market capitalization (in millions) $1,140.7 Dividend yield (regular dividend only) 3.59 % Average Daily Volume (3 month) Average daily volume (shares) 296,387 Average daily volume ($000s) $8,263 52-Week High
Slide 33: Appendix - Reconciliation of Non-GAAP Financial Measures and Quarterly Financial Statistics
APPENDIX - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND QUARTERLY FINANCIAL STATISTICS
Slide 34: Non-GAAP Financial Measures
34 NON-GAAP FINANCIAL MEASURES Dollars in thousands 2023 2024 2025 2026 YTD Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Adjusted Net Income and Adjusted Return on Average Assets ("ROAA"): Net income (GAAP) $ 61,755 $ 43,258 $ 67,532 $ 55,213 $ 19,169 $ 22,237 $ 18,947 $ 17,546 $ 18,720 Exclude (gain) lo
Slide 35: Non-GAAP Financial Measures
35 NON-GAAP FINANCIAL MEASURES 2023 2024 2025 2026 YTD Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Return on Average Tangible Common Equity ("ROATCE") and Adjusted ROATCE: Net income (GAAP) $ 61,755 $ 43,258 $ 67,532 $ 55,213 $ 19,169 $ 22,237 $ 18,947 $ 17,546 $ 18,720 Add amortization of intangible as
Slide 36: Non-GAAP Financial Measures
36 NON-GAAP FINANCIAL MEASURES 2023 2024 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Diluted Earnings per Share and Adjusted Diluted Earnings per Share: Net income (GAAP) $ 61,755 $ 43,258 $ 67,532 $ 19,169 $ 22,237 $ 18,947 $ 17,546 $ 18,720 Exclude (gain) loss on sale of investment securities, ne
Slide 37: Tangible Book Value Per Share
37 2017 2018 2019 2020 2021 2022 2023 2024 2025 Tangible Book Value Per Share: Total stockholders' equity (GAAP) $ 505,305 $ 760,723 $ 809,311 $ 820,439 $ 854,432 $ 797,893 $ 853,261 $ 863,527 $ 921,504 Exclude intangible assets (125,117) (261,553) (257,552) (254,027) (250,916) (248,166) (245,732) (
Slide 38: Non-GAAP Financial Measures
38 NON-GAAP FINANCIAL MEASURES Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Efficiency Ratio and Adjusted Efficiency Ratio Total noninterest expense (GAAP) $ 41,615 $ 41,483 $ 56,551 $ 64,324 $ 61,958 Exclude merger related costs 635 385 5,178 7,493 5,185 Exclude amortization of intangible assets $ 284 $
Slide 39: Quarterly Financial Statistics
39 As of Period End or for the Three Months Ended September 30, 2025 December 31, 2025 March 31, 2026 June 30, 2026 September 30, 2026 Profitability: Net income $ 19,169 $ 22,237 $ 18,947 $ 17,546 $ 18,720 Adjusted net income(1) $ 19,671 $ 22,541 $ 23,038 $ 23,637 $ 22,816 Diluted earnings per share