Heritage Financial (NASDAQ:HFWA) Posts Earnings Results, Beats Estimates By $0.13 EPS

Heritage Financial (NASDAQ:HFWA) announced its earnings results on Thursday. The financial services provider reported $0.57 earnings per share for the quarter, beating the consensus estimate of $0.44 by $0.13, Zacks reports. The business had revenue of $84.13 million during the quarter, compared to the consensus estimate of $86.30 million. Heritage Financial had a net margin of 20.50% and a return on equity of 8.71%.

Here are the key takeaways from Heritage Financial’s conference call:

• Heritage reported a higher net interest margin, up to 3.99% in Q2, and management expects further improvement as loan repricing continues, though at a more moderate pace.
• Loan production strengthened materially, with commercial teams closing $339 million of new commitments and the pipeline ending at $628 million, supporting management’s view of mid-single-digit loan growth over the next few quarters.
• Deposits fell $210 million in the quarter due to seasonal tax-related outflows, a large short-term customer balance leaving, and lower brokered CDs, though management expects deposit growth to improve in the back half of the year.
• Credit quality remained solid, with non-accrual loans at 0.27% of total loans, net charge-offs at just 0.03% annualized for the first half, and criticized/substandard trends generally stable to improving.
• The company reiterated that merger-related costs from Kitsap/Olympic integration will keep expenses elevated in Q3, with non-interest expense guided to $64 million-$65 million before easing to $56 million-$57 million in Q4.

Heritage Financial Price Performance

Shares of HFWA stock opened at $30.29 on Friday. The firm has a market cap of $1.25 billion, a P/E ratio of 14.85 and a beta of 0.49. The company has a debt-to-equity ratio of 0.04, a current ratio of 0.81 and a quick ratio of 0.81. Heritage Financial has a 1-year low of $21.32 and a 1-year high of $31.25. The firm has a fifty day moving average of $28.59 and a two-hundred day moving average of $27.16.

Heritage Financial Increases Dividend

The business also recently disclosed a quarterly dividend, which will be paid on Wednesday, August 19th. Shareholders of record on Wednesday, August 5th will be paid a dividend of $0.25 per share. This is a positive change from Heritage Financial’s previous quarterly dividend of $0.24. The ex-dividend date is Wednesday, August 5th. This represents a $1.00 dividend on an annualized basis and a yield of 3.3%. Heritage Financial’s payout ratio is currently 47.06%.

Insider Activity

In other news, CFO Donald Hinson sold 3,842 shares of the stock in a transaction dated Tuesday, June 9th. The shares were sold at an average price of $28.37, for a total transaction of $108,997.54. Following the transaction, the chief financial officer owned 41,241 shares of the company’s stock, valued at approximately $1,170,007.17. This trade represents a 8.52% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is accessible through this hyperlink. Company insiders own 1.49% of the company’s stock.

Institutional Trading of Heritage Financial

Several institutional investors and hedge funds have recently bought and sold shares of HFWA. State Street Corp grew its position in shares of Heritage Financial by 3.2% in the 4th quarter. State Street Corp now owns 1,573,458 shares of the financial services provider’s stock worth $37,212,000 after acquiring an additional 48,765 shares in the last quarter. Geode Capital Management LLC raised its position in shares of Heritage Financial by 0.5% during the 4th quarter. Geode Capital Management LLC now owns 842,598 shares of the financial services provider’s stock valued at $19,929,000 after acquiring an additional 4,170 shares in the last quarter. Wellington Management Group LLP acquired a new stake in shares of Heritage Financial during the 3rd quarter valued at approximately $11,210,000. Ameriprise Financial Inc. lifted its stake in Heritage Financial by 1.7% during the second quarter. Ameriprise Financial Inc. now owns 393,619 shares of the financial services provider’s stock worth $9,384,000 after purchasing an additional 6,663 shares during the last quarter. Finally, Bridgeway Capital Management LLC lifted its stake in Heritage Financial by 5.7% during the fourth quarter. Bridgeway Capital Management LLC now owns 275,015 shares of the financial services provider’s stock worth $6,504,000 after purchasing an additional 14,780 shares during the last quarter. Institutional investors and hedge funds own 78.30% of the company’s stock.

Analyst Ratings Changes

HFWA has been the topic of several analyst reports. Zacks Research raised shares of Heritage Financial from a “strong sell” rating to a “hold” rating in a research note on Friday, June 26th. Wall Street Zen upgraded Heritage Financial from a “sell” rating to a “hold” rating in a research note on Saturday, May 16th. Piper Sandler dropped their target price on Heritage Financial from $34.00 to $32.00 and set an “overweight” rating on the stock in a research report on Monday, April 27th. Finally, Weiss Ratings reiterated a “buy (b)” rating on shares of Heritage Financial in a research note on Tuesday, July 7th. Three equities research analysts have rated the stock with a Buy rating and three have assigned a Hold rating to the company’s stock. According to MarketBeat, the company currently has an average rating of “Moderate Buy” and a consensus target price of $30.50.

Trending Headlines about Heritage Financial

Here are the key news stories impacting Heritage Financial this week:

• Positive Sentiment: Heritage Financial beat Q2 adjusted EPS expectations, reporting $0.57 per share versus estimates around $0.44-$0.54, which suggests core profitability was stronger than analysts expected. Conference Call / Earnings Report
• Positive Sentiment: The company raised its quarterly dividend to $0.25 per share from $0.24, signaling management confidence in capital levels and cash generation. Press Release
• Positive Sentiment: Management commentary and call highlights pointed to “margin upside,” which investors may view as a sign that net interest income could improve in coming quarters. Earnings Call Highlights
• Neutral Sentiment: Quarterly revenue of $84.13 million came in below Wall Street expectations, so the earnings beat was not matched by a top-line outperformance. Conference Call / Earnings Report
• Neutral Sentiment: Net income and diluted EPS declined from the prior quarter, suggesting results were solid but not uniformly improving across all metrics. Press Release
• Neutral Sentiment: Heritage Financial outlined Q3 noninterest expense of $64 million-$65 million and a $56 million-$57 million Q4 run-rate as the Kitsap conversion nears, which adds visibility but also points to near-term cost pressures before expected synergies are realized. Seeking Alpha Article

Heritage Financial Company Profile

Heritage Financial Corporation (NASDAQ:HFWA) is a bank holding company headquartered in Spokane, Washington. Through its primary subsidiary, Heritage Bank, the company provides a comprehensive range of banking and financial services to both individual and commercial clients. Heritage Bank’s offerings encompass deposit products, lending solutions, treasury and cash management services, mortgage banking, and wealth management, positioning the organization as a full-service community bank.

The company’s lending portfolio includes commercial real estate loans, agricultural loans, small business administration (SBA) loans, construction and development financing, and a variety of consumer mortgage products.