Q3 2025 Heritage Financial Corp Earnings Call Transcript
Key Points
- Heritage Financial Corp (HFWA) reported an increase in adjusted earnings per share by 5.7% from the previous quarter and 24.4% from the same quarter last year.
- The company's net interest margin improved to 3.64% from 3.51% in the previous quarter and 3.30% in the third quarter of 2024.
- Total deposits increased by $73 million during the quarter, with noninterest-bearing deposits rising by $33.7 million.
- The pending merger with Olympic Bancorp is expected to enhance profitability and position the company for growth in the Puget Sound market.
- Credit quality remains strong and stable, with nonaccrual loans at 0.37% of total loans and net charge-offs at low levels.
- Total loan balances were relatively flat, decreasing by $5.7 million due to increased payoffs and prepayments.
- Noninterest expense increased by $530,000 from the prior quarter, driven by higher compensation and benefits expenses and merger-related costs.
- The provision for credit losses increased to $1.8 million from $956,000 in the previous quarter.
- The cost of interest-bearing deposits decreased slightly, but new accounts tend to have higher average costs, which could mitigate the benefits of rate cuts.
- The loan-to-deposit ratio decreased, and the company aims to increase it back to 85%, indicating a need for more loan opportunities.
Hello, everyone, and a warm welcome to the Heritage Financial 2025 Q3 earnings call. My name is Emily, and I'll be moderating your call today. (Operator Instructions).
I would now like to turn the call over to Bryan McDonald, President and Chief Executive Officer, to begin. Please go ahead.
Thank you, Emily. Welcome and good morning to everyone who called in and those who may listen later. This is Bryan McDonald, CEO of Heritage Financial. Attending with me are Don Hinson, Chief Financial Officer; and Tony Chalfant, Chief Credit Officer.
Our third quarter earnings release went out this morning premarket, and hopefully, you have had the opportunity to review it prior to the call. In addition to the earnings release, we have also posted an updated third quarter investor presentation on the Investor Relations portion of our corporate website, which includes more detail on our deposits, loan
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