Heritage Financial (NASDAQ:HFWA) Announces Earnings Results, Beats Estimates By $0.02 EPS

Key Points

• Heritage reported $0.59 EPS, beating estimates by $0.02, but revenue of $77.92M missed the consensus $80.31M.
• The bank closed the acquisition of Olympic Bancorp (adding ~ $954M in loans and ~$1.39B in deposits) and said net interest margin improved to 3.96% with a goal to exceed 4% by year-end from loan repricing and new originations.
• Management said merger-related charges and a systems conversion will raise noninterest expense to roughly $64–65M in Q2–Q3 before declining to ~$56–57M in Q4, while credit metrics remain strong (non-accruals $15M; annualized net charge-offs ~0.04%).

Heritage Financial (NASDAQ:HFWA - Get Free Report) issued its quarterly earnings data on Thursday. The financial services provider reported $0.59 earnings per share for the quarter, beating analysts' consensus estimates of $0.57 by $0.02, Zacks reports. Heritage Financial had a return on equity of 8.61% and a net margin of 20.10%.The company had revenue of $77.92 million for the quarter, compared to the consensus estimate of $80.31 million.

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

• Heritage closed the acquisition of Olympic Bancorp, adding ~$954M in loans and ~$1.39B in deposits and strengthening the bank's presence in the Puget Sound market.
• Net interest margin improved to 3.96% (loan yield 5.73%) with management expecting continued margin expansion and a goal of reaching >4% by year-end driven by loan repricing and new originations.
• Merger-related charges and an upcoming systems conversion will lift noninterest expense, with Q2–Q3 run-rates of roughly $64–65M before falling to ~$56–57M in Q4 (post-merger run-rate ex-merger ~ $55M).
• Credit metrics remained strong—non-accruals fell to $15M (0.26% of loans), a $1.03M reversal of the allowance was recorded, and net charge-offs stayed very low (annualized ~0.04%).
• Deposits rose materially from the acquisition but organic deposits fell ~$61M (seasonal and CD maturities); management expects deposit cost to hover around ~1.7% amid competitive market pressures.

Heritage Financial Stock Up 1.4%

Shares of HFWA opened at $27.70 on Friday. The company has a current ratio of 0.83, a quick ratio of 0.83 and a debt-to-equity ratio of 0.05. The firm has a market cap of $1.14 billion, a P/E ratio of 14.13 and a beta of 0.49. The company's 50-day moving average price is $26.47 and its 200 day moving average price is $25.03. Heritage Financial has a 12-month low of $21.32 and a 12-month high of $28.98.

Heritage Financial Dividend Announcement

The business also recently disclosed a quarterly dividend, which will be paid on Wednesday, May 20th. Investors of record on Wednesday, May 6th will be issued a $0.24 dividend. This represents a $0.96 annualized dividend and a yield of 3.5%. The ex-dividend date is Wednesday, May 6th. Heritage Financial's payout ratio is 48.98%.

Insider Activity

In related news, EVP Tony Chalfant sold 4,668 shares of the business's stock in a transaction on Wednesday, February 11th. The stock was sold at an average price of $27.65, for a total value of $129,070.20. Following the sale, the executive vice president owned 19,870 shares in the company, valued at approximately $549,405.50. The trade was a 19.02% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, Director Frederick B. Rivera sold 1,800 shares of the firm's stock in a transaction that occurred on Tuesday, February 3rd. The shares were sold at an average price of $26.31, for a total transaction of $47,358.00. Following the completion of the transaction, the director directly owned 4,972 shares of the company's stock, valued at approximately $130,813.32. The trade was a 26.58% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Over the last ninety days, insiders sold 8,368 shares of company stock valued at $226,740. 1.49% of the stock is currently owned by corporate insiders.

Institutional Investors Weigh In On Heritage Financial

A number of hedge funds and other institutional investors have recently modified their holdings of HFWA. Invesco Ltd. boosted its position in shares of Heritage Financial by 2.8% in the 4th quarter. Invesco Ltd. now owns 264,519 shares of the financial services provider's stock valued at $6,256,000 after purchasing an additional 7,292 shares during the period. EP Wealth Advisors LLC acquired a new position in Heritage Financial during the 4th quarter worth approximately $385,000. Empowered Funds LLC raised its position in Heritage Financial by 10.7% in the fourth quarter. Empowered Funds LLC now owns 152,515 shares of the financial services provider's stock worth $3,607,000 after acquiring an additional 14,780 shares in the last quarter. Tudor Investment Corp ET AL purchased a new stake in Heritage Financial during the fourth quarter worth about $325,000. Finally, Odyssean LLC purchased a new stake in shares of Heritage Financial during the 4th quarter worth approximately $572,000. 78.30% of the stock is currently owned by institutional investors and hedge funds.

Wall Street Analyst Weigh In

Several research analysts recently weighed in on the company. Stephens boosted their target price on Heritage Financial from $28.00 to $30.00 and gave the stock an "equal weight" rating in a research note on Monday, January 26th. Weiss Ratings upgraded Heritage Financial from a "hold (c)" rating to a "buy (b-)" rating in a research report on Monday, March 2nd. Wall Street Zen upgraded Heritage Financial from a "sell" rating to a "hold" rating in a research note on Saturday, April 4th. DA Davidson upped their price objective on shares of Heritage Financial from $29.00 to $32.00 and gave the stock a "buy" rating in a research report on Friday, January 23rd. Finally, Piper Sandler reduced their target price on Heritage Financial from $35.00 to $34.00 and set an "overweight" rating for the company in a report on Thursday, April 2nd. Three investment analysts have rated the stock with a Buy rating and three have issued a Hold rating to the company's stock. According to data from MarketBeat, the stock currently has a consensus rating of "Moderate Buy" and a consensus price target of $31.00.

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.