Heritage Financial reported second-quarter 2026 net income of $17.5 million, or $0.42 per diluted share, down from $18.9 million in the first quarter. The net interest margin expanded 3 basis points to 3.99%, or 8 basis points when excluding a prior-quarter interest recovery on nonaccrual loans, driven by higher investment portfolio yields and lower deposit costs. Total loans grew $26 million to $5.75 billion, while commercial loan commitments more than doubled to $339 million, though elevated prepayments of $152.4 million limited net growth. Total deposits fell $209.8 million to $7.04 billion due to seasonal tax outflows and a single $67 million relationship withdrawal, and the cost of interest-bearing deposits declined to 1.67%. Noninterest expense rose to $64.3 million, including $7.5 million in merger-related costs, and management guided to $64–$65 million in the third quarter before a drop to $56–$57 million in the fourth quarter following the Olympic Bancorp systems conversion. Credit quality remained strong with net charge-offs of just $234,000 and nonperforming assets at 0.19% of total assets, while the tangible common equity ratio ticked up to 9.7%.
Heritage Financial CorporationNet income fell to $17.5 million from $18.9 million in the prior quarter.