Heritage Financial Corp. (HFWA)
NASDAQ:HFWA
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Heritage Financial
(NASDAQ:HFWA)
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Rating:71Outperform
Price Target:
$29.00
â–²(15.22% Upside)
Action:ReiteratedDate:02/28/26
The score is driven primarily by improving financial fundamentals (profitability rebound and sharply lower leverage) and constructive earnings-call takeaways (margin expansion, strong funding/credit, and 2026 growth outlook), partially offset by weaker recent cash-flow momentum and mixed near-term technical signals.
Positive Factors
Improved balance sheet and materially lower leverage
A sharply de‑levered balance sheet and stronger tangible common equity provide lasting resilience against stress, support regulatory flexibility, and increase capacity for lending, dividends, or targeted M&A without relying on high borrowings. That structural improvement raises long‑term optionality and reduces capital strain.
Negative Factors
Weaker free cash flow momentum
A large decline and higher variability in free cash flow reduces durable internal funding for capital returns, loan growth, and integration costs. Persistent FCF weakness constrains flexibility for buybacks, acquisitions, or capital cushions, increasing reliance on balance sheet actions or slower growth pacing.
Read all positive and negative factors
Positive Factors
Negative Factors
Improved balance sheet and materially lower leverage
A sharply de‑levered balance sheet and stronger tangible common equity provide lasting resilience against stress, support regulatory flexibility, and increase capacity for lending, dividends, or targeted M&A without relying on high borrowings. That structural improvement raises long‑term optionality and reduces capital strain.
Read all positive factors
Heritage Financial (HFWA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.04B
Dividend Yield3.91%
Average Volume (3M)200.76K
Price to Earnings (P/E)11.9
Beta (1Y)0.70
Revenue Growth8.27%
EPS Growth54.96%
CountryUS
Employees757
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)0.65
Shares Outstanding41,131,100
10 Day Avg. Volume243,114
30 Day Avg. Volume200,762
Financial Highlights & Ratios
PEG Ratio0.21
Price to Book (P/B)0.87
Price to Sales (P/S)2.39
P/FCF Ratio9.38
Enterprise Value/Market Cap0.83
Enterprise Value/Revenue2.55
Enterprise Value/Gross Profit3.53
Enterprise Value/Ebitda10.77
Forecast
1Y Price Target
$31.75Price Target Upside26.14% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
EPS Forecast (FY)2.13
Revenue Forecast (FY)$349.08M
Heritage Financial Business Overview & Revenue Model
Company Description
Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to small and medium sized businesses and individuals in the United States. The company accepts various deposit products,...
How the Company Makes Money
Heritage Financial generates revenue through multiple key streams. Primarily, the company earns interest income from loans issued to consumers and businesses, including personal loans, commercial loans, and mortgages. Additionally, HFWA collects f...
Heritage Financial Earnings Call Summary
Earnings Call Date:Jan 22, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call conveyed solid underlying performance: higher adjusted EPS, improved ROA, expanding NIM, strong deposit growth, materially lower borrowings, and continued low credit losses. Management highlighted near-term headwinds including elevated prepayments/payoffs, softer origination yields, increased substandard loans (manageable), and significant merger-related expenses and integration/fair-value uncertainty. The pending Olympic Bancorp acquisition is presented as accretive over time and a growth enabler. Overall, the positives (profitability, margin expansion, deposit growth, strong credit metrics, and strategic merger) outweigh the transitory and manageable negatives (loan production softness, certain credit downgrades, and merger costs).Positive Updates
Adjusted EPS Growth
Adjusted diluted earnings per share increased 18% sequentially and 29% year-over-year (vs Q4 2024).
Negative Updates
Decline in New Commercial Loan Commitments
Commercial teams closed $254 million in new loan commitments, down from $317 million in the prior quarter and $316 million in Q4 2024, reflecting slowed originations.
Read all updates
Q4-2025 Updates
Positive
Negative
Adjusted EPS Growth
Adjusted diluted earnings per share increased 18% sequentially and 29% year-over-year (vs Q4 2024).
Read all positive updates
Company Guidance
Management guided that loan growth should resume to more historical levels in 2026—expecting low-single-digit growth in Q1 that accelerates to upper-single-digits over the year—as payoffs/prepaids (≈$170M in Q4 and ~$540–$550M for 2025) are expected to moderate by roughly one‑third and net advances move back from -$81M in 2025 to positive; they expect continued margin expansion (NIM 3.72% in Q4 vs 3.64% Q3 and 3.36% a year ago) driven by asset repricing (loan portfolio yield 5.54% in Q4; average new commercial loan rate 6.56%, all-new-loan rate 6.43%) and lower deposit costs (interest-bearing demand cost 1.83% vs 1.89% prior; deposits +$63M Q4, +$236M YTD; deposit pipeline $108M), with a pro forma blended margin potentially approaching ~4% by year-end after the Olympic Bancorp/Kitsap close (expected end of January, consuming ~100 bps of capital; Olympic loans expected in the low‑6s, investment yields low‑mid 4s, deposits ~20 bps cheaper); they also flagged ~$20–21M of merger-related expenses (conversion in September), near-term Q2/Q3 efficiency run‑rates in the mid‑50s% before core expenses settle toward ~$54M, and left other key metrics on track (total loans +$14M Q4; total new loan commitments $254M, production $271M, pipeline $468M; investment yield 3.26%; borrowings $20M down from $138M; TCE 10.1% from 9.8%; credit remains strong with Q4 net charge‑offs $481k and FY net charge‑offs ≈$1.4M or 0.03%, nonaccruals $21M or 0.44%).Heritage Financial Financial Statement Overview
Summary
Income Statement
73
Positive
Balance Sheet
78
Positive
Cash Flow
59
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 335.97M | 317.19M | 303.13M | 257.05M | 247.45M |
| Gross Profit | 243.35M | 210.56M | 239.54M | 250.40M | 269.78M |
| EBITDA | 79.64M | 55.49M | 78.52M | 102.53M | 101.88M |
| Net Income | 67.53M | 43.26M | 61.76M | 81.88M | 98.03M |
Balance Sheet | |||||
| Total Assets | 6.97B | 7.11B | 7.17B | 6.98B | 7.43B |
| Cash, Cash Equivalents and Short-Term Investments | 660.11M | 881.49M | 1.36B | 1.44B | 2.62B |
| Total Debt | 42.35M | 405.06M | 521.76M | 68.07M | 72.02M |
| Total Liabilities | 6.05B | 6.24B | 6.32B | 6.18B | 6.58B |
| Stockholders Equity | 921.50M | 863.53M | 853.26M | 797.89M | 854.43M |
Cash Flow | |||||
| Free Cash Flow | 85.66M | 61.02M | 99.15M | 90.44M | 66.51M |
| Operating Cash Flow | 94.82M | 64.48M | 109.52M | 94.46M | 69.53M |
| Investing Cash Flow | 186.75M | -85.90M | -93.45M | -1.21B | 163.76M |
| Financing Cash Flow | -165.58M | -86.45M | 105.31M | -506.38M | 746.68M |
Heritage Financial Technical Analysis
Negative
25.17
Price Trends
26.30
Negative
24.94
Positive
24.12
Positive
Market Momentum
-0.31
Negative
43.49
Neutral
69.46
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HFWA, the sentiment is Negative. The current price of 25.17 is below the 20-day moving average (MA) of 25.39, below the 50-day MA of 26.30, and above the 200-day MA of 24.12, indicating a neutral trend. The MACD of -0.31 indicates Negative momentum. The RSI at 43.49 is Neutral, neither overbought nor oversold. The STOCH value of 69.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HFWA.
Heritage Financial Risk Analysis
Heritage Financial disclosed 42 risk factors in its most recent earnings report. Heritage Financial reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Heritage Financial Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $1.13B | 9.18 | 13.88% | 1.70% | 4.33% | -2.20% | |
71 Outperform | $1.04B | 11.89 | 7.51% | 3.91% | 8.27% | 54.96% | |
68 Neutral | $829.19M | 10.73 | 11.65% | 3.39% | 1.22% | 15.97% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
65 Neutral | $898.52M | 10.81 | 6.99% | 4.73% | 6.27% | 79.25% | |
65 Neutral | $815.86M | 11.38 | 8.80% | 0.38% | 6.48% | 8.78% | |
53 Neutral | $830.37M | -5.75 | -20.64% | 3.50% | -78.64% | -913.67% |
* Financial Sector Average
HFWA
Heritage Financial
25.17
1.82
7.77%
CFFN
Capitol Federal Financial
6.92
1.65
31.23%
CPF
Central Pacific Financial
31.54
5.47
21.00%
HBNC
Horizon Bancorp
16.21
1.74
12.00%
MCB
Metropolitan Bank Holding
80.65
25.03
44.99%
AMAL
Amalgamated Bank
37.95
9.74
34.53%
Heritage Financial Corporate Events
Business Operations and StrategyM&A Transactions
Heritage Financial Completes Olympic Bancorp Acquisition and Merger
Positive
Feb 2, 2026
On January 31, 2026, Heritage Financial Corporation completed its previously announced acquisition of Olympic Bancorp, Inc., merging Olympic into Heritage and combining Olympic’s subsidiary Kitsap Bank into Heritage Bank in a follow-on trans...
Business Operations and StrategyDividendsFinancial DisclosuresM&A Transactions
Heritage Financial Posts Strong Quarter and Prepares Acquisition
Positive
Jan 22, 2026
On January 22, 2026, Heritage Financial reported significantly stronger fourth-quarter 2025 and full-year results, with quarterly net income rising to $22.2 million from $19.2 million in the prior quarter and $11.9 million a year earlier, and dilu...
Business Operations and StrategyM&A TransactionsShareholder Meetings
Heritage Financial Shareholders Approve Stock Issuance for Merger
Positive
Jan 22, 2026
On January 21, 2026, Heritage Financial Corporation held a virtual special meeting of shareholders to vote on matters related to its previously announced merger agreement with Olympic Bancorp, Inc., under which Olympic will merge into Heritage wit...
Business Operations and StrategyDividendsM&A Transactions
Heritage Financial Declares Early Quarterly Dividend Amid Merger
Positive
Jan 16, 2026
On January 16, 2026, Heritage Financial Corporation announced that its board declared a regular quarterly cash dividend of $0.24 per common share, to be paid on February 11, 2026, to shareholders of record as of January 28, 2026. The dividend was ...
Business Operations and StrategyM&A TransactionsRegulatory Filings and Compliance
Heritage Financial Gains Regulatory Clearance for Olympic Bancorp Acquisition
Positive
Dec 30, 2025
On December 29, 2025, Heritage Financial Corporation announced it had received all required U.S. banking regulatory approvals, including from federal and Washington state authorities, for its previously announced acquisition of Olympic Bancorp, In...
Business Operations and StrategyExecutive/Board Changes
Heritage Financial Appoints Scott Allan to Board of Directors
Positive
Dec 19, 2025
On December 18, 2025, Heritage Financial Corporation’s board approved the appointment of Scott T. Allan, an experienced executive and board member with a background spanning engineering, consulting, venture-backed startups, and consumer bran...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.