Heritage Financial (HFWA) AI Stock Analysis

• Market Cap: $760.63M
• Dividend Yield: 4.28%
• Average Volume (3M): 172.57K
• Price to Earnings (P/E): 13.5
• Beta (1Y): 0.74
• Revenue Growth: 8.27%
• EPS Growth: 54.96%
• Country: US
• Employees: 757
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 0.55
• Shares Outstanding: 33,956,738
• 10 Day Avg. Volume: 208,949
• 30 Day Avg. Volume: 172,566
• PEG Ratio: -0.69
• Price to Book (P/B): 0.98
• Price to Sales (P/S): 2.66
• P/FCF Ratio: 13.84
• Enterprise Value/Market Cap: 1.21
• Enterprise Value/Revenue: 2.84
• Enterprise Value/Gross Profit: 5.44
• Enterprise Value/Ebitda: 12.82
• 1Y Price Target: $28.00
• Price Target Upside: 24.72% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 1.87
• Revenue Forecast (FY): $252.25M

• Rating: 70 Outperform
• Price Target: $25.00 ▲(11.36% Upside)

Heritage Financial's overall stock score reflects its strong financial performance and positive earnings call, which highlight earnings growth and improved margins. The fair valuation and attractive dividend yield further support the score. However, technical indicators suggest caution due to bearish momentum, and challenges such as flat loan balances and increased nonaccrual loans temper the outlook.

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, such as noninterest demand deposits, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. Its loan portfolio includes commercial and industrial loans, owner-occupied and non-owner occupied commercial real estate loans, one-to-four family residential loans, real estate construction and land development loans, consumer loans, commercial business loans, lines of credit, term equipment financing, and term real estate loans, as well as commercial business loans to a range of businesses in industries that include real estate and rental and leasing, healthcare, accommodation and food services, retail trade, and construction. The company also originates loans that are guaranteed by the U.S. Small Business Administration; and offers trust services, as well as objective advice. As of January 27, 2022, it had a network of 49 banking offices located in Washington and Oregon. The company was formerly known as Heritage Financial Corporation, M.H.C. and changed its name to Heritage Financial Corporation in 1998. Heritage Financial Corporation was founded in 1927 and is headquartered in Olympia, Washington.

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 mortgages, personal loans, and commercial lending. Additionally, HFWA collects fees from various banking services, such as account maintenance, transaction fees, and ATM usage. The wealth management sector contributes to revenue through advisory fees and commissions on investment products. Significant partnerships with local businesses and real estate developers enhance their lending portfolio, while their commitment to community banking fosters customer loyalty, driving deposits that are crucial for funding loan operations.

Heritage Financial Financial Statement Overview

Summary

Heritage Financial demonstrates a solid financial position with strong profitability and cash flow management. Despite a decline in revenue growth, the company maintains robust margins and a stable balance sheet with low leverage. Positive cash flow trends further enhance its financial health.

Income Statement

Heritage Financial's income statement shows a mixed performance. The TTM data reveals a decline in revenue growth rate, indicating potential challenges in revenue generation. However, the company maintains a healthy gross profit margin of 68.06% and a net profit margin of 15.21%, which are strong indicators of profitability. The EBIT and EBITDA margins are also solid, reflecting efficient operational management. Despite the recent revenue decline, the company has demonstrated resilience in maintaining profitability.

Balance Sheet

The balance sheet of Heritage Financial is stable with a manageable debt-to-equity ratio of 0.32 in the TTM period, indicating a conservative approach to leveraging. The return on equity is modest at 5.64%, suggesting room for improvement in generating returns for shareholders. The equity ratio is strong, reflecting a solid capital structure with a significant portion of assets financed by equity. Overall, the balance sheet reflects financial stability with low leverage risk.

Cash Flow

The cash flow statement indicates positive trends, with a notable free cash flow growth rate of 22.28% in the TTM period. The operating cash flow to net income ratio is low, suggesting potential inefficiencies in converting income to cash. However, the free cash flow to net income ratio is high at 94.79%, indicating effective cash generation relative to net income. The company shows strong cash flow management, supporting its operational and investment activities.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	323.04M	317.19M	303.13M	257.05M	247.45M	251.55M
Gross Profit	168.96M	210.56M	239.54M	250.40M	269.78M	202.12M
EBITDA	71.67M	55.49M	78.52M	102.53M	101.88M	53.09M
Net Income	57.22M	43.26M	61.76M	81.88M	98.03M	46.57M
Balance Sheet
Total Assets	7.01B	7.11B	7.17B	6.98B	7.43B	6.62B
Cash, Cash Equivalents and Short-Term Investments	705.26M	881.49M	1.36B	1.44B	2.62B	1.55B
Total Debt	160.28M	405.06M	521.76M	68.07M	72.02M	56.57M
Total Liabilities	6.11B	6.24B	6.32B	6.18B	6.58B	5.79B
Stockholders Equity	904.06M	863.53M	853.26M	797.89M	854.43M	820.44M
Cash Flow
Free Cash Flow	86.65M	61.02M	99.15M	90.44M	66.51M	63.33M
Operating Cash Flow	87.45M	64.48M	109.52M	94.46M	69.53M	70.33M
Investing Cash Flow	119.69M	-85.90M	-93.45M	-1.21B	163.76M	-538.55M
Financing Cash Flow	-137.22M	-86.45M	105.31M	-506.38M	746.68M	982.97M

Heritage Financial Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 22.45
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HFWA, the sentiment is Neutral. The current price of 22.45 is above the 20-day moving average (MA) of 22.43, below the 50-day MA of 23.43, and below the 200-day MA of 23.22, indicating a neutral trend. The MACD of -0.30 indicates Negative momentum. The RSI at 46.28 is Neutral, neither overbought nor oversold. The STOCH value of 36.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HFWA.

Heritage Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AMAL	78 Outperform	$834.33M	8.38	13.88%	1.97%	4.33%	-2.20%
MCB	71 Outperform	$687.71M	11.46	8.80%	0.43%	6.48%	8.78%
HFWA	70 Outperform	$760.63M	13.49	6.43%	4.28%	8.27%	54.96%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
CPF	67 Neutral	$787.92M	12.09	11.65%	3.78%	1.22%	15.97%
HBNC	63 Neutral	$819.78M	―	-26.60%	3.95%	-78.71%	-913.67%
CFFN	57 Neutral	$822.70M	11.91	6.54%	5.33%	6.27%	79.32%

Heritage Financial Corporate Events

Heritage Financial’s Earnings Call Highlights Growth and Strategic Merger

The recent earnings call for Heritage Financial showcased a positive sentiment, highlighting strong earnings growth, an improved net interest margin, and robust deposit growth. Despite facing challenges such as flat loan balances and increased nonaccrual loans, the company remains optimistic about its future, particularly with the upcoming merger with Olympic Bancorp, which is expected to bolster growth prospects.

Heritage Financial Reports Strong Q3 2025 Results

Heritage Financial Corporation, based in Olympia, Washington, operates as a bank holding company with Heritage Bank as its sole subsidiary, offering full-service commercial banking across Washington, Oregon, and Idaho. In its third quarter of 2025, Heritage Financial reported a net income of $19.2 million, a significant increase from the previous quarter’s $12.2 million, alongside a regular cash dividend of $0.24 per share. The company also announced a definitive agreement to acquire Olympic Bancorp, Inc., which is expected to enhance its balance sheet and profitability.

Heritage Financial Reports Strong Q3 Results and Dividend

On October 23, 2025, Heritage Financial Corporation announced its third-quarter results, reporting a net income of $19.2 million, a significant increase from the previous quarter. The company also declared a regular quarterly cash dividend of $0.24 per share, payable on November 19, 2025. Heritage Financial’s financial performance was marked by an increase in net interest income and a decrease in borrowing costs, contributing to an improved net interest margin. Additionally, the company is set to acquire Olympic Bancorp, Inc., which is expected to strengthen its balance sheet and enhance profitability.

The most recent analyst rating on (HFWA) stock is a Hold with a $26.00 price target. To see the full list of analyst forecasts on Heritage Financial stock, see the HFWA Stock Forecast page.

Heritage Financial Announces Merger with Olympic Bancorp

On September 25, 2025, Heritage Financial Corporation announced a merger agreement to acquire Olympic Bancorp, Inc., the holding company for Kitsap Bank, in an all-stock transaction valued at approximately $176.6 million. The merger, expected to close in the first quarter of 2026, will see Kitsap Bank’s operations integrated into Heritage Bank, enhancing Heritage’s market presence in the Puget Sound region and making it the second largest community bank in the area. The merger is anticipated to improve Heritage’s financial metrics and provide significant benefits for stakeholders, including an 18% earnings per share accretion post-merger.

The most recent analyst rating on (HFWA) stock is a Buy with a $28.00 price target. To see the full list of analyst forecasts on Heritage Financial stock, see the HFWA Stock Forecast page.