Education
About Us
Working with TipRanks
Follow Us
Heritage Financial Corp. (HFWA)
NASDAQ:HFWA
Top Page
Heritage Financial
(NASDAQ:HFWA)
69Neutral
Heritage Financial (HFWA) vs. S&P 500 (SPY)
Market Cap
$712.79M
Dividend Yield4.12%
Average Volume (3M)360.83K
Price to Earnings (P/E)16.9
Beta (1Y)0.81
Revenue Growth9.12%
EPS Growth11.62%
CountryUS
Employees757
SectorFinancial
Sector Strength88
IndustryBanks - Regional
Share Statistics
EPS (TTM)0.34
Shares Outstanding33,990,826
10 Day Avg. Volume276,253
30 Day Avg. Volume360,831
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.78
Price to Cash Flow (P/CF)9.80
P/FCF Ratio2.80
Enterprise Value/Market Cap1.71
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit3.93
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$28.00Price Target Upside22.70% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Heritage Financial Business Overview & Revenue Model
Company DescriptionHeritage 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 MoneyHeritage Financial Corporation generates revenue primarily through interest income from its lending activities, including commercial loans, consumer loans, and real estate loans. Additionally, the company earns non-interest income from various sources such as service charges on deposit accounts, fees for wealth management and investment advisory services, and mortgage banking activities. Heritage Financial also benefits from strategic partnerships and local community engagement, which enhance its market presence and contribute to its earnings.
Heritage Financial Financial Statement Overview
Summary
Heritage Financial demonstrates solid financial stability with a strong balance sheet and efficient operations. However, challenges in revenue growth and declining profitability margins indicate areas for improvement. Cash flow remains stable but under pressure.Income Statement
Heritage Financial shows a mixed performance in its income statement. Gross profit margins are stable, indicating good cost management. However, net profit margin has decreased from the previous year, reflecting lower profitability. Revenue growth is inconsistent, with recent declines indicating potential challenges. EBIT margins are strong, suggesting efficient operations, although EBITDA margins are not applicable due to zero EBITDA reported.75
Positive
Balance Sheet
The balance sheet for Heritage Financial is strong, with a zero total debt indicating no leverage risk. The equity ratio is robust, showcasing financial stability and a strong asset base. Return on equity is positive, albeit lower than previous years, suggesting some efficiency concerns. Overall, the company's balance sheet reflects solid financial health with ample equity support.85
Very Positive
Cash Flow
Cash flow analysis reveals a slight decline in operating cash flow, yet free cash flow remains positive, indicating operational efficiency. Free cash flow growth is negative, reflecting challenges in maintaining cash generation levels. The operating cash flow to net income ratio is stable, but the declining free cash flow to net income ratio suggests potential pressure on liquidity.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 309.71M | 239.54M | 248.98M | 240.40M | 238.23M | Gross Profit |
| 309.71M | 239.54M | 248.98M | 240.40M | 238.23M | EBIT |
| 308.72M | 72.92M | 99.44M | 120.51M | 53.18M | EBITDA |
| 0.00 | 0.00 | 102.53M | 0.00 | 9.11M | Net Income Common Stockholders |
| 43.26M | 61.76M | 81.88M | 98.03M | 46.57M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 823.22M | 1.19B | 1.44B | 2.62B | 1.55B | Total Assets |
| 7.11B | 7.17B | 6.98B | 7.43B | 6.62B | Total Debt |
| 405.06M | 21.77M | 21.47M | 21.18M | 20.89M | Net Debt |
| 287.96M | -203.21M | -82.12M | -1.70B | -722.43M | Total Liabilities |
| 6.24B | 6.32B | 21.47M | 21.18M | 20.89M | Stockholders Equity |
| 863.53M | 853.26M | 797.89M | 854.43M | 820.44M |
| Cash Flow | Free Cash Flow | |||
| 61.02M | 99.15M | 90.44M | 66.51M | 63.33M | Operating Cash Flow |
| 64.48M | 109.52M | 94.46M | 69.53M | 70.33M | Investing Cash Flow |
| -85.90M | -93.45M | -1.21B | 163.76M | -538.55M | Financing Cash Flow |
| -86.45M | 105.31M | -506.38M | 746.68M | 982.97M |
Heritage Financial Technical Analysis
Positive
22.82
Price Trends
23.30
Negative
23.98
Negative
23.20
Negative
Market Momentum
-0.09
Negative
53.83
Neutral
57.58
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HFWA, the sentiment is Positive. The current price of 22.82 is above the 20-day moving average (MA) of 22.10, below the 50-day MA of 23.30, and below the 200-day MA of 23.20, indicating a neutral trend. The MACD of -0.09 indicates Negative momentum. The RSI at 53.83 is Neutral, neither overbought nor oversold. The STOCH value of 57.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $853.12M | 11.06 | 8.93% | 2.82% | 7.17% | 12.20% | |
70 Outperform | $835.74M | 15.87 | 10.71% | 3.86% | 181.68% | 28.77% | |
69 Neutral | $712.79M | 16.92 | 5.95% | 4.12% | 9.12% | 11.62% | |
67 Neutral | $801.73M | 10.12 | 9.62% | 2.84% | 17.70% | 3.88% | |
63 Neutral | $760.87M | 14.18 | 5.09% | 6.00% | 6.02% | ― | |
63 Neutral | $12.46B | 9.56 | 8.14% | 17044.64% | 12.63% | -4.25% | |
49 Neutral | $656.53M | ― | -1.39% | 2.14% | -5.38% | -186.90% |
* Financial Sector Average
Performance Comparison
HFWA
Heritage Financial
23.04
4.98
27.57%
CFFN
Capitol Federal Financial
5.73
0.85
17.42%
UVSP
Univest Of Pennsylvania
29.73
8.18
37.96%
FMBH
First Mid-Illinois Bancshares
34.44
2.96
9.40%
AMTB
Amerant Bancorp
16.86
-5.42
-24.33%
BHRB
Burke & Herbert Bank & Company
55.78
5.94
11.92%
Heritage Financial Earnings Call Summary
Earnings Call Date:Apr 24, 2025
(Q1-2025)
| % Change Since: -0.70%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with strong deposit growth, improved net interest margin, and stable credit quality as highlights. However, these were offset by a decrease in loan balances, a significant investment loss, and increased non-interest expenses. The overall sentiment is neutral given the balance of positive and negative aspects.Q1-2025 Updates
Positive Updates
Strong Deposit Growth
Total deposits increased $160.7 million in Q1, with 95% of this growth in non-mature deposits. The majority of growth was in money market accounts.
Improved Net Interest Margin
Net interest margin increased to 3.44% for Q1 from 3.36% in the prior quarter due to decreases in the cost of both deposits and borrowings.
Stable Credit Quality
Non-accrual loans totaled just over $4.4 million, representing 0.09% of total loans, with criticized loans decreasing by $1 million during the quarter.
Increased Capital Ratio
The TCE ratio increased to 9.3%, up from 9% in the prior quarter, maintaining a strong capital position.
Higher Interest Rates on New Loans
The average first quarter interest rate for new commercial loans was 6.83%, up 20 basis points from the last quarter.
Negative Updates
Decrease in Loan Balances
Total loan balances decreased by $37 million in Q1 due to elevated payoffs and prepayments, despite similar loan production to Q1 2024.
Investment Loss
A pretax loss of $3.9 million was recognized on the sale of $61 million of securities as part of a strategic repositioning of the balance sheet.
Increased Non-Interest Expense
Non-interest expense increased by $1.8 million from the prior quarter, mostly due to higher benefit costs and payroll taxes.
Reduced Loan Commitments
New loan commitments in commercial lending were $183 million, down from $316 million last quarter, although up from $133 million in Q1 2024.
Company Guidance
During the Heritage Financial Q1 2025 earnings call, the company provided guidance highlighting several key metrics. The total loan balances decreased by $37 million due to elevated payoffs and prepayments, with loan yields at 5.45%, reflecting a 2 basis point decrease from Q4 2024. However, strong deposit growth was observed, with total deposits increasing by $160.7 million, primarily in non-mature money market accounts. The cost of interest-bearing deposits decreased slightly to 1.92% from 1.98% in the previous quarter. The net interest margin improved to 3.44% from 3.36% in Q4 2024. Heritage Financial reported a provision for credit losses of $51,000, and noninterest expense increased by $1.8 million, mostly due to higher benefits and payroll taxes. The company maintains a stable credit quality with nonaccrual loans at $4.4 million, representing 0.09% of total loans. Heritage Financial is guiding for quarterly noninterest expenses in the range of $41 million to $42 million for the year. The company also noted that its total capital equity ratio increased to 9.3% from 9% in the prior quarter, supporting potential stock buybacks, though none were executed in Q1.Heritage Financial Corporate Events
DividendsBusiness Operations and StrategyFinancial Disclosures
Heritage Financial Reports Strong Q1 2025 Results
Positive
Apr 24, 2025
On April 24, 2025, Heritage Financial announced its first-quarter results, reporting a net income of $13.9 million, an increase from the previous quarter. The company declared a regular quarterly cash dividend of $0.24 per share, to be paid on May 21, 2025. Despite a pre-tax loss on the sale of securities, Heritage Financial saw improvements in net interest margin and deposit growth, reflecting a strategic repositioning of its balance sheet aimed at enhancing future profitability.
Spark’s Take on HFWA Stock
According to Spark, TipRanks’ AI Analyst, HFWA is a Neutral.
Heritage Financial’s overall stock score reflects a stable financial position with a strong balance sheet and efficient operations, but challenges in revenue growth and profitability persist. Technical indicators suggest a bearish trend, while valuation is moderate. The earnings call and corporate events provide a mixed outlook, highlighting both strategic improvements and potential risks.
To see Spark’s full report on HFWA stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.