HERITAGE FINANCIAL ANNOUNCES FIRST QUARTER 2025 RESULTS AND DECLARES REGULAR CASH DIVIDEND OF $0.24 PER SHARE

First Quarter 2025 Highlights Net income was $13.9 million, or $0.40 per diluted share, compared to $11.9 million, or $0.34 per diluted share, for the fourth quarter of 2024. Results included a pre-tax loss on sale of securities of $3.9 million resulting in a negative impact of $0.09 per diluted share, which is the same impact as for the fourth quarter of 2024. Net interest margin increased to 3.44%, from 3.36% for the fourth quarter of 2024. Deposits increased $160.7 million, or 2.8% (11.4% annualized). Cost of interest bearing deposits decreased to 1.92%, from 1.98% for the fourth quarter of 2024. Expanded into Spokane, Washington with the hiring of three experienced commercial bankers. Declared a regular cash dividend of $0.24 per share on April 23, 2025. , /PRNewswire/ -- Heritage Financial Corporation (Nasdaq GS: HFWA) (the "Company", "we," or "us"), the parent company of Heritage Bank (the "Bank"), today reported net income of $13.9 million for the first quarter of 2025, compared to $11.9 million for the fourth quarter of 2024 and $5.7 million for the first quarter of 2024. Diluted earnings per share for the first quarter of 2025 were $0.40 compared to $0.34 for the fourth quarter of 2024 and $0.16 for the first quarter of 2024. In the first quarter of 2025, the Company incurred a pre-tax loss of $3.9 million on the sale of investment securities in connection with the strategic repositioning of its balance sheet, which decreased diluted earnings per share by $0.09 for the quarter. The Company sold $60.9 million of investment securities with a book yield of 2.60%. Proceeds were used to purchase $28.2 million in investment securities with a book yield of 4.55% and fund new loans originated during the quarter. Jeff Deuel, Chief Executive Officer of the Company, commented, "We are very pleased with our operating results for the first quarter, which included solid deposit growth, margin expansion and lower cost of deposits. In addition, we have maintained strong credit quality metrics including low levels of net charge-offs and nonaccrual loan balances. We continue to strategically reposition our balance sheet to improve future profitability and invest in new production teams with the most recent in the Spokane market, where we see significant opportunity to grow our business. Although these actions may impact current earnings, we believe future earnings will be enhanced and we are optimistic that the combination of our strong balance sheet and prudent risk management will provide sustainable long-term returns for our shareholders." Financial Highlights The following table provides financial highlights at the dates and for the periods indicated: As of or for the Quarter Ended March 31,2025 December 31,2024 March 31,2024 (Dollars in thousands, except per share amounts) Net income $ 13,911 $ 11,928 $ 5,748 Diluted earnings per share $ 0.40 $ 0.34 $ 0.16 Return on average assets(2) 0.79 % 0.66 % 0.33 % Return on average common equity(2) 6.51 5.46 2.73 Return on average tangible common equity(1)(2) 9.22 7.81 4.07 Adjusted return on average tangible common equity(1)(2) 11.21 11.59 9.34 Net interest margin(2) 3.44 3.36 3.29 Cost of total deposits(2) 1.38 1.39 1.19 Efficiency ratio 71.9 69.3 83.0 Adjusted efficiency ratio(1) 67.3 64.4 68.9 Noninterest expense to average total assets(2) 2.36 2.20 2.29 Total assets $ 7,129,862 $ 7,106,278 $ 7,091,283 Loans receivable 4,764,848 4,802,123 4,428,165 Total deposits 5,845,335 5,684,613 5,532,327 Loan to deposit ratio(3) 81.5 % 84.5 % 80.0 % Book value per share $ 25.85 $ 25.40 $ 24.43 Tangible book value per share(1) 18.70 18.22 17.36 (1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" section for a reconciliation to the comparable GAAP financial measure. (2) Annualized. (3) Loans receivable divided by total deposits. Balance Sheet Cash and cash equivalents increased $131.6 million to $248.7 million at March 31, 2025 from $117.1 million at December 31, 2024 primarily due to deposit growth during the quarter. Total investment securities decreased $53.8 million, or 3.7%, to $1.41 billion at March 31, 2025 from $1.47 billion at December 31, 2024. As previously noted, the Company sold $60.9 million of investment securities at a pre-tax loss of $3.9 million during the quarter as part of its strategic balance sheet repositioning. In addition, there were investment maturities and repayments of $36.8 million during the first quarter of 2025. The decrease was partially offset by investment security purchases of $28.2 million during the first quarter of 2025 and a $15.5 million decrease in unrealized losses on available for sale securities, due primarily to changes in market rates. The following table summarizes the composition of the Company's investment securities portfolio at the dates indicated: March 31, 2025 December 31, 2024 Change Balance % of Total Balance % of Total $ % (Dollars in thousands) Investment securities available for sale, at fair value: U.S. government and agency securities $ 11,436 0.8 % $ 12,544 0.9 % $ (1,108) (8.8) % Municipal securities 50,725 3.6 50,942 3.5 (217) (0.4) Residential CMO and MBS(1) 356,860 25.2 369,331 25.2 (12,471) (3.4) Commercial CMO and MBS(1) 275,840 19.6 309,741 21.0 (33,901) (10.9) Corporate obligations 11,830 0.8 11,770 0.8 60 0.5 Other asset-backed securities 9,651 0.7 10,066 0.7 (415) (4.1) Total $ 716,342 50.7 % $ 764,394 52.1 % $ (48,052) (6.3) % Investment securities held to maturity, at amortized cost: U.S. government and agency securities $ 151,246 10.7 % $ 151,216 10.3 % $ 30 — % Residential CMO and MBS(1) 239,351 16.9 244,309 16.6 (4,958) (2.0) Commercial CMO and MBS(1) 306,964 21.7 307,760 21.0 (796) (0.3) Total $ 697,561 49.3 % $ 703,285 47.9 % $ (5,724) (0.8) % Total investment securities $ 1,413,903 100.0 % $ 1,467,679 100.0 % $ (53,776) (3.7) % (1) U.S. government agency and government-sponsored enterprise CMO and MBS Loans receivable decreased $37.3 million, or 0.8%, to $4.76 billion at March 31, 2025 from $4.80 billion at December 31, 2024. New loans funded declined during the first quarter of 2025 to $95.8 million, as compared to $181.0 million during the fourth quarter of 2024; however, new loan commitments increased during the first quarter of 2025 to $201.0 million compared to $179.4 million during the first quarter of 2024 and reflect the seasonality of loan originations. Loan prepayments increased to $79.9 million during the quarter, compared to $44.4 million the prior quarter. Loan payoffs also increased to $47.5 million, compared to $23.8 million the prior quarter. Commercial and industrial loans increased $8.1 million, or 1.0%, due primarily to new loan production of $25.6 million during the quarter, partially offset by pay downs on outstanding balances. Owner-occupied commercial real estate ("CRE") loans decreased $18.0 million, or 1.8%, due primarily to pay downs on outstanding balances, offset partially by new loan production of $23.3 million during the quarter. Non-owner occupied CRE loans increased $6.7 million, or 0.3%, due primarily to new loan production of $33.3 million during the quarter, offset by pay downs on outstanding balances. Residential construction and commercial and multifamily construction loans decreased $26.2 million or 5.5% due to pay downs on outstanding balances. The following table summarizes the Company's loans receivable at the dates indicated: March 31, 2025 December 31, 2024 Change Balance % ofTotal Balance % ofTotal $ % (Dollars in thousands) Commercial business: Commercial and industrial $ 850,764 17.9 % $ 842,672 17.5 % $ 8,092 1.0 % Owner-occupied CRE 985,272 20.7 1,003,243 20.9 (17,971) (1.8) Non-owner occupied CRE 1,915,788 40.1 1,909,107 39.9 6,681 0.3 Total commercial business 3,751,824 78.7 3,755,022 78.3 (3,198) (0.1) Residential real estate 393,301 8.3 402,954 8.4 (9,653) (2.4) Real estate construction and land development: Residential 76,108 1.6 83,890 1.7 (7,782) (9.3) Commercial and multifamily 377,100 7.9 395,553 8.2 (18,453) (4.7) Total real estate construction and land development 453,208 9.5 479,443 9.9 (26,235) (5.5) Consumer 166,515 3.5 164,704 3.4 1,811 1.1 Loans receivable $ 4,764,848 100.0 % $ 4,802,123 100.0 % $ (37,275) (0.8) Total deposits increased $160.7 million, or 2.8%, to $5.85 billion at March 31, 2025 from $5.68 billion at December 31, 2024. Non-maturity deposits increased by $152.7 million, or 3.2%, from December 31, 2024 due primarily to new accounts opened during the quarter and transfers of funds into existing accounts. Certificates of deposit increased $8.0 million, or 0.8%, to $985.3 million at March 31, 2025 from $977.3 million at December 31, 2024, primarily due to new accounts opened during the quarter. The following table summarizes the Company's total deposits at the dates indicated: March 31, 2025 December 31, 2024 Change Balance % ofTotal Balance % ofTotal $ % (Dollars in thousands) Noninterest demand deposits $ 1,621,890 27.7 % $ 1,654,955 29.1 % $ (33,065) (2.0) % Interest bearing demand deposits 1,525,522 26.1 1,464,129 25.8 61,393 4.2 Money market accounts 1,281,891 21.9 1,166,901 20.5 114,990 9.9 Savings accounts 430,749 7.4 421,377 7.4 9,372 2.2 Total non-maturity deposits 4,860,052 83.1 4,707,362 82.8 152,690 3.2 Certificates of deposit 985,283 16.9 977,251 17.2 8,032 0.8 Total deposits $ 5,845,335 100.0 % $ 5,684,613 100.0 % $ 160,722 2.8 % Total borrowings decreased $118.6 million to $264.4 million at March 31, 2025 from $383.0 million at December 31, 2024. All outstanding borrowings at March 31, 2025 were with the Federal Home Loan Bank ("FHLB") and mature within one year. Total stockholders' equity increased $18.0 million, or 2.1%, to $881.5 million at March 31, 2025 compared to $863.5 million at December 31, 2024 due primarily to $13.9 million of net income recognized for the quarter and an $11.9 million decrease in accumulated other comprehensive loss as a result of changes in market rates, offset partially by $8.3 million in dividends paid to common shareholders. The Company and Bank continued to maintain capital levels in excess of the applicable regulatory requirements for them both to be categorized as "well-capitalized" at March 31, 2025. The following table summarizes the capital ratios for the Company at the dates indicated: March 31,2025 December 31,2024 Stockholders' equity to total assets 12.4 % 12.2 % Tangible common equity to tangible assets (1) 9.3 9.0 Common equity tier 1 capital ratio (2) 12.2 12.0 Leverage ratio (2) 10.2 10.0 Tier 1 capital ratio (2) 12.6 12.4 Total capital ratio (2) 13.6 13.3 (1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" section for a reconciliation to the comparable GAAP financial measure. (2) Current quarter ratios are estimates pending completion and filing of the Company's regulatory reports. Allowance for Credit Losses and Provision for Credit Losses The allowance for credit losses ("ACL") on loans as a percentage of loans receivable was 1.09% at March 31, 2025 and December 31, 2024. During the first quarter of 2025, the Company recorded a $9,000 reversal of provision for credit losses on loans, compared to a $1.1 million provision for credit losses on loans during the fourth quarter of 2024. The reversal of provision for credit losses on loans during the quarter was due primarily to a decline in loan balances. Net charge-offs for the first quarter of 2025 were $299,000. During the first quarter of 2025, the Company recorded a $60,000 provision for credit losses on unfunded commitments compared to a $79,000 provision during the fourth quarter of 2024. The provision for credit losses on unfunded commitments during the first quarter of 2025 was due primarily to an increase in the unfunded exposure on loans. The following table provides detail on the changes in the ACL on loans and the ACL on unfunded commitments, and the related provision for (reversal of) credit losses for the periods indicated: As of or for the Quarter Ended March 31, 2025 December 31, 2024 March 31, 2024 ACL onLoans ACL onUnfunded Total ACL onLoans ACL onUnfunded Total ACL onLoans ACL onUnfunded Total (Dollars in thousands) Balance, beginning of period $ 52,468 $ 587 $ 53,055 $ 51,391 $ 508 $ 51,899 $ 47,999 $ 1,288 $ 49,287 (Reversal of) provision for credit losses (9) 60 51 1,104 79 1,183 1,704 (312) 1,392 (Net charge-offs) / recoveries (299) — (299) (27) — (27) 33 — 33 Balance, end of period $ 52,160 $ 647 $ 52,807 $ 52,468 $ 587 $ 53,055 $ 49,736 $ 976 $ 50,712 Credit Quality The percentage of classified loans to loans receivable remained stable at 1.4% at March 31, 2025 and December 31, 2024. Classified loans include loans rated substandard or worse. The following table illustrates total loans by risk rating and their respective percentage of total loans at the dates indicated: March 31, 2025 December 31, 2024 Balance % ofTotal Balance % ofTotal (Dollars in thousands) Risk Rating: Pass $ 4,586,757 96.2 % $ 4,623,080 96.3 % Special Mention 113,704 2.4 110,725 2.3 Substandard 64,387 1.4 68,318 1.4 Total $ 4,764,848 100.0 % $ 4,802,123 100.0 % Changes in nonaccrual loans during the periods indicated were as follows: Quarter Ended March 31,2025 December 31,2024 March 31,2024 (Dollars in thousands) Balance, beginning of period $ 4,079 $ 4,301 $ 4,468 Additions 832 160 593 Net principal payments and transfers to accruing status (214) (250) (269) Payoffs (38) (132) — Charge-offs (221) — — Balance, end of period $ 4,438 $ 4,079 $ 4,792 Nonaccrual loans to loans receivable 0.09 % 0.08 % 0.11 % Liquidity Total liquidity sources available at March 31, 2025 were $2.54 billion. This includes on- and off-balance sheet liquidity. The Company has access to FHLB advances and the Federal Reserve Bank ("FRB") Discount Window. The Company's available liquidity sources at March 31, 2025 represented a coverage ratio of 43.5% of total deposits and 109.3% of estimated uninsured deposits. The following table summarizes the Company's available liquidity: Quarter Ended March 31,2025 December 31,2024 (Dollars in thousands) On-balance sheet liquidity Cash and cash equivalents $ 248,660 $ 117,100 Unencumbered investment securities available for sale (1) 698,132 746,163 Total on-balance sheet liquidity $ 946,792 $ 863,263 Off-balance sheet liquidity FRB borrowing availability $ 365,624 $ 360,104 FHLB borrowing availability (2) 1,084,304 976,288 Fed funds line borrowing availability with correspondent banks 145,000 145,000 Total off-balance sheet liquidity $ 1,594,928 $ 1,481,392 Total available liquidity $ 2,541,720 $ 2,344,655 (1) Investment securities available for sale at fair value. (2) Includes FHLB total borrowing availability of $1.35 billion at March 31, 2025 based on pledged assets, however, maximum credit capacity is 45% of the Bank's total assets one quarter in arrears or $3.20 billion. Net Interest Margin and Net Interest Income The net interest margin increased eight basis points to 3.44% during the first quarter of 2025 from 3.36% during the fourth quarter of 2024. The yield on interest earning assets increased two basis points to 4.95% for the first quarter of 2025 compared to 4.93% for the fourth quarter of 2024 due to the change in mix of earning assets to higher yielding assets as average loan balances increased by $76.2 million while average balances of investment securities declined by $86.7 million. The yield on loans receivable decreased two basis points to 5.45% during the first quarter of 2025 compared to 5.47% during the fourth quarter of 2024 as loans indexed to Prime or SOFR repriced at lower rates due to reductions in the federal funds rate occurring late in the fourth quarter of 2024. The cost of interest bearing deposits decreased six basis points to 1.92% for the first quarter of 2025 from 1.98% for the fourth quarter of 2024. This decrease was primarily due to a decrease in certificate of deposit rates during the quarter. Net interest income decreased $73,000, or 0.1%, during the first quarter of 2025 compared to the fourth quarter of 2024 due primarily to the first quarter of 2025 including fewer days than the fourth quarter of 2024. Total interest expense decreased $1.5 million during the quarter offset by a decrease in total interest income of $1.6 million. The net interest margin increased 15 basis points to 3.44% from 3.29% compared to the same period in the prior year. Net interest income increased $2.2 million, or 4.2%, during the first quarter of 2025 compared to the first quarter of 2024. The increase was due primarily to an increase in yields earned on interest earning assets following increases in market interest rates and a decrease in borrowing interest expense due to lower average borrowing balances, partially offset by an increase in deposit interest expense resulting from increased deposit average balances and rates. The following table provides relevant net interest income information for the periods indicated: Quarter Ended March 31, 2025 December 31, 2024 March 31, 2024 Average Balance Interest Earned/ Paid AverageYield/Rate (1) Average Balance Interest Earned/ Paid AverageYield/Rate (1) Average Balance Interest Earned/ Paid AverageYield/Rate (1) (Dollars in thousands) Interest Earning Assets: Loans receivable (2)(3) $ 4,793,917 $ 64,436 5.45 % $ 4,717,748 $ 64,864 5.47 % $ 4,352,130 $ 57,862 5.35 % Taxable securities 1,427,976 11,739 3.33 1,514,210 12,510 3.29 1,810,709 14,834 3.29 Nontaxable securities (3) 15,686 139 3.59 16,138 146 3.60 21,302 181 3.42 Interest earning deposits 96,118 1,052 4.44 119,275 1,440 4.80 108,733 1,476 5.46 Total interest earning assets 6,333,697 77,366 4.95 % 6,367,371 78,960 4.93 % 6,292,874 74,353 4.75 % Noninterest earning assets 769,530 781,923 799,578 Total assets $ 7,103,227 $ 7,149,294 $ 7,092,452 Interest Bearing Liabilities: Certificates of deposit $ 980,336 $ 9,670 4.00 % $ 947,929 $ 10,070 4.23 % $ 733,816 $ 7,671 4.20 % Savings accounts 426,321 293 0.28 432,287 280 0.26 475,075 230 0.19 Interest bearing demand and money market accounts 2,705,686 9,526 1.43 2,631,577 9,622 1.45 2,659,999 8,487 1.28 Total interest bearing deposits 4,112,343 19,489 1.92 4,011,793 19,972 1.98 3,868,890 16,388 1.70 Junior subordinated debentures 22,086 471 8.65 22,019 512 9.25 21,800 547 10.09 Borrowings 320,286 3,716 4.71 373,493 4,713 5.02 500,660 5,888 4.73 Total interest bearing liabilities 4,454,715 23,676 2.16 % 4,407,305 25,197 2.27 % 4,391,350 22,823 2.09 % Noninterest demand deposits 1,631,268 1,703,357 1,657,132 Other noninterest bearing liabilities 150,615 170,324 197,023 Stockholders' equity 866,629 868,308 846,947 Total liabilities and stockholders' equity $ 7,103,227 $ 7,149,294 $ 7,092,452 Net interest income and spread $ 53,690 2.79 % $ 53,763 2.66 % $ 51,530 2.66 % Net interest margin 3.44 % 3.36 % 3.29 % (1) Annualized; average balances are calculated using daily balances. (2) Average loans receivable includes loans held for sale and loans classified as nonaccrual, which carry a zero yield. Interest earned on loans receivable includes the amortization of net deferred loan fees of $753,000, $878,000 and $809,000 for the first quarter of 2025, fourth quarter of 2024 and first quarter of 2024, respectively. (3) Yields on tax-exempt loans and securities have not been stated on a tax-equivalent basis. Noninterest Income Noninterest income increased $613,000 to $3.9 million during the first quarter of 2025 from $3.3 million during the fourth quarter of 2024. The increase was due primarily to an increase in bank owned life insurance ("BOLI") income as the fourth quarter of 2024 BOLI income included $508,000 in costs related to a BOLI restructuring. Interest rate swap fees declined due to lower activity during the first quarter of 2025. Noninterest income increased $6.8 million from the same period in 2024 due primarily to the decrease in loss resulting from the above-referenced sale of investment securities recognized in the first quarter of 2025 as part of the strategic repositioning of the balance sheet, compared to the loss recognized in the same quarter in 2024 in connection with the prior balance sheet repositioning transaction. The following table presents the key components of noninterest income and the change for the periods indicated: Quarter Ended Quarter OverQuarter Change Prior Year Quarter Change March 31,2025 December 31,2024 March 31,2024 $ % $ % (Dollars in thousands) Service charges and other fees $ 2,975 $ 2,892 $ 2,788 $ 83 2.9 % $ 187 6.7 % Card revenue 1,733 1,849 1,839 (116) (6.3) (106) (5.8) Loss on sale of investment securities (3,887) (3,903) (9,973) 16 0.4 6,086 61.0 Gain on sale of loans, net — — 26 — — (26) (100.0) Interest rate swap fees — 357 — (357) (100.0) — — Bank owned life insurance income 918 256 920 662 258.6 (2) (0.2) Gain on sale of other assets, net 3 23 — (20) (87.0) 3 — Other income 2,161 1,816 1,500 345 19.0 661 44.1 Total noninterest income (loss) $ 3,903 $ 3,290 $ (2,900) $ 613 18.6 % $ 6,803 234.6 % Noninterest Expense Noninterest expense increased $1.8 million, or 4.7%, during the first quarter of 2025 from the fourth quarter of 2024 due primarily to an increase in compensation and employee benefits due to an increase in benefit costs and higher payroll taxes paid in the first quarter each year. Noninterest expense increased $1.0 million, or 2.5%, during the first quarter of 2025 compared to the same period in 2024. Data processing expense increased due to annual cost increases and a $230,000 refund recognized in the first quarter of 2024 related to a contract termination. The following table presents the key components of noninterest expense and the change for the periods indicated: Quarter Ended Quarter OverQuarter Change Prior YearQuarter Change March 31,2025 December 31,2024 March 31,2024 $ % $ % (Dollars in thousands) Compensation and employee benefits $ 25,799 $ 24,236 $ 25,476 $ 1,563 6.4 % $ 323 1.3 % Occupancy and equipment 4,926 4,742 4,932 184 3.9 (6) (0.1) Data processing 3,897 4,020 3,331 (123) (3.1) 566 17.0 Marketing 335 405 211 (70) (17.3) 124 58.8 Professional services 734 663 567 71 10.7 167 29.5 State/municipal business and use taxes 1,220 1,180 1,300 40 3.4 (80) (6.2) Federal deposit insurance premium 812 829 795 (17) (2.1) 17 2.1 Amortization of intangible assets 303 399 421 (96) (24.1) (118) (28.0) Other expense 3,357 3,066 3,337 291 9.5 20 0.6 Total noninterest expense $ 41,383 $ 39,540 $ 40,370 $ 1,843 4.7 % $ 1,013 2.5 % Income Tax Expense Income tax expense decreased $2.2 million during the first quarter of 2025 to $2.2 million compared to $4.4 million for the fourth quarter of 2024. The decrease in income tax expense during the first quarter of 2025 compared to the prior quarter was primarily due to additional tax expense of $2.4 million related to the BOLI restructuring during the fourth quarter of 2024. Income tax expense increased $1.1 million in the first quarter of 2025 compared to same period in 2024 due to higher pre-tax income during the first quarter of 2025. The following table presents the income tax expense and related metrics and the change for the periods indicated: Quarter Ended Change March 31,2025 December 31,2024 March 31,2024 Quarter OverQuarter Prior YearQuarter (Dollars in thousands) Income before income taxes $ 16,159 $ 16,330 $ 6,868 $ (171) $ 9,291 Income tax expense $ 2,248 $ 4,402 $ 1,120 $ (2,154) $ 1,128 Effective income tax rate 13.9 % 27.0 % 16.3 % (13.1) % (2.4) % Dividends On April 23, 2025, the Company's Board of Directors declared a quarterly cash dividend of $0.24 per share. The dividend is payable on May 21, 2025 to shareholders of record as of the close of business on May 7, 2025. Earnings Conference Call The Company will hold a telephone conference call to discuss this earnings release on Thursday, April 24, 2025 at 10:00 a.m. Pacific time. To access the call, please dial (833) 470-1428 -- access code 817868 a few minutes prior to 10:00 a.m. Pacific time. The call will be available for replay through May 1, 2025 by dialing (866) 813-9403 -- access code 202025. About Heritage Financial Corporation Heritage Financial Corporation is an Olympia, Washington-based bank holding company with Heritage Bank, a full-service commercial bank, as its sole wholly-owned banking subsidiary. Heritage Bank has a network of 50 branches and one loan production office in Washington, Oregon and Idaho. Heritage Bank does business under the Whidbey Island Bank name on Whidbey Island, Washington. The Company's stock is traded on the Nasdaq Global Select Market under the symbol "HFWA." More information about Heritage Financial Corporation can be found on its website at www.hf-wa.com and more information about Heritage Bank can be found on its website at www.heritagebanknw.com. Forward-Looking Statements This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believes," "expects," "anticipates," "estimates," "forecasts," "intends," "plans," "targets," "potentially," "probably," "projects," "outlook" or similar expressions or future or conditional verbs such as "may," "will," "should," "would," and "could," as well as the negative of such words. Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements include, but are not limited to, the following: potential adverse impacts to economic conditions nationally or in our local market areas, other markets where we have lending relationships, or other aspects of our business operations or financial markets including, without limitation, as a result of credit quality deterioration, pronounced and sustained reductions in real estate market values, employment levels, labor shortages, a potential recession or slowed economic growth; effects on the U.S. economy resulting from the threat or implementation of, or changes to existing, policies and executive orders, including tariffs, immigration policy, regulatory and other governmental agencies, foreign policy, and tax regulations; changes in the interest rate environment which could adversely affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; the level and impact of inflation and the current and future monetary policies of the Board of Governors of the Federal Reserve System in response thereto; legislative or regulatory changes that adversely affect our business, including changes in banking, securities, and tax law, in regulatory policies and principles, or the interpretation and prioritization of such rules and regulations; credit and interest rate risks associated with our business, customers, borrowings, repayment, investment, and deposit practices; fluctuations in deposits and deposit concentrations; liquidity issues, including our ability to borrow funds or raise additional capital, if necessary; fluctuations in the value of our investment securities; credit risks and risks from concentrations (by type of geographic area, collateral and industry) within our loan portfolio; disruptions, security breaches, insider fraud, cybersecurity incidents or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform our critical processing functions for our business, including sophisticated attacks using artificial intelligence and similar tools; rapid technological change in the financial services industry; increased competition in the financial services industry from non-banks such as credit unions and financial technology companies, including digital asset service providers; our ability to adapt successfully to technological changes to compete effectively in the marketplace, including as a result of competition from other commercial banks, mortgage banking firms, credit unions, securities brokerage firms, insurance companies, and financial technology companies; effects of critical accounting policies and judgments, including the use of estimates in determining the fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; the commencement, costs, effects and outcome of litigation and other legal proceedings and regulatory actions against us or to which we may become subject; loss of, or inability to attract, key personnel; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business and the businesses of our clients; the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks; our success at managing and responding to the risks involved in the foregoing items; and other factors described in our latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission (the "SEC") which are available on our website at www.hf-wa.com and on the SEC's website at www.sec.gov. We caution readers not to place undue reliance on any forward-looking statements. Moreover, any of the forward-looking statements that we make in this press release or the documents we file with or furnish to the SEC are based only on information then actually known to us and upon management's beliefs and assumptions at the time they are made which may turn out to be wrong because of inaccurate assumptions we might make, because of the factors described above or because of other factors that we cannot foresee. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. HERITAGE FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) (Dollars in thousands, except shares) March 31,2025 December 31,2024 Assets Cash on hand and in banks $ 89,072 $ 58,821 Interest earning deposits 159,588 58,279 Cash and cash equivalents 248,660 117,100 Investment securities available for sale, at fair value (amortized cost of $772,086 and $835,592, respectively) 716,342 764,394 Investment securities held to maturity, at amortized cost (fair value of $632,648 and $623,452, respectively) 697,561 703,285 Total investment securities 1,413,903 1,467,679 Loans receivable 4,764,848 4,802,123 Allowance for credit losses on loans (52,160) (52,468) Loans receivable, net 4,712,688 4,749,655 Premises and equipment, net 71,079 71,580 Federal Home Loan Bank stock, at cost 16,160 21,538 Bank owned life insurance 112,656 111,699 Accrued interest receivable 19,651 19,483 Prepaid expenses and other assets 291,276 303,452 Other intangible assets, net 2,850 3,153 Goodwill 240,939 240,939 Total assets $ 7,129,862 $ 7,106,278 Liabilities and Stockholders' Equity Non-interest bearing deposits 1,621,890 1,654,955 Interest bearing deposits 4,223,445 4,029,658 Total deposits 5,845,335 5,684,613 Borrowings 264,400 383,000 Junior subordinated debentures 22,131 22,058 Accrued expenses and other liabilities 116,481 153,080 Total liabilities 6,248,347 6,242,751 Common stock 532,124 531,674 Retained earnings 392,737 387,097 Accumulated other comprehensive loss, net (43,346) (55,244) Total stockholders' equity 881,515 863,527 Total liabilities and stockholders' equity $ 7,129,862 $ 7,106,278 Shares outstanding 34,105,516 33,990,827 HERITAGE FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts) Quarter Ended March 31,2025 December 31,2024 March 31,2024 Interest Income Interest and fees on loans $ 64,436 $ 64,864 $ 57,862 Taxable interest on investment securities 11,739 12,510 14,834 Nontaxable interest on investment securities 139 146 181 Interest on interest earning deposits 1,052 1,440 1,476 Total interest income 77,366 78,960 74,353 Interest Expense Deposits 19,489 19,972 16,388 Junior subordinated debentures 471 512 547 Borrowings 3,716 4,713 5,888 Total interest expense 23,676 25,197 22,823 Net interest income 53,690 53,763 51,530 Provision for credit losses 51 1,183 1,392 Net interest income after provision for credit losses 53,639 52,580 50,138 Noninterest Income Service charges and other fees 2,975 2,892 2,788 Card revenue 1,733 1,849 1,839 Loss on sale of investment securities, net (3,887) (3,903) (9,973) Gain on sale of loans, net — — 26 Interest rate swap fees — 357 — Bank owned life insurance income 918 256 920 Gain on sale of other assets, net 3 23 — Other income 2,161 1,816 1,500 Total noninterest income (loss) 3,903 3,290 (2,900) Noninterest Expense Compensation and employee benefits 25,799 24,236 25,476 Occupancy and equipment 4,926 4,742 4,932 Data processing 3,897 4,020 3,331 Marketing 335 405 211 Professional services 734 663 567 State/municipal business and use taxes 1,220 1,180 1,300 Federal deposit insurance premium 812 829 795 Amortization of intangible assets 303 399 421 Other expense 3,357 3,066 3,337 Total noninterest expense 41,383 39,540 40,370 Income before income taxes 16,159 16,330 6,868 Income tax expense 2,248 4,402 1,120 Net income $ 13,911 $ 11,928 $ 5,748 Basic earnings per share $ 0.41 $ 0.35 $ 0.17 Diluted earnings per share $ 0.40 $ 0.34 $ 0.16 Dividends declared per share $ 0.24 $ 0.23 $ 0.23 Average shares outstanding - basic 34,012,490 34,109,339 34,825,471 Average shares outstanding - diluted 34,506,238 34,553,139 35,227,138 HERITAGE FINANCIAL CORPORATION FINANCIAL STATISTICS (Unaudited) (Dollars in thousands) Nonperforming Assets and Credit Quality Metrics: Quarter Ended March 31, 2025 December 31,2024 March 31,2024 Allowance for Credit Losses on Loans: Balance, beginning of period $ 52,468 $ 51,391 $ 47,999 (Reversal of) provision for credit losses on loans (9) 1,104 1,704 Charge-offs: Commercial business (222) (4) (77) Consumer (154) (92) (123) Total charge-offs (376) (96) (200) Recoveries: Commercial business 26 48 217 Consumer 51 21 16 Total recoveries 77 69 233 Net (charge-offs) recoveries (299) (27) 33 Balance, end of period $ 52,160 $ 52,468 $ 49,736 Net charge-offs on loans to average loans receivable (1) 0.03 % — % — % (1) Annualized. March 31,2025 December 31,2024 Nonperforming Assets: Nonaccrual loans: Commercial business $ 3,455 $ 3,919 Residential real estate 832 — Consumer 151 160 Total nonaccrual loans 4,438 4,079 Accruing loans past due 90 days or more — 1,195 Total nonperforming loans 4,438 5,274 Other real estate owned — — Nonperforming assets $ 4,438 $ 5,274 ACL on loans to: Loans receivable 1.09 % 1.09 % Nonaccrual loans 1,175.30 1,286.30 Nonaccrual loans to loans receivable 0.09 0.08 Nonperforming loans to loans receivable 0.09 0.11 Nonperforming assets to total assets 0.06 0.07 HERITAGE FINANCIAL CORPORATION QUARTERLY FINANCIAL STATISTICS (Unaudited) (Dollars in thousands, except per share amounts) Quarter Ended March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024 Earnings: Net interest income $ 53,690 $ 53,763 $ 52,958 $ 51,113 $ 51,530 Provision for credit losses 51 1,183 2,439 1,268 1,392 Noninterest income (loss) 3,903 3,290 1,837 5,246 (2,900) Noninterest expense 41,383 39,540 39,290 39,096 40,370 Net income 13,911 11,928 11,423 14,159 5,748 Basic earnings per share $ 0.41 $ 0.35 $ 0.33 $ 0.41 $ 0.17 Diluted earnings per share $ 0.40 $ 0.34 $ 0.33 $ 0.41 $ 0.16 Average Balances: Loans receivable (2) $ 4,793,917 $ 4,717,748 $ 4,606,856 $ 4,466,499 $ 4,352,130 Total investment securities 1,443,662 1,530,348 1,622,011 1,704,607 1,832,011 Total interest earning assets 6,333,697 6,367,371 6,379,251 6,292,645 6,292,874 Total assets 7,103,227 7,149,294 7,182,921 7,106,791 7,092,452 Total interest bearing deposits 4,112,343 4,011,793 3,997,496 3,916,977 3,868,890 Total noninterest demand deposits 1,631,268 1,703,357 1,677,984 1,638,262 1,657,132 Stockholders' equity 866,629 868,308 857,799 843,438 846,947 Financial Ratios: Return on average assets (3) 0.79 % 0.66 % 0.63 % 0.80 % 0.33 % Return on average common equity (3) 6.51 5.46 5.30 6.75 2.73 Return on average tangible common equity (1)(3) 9.22 7.81 7.62 9.74 4.07 Adjusted return on average tangible common equity (1)(3) 11.21 11.59 10.42 10.74 9.34 Efficiency ratio 71.9 69.3 71.7 69.4 83.0 Adjusted efficiency ratio (1) 67.3 64.4 65.2 67.1 68.9 Noninterest expense to average total assets (3) 2.36 2.20 2.18 2.21 2.29 Net interest spread (3) 2.79 2.66 2.59 2.58 2.66 Net interest margin (3) 3.44 3.36 3.30 3.27 3.29 (1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" section for a reconciliation to the comparable GAAP financial measure. (2) Average loans receivable includes loans held for sale. (3) Annualized. HERITAGE FINANCIAL CORPORATION QUARTERLY FINANCIAL STATISTICS (Unaudited) (Dollars in thousands, except per share amounts) As of or for the Quarter Ended March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024 Select Balance Sheet: Total assets $ 7,129,862 $ 7,106,278 $ 7,153,363 $ 7,059,857 $ 7,091,283 Loans receivable 4,764,848 4,802,123 4,679,479 4,532,615 4,428,165 Total investment securities 1,413,903 1,467,679 1,572,179 1,658,590 1,730,516 Total deposits 5,845,335 5,684,613 5,708,492 5,515,652 5,532,327 Noninterest demand deposits 1,621,890 1,654,955 1,682,219 1,599,367 1,637,111 Stockholders' equity 881,515 863,527 874,514 850,507 847,580 Financial Measures: Book value per share $ 25.85 $ 25.40 $ 25.61 $ 24.66 $ 24.43 Tangible book value per share (1) 18.70 18.22 18.45 17.56 17.36 Stockholders' equity to total assets 12.4 % 12.2 % 12.2 % 12.0 % 12.0 % Tangible common equity to tangible assets (1) 9.3 9.0 9.1 8.9 8.8 Loans to deposits ratio 81.5 84.5 82.0 82.2 80.0 Regulatory Capital Ratios:(2) Common equity tier 1 capital ratio 12.2 % 12.0 % 12.3 % 12.6 % 12.6 % Leverage ratio 10.2 10.0 9.9 10.1 10.0 Tier 1 capital ratio 12.6 12.4 12.7 13.0 13.0 Total capital ratio 13.6 13.3 13.6 13.9 13.9 Credit Quality Metrics: ACL on loans to: Loans receivable 1.09 % 1.09 % 1.10 % 1.13 % 1.12 % Nonaccrual loans 1,175.3 1,286.3 1,194.9 1,338.7 1,037.9 Nonaccrual loans to loans receivable 0.09 0.08 0.09 0.08 0.11 Nonperforming loans to loans receivable 0.09 0.11 0.21 0.18 0.17 Nonperforming assets to total assets 0.06 0.07 0.13 0.12 0.10 Net charge-offs (recoveries) on loans to average loans receivable (3) 0.03 0.00 0.22 0.00 0.00 Criticized Loans by Credit Quality Rating: Special mention $ 113,704 $ 110,725 $ 99,078 $ 93,694 $ 102,232 Substandard 64,387 68,318 71,977 82,496 70,183 Other Metrics: Number of branches 50 50 50 50 50 Deposits per branch $ 116,907 $ 113,692 $ 114,170 $ 110,313 $ 110,647 Average number of full-time equivalent employees 757 751 749 748 765 Average assets per full-time equivalent employee 9,383 9,520 9,590 9,501 9,271 (1) See Non-GAAP Financial Measures section herein. (2) Current quarter ratios are estimates pending completion and filing of the Company's regulatory reports. (3) Annualized. HERITAGE FINANCIAL CORPORATIONNON-GAAP FINANCIAL MEASURES (Unaudited)(Dollars in thousands, except per share amounts) This earnings release contains certain financial measures not presented in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") in addition to financial measures presented in accordance with GAAP. The Company has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in the Company's capital, performance and asset quality reflected in the current quarter and comparable period results and to facilitate comparison of its performance with the performance of its peers. These non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for financial measures presented in accordance with GAAP. These non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of the non-GAAP financial measures used in this earnings release to the comparable GAAP financial measures are presented below. The Company considers the tangible common equity to tangible assets ratio and tangible book value per share to be useful measurements of the adequacy of the Company's capital levels. March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024 Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share: Total stockholders' equity (GAAP) $ 881,515 $ 863,527 $ 874,514 $ 850,507 $ 847,580 Exclude intangible assets (243,789) (244,092) (244,491) (244,890) (245,311) Tangible common equity (non-GAAP) $ 637,726 $ 619,435 $ 630,023 $ 605,617 $ 602,269 Total assets (GAAP) $ 7,129,862 $ 7,106,278 $ 7,153,363 $ 7,059,857 $ 7,091,283 Exclude intangible assets (243,789) (244,092) (244,491) (244,890) (245,311) Tangible assets (non-GAAP) $ 6,886,073 $ 6,862,186 $ 6,908,872 $ 6,814,967 $ 6,845,972 Stockholders' equity to total assets (GAAP) 12.4 % 12.2 % 12.2 % 12.0 % 12.0 % Tangible common equity to tangible assets (non-GAAP) 9.3 % 9.0 % 9.1 % 8.9 % 8.8 % Shares outstanding 34,105,516 33,990,827 34,153,539 34,496,197 34,689,843 Book value per share (GAAP) $ 25.85 $ 25.40 $ 25.61 $ 24.66 $ 24.43 Tangible book value per share (non-GAAP) $ 18.70 $ 18.22 $ 18.45 $ 17.56 $ 17.36 HERITAGE FINANCIAL CORPORATIONNON-GAAP FINANCIAL MEASURES (Unaudited)(Dollars in thousands, except per share amounts) The Company considers the return on average tangible common equity ratio to be a useful measurement of the Company's ability to generate returns for its common shareholders. By removing the impact of intangible assets and their related amortization and tax effects, the performance of the Company's ongoing business operations can be evaluated. The Company believes that presenting an adjusted return on tangible common equity ratio provides useful and comparative information to assess trends in the Company's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. Quarter Ended March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024 Return on Average Tangible Common Equity, annualized: Net income (GAAP) $ 13,911 $ 11,928 $ 11,423 $ 14,159 $ 5,748 Add amortization of intangible assets 303 399 399 421 421 Exclude tax effect of adjustment (64) (84) (84) (88) (88) Tangible net income (non-GAAP) $ 14,150 $ 12,243 $ 11,738 $ 14,492 $ 6,081 Tangible net income (non-GAAP) $ 14,150 $ 12,243 $ 11,738 $ 14,492 $ 6,081 Exclude loss on sale of investment securities, net 3,887 3,903 6,945 1,921 9,973 Exclude gain on sale of premises and equipment (3) (23) (1,480) (49) — Exclude tax effect of adjustment (816) (815) (1,148) (393) (2,094) Exclude BOLI restructuring costs included in BOLI Income — 508 — — — Exclude tax expense related to BOLI restructuring — 2,371 — — — Adjusted tangible net income (non-GAAP) $ 17,218 $ 18,187 $ 16,055 $ 15,971 $ 13,960 Average stockholders' equity (GAAP) $ 866,629 $ 868,308 $ 857,799 $ 843,438 $ 846,947 Exclude average intangible assets (243,945) (244,302) (244,706) (245,106) (245,536) Average tangible common stockholders' equity (non-GAAP) $ 622,684 $ 624,006 $ 613,093 $ 598,332 $ 601,411 Return on average common equity, annualized (GAAP) 6.51 % 5.46 % 5.30 % 6.75 % 2.73 % Return on average tangible common equity, annualized (non-GAAP) 9.22 % 7.81 % 7.62 % 9.74 % 4.07 % Adjusted return on average tangible common equity, annualized (non-GAAP) 11.21 % 11.59 % 10.42 % 10.74 % 9.34 % HERITAGE FINANCIAL CORPORATIONNON-GAAP FINANCIAL MEASURES (Unaudited)(Dollars in thousands, except per share amounts) The Company believes that presenting an adjusted efficiency ratio provides useful and comparative information to assess trends in the Company's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. Quarter Ended March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024 Adjusted Efficiency Ratio : Total noninterest expense (GAAP) $ 41,383 $ 39,540 $ 39,290 $ 39,096 $ 40,370 Net interest income (GAAP) $ 53,690 $ 53,763 $ 52,958 $ 51,113 $ 51,530 Total noninterest income (GAAP) $ 3,903 $ 3,290 $ 1,837 $ 5,246 $ (2,900) Exclude loss on sale of investment securities, net 3,887 3,903 6,945 1,921 9,973 Exclude gain on sale of premises and equipment (3) (23) (1,480) (49) — Exclude BOLI restructuring costs included in BOLI Income — 508 — — — Adjusted total noninterest income (non-GAAP) $ 7,787 $ 7,678 $ 7,302 $ 7,118 $ 7,073 Efficiency ratio (GAAP) 71.9 % 69.3 % 71.7 % 69.4 % 83.0 % Adjusted efficiency ratio (non-GAAP) 67.3 % 64.4 % 65.2 % 67.1 % 68.9 % SOURCE Heritage Financial Corporation WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

HERITAGE FINANCIAL ANNOUNCES FIRST QUARTER 2025 RESULTS AND DECLARES REGULAR CASH DIVIDEND OF $0.24 PER SHARE

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