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

Second Quarter 2025 Highlights Net income was $12.2 million, or $0.36 per diluted share, compared to $13.9 million, or $0.40 per diluted share, for the first quarter of 2025. Results included a pre-tax loss on sale of securities of $6.9 million resulting in a negative impact of $0.15 per diluted share. Net interest margin increased to 3.51%, from 3.44% for the first quarter of 2025. Yield on loans increased to 5.50%, from 5.45% for the first quarter of 2025. Cost of interest bearing deposits increased to 1.94%, from 1.92% for the first quarter of 2025. Declared a regular cash dividend of $0.24 per share on July 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 $12.2 million for the second quarter of 2025, compared to $13.9 million for the first quarter of 2025 and $14.2 million for the second quarter of 2024. Diluted earnings per share for the second quarter of 2025 were $0.36 compared to $0.40 for the first quarter of 2025 and $0.41 for the second quarter of 2024. In the second quarter of 2025, the Company incurred a pre-tax loss of $6.9 million on the sale of investment securities in connection with the strategic repositioning of its balance sheet, which decreased diluted earnings per share by $0.15 for the quarter. The Company sold $91.6 million of investment securities with an average book yield of 2.63%. Net proceeds from the sale were used to purchase $56.4 million in investment securities with an average book yield of 5.06% and fund new loans originated during the quarter. The Company also incurred pre-tax losses on the sale of investment securities in connection with balance sheet repositioning during the first quarter of 2025 and second quarter of 2024 in the amounts of $3.9 million and $1.9 million, respectively, which decreased diluted earnings per share by $0.09 and $0.04, respectively, for such quarters. In addition, the Company surrendered $8.5 million of its bank owned life insurance ("BOLI") portfolio during the second quarter of 2025, incurring tax expense related to the surrender of BOLI of $515,000 which decreased diluted earnings per share by $0.02 for the quarter. Bryan McDonald, Chief Executive Officer of the Company, commented, "We are pleased with the continued growth in core earnings, both compared to the prior quarter and to the same quarter in the prior year. This is partly due to the ongoing expansion of our net interest margin, due mostly to increases in yields on loans and investment securities. Despite a seasonal decline in deposit balances in the second quarter, our total deposits have increased $100 million since year-end 2024. We continue to strategically reposition our balance sheet to improve future profitability and will consider investment in new production teams when favorable opportunities are presented. 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 June 30,2025 March 31,2025 June 30,2024 (Dollars in thousands, except per share amounts) Net income $ 12,215 $ 13,911 $ 14,159 Diluted earnings per share $ 0.36 $ 0.40 $ 0.41 Adjusted diluted earnings per share (1) $ 0.53 $ 0.49 $ 0.45 Return on average assets(2) 0.70 % 0.79 % 0.80 % Return on average common equity(2) 5.57 6.51 6.75 Return on average tangible common equity(1)(2) 7.85 9.22 9.74 Adjusted return on average tangible common equity(1)(2) 11.59 11.21 10.74 Net interest margin(2) 3.51 3.44 3.27 Cost of total deposits(2) 1.40 1.38 1.34 Efficiency ratio 72.7 71.9 69.4 Adjusted efficiency ratio(1) 64.9 67.3 67.1 Noninterest expense to average total assets(2) 2.34 2.36 2.21 Total assets $ 7,070,641 $ 7,129,862 $ 7,059,857 Loans receivable 4,774,855 4,764,848 4,532,615 Total deposits 5,784,413 5,845,335 5,515,652 Loan to deposit ratio(3) 82.5 % 81.5 % 82.2 % Book value per share $ 26.16 $ 25.85 $ 24.66 Tangible book value per share(1) 18.99 18.70 17.56 (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 Total investment securities decreased $67.6 million, or 4.8%, to $1.35 billion at June 30, 2025 from $1.41 billion at March 31, 2025. As previously noted, the Company sold $91.6 million of investment securities at a pre-tax loss of $6.9 million during the quarter as part of its strategic balance sheet repositioning. In addition, there were investment maturities and repayments of $40.8 million during the second quarter of 2025. The decrease was partially offset by investment security purchases of $56.4 million during the second quarter of 2025 and an $8.0 million decrease in unrealized losses on available for sale securities. The following table summarizes the composition of the Company's investment securities portfolio at the dates indicated: June 30, 2025 March 31, 2025 Change Balance % of Total Balance % of Total $ % (Dollars in thousands) Investment securities available for sale, at fair value: U.S. government and agency securities $ 11,510 0.9 % $ 11,436 0.8 % $ 74 0.6 % Municipal securities 50,215 3.7 50,725 3.6 (510) (1.0) Residential CMO and MBS(1) 317,214 23.6 356,860 25.2 (39,646) (11.1) Commercial CMO and MBS(1) 260,720 19.3 275,840 19.6 (15,120) (5.5) Corporate obligations 10,010 0.7 11,830 0.8 (1,820) (15.4) Other asset-backed securities 6,783 0.5 9,651 0.7 (2,868) (29.7) Total $ 656,452 48.7 % $ 716,342 50.7 % $ (59,890) (8.4) % Investment securities held to maturity, at amortized cost: U.S. government and agency securities $ 151,274 11.2 % $ 151,246 10.7 % $ 28 — % Residential CMO and MBS(1) 232,244 17.3 239,351 16.9 (7,107) (3.0) Commercial CMO and MBS(1) 306,304 22.8 306,964 21.7 (660) (0.2) Total $ 689,822 51.3 % $ 697,561 49.3 % $ (7,739) (1.1) % Total investment securities $ 1,346,274 100.0 % $ 1,413,903 100.0 % $ (67,629) (4.8) % (1) U.S. government agency and government-sponsored enterprise CMO and MBS Loans receivable increased $10.0 million, or 0.2%, to $4.77 billion at June 30, 2025 from $4.76 billion at March 31, 2025. New loans funded increased during the second quarter of 2025 to $139.9 million, compared to $95.8 million during the first quarter of 2025. New loan commitments increased during the second quarter of 2025 to $267.6 million compared to $201.0 million during the first quarter of 2025, reflecting the seasonality of loan originations. Loan prepayments decreased to $58.9 million during the quarter, compared to $79.9 million during the prior quarter. Loan payoffs increased to $51.0 million, compared to $47.5 million in the prior quarter. Commercial and industrial loans decreased $19.7 million, or 2.3%, during the second quarter, due primarily to pay downs on outstanding balances, partially offset by new loan production of $18.7 million. Owner-occupied commercial real estate ("CRE") loans increased $29.6 million, or 3.0%, during the second quarter, due primarily to new loan production of $49.1 million, offset by pay downs on outstanding balances. Non-owner occupied CRE loans increased $24.0 million, or 1.3%, during the quarter, due primarily to new loan production of $57.8 million, offset by pay downs on outstanding balances. Residential construction and commercial and multifamily construction loans decreased $19.9 million or 4.4%, due primarily to pay downs on outstanding balances. The following table summarizes the Company's loans receivable at the dates indicated: June 30, 2025 March 31, 2025 Change Balance % of Total Balance % of Total $ % (Dollars in thousands) Commercial business: Commercial and industrial $ 831,096 17.4 % $ 850,764 17.9 % $ (19,668) (2.3) % Owner-occupied CRE 1,014,891 21.3 985,272 20.7 29,619 3.0 Non-owner occupied CRE 1,939,752 40.7 1,915,788 40.1 23,964 1.3 Total commercial business 3,785,739 79.4 3,751,824 78.7 33,915 0.9 Residential real estate 383,927 8.0 393,301 8.3 (9,374) (2.4) Real estate construction and land development: Residential 78,070 1.6 76,108 1.6 1,962 2.6 Commercial and multifamily 355,268 7.4 377,100 7.9 (21,832) (5.8) Total real estate construction and land development 433,338 9.0 453,208 9.5 (19,870) (4.4) Consumer 171,851 3.6 166,515 3.5 5,336 3.2 Loans receivable $ 4,774,855 100.0 % $ 4,764,848 100.0 % $ 10,007 0.2 Total deposits decreased $60.9 million, or 1.0%, to $5.78 billion at June 30, 2025 from $5.85 billion at March 31, 2025. Non-maturity deposits decreased by $57.3 million, or 1.2%, from March 31, 2025 due primarily to a decline in customer balances in noninterest bearing demand and interest bearing demand accounts. The decrease in non-maturity deposits was partially offset by an increase of $27.1 million in money market accounts as customers transferred balances into these higher yielding accounts. Although total deposits at June 30, 2025 decreased from March 31, 2025, average total deposits increased $35.4 million during the second quarter of 2025. The following table summarizes the Company's total deposits at the dates indicated: June 30, 2025 March 31, 2025 Change Balance % of Total Balance % of Total $ % (Dollars in thousands) Noninterest demand deposits $ 1,584,231 27.4 % $ 1,621,890 27.7 % $ (37,659) (2.3) % Interest bearing demand deposits 1,487,208 25.7 1,525,522 26.1 (38,314) (2.5) Money market accounts 1,308,952 22.6 1,281,891 21.9 27,061 2.1 Savings accounts 422,372 7.3 430,749 7.4 (8,377) (1.9) Total non-maturity deposits 4,802,763 83.0 4,860,052 83.1 (57,289) (1.2) Certificates of deposit 981,650 17.0 985,283 16.9 (3,633) (0.4) Total deposits $ 5,784,413 100.0 % $ 5,845,335 100.0 % $ (60,922) (1.0) % Total borrowings decreased $1.2 million to $263.2 million at June 30, 2025 from $264.4 million at March 31, 2025. All outstanding borrowings at June 30, 2025 were with the Federal Home Loan Bank ("FHLB") and mature within one year. Total stockholders' equity increased $6.7 million, or 0.8%, to $888.2 million at June 30, 2025 compared to $881.5 million at March 31, 2025 due primarily to $12.2 million of net income recognized for the quarter. The increase in total stockholders' equity was also due to a $6.2 million decrease in accumulated other comprehensive loss as a result of losses recognized on sales of investment securities in connection with balance sheet repositioning efforts. These increases were partially offset by $8.3 million in dividends paid to common shareholders and $4.6 million of stock repurchases. 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 June 30, 2025. The following table summarizes the capital ratios for the Company at the dates indicated: June 30,2025 March 31,2025 Stockholders' equity to total assets 12.6 % 12.4 % Tangible common equity to tangible assets (1) 9.4 9.3 Common equity tier 1 capital ratio (2) 12.2 12.2 Leverage ratio (2) 10.3 10.2 Tier 1 capital ratio (2) 12.6 12.6 Total capital ratio (2) 13.6 13.6 (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 1.10% at June 30, 2025 compared to 1.09% at March 31, 2025. The increase in the ACL as a percentage of loans was due primarily to changes in the weighted average life of the loans in the real estate construction and land development segment. During the second quarter of 2025, the Company recorded an $863,000 provision for credit losses on loans, compared to a $9,000 reversal of provision for credit losses on loans during the first quarter of 2025. The provision for credit losses on loans recognized during the second quarter of 2025 was due primarily to charge-offs of $494,000 and secondarily to growth in balances of collectively evaluated loans. During the second quarter of 2025, the Company recorded a $93,000 provision for credit losses on unfunded commitments compared to a $60,000 provision during the first quarter of 2025. The provision for credit losses on unfunded commitments during the second quarter of 2025 was due primarily to an increase in the unfunded exposure on construction 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 June 30, 2025 March 31, 2025 June 30, 2024 ACL on Loans ACL on Unfunded Total ACL on Loans ACL on Unfunded Total ACL on Loans ACL on Unfunded Total (Dollars in thousands) Balance, beginning of period $ 52,160 $ 647 $ 52,807 $ 52,468 $ 587 $ 53,055 $ 49,736 $ 976 $ 50,712 Provision for (reversal of) credit losses 863 93 956 (9) 60 51 1,470 (202) 1,268 (Net charge-offs) / recoveries (494) — (494) (299) — (299) 13 — 13 Balance, end of period $ 52,529 $ 740 $ 53,269 $ 52,160 $ 647 $ 52,807 $ 51,219 $ 774 $ 51,993 Credit Quality Classified loans (loans rated substandard or worse) increased $35.3 million from the prior quarter, resulting in the percentage of classified loans to loans receivable increasing to 2.1% at June 30, 2025 compared to 1.4% at March 31, 2025. The Company downgraded $38.2 million of loans to substandard during the second quarter of 2025, including, non-owner occupied CRE loans of $16.3 million, commercial and industrial loans of $9.7 million, commercial and multifamily construction loans of $6.0 million, and owner occupied CRE loans of $5.7 million. The following table illustrates total loans by risk rating and their respective percentage of total loans at the dates indicated: June 30, 2025 March 31, 2025 Balance % of Total Balance % of Total (Dollars in thousands) Risk Rating: Pass $ 4,560,994 95.5 % $ 4,586,757 96.2 % Special Mention 114,146 2.4 113,704 2.4 Substandard 99,715 2.1 64,387 1.4 Total $ 4,774,855 100.0 % $ 4,764,848 100.0 % Nonaccrual loans increased by $5.4 million during the second quarter of 2025 due primarily to the migration of a $6.0 million commercial and multifamily construction loan and a $1.7 million commercial and industrial loan. These increases were partially offset by a $2.0 million pay down on a commercial real estate loan. The following table illustrates changes in nonaccrual loans during the periods indicated: Quarter Ended June 30,2025 March 31,2025 June 30,2024 (Dollars in thousands) Balance, beginning of period $ 4,438 $ 4,079 $ 4,792 Additions 7,922 832 549 Net principal payments and transfers to accruing status (2,041) (214) (483) Payoffs — (38) (769) Charge-offs (454) (221) (263) Balance, end of period $ 9,865 $ 4,438 $ 3,826 Nonaccrual loans to loans receivable 0.21 % 0.09 % 0.08 % Liquidity Total liquidity sources available at June 30, 2025 were $2.38 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 June 30, 2025 represented a coverage ratio of 41.1% of total deposits and 100.4% of estimated uninsured deposits. The following table summarizes the Company's available liquidity: Quarter Ended June 30,2025 March 31,2025 (Dollars in thousands) On-balance sheet liquidity Cash and cash equivalents $ 254,096 $ 248,660 Unencumbered investment securities available for sale (1) 655,876 698,132 Total on-balance sheet liquidity $ 909,972 $ 946,792 Off-balance sheet liquidity FRB borrowing availability $ 346,307 $ 365,624 FHLB borrowing availability (2) 977,805 1,084,304 Fed funds line borrowing availability with correspondent banks 145,000 145,000 Total off-balance sheet liquidity $ 1,469,112 $ 1,594,928 Total available liquidity $ 2,379,084 $ 2,541,720 (1) Investment securities available for sale at fair value. (2) Includes FHLB total borrowing availability of $1.24 billion at June 30, 2025 based on pledged assets, however, maximum credit capacity is 45% of the Bank's total assets one quarter in arrears or $3.21 billion. Net Interest Margin and Net Interest Income The net interest margin increased seven basis points to 3.51% during the second quarter of 2025 from 3.44% during the first quarter of 2025. The yield on interest earning assets increased six basis points to 5.01% for the second quarter of 2025, compared to 4.95% for the first quarter of 2025. The yield on loans receivable increased five basis points to 5.50% during the second quarter of 2025, compared to 5.45% during the first quarter of 2025 as new loans were booked and adjustable rate loans repriced at higher rates. The cost of interest bearing deposits increased two basis points to 1.94% for the second quarter of 2025 from 1.92% for the first quarter of 2025. This increase was primarily due to an increase in rates on interest bearing demand and money market accounts during the quarter, offset partially by a decrease in certificate of deposit rates. Net interest income increased $1.3 million, or 2.4%, during the second quarter of 2025 compared to the first quarter of 2025 due to a $1.1 million increase in total interest income and a decrease in interest expense of $0.2 million. The net interest margin increased 24 basis points to 3.51% from 3.27% compared to the same period in the prior year. Net interest income increased $3.9 million, or 7.6%, during the second quarter of 2025 compared to the second quarter of 2024. The increase was due to a change in the mix of earning assets to higher yielding loan balances and a decrease in borrowing interest expense due to lower average balances, partially offset by an increase in deposit interest expense resulting from increased average balances and rates. The following table provides relevant net interest income information for the periods indicated: Quarter Ended June 30, 2025 March 31, 2025 June 30, 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) $ 4,768,558 $ 65,373 5.50 % $ 4,793,917 $ 64,436 5.45 % $ 4,466,499 $ 60,608 5.46 % Taxable securities 1,374,770 11,579 3.38 1,427,976 11,739 3.33 1,685,795 14,156 3.38 Nontaxable securities (3) 15,294 137 3.59 15,686 139 3.59 18,812 165 3.53 Interest earning deposits 127,687 1,411 4.43 96,118 1,052 4.44 121,539 1,653 5.47 Total interest earning assets 6,286,309 78,500 5.01 % 6,333,697 77,366 4.95 % 6,292,645 76,582 4.89 % Noninterest earning assets 760,634 769,530 814,146 Total assets $ 7,046,943 $ 7,103,227 $ 7,106,791 Interest Bearing Liabilities: Certificates of deposit $ 979,997 $ 9,349 3.83 % $ 980,336 $ 9,670 4.00 % $ 838,285 $ 9,128 4.38 % Savings accounts 425,703 288 0.27 426,321 293 0.28 453,099 190 0.17 Interest bearing demand and money market accounts 2,770,352 10,513 1.52 2,705,686 9,526 1.43 2,625,593 9,135 1.40 Total interest bearing deposits 4,176,052 20,150 1.94 4,112,343 19,489 1.92 3,916,977 18,453 1.89 Junior subordinated debentures 22,165 472 8.54 22,086 471 8.65 21,874 539 9.91 Borrowings 245,663 2,895 4.73 320,286 3,716 4.71 500,230 6,477 5.21 Total interest bearing liabilities 4,443,880 23,517 2.12 % 4,454,715 23,676 2.16 % 4,439,081 25,469 2.31 % Noninterest demand deposits 1,602,987 1,631,268 1,638,262 Other noninterest bearing liabilities 120,268 150,615 186,010 Stockholders' equity 879,808 866,629 843,438 Total liabilities and stockholders' equity $ 7,046,943 $ 7,103,227 $ 7,106,791 Net interest income and spread $ 54,983 2.89 % $ 53,690 2.79 % $ 51,113 2.58 % Net interest margin 3.51 % 3.44 % 3.27 % (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 $903,000, $753,000 and $971,000 for the second quarter of 2025, first quarter of 2025 and second 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 decreased $2.4 million to $1.5 million during the second quarter of 2025 from $3.9 million during the first quarter of 2025. The decrease was due primarily to higher losses resulting from the above-referenced sale of investment securities recognized in the second quarter of 2025 as part of the strategic repositioning of the balance sheet, compared to losses recognized in the prior quarter. The decrease was partially offset by an increase in BOLI income due to death benefit proceeds and an increase in card revenue due to increased card activity. Noninterest income decreased $3.7 million from the same period in 2024 due primarily to higher losses resulting from the above-referenced sale of investment securities recognized in the second quarter of 2025 as part of the strategic repositioning of the balance sheet, compared to losses recognized in the same quarter in 2024. The decrease was partially offset by an increase in BOLI income as a result of BOLI restructuring which occurred in the fourth quarter of 2024 and an increase in other income primarily due to an increase in FHLB dividend income. The following table presents the key components of noninterest income and the change for the periods indicated: Quarter Ended Quarter Over Quarter Change Prior Year Quarter Change June 30,2025 March 31,2025 June 30,2024 $ % $ % (Dollars in thousands) Service charges and other fees $ 2,932 $ 2,975 $ 2,817 $ (43) (1.4) % $ 115 4.1 % Card revenue 2,008 1,733 1,930 275 15.9 78 4.0 Loss on sale of investment securities (6,854) (3,887) (1,921) (2,967) (76.3) (4,933) (256.8) Interest rate swap fees 19 — 52 19 — (33) (63.5) Bank owned life insurance income 1,280 918 931 362 39.4 349 37.5 Gain on sale of other assets, net 5 3 49 2 66.7 (44) (89.8) Other income 2,127 2,161 1,388 (34) (1.6) 739 53.2 Total noninterest income (loss) $ 1,517 $ 3,903 $ 5,246 $ (2,386) (61.1) % $ (3,729) (71.1) % Noninterest Expense Noninterest expense decreased $0.3 million, or 0.7%, to $41.1 million during the second quarter of 2025, compared to $41.4 million in the first quarter of 2025, due primarily to a decrease in compensation and employee benefits resulting from a decrease in payroll taxes, offset partially by an increase in salary expense due to annual merit increases in base pay. Data processing expense decreased primarily due to a decline in ongoing costs resulting from technology-related contract renewals. Professional fees increased due primarily to consulting costs related to technology-related contract renewals. Noninterest expense increased $2.0 million, or 5.1%, during the second quarter of 2025 compared to the same period in 2024 due primarily to an increase in compensation and employee benefits due to annual merit increases in base pay. Professional fees increased due primarily to consulting costs related to technology-related contract renewals recognized in the second quarter of 2025. The following table presents the key components of noninterest expense and the change for the periods indicated: Quarter Ended Quarter Over Quarter Change Prior Year Quarter Change June 30,2025 March 31,2025 June 30,2024 $ % $ % (Dollars in thousands) Compensation and employee benefits $ 25,467 $ 25,799 $ 24,448 $ (332) (1.3) % $ 1,019 4.2 % Occupancy and equipment 4,840 4,926 4,765 (86) (1.7) 75 1.6 Data processing 3,666 3,897 3,584 (231) (5.9) 82 2.3 Marketing 336 335 244 1 0.3 92 37.7 Professional services 1,122 734 795 388 52.9 327 41.1 State/municipal business and use taxes 1,205 1,220 1,160 (15) (1.2) 45 3.9 Federal deposit insurance premium 810 812 812 (2) (0.2) (2) (0.2) Amortization of intangible assets 302 303 421 (1) (0.3) (119) (28.3) Other expense 3,337 3,357 2,867 (20) (0.6) 470 16.4 Total noninterest expense $ 41,085 $ 41,383 $ 39,096 $ (298) (0.7) % $ 1,989 5.1 % Income Tax Expense Income tax expense was $2.2 million during the second quarter of 2025 and first quarter of 2025. The Company recognized $515,000 in income tax expense related to the surrender of $8.5 million in BOLI policies during the second quarter of 2025. Income tax expense increased $0.4 million in the second quarter of 2025 compared to same period in 2024 due primarily to a higher effective tax rate during the second quarter of 2025. The following table presents the income tax expense and related metrics and the change for the periods indicated: Quarter Ended Change June 30,2025 March 31,2025 June 30,2024 Quarter Over Quarter Prior Year Quarter (Dollars in thousands) Income before income taxes $ 14,459 $ 16,159 $ 15,995 $ (1,700) $ (1,536) Income tax expense $ 2,244 $ 2,248 $ 1,836 $ (4) $ 408 Effective income tax rate 15.5 % 13.9 % 11.5 % 1.6 % 4.0 % Dividends On July 23, 2025, the Company's Board of Directors declared a quarterly cash dividend of $0.24 per share. The dividend is payable on August 20, 2025 to shareholders of record as of the close of business on August 6, 2025. Earnings Conference Call The Company will hold a telephone conference call to discuss this earnings release on Thursday, July 24, 2025 at 10:00 a.m. Pacific time. To access the call, please dial (833) 470-1428 -- access code 464904 a few minutes prior to 10:00 a.m. Pacific time. The call will be available for replay through July 31, 2025 by dialing (866) 813-9403 -- access code 276171. 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, and 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 the imposition of tariffs, changes to immigration policy, regulatory and other governmental agencies, DEI and ESG initiatives, consumer protection, 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 critical processing functions for our business, including sophisticated attacks using artificial intelligence and similar tools; rapid technological changes implemented by us and other parties in the financial services industry; including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequence to us and our customers, including the development and implementation of tools incorporating artificial intelligence; 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 Fintech companies; effects of critical accounting policies and judgments, including the use of estimates in determining 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) June 30,2025 March 31,2025 December 31,2024 Assets Cash on hand and in banks $ 90,754 $ 89,072 $ 58,821 Interest earning deposits 163,342 159,588 58,279 Cash and cash equivalents 254,096 248,660 117,100 Investment securities available for sale, at fair value (amortized cost of $704,207, $772,086 and $835,592, respectively) 656,452 716,342 764,394 Investment securities held to maturity, at amortized cost (fair value of $629,658, $632,648 and $623,452, respectively) 689,822 697,561 703,285 Total investment securities 1,346,274 1,413,903 1,467,679 Loans receivable 4,774,855 4,764,848 4,802,123 Allowance for credit losses on loans (52,529) (52,160) (52,468) Loans receivable, net 4,722,326 4,712,688 4,749,655 Premises and equipment, net 71,111 71,079 71,580 Federal Home Loan Bank stock, at cost 16,107 16,160 21,538 Bank owned life insurance 104,456 112,656 111,699 Accrued interest receivable 18,559 19,651 19,483 Prepaid expenses and other assets 294,225 291,276 303,452 Other intangible assets, net 2,548 2,850 3,153 Goodwill 240,939 240,939 240,939 Total assets $ 7,070,641 $ 7,129,862 $ 7,106,278 Liabilities and Stockholders' Equity Non-interest bearing deposits $ 1,584,231 $ 1,621,890 $ 1,654,955 Interest bearing deposits 4,200,182 4,223,445 4,029,658 Total deposits 5,784,413 5,845,335 5,684,613 Borrowings 263,200 264,400 383,000 Junior subordinated debentures 22,204 22,131 22,058 Accrued expenses and other liabilities 112,612 116,481 153,080 Total liabilities 6,182,429 6,248,347 6,242,751 Common stock 528,758 532,124 531,674 Retained earnings 396,643 392,737 387,097 Accumulated other comprehensive loss, net (37,189) (43,346) (55,244) Total stockholders' equity 888,212 881,515 863,527 Total liabilities and stockholders' equity $ 7,070,641 $ 7,129,862 $ 7,106,278 Shares outstanding 33,953,194 34,105,516 33,990,827 HERITAGE FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts) Quarter Ended Six Months Ended June 30,2025 March 31,2025 June 30,2024 June 30,2025 June 30,2024 Interest Income Interest and fees on loans $ 65,373 $ 64,436 $ 60,608 $ 129,809 $ 118,470 Taxable interest on investment securities 11,579 11,739 14,156 23,318 28,990 Nontaxable interest on investment securities 137 139 165 276 346 Interest on interest earning deposits 1,411 1,052 1,653 2,463 3,129 Total interest income 78,500 77,366 76,582 155,866 150,935 Interest Expense Deposits 20,150 19,489 18,453 39,639 34,841 Junior subordinated debentures 472 471 539 943 1,086 Borrowings 2,895 3,716 6,477 6,611 12,365 Total interest expense 23,517 23,676 25,469 47,193 48,292 Net interest income 54,983 53,690 51,113 108,673 102,643 Provision for credit losses 956 51 1,268 1,007 2,660 Net interest income after provision for credit losses 54,027 53,639 49,845 107,666 99,983 Noninterest Income Service charges and other fees 2,932 2,975 2,817 5,907 5,605 Card revenue 2,008 1,733 1,930 3,741 3,769 Loss on sale of investment securities, net (6,854) (3,887) (1,921) (10,741) (11,894) Gain on sale of loans, net — — — — 26 Interest rate swap fees 19 — 52 19 52 Bank owned life insurance income 1,280 918 931 2,198 1,851 Gain on sale of other assets, net 5 3 49 8 49 Other income 2,127 2,161 1,388 4,288 2,888 Total noninterest income (loss) 1,517 3,903 5,246 5,420 2,346 Noninterest Expense Compensation and employee benefits 25,467 25,799 24,448 51,266 49,924 Occupancy and equipment 4,840 4,926 4,765 9,766 9,697 Data processing 3,666 3,897 3,584 7,563 6,915 Marketing 336 335 244 671 455 Professional services 1,122 734 795 1,856 1,362 State/municipal business and use taxes 1,205 1,220 1,160 2,425 2,460 Federal deposit insurance premium 810 812 812 1,622 1,607 Amortization of intangible assets 302 303 421 605 842 Other expense 3,337 3,357 2,867 6,694 6,204 Total noninterest expense 41,085 41,383 39,096 82,468 79,466 Income before income taxes 14,459 16,159 15,995 30,618 22,863 Income tax expense 2,244 2,248 1,836 4,492 2,956 Net income $ 12,215 $ 13,911 $ 14,159 $ 26,126 $ 19,907 Basic earnings per share $ 0.36 $ 0.41 $ 0.41 $ 0.77 $ 0.58 Diluted earnings per share $ 0.36 $ 0.40 $ 0.41 $ 0.76 $ 0.57 Dividends declared per share $ 0.24 $ 0.24 $ 0.23 $ 0.48 $ 0.46 Average shares outstanding - basic 34,028,592 34,012,490 34,609,900 34,037,067 34,717,685 Average shares outstanding - diluted 34,446,710 34,506,238 34,919,395 34,512,260 35,127,407 HERITAGE FINANCIAL CORPORATION FINANCIAL STATISTICS (Unaudited) (Dollars in thousands) Average Balances, Yields, and Rates Paid: Six Months Ended June 30, 2025 2024 Average Balance Interest Earned/ Paid AverageYield/Rate (1) Average Balance Interest Earned/ Paid AverageYield/Rate (1) Interest Earning Assets: Loans receivable(2)(3) $ 4,781,167 $ 129,809 5.48 % $ 4,409,315 $ 118,470 5.40 % Taxable securities 1,401,226 23,318 3.36 1,748,252 28,990 3.33 Nontaxable securities(3) 15,489 276 3.59 20,057 346 3.47 Interest earning deposits 111,990 2,463 4.44 115,136 3,129 5.47 Total interest earning assets 6,309,872 155,866 4.98 % 6,292,760 150,935 4.82 % Noninterest earning assets 765,058 806,861 Total assets $ 7,074,930 $ 7,099,621 Interest Bearing Liabilities: Certificates of deposit $ 980,166 $ 19,019 3.91 % $ 786,050 $ 16,799 4.30 % Savings accounts 426,010 581 0.28 464,087 420 0.18 Interest bearing demand and money market accounts 2,738,197 20,039 1.48 2,642,796 17,622 1.34 Total interest bearing deposits 4,144,373 39,639 1.93 3,892,933 34,841 1.80 Junior subordinated debentures 22,126 943 8.59 21,837 1,086 10.00 Borrowings 282,768 6,611 4.71 500,445 12,365 4.97 Total interest bearing liabilities 4,449,267 47,193 2.14 % 4,415,215 48,292 2.20 % Noninterest demand deposits 1,617,050 1,647,697 Other noninterest bearing liabilities 135,358 191,516 Stockholders' equity 873,255 845,193 Total liabilities and stockholders' equity $ 7,074,930 $ 7,099,621 Net interest income and spread $ 108,673 2.84 % $ 102,643 2.62 % Net interest margin 3.47 % 3.28 % (1) 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 $1.7 million and $1.8 million for the six months ended June 30, 2025 and 2024, respectively. (3) Yields on tax-exempt loans and securities have not been stated on a tax-equivalent basis. HERITAGE FINANCIAL CORPORATION FINANCIAL STATISTICS (Unaudited) (Dollars in thousands) Nonperforming Assets and Credit Quality Metrics: Quarter Ended Six Months Ended June 30,2025 March 31,2025 June 30,2024 June 30,2025 June 30,2024 Allowance for Credit Losses on Loans: Balance, beginning of period $ 52,160 $ 52,468 $ 49,736 $ 52,468 $ 47,999 Provision for credit losses on loans 863 (9) 1,470 854 3,174 Charge-offs: Commercial business (454) (222) (312) (676) (389) Consumer (104) (154) (238) (258) (361) Total charge-offs (558) (376) (550) (934) (750) Recoveries: Commercial business 18 26 518 44 735 Consumer 46 51 45 97 61 Total recoveries 64 77 563 141 796 Net (charge-offs) recoveries (494) (299) 13 (793) 46 Balance, end of period $ 52,529 $ 52,160 $ 51,219 $ 52,529 $ 51,219 Net charge-offs on loans to average loans receivable annualized 0.04 % 0.03 % — % 0.03 % — % June 30,2025 March 31,2025 December 31,2024 Nonperforming Assets: Nonaccrual loans: Commercial business $ 2,916 $ 3,455 $ 3,919 Residential real estate 832 832 — Real estate construction and land development 5,969 — — Consumer 148 151 160 Total nonaccrual loans 9,865 4,438 4,079 Accruing loans past due 90 days or more 8,613 — 1,195 Total nonperforming loans 18,478 4,438 5,274 Other real estate owned — — — Nonperforming assets $ 18,478 $ 4,438 $ 5,274 ACL on loans to: Loans receivable 1.10 % 1.09 % 1.09 % Nonaccrual loans 532.48 % 1,175.30 % 1,286.30 % Nonaccrual loans to loans receivable 0.21 % 0.09 % 0.08 % Nonperforming loans to loans receivable 0.39 % 0.09 % 0.11 % Nonperforming assets to total assets 0.26 % 0.06 % 0.07 % HERITAGE FINANCIAL CORPORATION QUARTERLY FINANCIAL STATISTICS (Unaudited) (Dollars in thousands, except per share amounts) Quarter Ended June 30,2025 March 31,2025 December 31,2024 September 30,2024 June 30,2024 Earnings: Net interest income $ 54,983 $ 53,690 $ 53,763 $ 52,958 $ 51,113 Provision for credit losses 956 51 1,183 2,439 1,268 Noninterest income 1,517 3,903 3,290 1,837 5,246 Noninterest expense 41,085 41,383 39,540 39,290 39,096 Net income 12,215 13,911 11,928 11,423 14,159 Basic earnings per share $ 0.36 $ 0.41 $ 0.35 $ 0.33 $ 0.41 Diluted earnings per share $ 0.36 $ 0.40 $ 0.34 $ 0.33 $ 0.41 Adjusted diluted earnings per share (1) $ 0.53 $ 0.49 $ 0.51 $ 0.45 $ 0.45 Average Balances: Loans receivable $ 4,768,558 $ 4,793,917 $ 4,717,748 $ 4,606,856 $ 4,466,499 Total investment securities 1,390,064 1,443,662 1,530,348 1,622,011 1,704,607 Total interest earning assets 6,286,309 6,333,697 6,367,371 6,379,251 6,292,645 Total assets 7,046,943 7,103,227 7,149,294 7,182,921 7,106,791 Total interest bearing deposits 4,176,052 4,112,343 4,011,793 3,997,496 3,916,977 Total noninterest demand deposits 1,602,987 1,631,268 1,703,357 1,677,984 1,638,262 Stockholders' equity 879,808 866,629 868,308 857,799 843,438 Financial Ratios: Return on average assets (2) 0.70 % 0.79 % 0.66 % 0.63 % 0.80 % Return on average common equity (2) 5.57 6.51 5.46 5.30 6.75 Return on average tangible common equity (1)(2) 7.85 9.22 7.81 7.62 9.74 Adjusted return on average tangible common equity (1)(2) 11.59 11.21 11.59 10.42 10.74 Efficiency ratio 72.7 71.9 69.3 71.7 69.4 Adjusted efficiency ratio (1) 64.9 67.3 64.4 65.2 67.1 Noninterest expense to average total assets (2) 2.34 2.36 2.20 2.18 2.21 Net interest spread (2) 2.89 2.79 2.66 2.59 2.58 Net interest margin (2) 3.51 3.44 3.36 3.30 3.27 (1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" section for a reconciliation to the comparable GAAP financial measure. (2) Annualized. HERITAGE FINANCIAL CORPORATION QUARTERLY FINANCIAL STATISTICS (Unaudited) (Dollars in thousands, except per share amounts) As of or for the Quarter Ended June 30,2025 March 31,2025 December 31,2024 September 30,2024 June 30,2024 Select Balance Sheet: Total assets $ 7,070,641 $ 7,129,862 $ 7,106,278 $ 7,153,363 $ 7,059,857 Loans receivable 4,774,855 4,764,848 4,802,123 4,679,479 4,532,615 Total investment securities 1,346,274 1,413,903 1,467,679 1,572,179 1,658,590 Total deposits 5,784,413 5,845,335 5,684,613 5,708,492 5,515,652 Noninterest demand deposits 1,584,231 1,621,890 1,654,955 1,682,219 1,599,367 Stockholders' equity 888,212 881,515 863,527 874,514 850,507 Financial Measures: Book value per share $ 26.16 $ 25.85 $ 25.40 $ 25.61 $ 24.66 Tangible book value per share (1) 18.99 18.70 18.22 18.45 17.56 Stockholders' equity to total assets 12.6 % 12.4 % 12.2 % 12.2 % 12.0 % Tangible common equity to tangible assets (1) 9.4 9.3 9.0 9.1 8.9 Loans to deposits ratio 82.5 81.5 84.5 82.0 82.2 Regulatory Capital Ratios:(2) Common equity tier 1 capital ratio 12.2 % 12.2 % 12.0 % 12.3 % 12.6 % Leverage ratio 10.3 10.2 10.0 9.9 10.1 Tier 1 capital ratio 12.6 12.6 12.4 12.7 13.0 Total capital ratio 13.6 13.6 13.3 13.6 13.9 Credit Quality Metrics: ACL on loans to: Loans receivable 1.10 % 1.09 % 1.09 % 1.10 % 1.13 % Nonaccrual loans 532.5 1,175.3 1,286.3 1,194.9 1,338.7 Nonaccrual loans to loans receivable 0.21 0.09 0.08 0.09 0.08 Nonperforming loans to loans receivable 0.39 0.09 0.11 0.21 0.18 Nonperforming assets to total assets 0.26 0.06 0.07 0.13 0.12 Net charge-offs on loans to average loans receivable (3) 0.04 0.03 0.00 0.22 0.00 Criticized Loans by Credit Quality Rating: Special mention $ 114,146 $ 113,704 $ 110,725 $ 99,078 $ 93,694 Substandard 99,715 64,387 68,318 71,977 82,496 Other Metrics: Number of branches 50 50 50 50 50 Deposits per branch $ 115,688 $ 116,907 $ 113,692 $ 114,170 $ 110,313 Average number of full-time equivalent employees 747 757 751 749 748 Average assets per full-time equivalent employee 9,434 9,383 9,520 9,590 9,501 (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 believes that presenting the adjusted diluted earnings per share 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. June 30,2025 March 31,2025 December 31,2024 September 30,2024 June 30,2024 Diluted Earnings per Share and Adjusted Diluted Earnings per Share: Net income (GAAP) $ 12,215 $ 13,911 $ 11,928 $ 11,423 $ 14,159 Exclude loss on sale of investment securities, net 6,854 3,887 3,903 6,945 1,921 Exclude gain on sale of premises and equipment (5) (3) (23) (1,480) (49) Exclude tax effect of adjustment (1,438) (816) (815) (1,148) (393) Exclude BOLI restructuring costs included in BOLI Income — — 508 — — Exclude tax expense related to BOLI restructuring 515 — 2,371 — — Adjusted net income (non-GAAP) $ 18,141 $ 16,979 $ 17,872 $ 15,740 $ 15,638 Average number of diluted shares outstanding 34,446,710 34,506,238 34,553,139 34,658,674 34,919,395 Diluted earnings per share (GAAP) $ 0.36 $ 0.40 $ 0.34 $ 0.33 $ 0.41 Adjusted diluted earnings per share (non-GAAP) $ 0.53 $ 0.49 $ 0.51 $ 0.45 $ 0.45 HERITAGE FINANCIAL CORPORATIONNON-GAAP FINANCIAL MEASURES (Unaudited)(Dollars in thousands, except per share amounts) 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. June 30,2025 March 31,2025 December 31,2024 September 30,2024 June 30,2024 Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share: Total stockholders' equity (GAAP) $ 888,212 $ 881,515 $ 863,527 $ 874,514 $ 850,507 Exclude intangible assets (243,487) (243,789) (244,092) (244,491) (244,890) Tangible common equity (non-GAAP) $ 644,725 $ 637,726 $ 619,435 $ 630,023 $ 605,617 Total assets (GAAP) $ 7,070,641 $ 7,129,862 $ 7,106,278 $ 7,153,363 $ 7,059,857 Exclude intangible assets (243,487) (243,789) (244,092) (244,491) (244,890) Tangible assets (non-GAAP) $ 6,827,154 $ 6,886,073 $ 6,862,186 $ 6,908,872 $ 6,814,967 Stockholders' equity to total assets (GAAP) 12.6 % 12.4 % 12.2 % 12.2 % 12.0 % Tangible common equity to tangible assets (non-GAAP) 9.4 % 9.3 % 9.0 % 9.1 % 8.9 % Shares outstanding 33,953,194 34,105,516 33,990,827 34,153,539 34,496,197 Book value per share (GAAP) $ 26.16 $ 25.85 $ 25.40 $ 25.61 $ 24.66 Tangible book value per share (non- GAAP) $ 18.99 $ 18.70 $ 18.22 $ 18.45 $ 17.56 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 June 30,2025 March 31,2025 December 31,2024 September 30,2024 June 30,2024 Return on Average Tangible Common Equity, annualized: Net income (GAAP) $ 12,215 $ 13,911 $ 11,928 $ 11,423 $ 14,159 Add amortization of intangible assets 302 303 399 399 421 Exclude tax effect of adjustment (63) (64) (84) (84) (88) Tangible net income (non-GAAP) $ 12,454 $ 14,150 $ 12,243 $ 11,738 $ 14,492 Tangible net income (non-GAAP) $ 12,454 $ 14,150 $ 12,243 $ 11,738 $ 14,492 Exclude loss on sale of investment securities, net 6,854 3,887 3,903 6,945 1,921 Exclude gain on sale of premises and equipment (5) (3) (23) (1,480) (49) Exclude tax effect of adjustment (1,438) (816) (815) (1,148) (393) Exclude BOLI restructuring costs included in BOLI Income — — 508 — — Exclude tax expense related to BOLI restructuring 515 — 2,371 — — Adjusted tangible net income (non- GAAP) $ 18,380 $ 17,218 $ 18,187 $ 16,055 $ 15,971 Average stockholders' equity (GAAP) $ 879,808 $ 866,629 $ 868,308 $ 857,799 $ 843,438 Exclude average intangible assets (243,651) (243,945) (244,302) (244,706) (245,106) Average tangible common stockholders' equity (non-GAAP) $ 636,157 $ 622,684 $ 624,006 $ 613,093 $ 598,332 Return on average common equity, annualized (GAAP) 5.57 % 6.51 % 5.46 % 5.30 % 6.75 % Return on average tangible common equity, annualized (non-GAAP) 7.85 % 9.22 % 7.81 % 7.62 % 9.74 % Adjusted return on average tangible common equity, annualized (non- GAAP) 11.59 % 11.21 % 11.59 % 10.42 % 10.74 % 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 June 30,2025 March 31,2025 December 31,2024 September 30,2024 June 30,2024 Adjusted Efficiency Ratio : Total noninterest expense (GAAP) $ 41,085 $ 41,383 $ 39,540 $ 39,290 $ 39,096 Net interest income (GAAP) $ 54,983 $ 53,690 $ 53,763 $ 52,958 $ 51,113 Total noninterest income (GAAP) $ 1,517 $ 3,903 $ 3,290 $ 1,837 $ 5,246 Exclude loss on sale of investment securities, net 6,854 3,887 3,903 6,945 1,921 Exclude gain on sale of premises and equipment (5) (3) (23) (1,480) (49) Exclude BOLI restructuring costs included in BOLI Income — — 508 — — Adjusted total noninterest income (non-GAAP) $ 8,366 $ 7,787 $ 7,678 $ 7,302 $ 7,118 Efficiency ratio (GAAP) 72.7 % 71.9 % 69.3 % 71.7 % 69.4 % Adjusted efficiency ratio (non-GAAP) 64.9 % 67.3 % 64.4 % 65.2 % 67.1 % 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 SECOND QUARTER 2025 RESULTS AND DECLARES REGULAR CASH DIVIDEND OF $0.24 PER SHARE

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