ヘリテージファイナンシャルの適時開示・決算・その他

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities and Exchange Act of 1934

Date of Report (Dated of earliest event reported): July 21, 2022

HERITAGE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Commission File Number 000-29480

Washington

91-1857900

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

201 Fifth Avenue SW,

Olympia

98501

(Address of principal executive offices)

(Zip Code)

(360) 943-1500

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12 (b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, no par value	HFWA	NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1934 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On July 21, 2022, Heritage Financial Corporation (“Heritage”) issued a press release announcing its financial results for the second quarter and year ended June 30, 2022.

A copy of the release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure

Heritage is filing an investor slide presentation that it reviewed in conjunction with its earnings release conference call on July 21, 2022.

A copy of the presentation materials is furnished herewith as Exhibit 99.2 and is incorporated herein by reference.

Item 8.01 Other Events

On July 21, 2022, Heritage issued a press release announcing a regular quarterly cash dividend of $0.21 per common share. The dividend will be paid on August 17, 2022 to shareholders of record at the close of business on August 3, 2022.

A copy of the release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibit is being filed herewith and this list shall constitute the exhibit index:


Exhibit 99.1						Press Release dated July 21, 2022 announcing financial results for the second quarter and year ended June 30, 2022 and cash dividend

Exhibit 99.2						Heritage Financial Corporation Presentation Materials

104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


						HERITAGE FINANCIAL CORPORATION

Date:
July 21, 2022						/S/ JEFFREY J. DEUEL
						Jeffrey J. Deuel
						President and Chief Executive Officer
						(Duly Authorized Officer)

EX-99.1 2 a8-kexhibit991063022.htm EX-99.1 Document

FOR IMMEDIATE RELEASE

DATE: July 21, 2022

HERITAGE FINANCIAL ANNOUNCES SECOND QUARTER 2022 RESULTS AND DECLARES REGULAR CASH DIVIDEND

•Net income was $18.6 million, or $0.52 per diluted share, for the second quarter of 2022 compared to $19.8 million, or $0.56 per diluted share, for the first quarter of 2022 and $32.7 million, or $0.90 per diluted share, for the second quarter of 2021.

•Loans receivable grew $52.9 million, or 1.4% (5.6% annualized), in the second quarter of 2022; excluding SBA PPP loan repayments of $53.6 million, loans receivable grew $106.5 million, or 2.8% (11.2% annualized).

•Expanded our existing presence in the Portland-Vancouver MSA and gained an important entry into the Eugene, Oregon market through the hiring of four experienced banking teams, including commercial relationship managers, deposit relationship managers, support staff and leadership.

•Net interest margin increased to 3.04% for the second quarter of 2022 from 2.84% for the first quarter of 2022.

•The ratio of nonperforming assets to total assets decreased to 0.14% at June 30, 2022 compared to 0.22% at March 31, 2022 and 0.32% at December 31, 2021.

•Noninterest expense to average total assets, annualized, was 1.94% for the second quarter of 2022 compared to 1.95% for the first quarter of 2022 and 2.06% for the second quarter of 2021.

•Declared a regular cash dividend of $0.21 per common share on July 20, 2022.

Olympia, WA - Heritage Financial Corporation (NASDAQ GS: HFWA) (the “Company” or “Heritage”), the parent company of Heritage Bank (the "Bank"), today reported net income of $18.6 million for the second quarter of 2022 compared to $19.8 million for the first quarter of 2022 and $32.7 million for the second quarter of 2021. Diluted earnings per share for the second quarter of 2022 were $0.52 compared to $0.56 for the first quarter of 2022 and $0.90 for the second quarter of 2021.

Jeffrey J. Deuel, President and Chief Executive Officer of Heritage, commented, “We are pleased with the positive progress we are seeing in loan growth as well as the continuing improvement in the underlying credit quality of our loan portfolio. We are beginning to see the benefits of our asset sensitivity and core deposit base in the current rate environment, which is noticeable in our increased net interest margin this quarter.

We are also excited about the new teams we hired to expand our production capabilities in the Portland-Vancouver MSA and Eugene, Oregon. These are attractive markets for us to grow loans and deposits, and the teams of bankers are a natural fit with the Heritage culture.

During the second quarter, we closed on the financing of Northwest Housing Alternatives' (a leading Oregon-wide affordable housing provider headquartered in the Portland Metro area) 42-unit Trillium House Project in Warrenton, Oregon, a coastal community which is underserved in affordable housing. The construction loan was $11.6 million and the structure included our first Agricultural Worker Housing Tax Credit investment in addition to a Low Income Housing Tax Credit investment. We are pleased with the success of our efforts to positively impact housing in the markets we serve.”

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, 2022			March 31, 2022			June 30, 2021
	(Dollars in thousands, except per share amounts)
Net income	$	18,584		$	19,757		$	32,702
Pre-tax, pre-provision income (1)	$	21,357		$	19,762		$	26,166
Diluted earnings per share	$	0.52		$	0.56		$	0.90
Return on average assets (2)	1.01		%	1.08		%	1.85		%


	As of or for the Quarter Ended
	June 30, 2022			March 31, 2022			June 30, 2021
	(Dollars in thousands, except per share amounts)
Pre-tax, pre-provision return on average assets (1) (2)	1.16		%	1.08		%	1.48		%
Return on average common equity (2)	9.19		%	9.47		%	15.69		%
Return on average tangible common equity (1) (2)	13.68		%	13.83		%	22.94		%
Net interest margin (2)	3.04		%	2.84		%	3.44		%
Cost of total deposits (2)	0.09		%	0.09		%	0.10		%
Efficiency ratio	62.57		%	64.38		%	58.18		%
Noninterest expense to average total assets (2)	1.94		%	1.95		%	2.06		%
Total assets	$	7,316,467		$	7,483,814		$	7,105,672
Loans receivable, net	$	3,834,368		$	3,780,845		$	4,155,968
Total deposits	$	6,330,190		$	6,491,500		$	6,074,385
Loan to deposit ratio (3)	61.2		%	58.9		%	69.3		%
Book value per share	$	22.94		$	23.40		$	23.77
Tangible book value per share (1)	$	15.83		$	16.27		$	16.76
Tangible book value per share, excluding AOCI (1) (4)	$	17.59		$	17.25		$	16.32

(1) See Non-GAAP Financial Measures section herein.

(2) Annualized.

(3) Loans receivable divided by total deposits.

(4) Accumulated other comprehensive income or loss ("AOCI").

Balance Sheet

Cash and cash equivalents decreased $582.7 million, or 37.0%, to $994.1 million at June 30, 2022 from $1.58 billion at March 31, 2022 due primarily to the increase in investment securities and secondarily due to a decrease in deposits.

The following table provides information regarding our investment securities at the dates indicated:


	June 30, 2022				March 31, 2022
	Balance		% of Total		Balance		% of Total		Change		% Change
	(Dollars in thousands)
Investment securities available for sale, at fair value:
U.S. government and agency securities	$	65,668	3.6	%	$	39,555	2.7	%	$	26,113	66.0	%
Municipal securities	200,010		11.1		210,239		14.4		(10,229)		(4.9)
Residential CMO and MBS	398,156		22.1		358,409		24.5		39,747		11.1
Commercial CMO and MBS	493,620		27.4		404,505		27.7		89,115		22.0
Corporate obligations	5,978		0.3		2,009		0.1		3,969		197.6
Other asset-backed securities	24,156		1.3		25,207		1.7		(1,051)		(4.2)
Total	$	1,187,588	65.8	%	$	1,039,924	71.1	%	$	147,664	14.2	%

Investment securities held to maturity, at amortized cost:
U.S. government and agency securities	$	150,960	8.4	%	$	150,973	10.3	%	$	(13)	—	%

Residential CMO and MBS	159,007		8.8		54,486		3.7		104,521		191.8
Commercial CMO and MBS	305,686		17.0		216,754		14.9		88,932		41.0


Total	$	615,653	34.2	%	$	422,213	28.9	%	$	193,440	45.8	%

Total investment securities	$	1,803,241	100.0	%	$	1,462,137	100.0	%	$	341,104	23.3	%

Total investment securities increased $341.1 million, or 23.3%, to $1.80 billion at June 30, 2022 from $1.46 billion at March 31, 2022 due primarily to purchases to deploy excess liquidity into higher yielding assets.

The following table summarizes the Company's loans receivable, net at the dates indicated:


	June 30, 2022				March 31, 2022				Change
	Balance		% of Total		Balance		% of Total		Amount		%
	(Dollars in thousands)
Commercial business:
Commercial and industrial	$	698,828	18.0	%	$	651,523	17.1	%	$	47,305	7.3	%
SBA PPP	11,334		0.3		64,962		1.7		(53,628)		(82.6)
Owner-occupied commercial real estate ("CRE")	950,699		24.6		935,705		24.5		14,994		1.6
Non-owner occupied CRE	1,515,796		39.1		1,505,483		39.4		10,313		0.7
Total commercial business	3,176,657		82.0		3,157,673		82.7		18,984		0.6
Residential real estate	265,382		6.9		223,442		5.8		41,940		18.8
Real estate construction and land development:
Residential	90,546		2.3		83,529		2.2		7,017		8.4
Commercial and multifamily	128,060		3.3		138,583		3.6		(10,523)		(7.6)
Total real estate construction and land development	218,606		5.6		222,112		5.8		(3,506)		(1.6)
Consumer	213,419		5.5		217,951		5.7		(4,532)		(2.1)
Loans receivable	3,874,064		100.0	%	3,821,178		100.0	%	52,886		1.4
Allowance for credit losses on loans	(39,696)				(40,333)				637		(1.6)
Loans receivable, net	$	3,834,368			$	3,780,845			$	53,523	1.4	%

Loans receivable grew $52.9 million, or 1.4% (5.6% annualized), in the second quarter of 2022. New loans funded during the second and first quarter of 2022 were $242.4 million and $226.0 million, respectively, including purchased residential real estate loans of $27.3 million and $42.2 million, respectively. Loan repayments were $136.5 million during the second quarter of 2022 compared to $140.0 million in the first quarter of 2022, exclusive of SBA PPP loan repayments, net deferred fees, and net acquired discounts.

Total deposits decreased $161.3 million, or 2.5%, from March 31, 2022. The following table summarizes the Company's total deposits at the dates indicated:


	June 30, 2022				March 31, 2022				Change
	Balance		% of Total		Balance		% of Total		Amount		%
	(Dollars in thousands)
Noninterest demand deposits	$	2,325,139	36.7	%	$	2,393,972	36.9	%	$	(68,833)	(2.9)	%
Interest bearing demand deposits	1,977,527		31.3		2,018,032		31.1		(40,505)		(2.0)
Money market accounts	1,062,178		16.8		1,099,539		16.9		(37,361)		(3.4)
Savings accounts	654,577		10.3		651,541		10.0		3,036		0.5
Total non-maturity deposits	6,019,421		95.1		6,163,084		94.9		(143,663)		(2.3)
Certificates of deposit	310,769		4.9		328,416		5.1		(17,647)		(5.4)
Total deposits	$	6,330,190	100.0	%	$	6,491,500	100.0	%	$	(161,310)	(2.5)	%

During the second quarter of 2022, the Company repurchased $0.5 million, or 19,531 shares of its common stock at a weighted average price per share of $24.63, as compared to the repurchase of $2.0 million, or 80,559 shares of its common stock, at a weighted average price per share of $25.17, during the first quarter of 2022. As of June 30, 2022, there were 638,214 shares available for repurchase under the current repurchase plan.

Total stockholders' equity decreased $16.1 million during the second quarter of 2022 due primarily to a decrease in AOCI of $27.6 million following an increase in market interest rates during the quarter, which negatively impacted the fair value of our investment securities available for sale at June 30, 2022. AOCI has no effect on our regulatory capital ratios as the Company opted to exclude it from our common equity tier 1 capital calculations.

The Company and Bank continue to maintain capital levels in excess of the applicable regulatory requirements for them both to be categorized as “well-capitalized”. The following table summarizes capital ratios for the Company at the dates indicated:


	June 30, 2022		March 31, 2022		Change
Stockholders' equity to total assets	11.0	%	11.0	%	—	%
Tangible common equity to tangible assets (1)	7.9		7.9		—
Tangible common equity to tangible assets, excluding AOCI (1)	8.7		8.3		0.4
Common equity Tier 1 capital to risk-weighted assets (2)	13.2		13.4		(0.2)
Tier 1 leverage capital to average quarterly assets (2)	8.9		8.8		0.1
Tier 1 capital to risk-weighted assets (2)	13.6		13.9		(0.3)
Total capital to risk-weighted assets (2)	14.4		14.7		(0.3)

(1) See Non-GAAP Financial Measures section herein.

(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 following table provides detail on the changes in the allowance for credit losses ("ACL") on loans and the ACL on unfunded commitments ("Unfunded") and the related reversal of provision for credit losses for the periods indicated:


	As of or for the Quarter Ended
	June 30, 2022						March 31, 2022						June 30, 2021
	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	$	40,333	$	1,552	$	41,885	$	42,361	$	2,607	$	44,968	$	64,225	$	3,617	$	67,842
Reversal of provision for credit losses	(649)		(555)		(1,204)		(2,522)		(1,055)		(3,577)		(12,821)		(1,166)		(13,987)
Net recovery	12		—		12		494		—		494		158		—		158
Balance, end of period	$	39,696	$	997	$	40,693	$	40,333	$	1,552	$	41,885	$	51,562	$	2,451	$	54,013

The ACL on loans decreased compared to March 31, 2022 due primarily to a reduction of loans individually evaluated for losses and their related ACL. The ACL on Unfunded decreased due primarily to higher utilization rates on commercial and industrial lines of credit.

Credit Quality

Nonperforming assets decreased to 0.14% of total assets at June 30, 2022 compared to 0.22% of total assets at March 31, 2022. Nonperforming assets at both June 30, 2022 and March 31, 2022 consisted only of nonaccrual loans. Changes in nonaccrual loans during the periods indicated were as follows:


	Quarter Ended
	June 30, 2022		March 31, 2022		June 30, 2021
	(In thousands)
Balance, beginning of period	$	16,527	$	23,754	$	52,868
Additions	720		—		401
Net principal payments and transfers to accruing status	(5,964)		(3,804)		(2,093)
Payoffs	(691)		(3,369)		(15,835)
Charge-offs	(117)		(54)		—

Balance, end of period	$	10,475	$	16,527	$	35,341

Nonaccrual loans declined during the second quarter of 2022 due primarily to the transfer of two CRE loan relationships totaling $4.9 million back to accrual status.

Net Interest Income and Net Interest Margin

Net interest income increased $3.1 million, or 6.6%, compared to the first quarter of 2022 due primarily to increases in yields earned on investment securities and interest earning deposits following increases in market interest rates. The increase in yields was offset partially by a decrease in deferred SBA PPP loan fees recognized due to a decrease in the volume of forgiven SBA PPP loans.

Net interest income decreased $4.2 million, or 7.8%, compared to the second quarter of 2021 due primarily to the decrease in deferred SBA PPP loan fees recognized, offset partially by a higher average balance of taxable investment securities and higher yield earned on interest earning deposits.

The following table presents the loan yield and the impact of SBA PPP loans and the incremental accretion on purchased loans on this financial measure for the periods presented below:


	Quarter Ended
	June 30, 2022		March 31, 2022		June 30, 2021
Loan yield (GAAP)	4.30	%	4.41	%	4.62	%
Exclude impact from SBA PPP loans	(0.15)		(0.21)		(0.12)
Exclude impact from incremental accretion on purchased loans	(0.03)		(0.06)		(0.05)
Loan yield, excluding SBA PPP loans and incremental accretion on purchased loans (non-GAAP) (1)	4.12	%	4.14	%	4.45	%

(1) See Non-GAAP Financial Measures section.

The impact to loan yield from recoveries of interest and fees on loans classified as nonaccrual was one basis point during the second quarter of 2022 compared to 11 basis points during the first quarter of 2022 and 18 basis points during the second quarter of 2021.

Net interest margin increased to 3.04% for the second quarter of 2022 as compared to 2.84% for the first quarter of 2022 due primarily to a shift into higher yielding interest earning assets with a lower ratio of lower yielding interest earning deposits to total interest earning assets and secondarily due to higher yields on interest earning assets.

Net interest margin decreased from 3.44% for the second quarter of 2021 due primarily to the change in the mix of total interest earning assets into a higher proportion of lower yielding investment securities and interest earning deposits, resulting mostly from a significant decrease in SBA PPP loan balances.

Noninterest 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, 2022		March 31, 2022		June 30, 2021		Change		% Change		Change		% Change
	(Dollar amounts in thousands)
Service charges and other fees	$	2,391	$	2,296	$	2,067	$	95	4.1	%	$	324	15.7	%
Card revenue	2,332		2,441		2,338		(109)		(4.5)		(6)		(0.3)

Gain on sale of loans, net	219		241		1,003		(22)		(9.1)		(784)		(78.2)
Interest rate swap fees	26		279		209		(253)		(90.7)		(183)		(87.6)
Bank owned life insurance income	764		1,695		717		(931)		(54.9)		47		6.6
Gain on sale of other assets, net	—		204		724		(204)		(100.0)		(724)		(100.0)
Other income	1,284		1,382		1,239		(98)		(7.1)		45		3.6
Total noninterest income	$	7,016	$	8,538	$	8,297	$	(1,522)	(17.8)	%	$	(1,281)	(15.4)	%

Noninterest income decreased from the first quarter of 2022 due primarily to the recognition of a bank owned life insurance death benefit income of $1.0 million in the prior quarter.

Noninterest income decreased from the same period in 2021 due primarily to reduced gain on sale of loans, net as sales volume of secondary market mortgage loans declined and secondarily due to gain on sale of branches held for sale recognized during the second quarter of 2021.

Noninterest Expense

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, 2022		March 31, 2022		June 30, 2021		Change		% Change		Change		% Change
	(Dollar amounts in thousands)
Compensation and employee benefits	$	21,778	$	21,252	$	21,803	$	526	2.5	%	$	(25)	(0.1)	%
Occupancy and equipment	4,171		4,331		4,091		(160)		(3.7)		80		2.0
Data processing	4,185		4,061		3,998		124		3.1		187		4.7
Marketing	344		266		567		78		29.3		(223)		(39.3)
Professional services	529		699		1,037		(170)		(24.3)		(508)		(49.0)
State/municipal business and use tax	867		796		991		71		8.9		(124)		(12.5)
Federal deposit insurance premium	425		600		339		(175)		(29.2)		86		25.4

Amortization of intangible assets	704		704		797		—		—		(93)		(11.7)
Other expense	2,704		3,011		2,773		(307)		(10.2)		(69)		(2.5)
Total noninterest expense	$	35,707	$	35,720	$	36,396	$	(13)	—	%	$	(689)	(1.9)	%

Noninterest expense decreased slightly from the first quarter of 2022 due primarily to a reduction in several expense categories, offset partially by an increase in compensation and employee benefits related to the addition of commercial and relationship banking teams.

Noninterest expense decreased from the same period in 2021 due primarily to third-party expenses related to PPP loan forgiveness and higher legal costs related to loan collection efforts included in professional services expense for the second quarter of 2021.

Income Tax Expense

The following table presents the income tax expense and related metrics and the change for the periods indicated:


	Quarter Ended									Quarter Over Quarter Change					Prior Year Quarter Change
	June 30, 2022			March 31, 2022			June 30, 2021			Change			% Change		Change			% Change

	(Dollar amounts in thousands)
Income before income taxes	$	22,561		$	23,339		$	40,153		$	(778)		(3.3)	%	$	(17,592)		(43.8)	%
Income tax expense	$	3,977		$	3,582		$	7,451		$	395		11.0	%	$	(3,474)		(46.6)	%
Effective income tax rate	17.6		%	15.3		%	18.6		%	2.3		%	15.0	%	(1.0)		%	(5.4)	%

Income tax expense increased compared to the first quarter of 2022 due primarily to a higher effective income tax rate during the second quarter of 2022 following an increase in estimated annual pre-tax income for the year ended 2022, which decreased the impact of favorable permanent tax items such as tax-exempt investments, investments in bank owned life insurance and low-income housing tax credits.

Income tax expense decreased compared to the same period in 2021 primarily reflecting the change in income before income taxes earned between the periods.

Dividend

On July 20, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.21 per share. The dividend is payable on August 17, 2022 to shareholders of record as of the close of business on August 3, 2022.

Earnings Conference Call

The Company will hold a telephone conference call to discuss this earnings release on Thursday, July 21, 2022 at 11:00 a.m. Pacific time. To access the call, please dial (844) 200-6205 -- access code 476131 a few minutes prior to 11:00 a.m. Pacific time. The call will be available for replay through July 28, 2022 by dialing (866) 813-9403 -- access code 467910.

About Heritage Financial

Heritage Financial Corporation is an Olympia-based bank holding company with Heritage Bank, a full-service commercial bank, as its sole wholly-owned banking subsidiary. Heritage Bank has a branch network of 49 banking offices in Washington and Oregon. Heritage Bank does business under the Whidbey Island Bank name on Whidbey Island. Heritage’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.

Contact

Jeffrey J. Deuel, President and Chief Executive Officer, (360) 943-1500

Donald J. Hinson, Executive Vice President and Chief Financial Officer, (360) 943-1500

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 "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." 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 the Company’s actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels, and labor shortages including the effects of inflation, a potential recession or slowed economic growth caused by increasing political instability from acts of war including Russia’s invasion of Ukraine, as well as increasing oil prices and supply chain disruptions and market liquidity; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes, including as a result of the COVID-19 pandemic or the possibility of a new COVID-19 variant; and other factors described in Heritage's 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-which are available on our website at www.heritagebanknw.com and on the SEC's website at www.sec.gov. The Company cautions 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 the Company 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. The Company does not undertake and specifically disclaims 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. These risks could cause our actual results for 2022 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us, and could negatively affect the Company’s operating and stock price performance.

HERITAGE FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(Dollar amounts in thousands, except shares)


	June 30, 2022		March 31, 2022		December 31, 2021
Assets
Cash on hand and in banks	$	93,675	$	87,907	$	61,377
Interest earning deposits	900,380		1,488,815		1,661,915
Cash and cash equivalents	994,055		1,576,722		1,723,292
Investment securities available for sale, at fair value (amortized cost of $1,267,715, $1,085,016 and $883,832, respectively)	1,187,588		1,039,924		894,335
Investment securities held to maturity, at amortized cost (fair value of $559,312, $384,822 and $376,331, respectively)	615,653		422,213		383,393
Total investment securities	1,803,241		1,462,137		1,277,728
Loans held for sale	1,311		1,142		1,476
Loans receivable	3,874,064		3,821,178		3,815,662
Allowance for credit losses on loans	(39,696)		(40,333)		(42,361)
Loans receivable, net	3,834,368		3,780,845		3,773,301
Other real estate owned	—		—		—
Premises and equipment, net	77,164		78,737		79,370
Federal Home Loan Bank stock, at cost	8,916		8,916		7,933
Bank owned life insurance	120,646		119,929		120,196
Accrued interest receivable	15,908		14,582		14,657
Prepaid expenses and other assets	211,350		190,592		183,543
Other intangible assets, net	8,569		9,273		9,977
Goodwill	240,939		240,939		240,939
Total assets	$	7,316,467	$	7,483,814	$	7,432,412

Liabilities and Stockholders' Equity
Deposits	$	6,330,190	$	6,491,500	$	6,394,290

Junior subordinated debentures	21,326		21,253		21,180
Securities sold under agreement to repurchase	41,827		49,069		50,839
Accrued expenses and other liabilities	117,758		100,543		111,671
Total liabilities	6,511,101		6,662,365		6,577,980

Common stock	550,417		550,096		551,798
Retained earnings	316,732		305,581		293,238
Accumulated other comprehensive (loss) income, net	(61,783)		(34,228)		9,396
Total stockholders' equity	805,366		821,449		854,432
Total liabilities and stockholders' equity	$	7,316,467	$	7,483,814	$	7,432,412

Shares outstanding	35,103,929		35,102,372		35,105,779

HERITAGE FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollar amounts in thousands, except per share amounts)


	Quarter Ended						Six Months Ended
	June 30, 2022		March 31, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Interest Income
Interest and fees on loans	$	40,890	$	41,025	$	50,750	$	81,915	$	100,274
Taxable interest on investment securities	7,607		6,003		4,050		13,610		7,584
Nontaxable interest on investment securities	893		860		947		1,753		1,905
Interest on interest earning deposits	2,342		706		263		3,048		438
Total interest income	51,732		48,594		56,010		100,326		110,201
Interest Expense
Deposits	1,413		1,424		1,524		2,837		3,252
Junior subordinated debentures	239		194		186		433		373
Other borrowings	32		32		35		64		73
Total interest expense	1,684		1,650		1,745		3,334		3,698
Net interest income	50,048		46,944		54,265		96,992		106,503
Reversal of provision for credit losses	(1,204)		(3,577)		(13,987)		(4,781)		(21,186)
Net interest income after reversal of provision for credit losses	51,252		50,521		68,252		101,773		127,689
Noninterest Income
Service charges and other fees	2,391		2,296		2,067		4,687		3,959
Card revenue	2,332		2,441		2,338		4,773		4,435
Gain on sale of investment securities, net	—		—		—		—		29
Gain on sale of loans, net	219		241		1,003		460		2,373
Interest rate swap fees	26		279		209		305		361
Bank owned life insurance income	764		1,695		717		2,459		1,373
Gain on sale of other assets, net	—		204		724		204		746
Other income	1,284		1,382		1,239		2,666		3,272
Total noninterest income	7,016		8,538		8,297		15,554		16,548
Noninterest Expense
Compensation and employee benefits	21,778		21,252		21,803		43,030		44,004
Occupancy and equipment	4,171		4,331		4,091		8,502		8,545
Data processing	4,185		4,061		3,998		8,246		7,810
Marketing	344		266		567		610		1,080
Professional services	529		699		1,037		1,228		2,307
State/municipal business and use taxes	867		796		991		1,663		1,963
Federal deposit insurance premium	425		600		339		1,025		928

Amortization of intangible assets	704		704		797		1,408		1,594
Other expense	2,704		3,011		2,773		5,715		5,407
Total noninterest expense	35,707		35,720		36,396		71,427		73,638
Income before income taxes	22,561		23,339		40,153		45,900		70,599
Income tax expense	3,977		3,582		7,451		7,559		12,553
Net income	$	18,584	$	19,757	$	32,702	$	38,341	$	58,046

Basic earnings per share	$	0.53	$	0.56	$	0.91	$	1.09	$	1.61
Diluted earnings per share	$	0.52	$	0.56	$	0.90	$	1.08	$	1.60
Dividends declared per share	$	0.21	$	0.21	$	0.20	$	0.42	$	0.40
Average shares outstanding - basic	35,110,334		35,094,725		35,994,740		35,102,572		35,961,032
Average shares outstanding - diluted	35,409,524		35,412,098		36,289,464		35,412,722		36,268,861

HERITAGE FINANCIAL CORPORATION

FINANCIAL STATISTICS (Unaudited)

(Dollar amounts in thousands, except per share amounts)

Nonperforming Assets and Credit Quality Metrics:


	Quarter Ended									Six Months Ended
	June 30, 2022			March 31, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Allowance for Credit Losses on Loans:
Balance, beginning of period	$	40,333		$	42,361		$	64,225		$	42,361		$	70,185
Reversal of provision for credit losses on loans	(649)			(2,522)			(12,821)			(3,171)			(18,956)
Charge-offs:
Commercial business	(117)			(199)			(13)			(316)			(14)
Residential real estate	—			(30)			—			(30)			—
Real estate construction and land development	—			—			—			—			(1)
Consumer	(132)			(126)			(120)			(258)			(305)
Total charge-offs	(249)			(355)			(133)			(604)			(320)
Recoveries:
Commercial business	149			272			143			421			350
Residential real estate	—			3			—			3			—
Real estate construction and land development	59			8			4			67			20
Consumer	53			566			144			619			283
Total recoveries	261			849			291			1,110			653
Net recoveries (charge-offs)	12			494			158			506			333
Balance, end of period	$	39,696		$	40,333		$	51,562		$	39,696		$	51,562
Net (recoveries) charge-offs on loans to average loans, annualized	—		%	(0.05)		%	(0.01)		%	(0.03)		%	(0.02)		%


	June 30, 2022			March 31, 2022			December 31, 2021
Nonperforming Assets:
Nonaccrual loans:
Commercial business	$	10,475		$	15,956		$	23,107
Residential real estate	—			—			47
Real estate construction and land development	—			571			571
Consumer	—			—			29
Total nonaccrual loans	10,475			16,527			23,754
Other real estate owned	—			—			—
Nonperforming assets	$	10,475		$	16,527		$	23,754

Restructured performing loans	$	63,694		$	62,627		$	59,110
Accruing loans past due 90 days or more	2,036			1,318			293
ACL on loans to:
Loans receivable	1.02		%	1.06		%	1.11		%
Loans receivable, excluding SBA PPP loans (1)	1.03		%	1.07		%	1.15		%
Nonaccrual loans	378.96		%	244.04		%	178.33		%
Nonperforming loans to loans receivable	0.27		%	0.43		%	0.62		%
Nonperforming assets to total assets	0.14		%	0.22		%	0.32		%

(1) See Non-GAAP Financial Measures section herein.

Average Balances, Yields, and Rates Paid:


	Quarter Ended
	June 30, 2022						March 31, 2022						June 30, 2021
	Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)
Interest Earning Assets:
Loans receivable, net (2)(3)	$	3,812,045	$	40,890	4.30	%	$	3,773,325	$	41,025	4.41	%	$	4,402,868	$	50,750	4.62	%
Taxable securities	1,450,328		7,607		2.10		1,271,557		6,003		1.91		799,023		4,050		2.03
Nontaxable securities (3)	137,429		893		2.61		146,409		860		2.38		160,489		947		2.37
Interest earning deposits	1,213,156		2,342		0.77		1,503,287		706		0.19		964,791		263		0.11
Total interest earning assets	6,612,958		51,732		3.14	%	6,694,578		48,594		2.94	%	6,327,171		56,010		3.55	%
Noninterest earning assets	772,658						740,209						752,034
Total assets	$	7,385,616					$	7,434,787					7,079,205
Interest Bearing Liabilities:
Certificates of deposit	$	321,926	$	324	0.40	%	$	336,353	$	338	0.41	%	$	381,417	$	481	0.51	%
Savings accounts	652,407		88		0.05		646,684		87		0.05		591,616		89		0.06
Interest bearing demand and money market accounts	3,067,373		1,001		0.13		3,066,320		999		0.13		2,836,717		954		0.13
Total interest bearing deposits	4,041,706		1,413		0.14		4,049,357		1,424		0.14		3,809,750		1,524		0.16
Junior subordinated debentures	21,287		239		4.50		21,214		194		3.71		20,986		186		3.55
Securities sold under agreement to repurchase	48,272		32		0.27		50,017		32		0.26		43,259		35		0.32

Total interest bearing liabilities	4,111,265		1,684		0.16	%	4,120,588		1,650		0.16	%	3,873,995		1,745		0.18	%
Noninterest demand deposits	2,349,746						2,359,451						2,261,373
Other noninterest bearing liabilities	113,644						108,663						108,076
Stockholders’ equity	810,961						846,085						835,761
Total liabilities and stockholders’ equity	$	7,385,616					$	7,434,787					$	7,079,205
Net interest income and spread			$	50,048	2.98	%			$	46,944	2.78	%			$	54,265	3.37	%
Net interest margin					3.04	%					2.84	%					3.44	%

(1)Annualized; average balances are calculated using daily balances.

(2)Average loans receivable, net includes loans held for sale and loans classified as nonaccrual, which carry a zero yield. Interest earned on loans receivable, net includes the amortization of net deferred loan fees of $2.4 million, $3.5 million and $8.2 million for the second quarter of 2022, first quarter of 2022 and second quarter of 2021, respectively.

(3)Yields on tax-exempt loans and securities have not been stated on a tax-equivalent basis.


	Six Months Ended
	June 30, 2022						June 30, 2021
	Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)
Interest Earning Assets:
Loans receivable, net (2) (3)	$	3,792,792	$	81,915	4.36	%	$	4,446,442	$	100,274	4.55	%
Taxable securities	1,361,437		13,610		2.02		736,990		7,584		2.08
Nontaxable securities (3)	141,894		1,753		2.49		162,192		1,905		2.37
Interest earning deposits	1,357,420		3,048		0.45		840,030		438		0.11
Total interest earning assets	6,653,543		100,326		3.04	%	6,185,654		110,201		3.59	%
Noninterest earning assets	756,523						754,533
Total assets	$	7,410,066					$	6,940,187
Interest Bearing Liabilities:
Certificates of deposit	$	329,100	$	662	0.41	%	$	387,310	$	1,040	0.54	%
Savings accounts	649,562		175		0.05		575,942		184		0.06
Interest bearing demand and money market accounts	3,066,849		2,000		0.13		2,784,714		2,028		0.15
Total interest bearing deposits	4,045,511		2,837		0.14		3,747,966		3,252		0.17
Junior subordinated debentures	21,250		433		4.11		20,950		373		3.59
Securities sold under agreement to repurchase	49,140		64		0.26		41,676		73		0.35

Total interest bearing liabilities	4,115,901		3,334		0.16	%	3,810,592		3,698		0.20	%
Noninterest demand deposits	2,354,571						2,183,638
Other noninterest bearing liabilities	111,167						114,542
Stockholders’ equity	828,427						831,415
Total liabilities and stockholders’ equity	$	7,410,066					$	6,940,187
Net interest income and spread			$	96,992	2.88	%			$	106,503	3.39	%
Net interest margin					2.94	%					3.47	%

(1)Average balances are calculated using daily balances.

(2)Average loan receivable, net includes loans held for sale and loans classified as nonaccrual, which carry a zero yield. Interest earned on loans receivable, net includes the amortization of net deferred loan fees of $5.8 million and $15.4 million for the six months ended June 30, 2022 and 2021, respectively.

(3)Yields on tax-exempt loans and securities have not been stated on a tax-equivalent basis.

HERITAGE FINANCIAL CORPORATION

QUARTERLY FINANCIAL STATISTICS (Unaudited)

(Dollar amounts in thousands, except per share amounts)


	Quarter Ended
	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Earnings:
Net interest income	$	50,048		$	46,944		$	47,908		$	51,378		$	54,265
Reversal of provision for credit losses	(1,204)			(3,577)			(5,037)			(3,149)			(13,987)
Noninterest income	7,016			8,538			9,839			8,228			8,297
Noninterest expense	35,707			35,720			38,465			37,166			36,396
Net income	18,584			19,757			19,397			20,592			32,702
Pre-tax, pre-provision net income (3)	21,357			19,762			19,282			22,440			26,166
Basic earnings per share	$	0.53		$	0.56		$	0.56		$	0.58		$	0.91
Diluted earnings per share	$	0.52		$	0.56		$	0.55		$	0.58		$	0.90
Average Balances:
Loans receivable, net (1)	$	3,812,045		$	3,773,325		$	3,836,029		$	4,005,585		$	4,402,868
Total investment securities	1,587,757			1,417,966			1,170,315			1,051,281			959,512
Total interest earning assets	6,612,958			6,694,578			6,671,984			6,474,527			6,327,171
Total assets	7,385,616			7,434,787			7,403,597			7,214,960			7,079,205
Total interest bearing deposits	4,041,706			4,049,357			3,977,721			3,856,663			3,809,750
Total noninterest demand deposits	2,349,746			2,359,451			2,396,452			2,313,145			2,261,373
Stockholders' equity	810,961			846,085			849,383			855,708			835,761
Financial Ratios:
Return on average assets (2)	1.01		%	1.08		%	1.04		%	1.13		%	1.85		%
Pre-tax, pre-provision return on average assets (2)(3)	1.16			1.08			1.03			1.23			1.48
Return on average common equity (2)	9.19			9.47			9.06			9.55			15.69
Return on average tangible common equity (2) (3)	13.68			13.83			13.27			13.93			22.94
Efficiency ratio	62.57			64.38			66.61			62.35			58.18
Noninterest expense to average total assets (2)	1.94			1.95			2.06			2.04			2.06
Net interest spread (2)	2.98			2.78			2.79			3.08			3.37
Net interest margin (2)	3.04			2.84			2.85			3.15			3.44

(1) Average loan receivable, net includes loans held for sale.

(2) Annualized.

(3) See Non-GAAP Financial Measures section herein.


	As of or for the Quarter Ended
	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Select Balance Sheet:
Total assets	$	7,316,467		$	7,483,814		$	7,432,412		$	7,259,038		$	7,105,672
Loans receivable, net	3,834,368			3,780,845			3,773,301			3,905,567			4,155,968
Total investment securities	1,803,241			1,462,137			1,277,728			1,072,600			1,049,524
Deposits	6,330,190			6,491,500			6,394,290			6,229,017			6,074,385
Noninterest demand deposits	2,325,139			2,393,972			2,343,909			2,312,707			2,269,020
Stockholders' equity	805,366			821,449			854,432			848,404			855,984
Financial Measures:
Book value per share	$	22.94		$	23.40		$	24.34		$	24.13		$	23.77
Tangible book value per share (1)	15.83			16.27			17.19			16.97			16.76
Tangible book value per share, excluding AOCI (1)	17.59			17.25			16.92			16.55			16.32
Stockholders' equity to total assets	11.0		%	11.0		%	11.5		%	11.7		%	12.0		%
Tangible common equity to tangible assets (1)	7.9			7.9			8.4			8.5			8.8
Tangible common equity to tangible assets, excluding AOCI (1)	8.7			8.3			8.3			8.3			8.6
Loans to deposits ratio	61.2			58.9			59.7			63.5			69.3
Regulatory Capital Ratios:
Common equity Tier 1 capital to risk-weighted assets(2)	13.2		%	13.4		%	13.5		%	13.3		%	13.6		%
Tier 1 leverage capital to average assets(2)	8.9		%	8.8		%	8.7		%	8.8		%	9.1		%
Tier 1 capital to risk-weighted assets(2)	13.6		%	13.9		%	13.9		%	13.8		%	14.0		%
Total capital to risk-weighted assets(2)	14.4		%	14.7		%	14.8		%	14.8		%	15.1		%
Credit Quality Metrics:
ACL on loans to:
Loans receivable	1.02		%	1.06		%	1.11		%	1.22		%	1.23		%
Loans receivable, excluding SBA PPP loans (1)	1.03			1.07			1.15			1.31			1.41
Nonperforming loans	378.96			244.04			178.33			186.60			145.90
Nonperforming loans to loans receivable	0.27			0.43			0.62			0.65			0.84
Nonperforming assets to total assets	0.14			0.22			0.32			0.36			0.50
Net (recoveries) charge-offs on loans to average loans receivable	—			(0.05)			0.05			0.04			(0.01)
Criticized Loans by Credit Quality Rating:
Special mention	$	72,062		$	63,269		$	71,020		$	90,554		$	100,317
Substandard	94,419			111,300			112,450			126,694			135,374
Other Metrics:
Number of banking offices	49			49			49			53			53
Average number of full-time equivalent employees	765			751			782			813			822
Deposits per branch	$	129,188		$	132,480		$	130,496		$	117,529		$	114,611
Average assets per full-time equivalent employee	9,654			9,900			9,468			8,874			8,612

(1) See Non-GAAP Financial Measures section herein.

(2) Current quarter ratios are estimates pending completion and filing of the Company’s regulatory reports.

HERITAGE FINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES (Unaudited)

(Dollar amounts in thousands, except per share amounts)

This earnings release contains certain financial measures not presented in accordance with 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 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 measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of the GAAP and non-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. Additionally, recent changes in market interest rates introduced significant volatility in the unrealized gain or loss of investment securities available for sale ("UGL") and the related AOCI. Management excluded UGL and AOCI from tangible assets and tangible common equity, respectively, to improve comparability of capital levels as UGL and AOCI are excluded from the calculation of regulatory capital ratios.


	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share:
Total stockholders' equity (GAAP)	$	805,366		$	821,449		$	854,432		$	848,404		$	855,984
Exclude intangible assets	(249,508)			(250,212)			(250,916)			(251,675)			(252,433)
Tangible common equity (non-GAAP)	$	555,858		$	571,237		$	603,516		$	596,729		$	603,551
Exclude AOCI	61,783			34,228			(9,396)			(14,734)			(16,061)
Tangible common equity, excluding AOCI (non-GAAP)	$	617,641		$	605,465		$	594,120		$	581,995		$	587,490

Total assets (GAAP)	$	7,316,467		$	7,483,814		$	7,432,412		$	7,259,038		$	7,105,672
Exclude intangible assets	(249,508)			(250,212)			(250,916)			(251,675)			(252,433)
Tangible assets (non-GAAP)	$	7,066,959		$	7,233,602		$	7,181,496		$	7,007,363		$	6,853,239
Exclude UGL, net of tax	61,783			34,228			(9,396)			(14,734)			(16,061)
Tangible assets, excluding UGL, net of tax (non-GAAP)	$	7,128,742		$	7,267,830		$	7,172,100		$	6,992,629		$	6,837,178

Stockholders' equity to total assets (GAAP)	11.0		%	11.0		%	11.5		%	11.7		%	12.0		%
Tangible common equity to tangible assets (non-GAAP)	7.9		%	7.9		%	8.4		%	8.5		%	8.8		%
Tangible common equity to tangible assets, excluding AOCI (non-GAAP)	8.7		%	8.3		%	8.3		%	8.3		%	8.6		%

Shares outstanding	35,103,929			35,102,372			35,105,779			35,166,599			36,006,560

Book value per share (GAAP)	$	22.94		$	23.40		$	24.34		$	24.13		$	23.77
Tangible book value per share (non-GAAP)	$	15.83		$	16.27		$	17.19		$	16.97		$	16.76
Tangible book value per share, excluding AOCI (non-GAAP)	$	17.59		$	17.25		$	16.92		$	16.55		$	16.32

The Company considers presenting the ratio of ACL on loans to loans receivable, excluding SBA PPP loans, to be a useful measurement in evaluating the adequacy of the Company's ACL on loans as the balance of SBA PPP loans was significant to the loan portfolio; however, since SBA PPP loans are guaranteed by the SBA, the Company has not provided an ACL on loans for these loans.


	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
ACL on Loans to Loans Receivable, excluding SBA PPP Loans:
Allowance for credit losses on loans	$	39,696		$	40,333		$	42,361		$	48,317		$	51,562

Loans receivable (GAAP)	$	3,874,064		$	3,821,178		$	3,815,662		$	3,953,884		$	4,207,530
Exclude SBA PPP loans	(11,334)			(64,962)			(145,840)			(266,896)			(544,250)
Loans receivable, excluding SBA PPP loans (non-GAAP)	$	3,862,730		$	3,756,216		$	3,669,822		$	3,686,988		$	3,663,280

ACL on loans to loans receivable (GAAP)	1.02		%	1.06		%	1.11		%	1.22		%	1.23		%
ACL on loans to loans receivable, excluding SBA PPP loans (non-GAAP)	1.03		%	1.07		%	1.15		%	1.31		%	1.41		%

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.


	Quarter Ended
	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Return on Average Tangible Common Equity, annualized:
Net income (GAAP)	$	18,584		$	19,757		$	19,397		$	20,592		$	32,702
Add amortization of intangible assets	704			704			759			758			797
Exclude tax effect of adjustment	(148)			(148)			(159)			(159)			(167)
Tangible net income (non-GAAP)	$	19,140		$	20,313		$	19,997		$	21,191		$	33,332

Average stockholders' equity (GAAP)	$	810,961		$	846,085		$	849,383		$	855,708		$	835,761
Exclude average intangible assets	(249,890)			(250,593)			(251,331)			(252,159)			(252,955)
Average tangible common stockholders' equity (non-GAAP)	$	561,071		$	595,492		$	598,052		$	603,549		$	582,806

Return on average common equity, annualized (GAAP)	9.19		%	9.47		%	9.06		%	9.55		%	15.69		%
Return on average tangible common equity, annualized (non-GAAP)	13.68		%	13.83		%	13.27		%	13.93		%	22.94		%

The Company believes that presenting pre-tax pre-provision income, which reflects its profitability before income taxes and provision for credit losses, and the pre-tax, pre-provision return on average assets, are useful measurements in assessing its operating income and expenses by removing the volatility that may be associated with credit loss provisions. The Company also believes that during a crisis such as the COVID-19 pandemic, this information is useful as the impact of the pandemic on credit loss provisions of various institutions has varied based on the geography of the communities served by a particular institution and the decision to adopt or defer the current expected credit losses ("CECL") methodology required by Accounting Standards Update 2016-13.


	Quarter Ended
	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Pre-tax, Pre-provision Income and Pre-tax, Pre-provision Return on Average Assets, annualized:
Net income (GAAP)	$	18,584		$	19,757		$	19,397		$	20,592		$	32,702
Add income tax expense	3,977			3,582			4,922			4,997			7,451
Add reversal of provision for credit losses	(1,204)			(3,577)			(5,037)			(3,149)			(13,987)
Pre-tax, pre-provision income (non-GAAP)	$	21,357		$	19,762		$	19,282		$	22,440		$	26,166

Average total assets (GAAP)	$	7,385,616		$	7,434,787		$	7,403,597		$	7,214,960		$	7,079,205

Return on average assets, annualized (GAAP)	1.01		%	1.08		%	1.04		%	1.13		%	1.85		%
Pre-tax, pre-provision return on average assets (non-GAAP)	1.16		%	1.08		%	1.03		%	1.23		%	1.48		%

The Company believes presenting loan yield excluding the effect of discount accretion on purchased loans is useful in assessing the impact of acquisition accounting on loan yield as the effect of loan discount accretion is expected to decrease as the acquired loans mature or roll off its balance sheet. Incremental accretion on purchased loans represents the amount of interest income recorded on purchased loans in excess of the contractual stated interest rate in the individual loan notes due to incremental accretion of purchased discount or premium. Purchased discount or premium is the difference between the contractual loan balance and the fair value of acquired loans at the acquisition date, or as modified by the adoption of CECL. The purchased discount is accreted into income over the remaining life of the loan. The impact of incremental accretion on loan yield will change during any period based on the volume of prepayments, but it is expected to decrease over time as the balance of the purchased loans decreases.

Similarly, presenting loan yield excluding the effect of SBA PPP loans is useful in assessing the impact of these special program loans that have substantially decreased within a short time frame.


	Quarter Ended
	June 30, 2022			March 31, 2022			June 30, 2021
Loan Yield, excluding SBA PPP Loans and Incremental Accretion on Purchased Loans, annualized:
Interest and fees on loans (GAAP)	$	40,890		$	41,025		$	50,750
Exclude interest and fees on SBA PPP loans	(1,782)			(3,081)			(10,003)
Exclude incremental accretion on purchased loans	(270)			(584)			(495)
Adjusted interest and fees on loans (non-GAAP)	$	38,838		$	37,360		$	40,252

Average loans receivable, net (GAAP)	$	3,812,045		$	3,773,325		$	4,402,868
Exclude average SBA PPP loans	(34,090)			(109,594)			(777,156)
Adjusted average loans receivable, net (non-GAAP)	$	3,777,955		$	3,663,731		$	3,625,712

Loan yield, annualized (GAAP)	4.30		%	4.41		%	4.62		%
Loan yield, excluding SBA PPP loans and incremental accretion on purchased loans, annualized (non-GAAP)	4.12		%	4.14		%	4.45		%

EX-99.2 3 investorpresentation06.htm EX-99.2 investorpresentation06

INVESTOR PRESENTATION Q2 2022

2 Factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements, include, but are not limited to, the following: • the U.S. and global economies, and consumer and corporate customers, including economic activity, market liquidity, employment levels and labor shortages, including the effects of inflation, a potential recession or slowed economic growth caused by the increasing political instability from acts of war including Russia’s invasion of Ukraine, as well as increasing oil prices and supply chain disruptions ; • the credit risks of lending activities, including changes in the interest rate environment and trend of loan delinquencies and write-offs. In addition, changes in our allowance for credit losses ("ACL") on loans and provision for credit losses on loans may be effected by deterioration in economic conditions, which may lead to increased losses and nonperforming assets in our loan portfolio, and may result in our ACL on loans no longer being adequate to cover actual losses, and require us to increase our ACL on loans; • changes in economic conditions either nationally or in our market areas; • changes in the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; the transition away from LIBOR toward new interest rate benchmarks; • the risks related to acquiring assets in or entering markets in which we have not previously operated and may not be familiar; • fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas; • results of examinations of us by the bank regulators, including the possibility that any such regulatory authority may, among other things, initiate an enforcement action against the Company or our bank subsidiary which could require us to increase our ACL on loans, write-down assets, change our regulatory capital position, affect our ability to borrow funds or maintain or increase deposits, or impose additional requirements on us, any of which could affect our ability to continue our growth through mergers, acquisitions or similar transactions and adversely affect our liquidity and earnings; • our ability to control operating costs and expenses; • 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; • staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; • disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; • our ability to retain key members of our senior management team; • costs and effects of litigation, including settlements and judgments; • our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames or at all, and any goodwill charges related thereto and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, which might be greater than expected; • increased competitive pressures among financial service companies; • adverse changes in the securities markets; • inability of key third-party providers to perform their obligations to us; • changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the FASB, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods and as a result of the CARES Act and the CA Act; and • other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services, including from the CARES Act, CA Act, the COVID-19 pandemic, the possibility of a new COVID-19 variant, vaccination efforts and the other risks detailed from time to time in our filings with the SEC including our Annual Form 10-K and Quarterly Form 10-Qs. The Company cautions readers not to place undue reliance on any forward-looking statements. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. The Company does not undertake and specifically disclaims 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. These risks could cause our actual results for future periods to differ materially from those expressed in any forward-looking statements by, or on behalf of, us, and could negatively affect the Company’s operating results and stock price performance. All dollars throughout the entire presentation are in thousands unless otherwise noted, except share amounts. FORWARD LOOKING STATEMENTS

COMPANY OVERVIEW

4 OVERVIEW Overview NASDAQ symbol HFWA Stock price $25.94 Market capitalization $910.6 million Institutional ownership 80.1% Headquarters Olympia, WA # of branches 49 Year established 1927 Q2 2022 Financial Highlights Assets $7.32 billion Deposits $6.33 billion Loans receivable $3.87 billion Net income (GAAP) $18.6 million Pre-tax, pre-provision income (non-GAAP) $21.4 million Net interest margin 3.04% Efficiency ratio 62.57% Tier 1 leverage ratio 8.9% Total risk based capital ratio 14.4% – Map obtained from S&P Global Market Intelligence; certain locations of branches overlap on the map. – Market information as of July 6, 2022. – Refer to Appendix for calculation of non-GAAP financial measure. – Eugene, OR branch anticipated to open In August 2022. HFWA Branch Seattle-Tacoma-Bellevue MSA Portland-Vancouver-Hillsboro MSA Tacoma

5 COMPANY STRATEGY Allocate capital to organically grow our core banking business Ÿ Successful hiring of individuals and teams of bankers in high-growth and dynamic Seattle and Portland markets as well as other key markets in and adjacent to our current footprint Ÿ Disciplined approach to concentration risk and active portfolio management Improve operational efficiencies and rationalize branch network Ÿ Achieving increased efficiencies with operational scale, internal focus on improving processes and technology solutions, including improvement in the overhead ratio to 1.94% during Q2 2022 compared to 2.06% for the same quarter in 2021 Ÿ Closed/Consolidated 35 branches since the beginning of 2010, including 12 branches in 2021 Generate stable profitability and risk adjusted returns Ÿ 1.01% return on average assets and 9.19% return on average equity in Q2 2022, annualized Ÿ Five-year growth in tangible book value, excluding AOCI (non-GAAP) of $5.14, or 41.3%, to $17.59 at June 30, 2022 from $12.45 at June 30, 2017 Active and disciplined in M&A Ÿ Be the "acquirer of choice" in the Pacific Northwest Ÿ Most acquisitive bank in Oregon and Washington since 2013 with 5 acquisitions Ÿ Target Metrics = IRR of >15% with earnbacks < 3 years Maintain conservative underwriting standards and actively manage the loan portfolio Ÿ Long track record of strong underwriting with conservative risk profile Ÿ Disciplined approach to concentration risk Ÿ Nonaccrual loans decreased 55.9% since December 31, 2021 to 0.14% of total assets Focus on core deposits is key to franchise value over the long term Ÿ 36.7% noninterest demand deposits to total deposits Ÿ Noninterest demand deposit CAGR of 22% since 2017 Ÿ 0.09% cost of total deposits; top 25% performance among US publicly traded banks Proactive capital management Ÿ History of increasing regular dividends and utilizing special dividends to manage capital Ÿ Repurchases totaled $2.5 million, or 100,090 shares, of common stock YTD 2022. Repurchases in 2021 totaled $22.1 million, or 904,972 shares of common stock, and represented approximately 2.5% of common stock outstanding at December 31, 2020 Ÿ Strong capital ratios: Tier 1 leverage ratio = 8.9%; Total risk based capital ratio = 14.4% – Refer to Appendix for calculation of non-GAAP financial measure. – Comparable cost of total deposits information provided by S&P Global Market Intelligence for the first quarter of 2022 and includes banks nationwide with shares on NASDAQ or NYSE and total assets less than $100 billion; excluding pending merger targets. – Current quarter capital ratios are estimates pending completion and filing of the Company's regulatory reports.

6 TECHNOLOGY INVESTMENT Objective: Invest in technologies that enable Community Banking @ Scale HeritageONE Technology convergence & omni- channel experiences Ÿ Cutting-edge, proprietary ecosystem for integrating processes and technologies to create highly converged, omni-channel customer experiences Ÿ Designed to minimize the cost of internal solution development and accelerate the Bank’s ability to integrate with best of breed vendor solutions Ÿ Investment in JAM FINTOP Blockchain fund, providing access to early-stage innovations in blockchain-based solutions; exploring opportunities to make blockchain enabled services native to the HeritageONE ecosystem 2022-2024 Roadmap Integration and process efficiency Ÿ Continued investment in HeritageONE based solutions, expanding the capabilities of existing tools and adding several new tools to drive efficiency and unify customer- experiences Ÿ Enhance digital account opening capabilities in partnership with Q2; unified call, chat and self-service IVR solution in partnership with Cisco Ÿ Customize online banking and call center platforms to leverage data to drive personalized and omni-channel experiences Key Outcomes Community Banking @ Scale Ÿ Heritage Bank positioned to be a technology leader among Community Banks Ÿ Next generation front & back office integration delivering efficiency, consistency and scalability Ÿ Bankers equipped with better sales and service tools to meet growth & profitability objectives Ÿ Vastly improved customer experience for on-boarding & managing complex banking relationships

7 HeritageONE – Technology Ecosystem Proprietary middleware and application ecosystem. Foundation for all internal software development, integration & open- banking capabilities. 2020 Notify – Alerts & Reminders Event- & schedule-driven alerts & reminders. 2022 Data360 – Data Glossary Repository used to document applications in business and technical terms. 2022AM360 – Asset Management Automating & managing loan portfolio processes. 2023 DO360 – Deposit Operations Automating standard processes within Deposit Operations. 2024 Heritage360 – Customer Service Engine Hub for relationship management & service delivery. 2021 TM360 – Treasury Management Engine for automating & orchestrating TM related onboarding & service tasks. 2022 CL360 – Commercial Loan Origination Commercial Loan Origination System for managing & automating complex Commercial loan transactions. 2021 DocGen – Document Generation Template driven solution for static and dynamic documents and electronic communications. 2022 HeritageONE – Technology Innovation Proprietary technology ecosystem for converging product and service solutions to enable Community Banking @ Scale HeritageONE Data360 Heritage360 Doc Portal Sales Pipeline Service Engine Work Flows CL360 TM360 Marketing Campaigns AM360 Ent. Content Mgmt Digital Account Opening DO360 Call Center IVR Data Store Doc Gen Notify Banking Core Online Banking TECHNOLOGY STRATEGY

8 ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") PRACTICES We are committed to environmental and sustainability efforts, our human capital, our customers and strengthening the communities and markets in which we operate. Environment and Sustainability Ÿ Have a Green Team Committee focused on sustainability Ÿ Participating in an energy-saving pilot program with our Hillsboro branch in partnership with Energy Trust of Oregon and Strategic-Energy Management Ÿ Continually reducing our carbon footprint through branch consolidations and focus on recycling Ÿ Achieved a Gold Sustainability at Work certification for the Portland office Social Responsibility and Human Capital Ÿ Established a DEI ("Diversity, Equity, and Inclusion") Plan, a DEI Statement, a DEI Council and a DEI Officer who has been certified by the National Diversity Council and serves on the Washington Bankers Association DEI Committee. Ÿ Focusing on the safety, health and wellness of our employees as the COVID-19 pandemic continues to ebb and flow by continually monitoring infections and adapting operations to guidance from the Centers for Disease Control and state/ local health authorities Ÿ Donated $0.87 million and $1.26 million in YTD 2022 and FY 2021, respectively, through our Heritage Helps community investment and giving program, focused on driving positive impact in the areas of: education and youth development; health and human services; business and economic development; environmental stewardship; and social equity. Ÿ Financed more than $152 million of affordable housing projects in 2021 and $23 million YTD 2022 with a further $170 million anticipated through year end Ÿ Provided a $10 million loan to broaden the capacity of the Washington State Small Business Flex Fund Ÿ Awarded the American Bankers Association Community Commitment Award for Affordable Housing Ÿ In 2021, formed the Heritage Bank Community Development Entity with $50 million in capitalization Governance Ÿ Supervised by an engaged Board who actively monitor the policies and business strategies of the Company and are committed to the interests of the Company, its shareholders, employees and communities Ÿ Appointed two directors with technology industry experience during Q4 2021 Ÿ Utilized the Sustainability Accounting Standards Board Commercial Bank framework and industry guidance published by respected national and international organizations to identify risks and develop our ESG platform Ÿ Maintain effective governance practices including Corporate Governance Guidelines, Committee Charters, Stock Ownership Guidelines, a Code of Ethics Policy and a Whistleblower Policy PK 7/13/22 NOTE FOR Q3 FROM BRYAN: On the Community Development loan fund…we have not closed any new loans yet, but two moving to closing. Paul Dini would be a good source for information on closed loans if you need on (or Jen) We have two other items pending that could be added next quarter (if they happen). (A) we expect to close our first solar investment in Q3 through a partnership with Twain; (b) we anticipate receiving an official “yes” soon on the SSBCI RFP we submitted to the State of Washington. This will create a new loan program for underserved with up to $65MM of forgivable loans (over $700 million in total projects). Will provide further information if/when we get an official decision and award amount.

9 6.5% 15.2% 4.8% 12.6% $87,753 3.2% 12.1% $72,465 Seattle MSA Portland MSA USA 2022-2027 Proj, population growth 2022-2027 Proj. median household income growth Median household income $105,233 $87,753 $72,465 STRONG AND DIVERSE ECONOMIC LANDSCAPE Market Highlights Major Employers in the Pacific Northwest Market Demographics Seattle MSA Portland MSA 2.8% 14.2% Unemployment rate in May 2022 (compared to 3.9% for Washington state and 3.6% for USA) 2022-2027 proj. growth in household income for Washington state 3.1% 13.6% Unemployment rate in May 2022 (compared to 3.6% for Oregon state and 3.6% for USA) 2022-2027 proj. growth in household income for Oregon state – Economic data obtained from www.bls.gov, www.bea.gov and S&P Global Market Intelligence. Unemployment data reflects the BLS's latest monthly Economic New Release - Employment & Unemployment. MSA Tie-out of websites used: https://www.bls.gov/web/metro/laulrgma.htm https://www.bls.gov/web/laus/laumstcm.htm https://data.bls.gov/timeseries/LNS14000000

10 MAJOR MSA FUNDS UNDER MANAGEMENT Seattle MSA Funds Under Management = Loans + Deposits $2,770 $2,941 $3,845 $4,020 $4,960 $5,286 $5,322 $5,184 $1,476 $1,526 $1,995 $2,111 $2,650 $3,231 $3,274 $3,174 $1,294 $1,415 $1,850 $1,909 $1,936 $1,981 $2,009 $2,005 Deposits Total loans, excluding SBA PPP loans SBA PPP loans 2016 2017 2018 2019 2020 2021 Q1 2022 Q2 2022 – Prior period information includes branches that were closed or consolidated prior to June 30, 2022. – Loan information is provided gross of deferred fees and/or costs and acquired discount and/or premium. – Dollars in millions. Portland MSA Funds Under Management = Loans + Deposits $43 $112 $856 $907 $1,269 $1,197 $1,178 $1,187 $477 $498 $676 $723 $734 $719 $379 $409 $432 $443 $433 $465 Deposits Total loans, excluding SBA PPP loans SBA PPP loans 2016 2017 2018 2019 2020 2021 Q1 2022 Q2 2022

11 POTENTIAL GROWTH OPPORTUNITIES – Map obtained from S&P Global Market Intelligence. – Certain locations of bank headquarters overlap on the map. – Financial information as of the most recent quarter publicly available. • Long-term goal to build a PNW regional commercial community bank; potential opportunities for M&A and production team lift-outs in OR and ID in addition to WA. • HFWA positioned to be the acquiror of choice in the Pacific Northwest. • Significant number of banks remaining in HFWA footprint; further consolidation is expected. – 12 banks between $200 million and $500 million in assets – 18 banks between $500 million and $1.0 billion in assets – 15 banks between $1.0 billion and $3.5 billion in assets • Financial parameters include 15% IRR and earnback of < 3 years. Bank headquarters

12 Completed 2 FDIC deals Pierce Commercial Bank $211MM in assets Cowlitz Bank $345MM in assets Acquired Puget Sound Bancorp $639MM in assets Premier Commercial Bancorp $440MM in assets $1,015 $812 $1,369 $1,346 $1,340 $1,712 $3,651 $3,879 $4,113 $4,238 $5,553 $6,615 $7,432 $7,484 $7,316 $556 $319 $1,747 $1,079 $12.21 $12.99 $13.10 $13.16 $13.31 $15.02 $15.68 $16.08 $20.63 $22.10 $22.85 $24.34 $23.40 $22.94 $11.00 $12.03 $12.16 $12.23 $11.40 $10.73 $11.41 $11.86 $12.70 $13.54 $15.07 $15.77 $17.19 $16.27 $15.83$13.74 $14.78 $15.08 $16.92 $17.25 $17.59 Organic Acquired Assets Book value per share (GAAP) Tangible book value per share (non-GAAP) Tangible book value per share, excluding AOCI (non-GAAP) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q1 2022 Q2 2022 HISTORICAL GROWTH ORGANIC AND ACQUISITIVE Merged with Washington Banking Company $1.7B in assets Acquired Valley Community Bancshares $254MM in assets Northwest Commercial Bank $65MM in assets – Refer to Appendix for calculation of non-GAAP financial measures. – Dollars in millions, except per share amounts. – Accumulated other comprehensive income or loss ("AOCI") – Tangible book value per share, excluding AOCI approximates tangible book value per share for the periods prior to 2018. $16.88

13 DEPOSIT MARKET SHARE Washington & Oregon - 2008 Washington & Oregon - 2013 Washington & Oregon - 2021 Rank Institution (State) Deposits in Market Market Share Rank Institution (State) Deposits in Market Market Share Rank Institution (State) Deposits in Market Market Share 1 Bank of America Corporation (NC) $32,880,496 20.36% 1 Bank of America Corporation (NC) $34,290,015 19.44% 1 Bank of America Corporation (NC) $61,116,155 18.10% 2 U.S. Bancorp (MN) 18,200,191 11.27% 2 U.S. Bancorp (MN) 24,912,264 14.12% 2 U.S. Bancorp (MN) 45,768,910 13.55% 3 Washington Mutual Inc. (WA) 18,044,059 11.17% 3 Wells Fargo & Co. (CA) 22,985,222 13.03% 3 JPMorgan Chase & Co. (NY) 42,247,914 12.51% 4 Wells Fargo & Co. (CA) 13,983,430 8.66% 4 JPMorgan Chase & Co. (NY) 15,638,062 8.87% 4 Wells Fargo & Company (CA) 41,397,689 12.26% 5 KeyCorp (OH) 11,282,327 6.99% 5 KeyCorp (OH) 11,805,664 6.69% 5 KeyCorp (OH) 23,612,824 6.99% 6 Sterling Financial Corp. (WA) 6,314,532 3.91% 6 Washington Federal Inc. (WA) 6,216,841 3.52% 6 Umpqua Holdings Corporation (OR) 17,093,442 5.06% 7 Washington Federal Inc. (WA) 4,697,167 2.91% 7 Columbia Banking System Inc. (WA) 5,840,021 3.31% 7 Columbia Banking System, Inc. (WA) 14,544,320 4.31% 8 Umpqua Holdings Corp. (OR) 3,683,451 2.28% 8 Umpqua Holdings Corp. (OR) 5,499,385 3.12% 8 Banner Corporation (WA) 10,483,137 3.10% 9 Banner Corp. (WA) 3,511,650 2.17% 9 Sterling Financial Corp. (WA) 5,203,136 2.95% 9 Washington Federal, Inc. (WA) 9,702,254 2.87% 10 Frontier Financial Corp. (WA) 3,303,562 2.05% 10 Mitsubishi UFJ Financial Group Inc. 3,474,540 1.97% 10 W.T.B. Financial Corporation (WA) 7,858,982 2.33% 11 Columbia Banking System Inc. (WA) 2,401,217 1.49% 11 Banner Corp. (WA) 3,255,301 1.85% 11 Heritage Financial Corporation (WA) 6,083,484 1.80% 12 W.T.B. Financial Corp. (WA) 2,355,857 1.46% 12 W.T.B. Financial Corp. (WA) 3,180,411 1.80% 12 HomeStreet, Inc. (WA) 4,262,425 1.26% 13 West Coast Bancorp (OR) 2,082,385 1.29% 13 HomeStreet Inc. (WA) 1,612,978 0.91% 13 First Interstate BancSystem, Inc. (MT) 3,422,135 1.01% 14 HomeStreet Inc. (WA) 1,268,125 0.79% 14 SKBHC Holdings LLC (WA) 1,550,759 0.88% 14 BNP Paribas SA 3,167,645 0.94% 15 Cascade Bancorp (OR) 1,142,435 0.71% 15 Washington Banking Co. (WA) 1,410,804 0.80% 15 Mitsubishi UFJ Financial Group, Inc. 2,825,816 0.84% 16 AmericanWest Bancorp. (WA) 1,100,332 0.68% 16 Yakima Federal S&L Assoc. (WA) 1,402,048 0.79% 16 Peoples Bancorp (WA) 2,387,119 0.71% 17 Horizon Financial Corp. (WA) 1,097,107 0.68% 17 BNP Paribas SA 1,314,955 0.75% 17 FS Bancorp, Inc. (WA) 1,892,926 0.56% 18 Yakima Federal S&L Assoc. (WA) 1,094,393 0.68% 18 Heritage Financial Corp. (WA) 1,227,045 0.70% 18 Cashmere Valley Bank (WA) 1,872,322 0.55% 19 BNP Paribas SA 1,001,691 0.62% 19 Peoples Bancorp (WA) 1,119,301 0.63% 19 Coastal Financial Corporation (WA) 1,806,367 0.53% 20 Cascade Financial Corp. (WA) 993,356 0.62% 20 Cashmere Valley Bank (WA) 1,094,353 0.62% 20 HSBC Holdings plc 1,691,344 0.50% 21 City Bank (WA) 955,179 0.59% 21 Pacific Continental Corp. (OR) 1,074,590 0.61% 21 First Republic Bank (CA) 1,628,909 0.48% 22 Columbia Bancorp (OR) 939,992 0.58% 22 Opus Bank (CA) 968,148 0.55% 22 East West Bancorp, Inc. (CA) 1,563,575 0.46% 23 Venture Financial Group Inc. (WA) 916,882 0.57% 23 East West Bancorp Inc. (CA) 924,708 0.52% 23 Zions Bancorporation, N.A. (UT) 1,527,609 0.45% 24 First Financial Northwest Inc. (WA) 867,502 0.54% 24 Olympic Bancorp Inc. (WA) 807,112 0.46% 24 Timberland Bancorp, Inc. (WA) 1,522,879 0.45% 25 Peoples Bancorp (WA) 845,949 0.52% 25 HSBC Holdings PLC 801,732 0.45% 25 Yakima Federal S&L Association (WA) 1,495,450 0.44% 26 Cashmere Valley Financial Corp. (WA) 841,611 0.52% 26 Cascade Bancorp (OR) 799,971 0.45% 26 First Northwest Bancorp (WA) 1,472,533 0.44% 27 Heritage Financial Corp. (WA) 802,020 0.50% 27 Zions Bancorp. NA (UT) 774,168 0.44% 27 Olympic Bancorp, Inc. (WA) 1,437,456 0.43% 28 Liberty Financial Group Inc. (OR) 778,222 0.48% 28 Skagit Bancorp Inc. (WA) 666,659 0.38% 28 Riverview Bancorp, Inc. (WA) 1,423,933 0.42% 29 Washington Banking Co. (WA) 733,643 0.45% 29 Riverview Bancorp Inc. (WA) 660,249 0.37% 29 First Financial Northwest, Inc. (WA) 1,153,830 0.34% 30 First Indep. Investment Group Inc. (WA) 684,404 0.42% 30 First Financial Northwest Inc. (WA) 642,130 0.36% 30 Pacific Financial Corporation (WA) 1,144,452 0.34% 31 Pacific Continental Corp. (OR) 676,993 0.42% 31 First Fed. S&L Assoc. of Port Angeles (WA) 598,820 0.34% 31 Pacific Premier Bancorp, Inc. (CA) 934,222 0.28% 32 PremierWest Bancorp (OR) 664,006 0.41% 32 Timberland Bancorp Inc. (WA) 596,187 0.34% 32 Glacier Bancorp, Inc. (MT) 898,509 0.27% 33 Riverview Bancorp Inc. (WA) 630,220 0.39% 33 Pacific Financial Corp. (WA) 591,430 0.34% 33 Citizens Bancorp (OR) 893,931 0.26% 34 Olympic Bancorp Inc. (WA) 626,828 0.39% 34 Baker Boyer Bancorp (WA) 467,717 0.27% 34 Sound Financial Bancorp, Inc. (WA) 814,055 0.24% 35 Zions Bancorp. NA (UT) 571,565 0.35% 35 Olympia Federal S&L Association (WA) 464,913 0.26% 35 Summit Bank Group, Inc. (OR) 728,073 0.22% 36 Whitman Bancorp. Inc. (WA) 527,546 0.33% 36 Home Federal Bancorp Inc. (ID) 451,386 0.26% 36 First Citizens BancShares, Inc. (NC) 720,949 0.21% 37 Washington First Financial Group Inc. (WA) 514,572 0.32% 37 First Citizens BancShares Inc. (NC) 415,562 0.24% 37 People's Bank of Commerce (OR) 712,979 0.21% 38 First Fed. S&L Assoc. of Port Angeles (WA) 495,891 0.31% 38 Citizens Bancorp (OR) 404,324 0.23% 38 Baker Boyer Bancorp (WA) 688,811 0.20% 39 Skagit Bancorp Inc. (WA) 486,490 0.30% 39 Coastal Financial Corp. (WA) 349,343 0.20% 39 Olympia Federal S&L Association (WA) 673,112 0.20% 40 Timberland Bancorp Inc. (WA) 480,261 0.30% 40 Evergreen Federal Bank (OR) 335,918 0.19% 40 BEO Bancorp (OR) 661,989 0.20% Total For Institutions In Market $161,492,273 Total For Institutions In Market $176,371,225 Total For Institutions In Market $337,661,736 Out of 148 Institutions Out of 120 Institutions Out of 83 Institutions – Data obtained from S&P Global Market Intelligence as of June 30 for the year indicated.

FINANCIAL UPDATE

15 FINANCIAL UPDATE - Q2 2022 • Net income was $18.6 million, or $0.52 per diluted share, for the second quarter of 2022 compared to $19.8 million, or $0.56 per diluted share, for the first quarter of 2022 and $32.7 million, or $0.90 per diluted share, for the second quarter of 2021. • Loans receivable grew $52.9 million, or 1.4% (5.6% annualized), in the second quarter of 2022; excluding SBA PPP loan repayments of $53.6 million, loans receivable grew $106.5 million, or 2.8% (11.2% annualized). • Expanded our existing presence in the Portland-Vancouver MSA and gained an important entry into the Eugene, Oregon market through the hiring of four experienced banking teams, including commercial relationship managers, deposit relationship managers, support staff and leadership. • Net interest margin increased to 3.04% for the second quarter of 2022 from 2.84% for the first quarter of 2022. • The ratio of nonperforming assets to total assets decreased to 0.14% at June 30, 2022 compared to 0.22% at March 31, 2022 and 0.32% at December 31, 2021. • Noninterest expense to average total assets, annualized, was 1.94% for the second quarter of 2022 compared to 1.95% for the first quarter of 2022 and 2.06% for the second quarter of 2021. • Declared a regular cash dividend of $0.21 per common share on July 20, 2022.

16 $3,669 $4,336 $4,181 $3,793 $4,403 $4,006 $3,836 $3,773 $3,812 5.17% 4.44% 4.54% 4.36% 4.34% 4.18% 4.62% 4.64% 4.42% 4.41% 4.30% 4.51% 4.26% 4.13% 4.20% 4.15% Average loans Loan yield Loan yield, excl. SBA PPP (non-GAAP) 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Average Loan Balances and Loan Yields Commercial & industrial 18.0% SBA PPP 0.3% Owner- occupied CRE 24.6% Non-owner occupied CRE 39.1% Residential real estate 6.9%Construction & land development 5.6% Consumer 5.5% LOAN PORTFOLIO Current Quarter Loan Portfolio Composition Loan Portfolio Repricing Schedule (excluding SBA PPP loans) 35.7% 33.9% 30.6% 28.6% 26.0% 22.0% 20.3% 21.3% 22.4% 23.9% 42.3% 45.8% 48.1% 49.0% 50.1% Fixed rate Floating (<3 month repricing) Adjustable (>3 month repricing) 2019 2020 2021 Q1 2022 Q2 2022 – Loan yield calculation incorporates the average balance of loans receivable, net and loans held for sale. – Refer to Appendix for calculation of non-GAAP financial measure. – Dollars in millions. 4.62%

17 LOAN PORTFOLIO COMPOSITION $3,768 $4,469 $3,816 $3,821 $3,874 $852 $733 $622 $652 $699 $805 $857 $931 $936 $951 $1,289 $1,410 $1,493 $1,505 $1,516 $132 $123 $165 $223 $265 $275 $306 $227 $222 $219$415 $325 $232 $218 $213 $715 $146 Commercial & industrial Owner-occupied CRE Non-owner occupied CRE Residential real estate Construction & land development Consumer SBA PPP 2019 2020 2021 Q1 2022 Q2 2022 – Dollars in millions.

18 New Commitments Originated $23 $30 $23 $22 $43 $22 $27 $45 $75 $62 $152 $271 $329 $224 $284 $27 Consumer Residential Commercial, excl. SBA PPP SBA PPP Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 LOAN PRODUCTION – Dollars in millions. – Q1 2022 and Q2 2022 residential commitments originated include $42 million and $27 million of purchased loans, respectively.

19 LINE OF CREDIT ("LOC") UTILIZATION 35.06% 25.62% 25.17% 28.53% 30.90% 36.28% 32.91% 31.33% 31.34% 31.30% 45.73% 63.96% 46.66% 47.48% 45.62% Utilization Rate - Construction LOCs Utilization Rate - Consumer LOCs Utilization Rate - Commercial and Industrial Loan LOCs 2019 2020 2021 Q1 2022 Q2 2022

20 CHANGES IN LOANS RECEIVABLE $3,821,178 $(53,628) $242,427 $(138,808) $(7,000) $9,895 $3,874,064 Loans receivable at March 31, 2022 PPP prepayments and payoffs Loans originated Prepayments Maturities / Payoffs Net advances/ payments Loans receivable at June 30, 2022 $3,815,662 $(83,685) $226,003 $(144,789) $(19,814) $27,801 $3,821,178 Loans receivable at December 31, 2021 PPP prepayments and payoffs Loans originated Prepayments Payoffs Net advances/ payments Loans receivable at March 31, 2022 Change in loans - Q2 2022 Change in loans - Q1 2022

21 COMMERCIAL LOAN EXPOSURE Commercial Business Loans by Industry Exposure Industry Amount WARR at 12/31/2021 WARR at 3/31/2022 WARR at 6/30/2022 Real estate, rental and leasing $1,601,076 4.42 4.41 4.39 Health care and social assistance 331,555 4.52 4.53 4.49 Accommodation and food services 179,457 6.26 6.08 5.99 Retail trade 157,955 4.58 4.47 4.46 Construction 157,101 4.62 4.63 4.60 Other services (except Public administration) 104,144 4.65 4.58 4.56 Manufacturing 96,379 5.05 5.03 5.02 All other industries 537,656 4.50 4.48 4.41 Total $3,165,323 4.60 4.58 4.53 CRE Loans only by Collateral Type Collateral Type Amount WARR at 12/31/2021 WARR at 3/31/2022 WARR at 6/30/2022 Office $553,351 4.34 4.34 4.30 Industrial 369,307 4.39 4.40 4.42 Retail store / shopping center 272,526 4.62 4.59 4.58 Multi-family 220,061 4.32 4.29 4.26 Mixed use property 167,064 4.66 4.62 4.59 Motel / hotel 144,319 6.09 5.94 5.83 Single purpose 117,406 4.28 4.26 4.59 Warehouse 135,455 4.57 4.57 4.52 Mini-storage 149,297 4.78 4.59 4.22 Recreational / school 71,321 5.06 4.98 4.85 Other 266,388 4.66 4.68 4.67 Total $2,466,495 4.59 4.57 4.53 – Categorized by NAICS code. – Excludes SBA PPP loans. – WARR = Weighted average risk rating. Office 22.4% Industrial 15.0% Retail store / shopping center 11.0%Multi-family 8.9% Mixed use property 6.8% Motel / hotel 5.9% Single purpose 4.8% Warehouse 5.5% Mini-storage 6.1% Recreational / school 2.9% Other 10.7% Real estate and rental and leasing 50.6% Health care and social assistance 10.5% Accommodation and food services 5.7% Retail trade 5.0% Construction 5.0% Other Services (except Public administration) 3.3% Manufacturing 3.0% All other industries 16.9%

22 HIGHER RISK INDUSTRIES WITH ENHANCED MONITORING – Categorized by NAICS code and excluding SBA PPP loans. Hotels and other accomodation Restaurants and other food service Recreation and fitness related activities Amortized cost $126,749 $52,503 $25,591 % of Loans receivable, excluding SBA PPP 3.3% 1.4% 0.7% Unfunded commitment $10,046 $7,071 $2,451 % Secured by real estate 92.9% 67.9% 63.2% Weighted average risk rating 6.26 5.34 4.94 Average non-zero balance loan size $3,841 $362 $985 Amortized cost classified as nonaccrual $— $5,423 $— Amortized cost classified as performing TDR $26,482 $1,320 $868 Amortized cost of criticized loans $57,510 $9,325 $4,015 Past due 30+ days on accrual status $— $— $7

23 $45,366 $58,092 $23,754 $16,527 $10,475 Nonaccrual loans OREO Nonperforming assets to total assets 2019 2020 2021 Q1 2022 Q2 2022 0.82% 0.88% 0.32% 0.22% 0.14% NONPERFORMING ASSETS $841 0.09% 0.07% 0.01% (0.03)% (0.01)% 0.04% 0.05% (0.05)% —% Net charge-offs (recoveries) on loans to average loans, annualized 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022

24 CRITICIZED LOANS $142,796 $290,551 $183,470 $174,569 $166,481 $44,525 $58,092 $23,754 $16,527 $10,475 $49,412 $100,423 $88,696 $94,773 $83,944 $48,859 $132,036 $71,020 $63,269 $72,062 Substandard - nonaccrual Substandard - accrual Special mention 2019 2020 2021 Q1 2022 Q2 2022 Criticized Loans by Collateral Type Commercial & industrial 22.1% Owner- occupied CRE 23.1% Non-owner occupied CRE 48.4% Residential real estate 0.1% Construction & land development 4.8% Consumer 1.5% Criticized Loans by Loan Segment Motel / hotel 35.5% Office 8.0% Retail store / shopping center 6.8%Mixed use property 5.2% Elder care 5.1% Farms 5.0% Assisted Living 3.5% Restaurant 3.0% Industrial 2.8% Warehouse 2.5% Other CRE 5.8% Non-CRE 16.9%

25– Refer to Appendix for calculation of non-GAAP financial measure. $36,171 $70,185 $42,361 $40,333 $39,696 ACL on loans ($) ACL on loans / Loans (%) ACL on loans / Loans excl. SBA PPP (non-GAAP) (%) 2019 2020 2021 Q1 2022 Q2 2022 0.96% 1.57% 1.11% 1.06% 1.02% 1.87% 1.15% 1.07% 1.03% ALLOWANCE FOR CREDIT LOSSES ("ACL") ON LOANS

26 $4,461 $5,298 $6,090 $6,398 $6,071 $6,170 $6,374 $6,409 $6,391 0.37% 0.23% 0.10% 0.09% 0.10% 0.09% 0.09% 0.09% 0.09% Average deposits Cost of total deposits 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Deposit Composition DEPOSITS Deposit Balances and Cost of Total Deposits 31.8% 35.5% 36.7% 36.9% 36.7% 29.3% 30.6% 30.4% 31.1% 31.3% 16.4% 17.2% 17.5% 16.9% 16.8% 11.1% 9.6% 10.0% 10.0% 10.3% 11.4% 7.1% 5.4% 5.1% 4.9% Noninterest demand deposits Interest bearing demand deposits Money market accounts Savings accounts Certificates of deposit 2019 2020 2021 Q1 2022 Q2 2022 – Dollars in millions.

27 $952 $802 $1,278 $1,803 $1,050 $1,073 $1,278 $1,462 $1,803 $243 $153 $757 $717 $223 $100 $268 $290 $427 2.75% 2.40% 2.13% 2.06% 2.09% 2.13% 2.12% 1.96% 2.15% Portfolio yield New purchases 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Investment Balances and Investment Yield INVESTMENT PORTFOLIO Investment Portfolio Composition (at fair value) US government and agencies 11.1% Municipal securities 11.4% Residential CMO and MBS 31.6% Commercial CMO and MBS 44.2% Corporate obligations 0.3% Other asset- backed securities 1.4% 3.15 2.69 4.85 5.28 4.22 4.35 4.85 5.52 5.28 3.59 5.64 6.76 4.18 6.68 7.94 5.20 4.51 3.96 Duration - total portfolio Duration - new purchases only 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Portfolio Duration • Strong credit quality with 92% of portfolio invested in U.S. government and agency securities or AAA rated • 99% of portfolio is rated AA or better – Dollars in millions.

28 3.47% (0.48)% (0.31)% 0.16% 0.08% 0.02% 2.94% YTD Q2 2021 PPP loans Loan yield Investments Interest earning deposits Total interest bearing liabilities YTD Q2 2022 4.22% 3.63% 3.23% 2.94% 3.44% 3.15% 2.85% 2.84% 3.04% 4.12% 3.57% 3.18% 2.91% 3.41% 3.11% 2.83% 2.81% 3.02% NIM, excluding accretion on purchased loans (non-GAAP) Accretion 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 NET INTEREST MARGIN – Refer to Appendix for calculation of non-GAAP financial measures. 2.84% (0.07)% 0.07% 0.10% 0.10% 3.04% QTD Q1 2022 PPP loans Loan yield Investments Interest earning deposits Total interest bearing liabilities QTD Q2 2022 Change in Net Interest Margin QTD Q2 2022 vs. QTD Q1 2022 Change in Net Interest Margin YTD Q2 2022 vs. YTD Q2 2021 Net Interest Margin (GAAP) 0.00%

29 Asset Repricing Composition at June 30, 2022 Floating rate (<3 month repricing) Adjustable rate (>3 month repricing) Fixed rate Total Interest earning deposits $ 900,380 $ — $ — $ 900,380 Total investment securities, at fair value 122,517 9,906 1,614,477 1,746,900 Loans receivable (excluding SBA PPP) 922,658 1,002,958 1,937,114 3,862,730 Total interest earning assets $ 1,945,555 $ 1,012,864 $ 3,551,591 $ 6,510,010 % of total interest earning assets 29.9 % 15.6 % 54.6 % Total noninterest earning assets 806,457 Total assets $ 7,316,467 % of total assets 26.6 % 13.8 % 48.5 % INTEREST EARNING ASSETS Average Interest Earning Assets Composition 77.6% 67.6% 56.9% 55.9% 57.3% 55.8% 54.4% 54.7% 57.2% 10.7% 8.6% 1.1% 12.3% 6.1% 3.1% 1.6% 0.5% 20.3% 16.0% 15.8% 22.6% 15.2% 16.2% 17.5% 21.2% 24.0% 5.7% 18.7% 20.4% 15.2% 21.9% 25.0% 22.5% 18.3% Interest earning deposits Investment securities SBA PPP loans Loans receivable, net, excl. SBA PPP 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 2.1%

30 $67.6 $46.6 $98.0 $38.3 $85.4 $89.3 $91.1 $41.1 Net income (GAAP) PTPP income (non-GAAP) 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 $32.7 $20.6 $19.4 $19.8 $18.6 $26.2 $22.4 $19.3 $19.8 $21.4 PROFITABILITY TRENDS ROAE (GAAP) and ROATCE (non-GAAP) Noninterest Expense/Avg. Assets ROAA (GAAP) and PTPP ROAA (non-GAAP) 1.25% 0.74% 1.38% 1.04% 1.85% 1.13% 1.04% 1.08% 1.01% 1.58% 1.42% 1.28% 1.12% 1.48% 1.23% 1.03% 1.08% 1.16% ROAA (GAAP) PTPP ROAA (non-GAAP) 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Net Income (GAAP) and PTPP Income (non- GAAP), in millions 13.35% 8.98% 17.05% 13.76% 22.94% 13.93% 13.27% 13.83% 13.68% 8.56% 5.78% 11.64% 9.33% 15.69% 9.55% 9.06% 9.47% 9.19% ROAE (GAAP) ROATCE (non-GAAP) 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 2.71% 2.37% 2.09% 1.94% 2.06% 2.04% 2.06% 1.95% 1.94% 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 – Refer to Appendix for calculation of non-GAAP financial measures. – ROAA - Return on average assets – PTPP - Pre-tax, pre-provision – ROAE - Return on average equity – ROATCE - Return on average tangible common equity

31 10.2% 8.5% 8.3% 8.3% 8.7% 10.4% 8.9% 8.4% 7.9% 7.9% 14.6% 12.4% 11.5% 11.0% 11.0% Stockholders' equity to total assets (GAAP) Tangible common equity ("TCE") to total tangible assets (non-GAAP) TCE to total tangible assets, excluding AOCI (non-GAAP) 2019 2020 2021 Q1 2022 Q2 2022 12.8% 14.0% 14.8% 14.7% 14.4% 10.0% 10.0% 10.0% 10.0% 10.0% 2.8% 4.0% 4.8% 4.7% 4.4% Well-capitalized Excess capital 2019 2020 2021 Q1 2022 Q2 2022 – Current quarter ratios are estimates pending completion and filing of the Company's regulatory reports. – Refer to Appendix for calculation of non-GAAP financial measures. – Well-capitalized represents FDIC well-capitalized ratio threshold for banks. The minimum capital ratio requirement for Tier 1 leverage and Total risk based capital is 4.0% and 8.0%, respectively. – Brokered CD capacity limited to 15% of total deposits in accordance with Bank's Asset and Liability Management policy. 10.6% 9.0% 8.7% 8.8% 8.9% 5.0% 5.0% 5.0% 5.0% 5.0% 5.6% 4.0% 3.7% 3.8% 3.9% Well-capitalized Excess capital 2019 2020 2021 Q1 2022 Q2 2022 CAPITAL AND SOURCES OF LIQUIDITY Tier 1 Leverage Ratio Total Risk Based Capital Equity Ratios Primary and Secondary Sources of Liquidity Source June 30, 2022 Cash and cash equivalents 994,055 Unencumbered investment securities 1,144,768 FHLB and FRB borrowing availability 1,185,786 Fed fund lines 215,000 Brokered CD capacity 949,529 Total $4,489,138

SHAREHOLDER RETURN

33 TOTAL SHAREHOLDER RETURN Stock Summary Ticker HFWA Exchange NASDAQ Stock price $25.94 Market capitalization (in millions) $910.6 Dividend yield (regular dividend only) 3.24% Average Daily Volume (3 month) Average daily volume (shares) 168,014 Average daily volume ($000s) $4,358 52-Week High and Low Price 52-week high (January 19, 2022) 27.45 52-week low (November 30, 2021) 20.95 Per Share Tangible book value per share $15.83 EPS - 2022E $2.02 EPS - 2023E $2.28 Number of research analysts 6 Valuation Ratios Price / Tangible book value 163.8% Price / 2022E EPS 12.8x Price / 2023E EPS 11.4x Dividends Per Share Declared $0.63 $0.50 $0.53 $0.72 $0.61 $0.72 $0.84 $0.80 $0.81 $0.08 $0.10 $0.11 $0.12 $0.15 $0.18 $0.20 $0.20 $0.21$0.08 $0.11 $0.12 $0.13 $0.15 $0.18 $0.20 $0.20 $0.21 $0.09 $0.11 $0.12 $0.13 $0.15 $0.19 $0.20 $0.20 $0.21 $0.09 $0.11 $0.12 $0.13 $0.17 $0.19 $0.20 $0.21 $0.16 $0.10 $0.25 $0.10 $0.10 $0.10 Q1 Q2 Q3 Q4 Special dividends 2014 2015 2016 2017 2018 2019 2020 2021 2022 Diluted Earnings Per Share – Market information as of July 6, 2022. – Dividend information as of July 21, 2022. $1.08 $0.79 $1.25 $1.30 $1.39 $1.49 $1.83 $1.29 $2.73 $0.16 $0.32 $0.30 $0.31 $0.27 $0.45 $0.34 $0.70 $0.56$0.16 $0.29 $0.30 $0.40 $0.35 $0.43 -$0.17 $0.90 $0.52 $0.23 $0.32 $0.37 $0.35 $0.42 $0.48 $0.46 $0.58 $0.24 $0.32 $0.33 $0.33 $0.45 $0.47 $0.66 $0.55 Q1 Q2 Q3 Q4 2014 2015 2016 2017 2018 2019 2020 2021 2022

APPENDIX - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND QUARTERLY FINANCIAL STATISTICS

35 NON-GAAP FINANCIAL MEASURES 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 PTPP Income and PTPP ROAA: Net income (GAAP) $67,557 $46,570 $98,035 $38,341 $32,702 $20,592 $19,397 $19,757 $18,584 Exclude income tax expense 13,488 6,610 22,472 7,559 7,451 4,997 4,922 3,582 3,977 Exclude provision for (reversal of provision for) credit losses 4,311 36,106 (29,372) (4,781) (13,987) (3,149) (5,037) (3,577) (1,204) PTPP income (non-GAAP) $85,356 $89,286 $91,135 $41,119 $26,166 $22,440 $19,282 $19,762 $21,357 Average total assets $5,411,078 $6,293,622 $7,126,250 $7,410,066 $7,079,205 $7,214,960 $7,403,597 $7,434,787 $7,385,616 ROAA, annualized (GAAP) 1.25 % 0.74 % 1.38 % 1.04 % 1.85 % 1.13 % 1.04 % 1.08 % 1.01 % PTPP ROAA, annualized (non-GAAP) 1.58 % 1.42 % 1.28 % 1.12 % 1.48 % 1.23 % 1.03 % 1.08 % 1.16 % Loan Yield, excluding SBA PPP Loans, annualized: Interest and fees on loans (GAAP) $189,515 $192,417 $189,832 $81,915 $50,750 $46,863 $42,695 $41,025 $40,890 Exclude impact on loan yield from SBA PPP loan interest and fees — (19,472) (32,109) (4,863) (10,003) (8,041) (4,927) (3,081) (1,782) Adjusted interest and fees on loans (non- GAAP) $189,515 $172,945 $157,723 $77,052 $40,747 $38,822 $37,768 $37,944 $39,108 Average loans receivable, net (GAAP) $3,668,665 $4,335,564 $4,181,464 $3,792,792 $4,402,868 $4,005,585 $3,836,029 $3,773,325 $3,812,045 Exclude average SBA PPP loans — (589,635) (549,422) (71,633) (777,156) (392,570) (204,436) (109,594) (34,090) Adjusted average loans receivable, net (non-GAAP) $3,668,665 $3,745,929 $3,632,042 $3,721,159 $3,625,712 $3,613,015 $3,631,593 $3,663,731 $3,777,955 Loan yield, annualized (GAAP) 5.17 % 4.44 % 4.54 % 4.36 % 4.62 % 4.64 % 4.42 % 4.41 % 4.30 % Loan yield, excluding SBA PPP loans, annualized (non-GAAP) 5.17 % 4.62 % 4.34 % 4.18 % 4.50 % 4.26 % 4.13 % 4.20 % 4.15 % – PTPP - Pre-tax, pre-provision – ROAA - Return on average assets Q2 2021 is unlinked due to unfortunate rounding linking; easier to unlink than fix and it will be gone next quarter anyway

36 2019 2020 2021 2022 YTD Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 ROATCE: Net income (GAAP) $67,557 $46,570 $98,035 $38,341 $32,702 $20,592 $19,397 $19,757 $18,584 Add amortization of intangible assets 4,001 3,525 3,111 1,408 797 758 759 704 704 Exclude tax effect of adjustment (840) (740) (653) (296) (167) (159) (159) (148) (148) Tangible net income (non-GAAP) $70,718 $49,355 $100,493 $39,453 $33,332 $21,191 $19,997 $20,313 $19,140 Average stockholders' equity (GAAP) $789,502 $805,580 $842,067 $828,427 $835,761 $855,708 $849,383 $846,085 $810,961 Exclude average intangible assets (259,667) (255,898) (252,540) (250,239) (252,955) (252,159) (251,331) (250,593) (249,890) Average tangible common stockholders' equity (non-GAAP) $529,835 $549,682 $589,527 $578,188 $582,806 $603,549 $598,052 $595,492 $561,071 ROAE, annualized (GAAP) 8.56 % 5.78 % 11.64 % 9.33 % 15.69 % 9.55 % 9.06 % 9.47 % 9.19 % ROATCE, annualized (non-GAAP) 13.35 % 8.98 % 17.05 % 13.76 % 22.94 % 13.93 % 13.27 % 13.83 % 13.68 % Net Interest Margin, excluding Incremental Accretion on Purchased Loans, annualized: Net interest income (GAAP) $199,682 $200,997 $205,789 $96,992 $54,265 $51,378 $47,908 $46,944 $50,048 Exclude incremental accretion on purchased loans (4,876) (3,446) (2,638) (854) (495) (681) (387) (584) (270) Adjusted net interest income (non-GAAP) $194,806 $197,551 $203,151 $96,138 $53,770 $50,697 $47,521 $46,360 $49,778 Average total interest earning assets, net $4,729,885 $5,535,236 $6,381,048 $6,653,543 $6,327,171 $6,474,527 $6,671,984 $6,694,578 $6,612,958 Net interest margin, annualized (GAAP) 4.22 % 3.63 % 3.23 % 2.94 % 3.44 % 3.15 % 2.85 % 2.84 % 3.04 % Net interest margin, excluding incremental accretion on purchased loans, annualized (non-GAAP) 4.12 % 3.57 % 3.18 % 2.91 % 3.41 % 3.11 % 2.83 % 2.81 % 3.02 % NON-GAAP FINANCIAL MEASURES – ROAE - Return on average equity – ROATCE - Return on average tangible common equity

37 2019 2020 2021 Q1 2022 Q2 2022 Tangible Common Equity to Tangible Assets and Tangible Common Equity to Tangible Assets, excluding AOCI: Total stockholders' equity (GAAP) $809,311 $820,439 $854,432 $821,449 $805,366 Exclude intangible assets (257,552) (254,027) (250,916) (250,212) (249,508) Tangible common equity (non-GAAP) $551,759 $566,412 $603,516 $571,237 $555,858 Exclude AOCI 10,378 25,018 9,396 (34,228) (61,783) Tangible common equity, excluding AOCI (non-GAAP) $541,381 $541,394 $594,120 $605,465 $617,641 Total assets (GAAP) $5,552,970 $6,615,318 $7,432,412 $7,483,814 $7,316,467 Exclude intangible assets (257,552) (254,027) (250,916) (250,212) (249,508) Tangible assets (non-GAAP) $5,295,418 $6,361,291 $7,181,496 $7,233,602 $7,066,959 Exclude unrealized gain or loss of investment securities available for sale, net of tax 10,378 25,018 9,396 (34,228) (61,783) Tangible assets, excluding AOCI (non-GAAP) $5,285,040 $6,336,273 $7,172,100 $7,267,830 $7,128,742 Stockholders' equity to total assets (GAAP) 14.6 % 12.4 % 11.5 % 11.0 % 11.0 % Tangible common equity to tangible assets (non-GAAP) 10.4 8.9 8.4 7.9 7.9 Tangible common equity to tangible assets, excluding AOCI (non-GAAP) 10.2 % 8.5 % 8.3 % 8.3 % 8.7 % ACL on Loans to Loans Receivable, excluding SBA PPP Loans: Allowance for credit losses on loans $36,171 $70,185 $42,361 $40,333 $39,696 Loans receivable (GAAP) $3,767,879 $4,468,647 $3,815,662 $3,821,178 $3,874,064 Exclude SBA PPP loans — (715,121) (145,840) (64,962) (11,334) Loans receivable, excluding SBA PPP (non-GAAP) $3,767,879 $3,753,526 $3,669,822 $3,756,216 $3,862,730 ACL on loans to loans receivable (GAAP) 0.96 % 1.57 % 1.11 % 1.06 % 1.02 % ACL on loans to loans receivable, excl. SBA PPP loans (non-GAAP) 0.96 % 1.87 % 1.15 % 1.07 % 1.03 % NON-GAAP FINANCIAL MEASURES

38 2009 2010 2011 2012 2013 2014 2015 2016 Tangible Book Value Per Share: Total stockholders' equity (GAAP) $158,498 $202,279 $202,520 $198,938 $215,762 $454,506 $469,970 $481,763 Exclude intangible assets (13,358) (14,965) (14,525) (14,098) (30,980) (129,918) (127,818) (126,403) Exclude preferred stock (23,487) — — — — — — — Tangible common equity (non-GAAP) $121,653 $187,314 $187,995 $184,840 $184,782 $324,588 $342,152 $355,360 Exclude AOCI (233) 377 1,736 1,744 (1,162) 3,378 2,559 (2,606) Tangible common equity, excluding AOCI (non-GAAP) $ 121,886 $ 186,937 $ 186,259 $ 183,096 $ 185,944 $ 321,210 $ 339,593 $ 357,966 Shares outstanding 11,057,972 15,568,471 15,456,297 15,117,980 16,210,747 30,259,838 29,975,439 29,954,931 Book value per share (GAAP) $12.21 $12.99 $13.10 $13.16 $13.31 $15.02 $15.68 $16.08 Tangible book value per share (non-GAAP) $11.00 $12.03 $12.16 $12.23 $11.40 $10.73 $11.41 $11.86 Tangible book value per share, excluding AOCI (non-GAAP) $11.02 $12.01 $12.05 $12.11 $11.47 $10.62 $11.33 $11.95 Tangible Book Value Per Share (continued): 2017 2018 2019 2020 2021 2022 Q1 Q2 Total stockholders' equity (GAAP) $505,305 $760,723 $809,311 $820,439 $854,432 $821,449 $805,366 Exclude intangible assets (125,117) (261,553) (257,552) (254,027) (250,916) (250,212) (249,508) Tangible common equity (non-GAAP) $380,188 $499,170 $551,759 $566,412 $603,516 $571,237 $555,858 Exclude AOCI (1,298) (7,455) 10,378 25,018 9,396 (34,228) (61,783) Tangible common equity, excluding AOCI (non-GAAP) 381,486 506,625 541,381 541,394 594,120 605,465 617,641 Shares outstanding 29,927,746 36,874,055 36,618,729 35,912,243 35,105,779 35,102,372 35,103,929 Book value per share (GAAP) $16.88 $20.63 $22.10 $22.85 $24.34 $23.40 $22.94 Tangible book value per share (non-GAAP) $12.70 $13.54 $15.07 $15.77 $17.19 $16.27 $15.83 Tangible book value per share, excluding AOCI (non-GAAP) $12.75 $13.74 $14.78 $15.08 $16.92 $17.25 $17.59 NON-GAAP FINANCIAL MEASURES

39 As of Period End or for the Three Months Ended June 30, 2021 September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 Profitability: Net income (GAAP) $ 32,702 $ 20,592 $ 19,397 $ 19,757 $ 18,584 Pre-tax, pre-provision net income (non-GAAP) 26,166 22,440 19,282 19,762 21,357 Diluted earnings per share $ 0.90 $ 0.58 $ 0.55 $ 0.56 $ 0.52 Return on average assets (GAAP) 1.85 % 1.13 % 1.04 % 1.08 % 1.01 % Pre-tax, pre-provision return on average assets (non-GAAP) 1.48 1.23 1.03 1.08 1.16 Return on average common equity (GAAP) 15.69 9.55 9.06 9.47 9.19 Return on average tangible common equity (non-GAAP) 22.94 13.93 13.27 13.83 13.68 Net interest margin 3.44 3.15 2.85 2.84 3.04 Efficiency ratio 58.18 62.35 66.61 64.38 62.57 Noninterest expense to average total assets 2.06 % 2.04 % 2.06 % 1.95 % 1.94 % Balance Sheet: Total assets $ 7,105,672 $ 7,259,038 $ 7,432,412 $ 7,483,814 $ 7,316,467 Loans receivable, net 4,155,968 3,905,567 3,773,301 3,780,845 3,834,368 Total deposits $ 6,074,385 $ 6,229,017 $ 6,394,290 $ 6,491,500 $ 6,330,190 Loan to deposit ratio 69.3 % 63.5 % 59.7 % 58.9 % 61.2 % Capital: Book value per share (GAAP) $ 23.77 $ 24.13 $ 24.34 $ 23.40 $ 22.94 Tangible book value per share (non-GAAP) $ 16.76 $ 16.97 $ 17.19 $ 16.27 $ 15.83 Tangible book value per share, excluding AOCI (non-GAAP) $ 16.32 $ 16.55 $ 16.92 $ 17.25 $ 17.59 Tier 1 leverage capital to average quarterly assets 9.1 % 8.8 % 8.7 % 8.8 % 8.9 % Total capital to risk-weighted assets 15.1 % 14.8 % 14.8 % 14.7 % 14.4 % Credit Quality: Nonperforming assets to total assets 0.50 % 0.36 % 0.32 % 0.22 % 0.14 % ACL on loans to loans receivable (GAAP) 1.23 1.22 1.11 1.06 1.02 ACL on loans to loans receivable, excluding SBA PPP (non-GAAP) 1.41 % 1.31 % 1.15 % 1.07 % 1.03 % – Refer to Appendix for calculation of non-GAAP financial measure. QUARTERLY FINANCIAL STATISTICS