# Heritage Financial Q3 Net Income Falls to $18.72 Million as Margin Rises

By John Kim

Canonical URL: https://www.tokenpost.com/news/business/38562
Published: 2026-10-23T01:43:03.000Z
Updated: 2026-10-23T01:43:03.000Z
Section: Business

> Adjusted diluted EPS was $0.55, while net interest income and noninterest income totaled $86.512 million. The company completed its Kitsap Bank account conversion and recorded $5.185 million in merger costs.

Heritage Financial posted $18.72 million in third-quarter 2026 net income as its net interest margin rose to 4.05%, while diluted earnings per share declined from a year earlier.

Diluted earnings were $0.46 per share, compared with $0.55 in the third quarter of 2025. Adjusted diluted earnings per share, a non-GAAP measure, were $0.55, versus $0.57 in the second quarter and $0.56 a year earlier.

Net interest income was $77.259 million, up $2.4 million, or 3.3%, from the prior quarter. Noninterest income was $9.253 million, bringing the two categories to $86.512 million. Net interest margin increased from 3.99% in the second quarter.

The Olympia, Washington-based bank holding company completed the conversion of Kitsap Bank customer accounts during the quarter and recorded $5.185 million in merger-related costs after the conversion and closure of two branches. Heritage acquired Olympic Bancorp, Inc., Kitsap Bank’s parent, on Jan. 31.

On Oct. 21, the board authorized repurchases of up to 5% of outstanding common shares, or about two million shares. President and CEO Bryan McDonald said, “We are pleased with the continued improvement in our net interest margin.”