Why did HFWA's Q4 earnings fall short of forecasts?

Heritage Financial's (HFWA) Q4 earnings fell short of forecasts due to several key factors:

1. **Revenue Decline**: The company reported a total revenue of $57.05 million for Q4, which was below the anticipated $59.73 million. This represented a year-over-year decline of 27.2%. The revenue surprise was negative, indicating that the actual revenue was lower than expected.

|code|Ticker|Name|Date|Revenue Surprise|Total Revenue|market_code|
|---|---|---|---|---|---|---|
|HFWA|HFWA.O|Heritage Financial|2024 Q1|-1.126E7|4.863E7|185|
|HFWA|HFWA.O|Heritage Financial|2024 Q2|-1930000|5.6359E7|185|
|HFWA|HFWA.O|Heritage Financial|2024 Q3|-3320000|5.4795E7|185|
|HFWA|HFWA.O|Heritage Financial|2024 Q4|-2290000|5.7053E7|185|

2. **Strategic Balance Sheet Revisions**: Heritage Financial incurred significant losses on the sale of investment securities, with pre-tax losses of $3.9 million in Q4. These sales were part of a strategic balance sheet repositioning, which negatively impacted earnings per share by $0.09.
3. **BOLI Restructuring Costs**: There were additional after-tax costs related to BOLI restructuring, totaling $2.9 million, which further reduced net income.
4. **Interest Expense Increase**: The cost of interest-bearing deposits fell to 1.98%, but the cost of total deposits increased to 1.42%. This increase in funding costs likely contributed to the decline in net income.

In summary, Heritage Financial's Q4 earnings fell short of forecasts due to lower-than-expected revenue, strategic balance sheet revisions resulting in losses from the sale of investment securities, and increased interest expense. These factors combined to negatively impact the company's financial performance for the period.