Heritage Financial Corporation (HFWA)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 36,913 | 36,913 | 46,353 | 50,653 | 68,708 | 96,597 | 100,848 | 102,526 | 98,816 | 91,863 | 86,316 | 96,885 | 105,564 | 112,939 | 110,918 | 70,795 | 53,180 | 45,440 | 47,843 | 74,104 |
| Interest expense (ttm) | US$ in thousands | 100,348 | 94,958 | 85,948 | 74,726 | 58,726 | 41,833 | 25,808 | 13,245 | 8,072 | 6,838 | 6,678 | 6,739 | 7,042 | 7,584 | 8,805 | 10,741 | 13,323 | 15,929 | 17,685 | 18,684 |
| Interest coverage | 0.37 | 0.39 | 0.54 | 0.68 | 1.17 | 2.31 | 3.91 | 7.74 | 12.24 | 13.43 | 12.93 | 14.38 | 14.99 | 14.89 | 12.60 | 6.59 | 3.99 | 2.85 | 2.71 | 3.97 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $36,913K ÷ $100,348K
= 0.37
The interest coverage ratio of Heritage Financial Corporation has shown a fluctuating trend over the past few years. From March 31, 2020, to December 31, 2021, the ratio steadily increased from 3.97 to 14.99, indicating the company's improving ability to cover its interest expenses with operating income.
However, starting from March 31, 2022, the interest coverage ratio started to decline. The ratio decreased to 7.74 by March 31, 2023, and further dropped to 0.37 by December 31, 2024. This significant decline in the ratio over these periods suggests potential issues with the company's ability to cover its interest obligations with its operating earnings.
The decreasing trend in interest coverage may raise concerns about Heritage Financial Corporation's financial health and ability to meet its debt obligations in the future. It is essential for investors and stakeholders to closely monitor the company's financial performance and management of interest expenses to ensure sustainable operations in the long term.