Exhibit 99.1

HERITAGE FINANCIAL ANNOUNCES SECOND QUARTER 2011 RESULTS AND DECLARES INCREASED CASH DIVIDEND

Olympia, WA - HERITAGE FINANCIAL CORPORATION (NASDAQ GS: HFWA) Brian L. Vance, President and CEO of Heritage Financial Corporation (“Company” or “Heritage”), today reported net income for the quarter ended June 30, 2011 of $1.69 million compared to net income of $855,000 for the quarter ended June 30, 2010 and $764,000 for the linked-quarter ended March 31, 2011. The net income applicable to common shareholders for the quarter ended June 30, 2011 was $0.11 per diluted common share, compared to $0.05 per diluted common share for the quarter ended June 30, 2010 and $0.05 per diluted common share for the linked-quarter ended March 31, 2011.

Net income applicable to common shareholders for the six months ended June 30, 2011 was $2.5 million, or $0.16 per diluted common share, compared to $888,000, or $0.08 per diluted common share, for the six months ended June 30, 2010.

Mr. Vance commented, “We are pleased with our second quarter financial performance. We are also satisfied with the performance of our two bank acquisitions. Deposit and loan balance retention have exceeded our expectations and credit quality of the acquired portfolios continues to perform better than originally expected. Additionally, we are pleased to see this quarter’s efficiency ratio improve to 69.3%.”

Balance Sheet

The Company’s total assets increased slightly to $1.339 billion at June 30, 2011 from $1.335 billion at March 31, 2011. During the quarter ended June 30, 2011, increases of $16.4 million in total loans (net) and $13.5 million in investments were offset by a decrease of $28.4 million in interest earning deposits. Total assets increased $329.0 million from June 30, 2010 as a result of the assets acquired from the Cowlitz Bank and Pierce Commercial Bank acquisitions (“Cowlitz and Pierce Acquisitions”).

Total originated loans (not including loans held for sale) increased $29.3 million to $782.5 million at June 30, 2011 from $753.2 million at March 31, 2011. This was primarily due to increases of $22.4 million in commercial business loans and $9.1 million in commercial construction loans partially offset by a $2.8 million decrease in single-family residential construction loans. At June 30, 2011, real estate construction loans accounted for $65.9 million, or 8.4% of total originated loans, of which $23.8 million, or 3.0% of total originated loans, were single-family residential construction loans.

Total deposits increased $8.0 million to $1.11 billion at June 30, 2011 from $1.10 billion at March 31, 2011. Total non-maturity deposits increased $13.6 million to $754.5 million at June 30, 2011 from $740.9 million at March 31, 2011 while certificate of deposit accounts decreased $5.6 million to $353.2 million at June 30, 2011 from $358.8 million at March 31, 2011. As a result, non-maturity deposits to total deposits increased to 68.1% at June 30, 2011 from 67.4% at March 31, 2011. In addition, non-interest demand deposits to total deposits increased to 17.5% at June 30, 2011 from 17.2% at March 31, 2011.

At June 30, 2011, the Company’s stockholders’ equity to total assets increased to 15.4% compared to 15.2% at March 31, 2011. The Company and its subsidiary banks continue to maintain capital levels significantly in excess of applicable regulatory requirements to be categorized as “well-capitalized”. The Company had Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios at June 30, 2011 of 14.4%, 20.4% and 21.6%, respectively, as compared to 14.1%, 20.6% and 21.9% at March 31, 2011, respectively.

Mr. Vance continued, “For the second consecutive quarter, our originated loan portfolio increased. Our total originated loans increased $29.3 million or 3.9% for the quarter. Additionally, our total net loans, including the acquired portfolios, increased $16.4 million or 1.7%. Clearly, our organic loan growth strategy, aided by the addition of several new lenders, is working.”

“Deposits increased a modest $8.0 million; however, we continue to focus on our long term goal of increasing transactions accounts. Our non-interest bearing demand deposits increased 2.6% for the quarter to 17.5% of total deposits. Our non-maturity deposits grew $13.6 million or 1.8% for the quarter while our total CDs decreased $5.6 million. As a result, our total non-maturity deposits increased to 68% of total deposits. In addition, we were able to reduce our total deposit costs to 75 basis points.”

Credit Quality

The allowance for loan losses on originated loans at June 30, 2011 increased by $629,000 to $22.0 million from $21.4 million at March 31, 2011. Nonperforming originated loans to total originated loans was 3.2% at June 30, 2011, a decrease from 3.4% at March 31, 2011. The allowance for loan losses to nonperforming originated loans was 86.9% at June 30, 2011 compared to 83.2% at March 31, 2011. Potential problem originated loans were $47.3 million at June 30, 2011, a decrease from $50.1 million at March 31, 2011. The Company believes that its allowance for loan losses is appropriate to provide for probable losses based on an evaluation of known and inherent risks in the loan portfolio at June 30, 2011.

Nonperforming originated assets were $30.9 million, or 2.4% of total originated assets, at June 30, 2011, compared to $32.9 million, or 2.7% of total originated assets, at March 31, 2011. Other real estate owned was reduced $1.6 million to $1.9 million at June 30, 2011 from $3.5 million at March 31, 2011.

Mr. Vance added, “We are pleased to report that our loan quality metrics continue to improve. Non-performing originated assets decreased $2.0 million during the quarter, thus improving the ratio of non-performing originated assets to total assets to 2.4% at June 30, 2011. Additionally, potential problem loans decreased $2.7 million during the quarter. The preceding metrics combined with a slight increase to our allowance for loan losses increased the ratio of our allowance for loan losses to non-performing loans to a favorable 86.9% at June 30, 2011.”

“Even though our overall financial performance for the quarter was encouragingly positive, we remain guarded in our optimism due to the continued structural weaknesses in the Pacific Northwest economy.”

Operating Results

Net interest income increased $7.4 million, or 68.6%, to $18.2 million for the quarter ended June 30, 2011 compared with $10.8 million during the same period in 2010. Net interest income increased $12.3 million, or 57.5%, to $33.8 million for the six months ended June 30, 2011 compared to $21.4 million during the same period in the prior year. These increases were a result of the increased earning assets acquired in the Cowlitz and Pierce Acquisitions and an

increase in the net interest margin. Heritage’s net interest margin for the quarter ended June 30, 2011 increased to 5.93% from 4.60% for the same period in 2010. For the six months ended June 30, 2011, the net interest margin increased to 5.50% from 4.59% in the same period in 2010. The increase in net interest margin was due primarily to increased loan yields as a result of discount accretion on the loan portfolios acquired in the Cowlitz and Pierce Acquisitions. The effect on the net interest margin of discount accretion on the acquired loan portfolio for the three months and six months ended June 30, 2011 was approximately 104 basis points and 68 basis points, respectively. Interest reversals on nonaccrual originated loans impacting the net interest margin for the three months and six months ended June 30, 2011 were approximately 13 basis points and 23 basis points, respectively, compared to 21 basis points and 18 basis points, respectively, for the prior year three months and six months ended June 30, 2010.

The provision for loan losses on originated loans decreased $1.2 million, or 36.7% to $2.0 million for the quarter ended June 30, 2011 from $3.2 million for the quarter ended June 30, 2010 and decreased $600,000, or 23.1%, from $2.6 million for the linked quarter ended March 31, 2011. For the six months ended June 30, 2011, the provision for loan losses on originated loans decreased to $4.6 million from $6.9 million for the six months ended June 30, 2010. The Company had net charge-offs of $1.4 million for the quarter ended June 30, 2011 compared to $3.3 million for the quarter ended March 31, 2011 and $1.7 million for the quarter ended June 30, 2010. For the six months ended June 30, 2011, the Company had net charge-offs of $4.6 million compared to $6.8 million for the six months ended June 30, 2010.

The provision for loan losses on purchased loans totaled $1.5 million and $3.3 million, respectively, for the three months and six months ended June 30, 2011. These provisions were due substantially to the decrease of estimated cash flows in certain pools of acquired loans from the original cash flow estimations. As of the acquisition dates, purchased loans were recorded at their estimated fair value, incorporating our estimate of future expected cash flows until the ultimate resolution of these credits. To the extent actual or projected cash flows are less than originally estimated, additional provisions for loan losses on the purchased loan portfolios will be recognized immediately into earnings. Provisions on the purchased covered loans, however, would be mostly offset by a corresponding increase in the Federal Deposit Insurance Corporation (“FDIC”) indemnification asset recognized within non-interest income. To the extent actual or projected cash flows are more than originally estimated, the increase in cash flows is prospectively recognized in interest income. The increase in interest income on purchased covered loans, however, would be mostly offset by a corresponding decrease in the FDIC indemnification asset recognized prospectively within non-interest income.

Cash flows on pools of acquired loans are re-estimated on a quarterly basis. Overall cash flow estimations have improved from the original cash flow estimations for the majority of the pools. As a result, incremental accretion income increased to $3.2 million in the quarter ended June 30, 2011 from $983,000 in the quarter ended March 31, 2011. Correspondingly, the change in FDIC indemnification asset was ($1.7) million in the quarter ended June 30, 2011 compared to $800,000 in the quarter ended March 31, 2011.

The following table illustrates the significant accounting entries associated with the Company’s acquired loan portfolios:

Donald J. Hinson, Senior Vice President and Chief Financial Officer commented, “We continue to be pleased with the cash flow performance of the acquired loan portfolios. As in the quarter ended March 31, 2011, we continue to experience some volatility in the reported amounts of net interest income, provision for loan losses and non-interest income due to the accounting entries associated with the acquired loans portfolios. However, the net impact to pre-tax earnings during the first two quarters of 2011 has not been significant.”

Non-interest income decreased $1.3 million to $853,000 for the quarter ended June 30, 2011 compared to $2.1 million for the same period in 2010 due substantially to the effects of the change in FDIC indemnification asset. In addition, service charges on deposits for the quarter ended June 30, 2011 increased $196,000 from the same period

in the prior year due to increases in deposit accounts as a result of the Cowlitz and Pierce Acquisitions. For the six months ended June 30, 2011, non-interest income increased $130,000 to $4.3 million from $4.2 million for the six months ended June 30, 2010.

Non-interest expense increased $4.7 million, or 55.5%, to $13.2 million during the quarter ended June 30, 2011 compared to $8.5 million for the quarter ended June 30, 2010 and increased $10.4 million, or 63.0%, to $26.8 million for the six months ended June 30, 2011 compared to $16.5 million for the six months ended June 30, 2010. The increase for the three months ended June 30, 2011 compared to the same period in the prior year was due to increased salaries and benefits expense in the amount of $2.9 million, increased occupancy and equipment expense of $729,000, increased data processing of $220,000, and increased state and local taxes expense of $213,000. The increase for the six months ended June 30, 2011 compared to the same period in the prior year was due to increased salaries and benefits expense in the amount of $5.5 million, increased occupancy and equipment expense of $1.5 million, increased data processing of $623,000, increased other real estate owned expense (including valuation adjustments) of $603,000, increase professional services of $422,000 and increased state and local taxes expense of $352,000. With the exception of expenses relating to other real estate owned, these increases were substantially due to the Cowlitz and Pierce Acquisitions.

Dividend

On July 27, 2011, the Company’s Board of Directors declared a dividend of $0.05 per share payable on August 26, 2011 to shareholders of record on August 12, 2011.

Mr. Vance commented, “We continue to see improving trends in metrics such as net income, capital levels and credit quality, which support an increase in the cash dividend this quarter. We recognize the economic environment remains difficult; however, we are optimistic about the long term performance of our Company and want to share our successes with our shareholders.”

Earnings Conference Call

The Company will hold a telephone conference call to discuss this earnings release on July 28, 2011, at 11:00 a.m. PDT. To access the call, please dial (866) 961-7938 a few minutes prior to 11:00 a.m. PDT. The call will be available for replay through August 11, 2011, by dialing (800) 475-6701 — access code 209849.

About Heritage Financial

Heritage Financial Corporation is a bank holding company headquartered in Olympia, Washington. The Company operates two community banks, Heritage Bank and Central Valley Bank. Heritage Bank serves western Washington and the greater Portland, Oregon area through its twenty-seven full-service banking offices and its Online Banking Website www.HeritageBankWA.com. Central Valley Bank serves Yakima and Kittitas counties in central Washington through its six full-service banking offices and its Online Banking Website www.CVBankWA.com. Additional information about Heritage Financial Corporation is available on its Internet Website www.HF-WA.com.

Non-GAAP Financial Measures

This news release contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (GAAP). These measures include tangible common equity, tangible book value per share and tangible common equity to tangible assets. Tangible common equity (tangible book value) excludes preferred stock, goodwill and other intangible assets. Tangible assets exclude goodwill and other intangible assets. Management 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 reflected in the current quarter and year-to-date results. Where applicable, the Company has also presented comparable capital information using GAAP financial measures. Reconciliations of the GAAP and non-GAAP financial measures are presented below.

Forward-Looking Statements

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; 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 Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and of our bank subsidiaries by the Federal Deposit Insurance Corporation (the “FDIC”), the Washington State Department of Financial Institutions, Division of Banks (the “Washington DFI”) or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, including the interpretation of regulatory capital or other rules including changes from the Dodd-Frank Wall Street Reform and Consumer Protection Act and regulations that have been or will be promulgated thereunder; 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; difficulties in reducing risk associated with the loans on our balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; computer systems on which we depend could fail or experience a security breach; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to implement our expansion strategy; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we have acquired including the Cowlitz Bank and Pierce Commercial Bank transactions or may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; risks relating to acquiring assets or entering

markets in which we have not previously operated and may not be familiar, changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; 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 Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and other risks detailed from time to time in our filings with the Securities and Exchange Commission.

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 2011 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 STATEMENTS OF FINANCIAL CONDITION

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HERITAGE FINANCIAL CORPORATION

CONDENSED STATEMENTS OF INCOME

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HERITAGE FINANCIAL CORPORATION

FINANCIAL STATISTICS

(Dollar amounts in thousands, except per share amounts; unaudited)

HERITAGE FINANCIAL CORPORATION

FINANCIAL STATISTICS

(Dollar amounts in thousands, except per share amounts; unaudited)

HERITAGE FINANCIAL CORPORATION

FINANCIAL STATISTICS

(Dollar amounts in thousands, except per share amounts; unaudited)