Exhibit 99.1

FOR IMMEDIATE RELEASE

DATE: July 25, 2012

HERITAGE FINANCIAL ANNOUNCES SECOND

QUARTER RESULTS AND DECLARES 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 that the Company had net income for the quarter ended June 30, 2012 of $3.2 million compared to net income of $1.7 million for the quarter ended June 30, 2011 and $4.2 million for the linked-quarter ended March 31, 2012. Net income for the quarter ended June 30, 2012 was $0.21 per diluted share, compared to $0.11 per diluted share for the quarter ended June 30, 2011 and $0.27 per diluted share for the linked-quarter ended March 31, 2012.

Net income for the six months ended June 30, 2012 was $7.4 million, or $0.48 per diluted common share, compared to $2.5 million, or $0.16 per diluted common share, for the six months ended June 30, 2011.

Mr. Vance commented, “Our year-over-year earnings continue to improve both on a quarter and a year-to-date basis. On a linked-quarter basis, earnings for the quarter ended June 30, 2012 were down from the earnings for the quarter ended March 31, 2012 largely as a result of increased credit costs primarily associated with the purchased loan portfolios. However, our credit metrics continue a trend of improvement. Nonperforming originated loans to total originated loans decreased to 1.69% at June 30, 2012 from 1.88% at March 31, 2012. In addition, our ratio of allowance for loan losses to nonperforming originated loans increased to 144.73% at June 30, 2012 from 143.11% at March 31, 2012 and 109.38% at June 30, 2011.”

Mr. Vance added, “The extended period of historically low interest rates is impacting our net interest margin. At 5.25% for the second quarter 2012, our margin is one of the highest of our peers but is down from a year ago and on a linked–quarter basis. Loan yields from new business and scheduled re-pricing of existing business will likely continue to decline at a faster rate than our already low deposit costs which will be a common challenge for community banks going forward.”

Balance Sheet

The Company’s total assets decreased to $1.34 billion at June 30, 2012 from $1.37 billion at March 31, 2012. During the quarter ended June 30, 2012, interest earning deposits decreased by $58.8 million which was partially offset by an $11.5 million increase in net loans.

Total originated loans (not including loans held for sale) increased $16.3 million to $853.6 million at June 30, 2012 from $837.3 million at March 31, 2012. The increase was due to an $18.6 million increase in commercial business loans during the quarter.

Total deposits decreased slightly to $1.11 billion at June 30, 2012 from $1.14 billion at March 31, 2012. Total non-maturity deposits decreased $18.8 million to $806.4 million at June 30, 2012 from $825.1 million at March 31, 2012 while certificate of deposit accounts decreased $7.4 million to $307.0 million at June 30, 2012 from $314.4 million at March 31, 2012. However, non-maturity deposits to total deposits remained constant at 72.4% at June 30, 2012 and March 31, 2012. In addition, non-interest demand deposits to total deposits was 20.5% at June 30, 2012 compared to 20.6% at March 31, 2012.

Total equity decreased $5.5 million to $200.1 million at June 30, 2012 from $205.7 million at March 31, 2012. The decrease was due to $5.2 million in stock repurchases and $4.3 million in cash dividends declared partially offset by $3.2 million in net income for the quarter ended June 30, 2012. During the quarter ended June 30, 2012, the Company repurchased approximately 383,000 shares at a weighted average price of $13.47 per share. The Company and its subsidiary banks continue to maintain capital levels significantly in excess of the applicable regulatory requirements for them 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, 2012 of 13.8%, 18.9% and 20.2%, respectively, as compared to 14.1%, 19.9% and 21.2% at March 31, 2012, respectively.

Mr. Vance continued, “We were pleased to see loan growth in the second quarter following a basically flat first quarter. The loan growth was primarily in originated commercial loans. The local economies in the communities we serve continue to experience difficulties in gaining meaningful traction and loan growth is likely to be more a function of increasing our market share rather than a growing economy. In addition to share repurchases, we declared a special dividend of $0.20 per share in June payable in July evidencing our focus on capital management. This is in addition to the regular $0.08 per share dividend we declared in April payable in May and the regular $0.08 per share dividend we declared this month payable in August.”

Credit Quality

The allowance for loan losses on originated loans at June 30, 2012 decreased $1.7 million to $20.8 million from $22.6 million at March 31, 2012 as a result of $1.9 million of net charge-offs recognized during the period. Nonperforming originated loans to total originated loans was 1.69% at June 30, 2012, a decrease from 1.88% at March 31, 2012. Nonaccrual originated loans decreased $1.5 million to $16.7 million ($14.4 million net of government agency guarantees) at June 30, 2012 from $18.2 million at March 31, 2012. The decrease in nonaccrual loans was due substantially to charge-offs during quarter.

The allowance for loan losses to nonperforming originated loans was 144.7% at June 30, 2012 compared to 143.1% at March 31, 2012. Potential problem originated loans were $28.3 million at June 30, 2012 compared to $31.3 million at March 31, 2012. Restructured originated performing loans were $14.1 million at June 30, 2012 compared to $14.6 million at March 31, 2012. The Company believes that its allowance for loan losses is appropriate to provide for probable incurred losses based on an evaluation of known and inherent risks in the loan portfolio at June 30, 2012.

Nonperforming originated assets were $24.8 million ($22.5 million net of government agency guarantees), or 1.92% of total originated assets, at June 30, 2012, compared to $25.8 million ($23.4 million net of government agency guarantees), or 1.95% of total originated assets, at March 31, 2012. Other real estate owned increased to $8.6 million at June 30, 2012 (of which $563,000 was covered by Federal Deposit Insurance Corporation (“FDIC”) loss sharing agreements) from $8.3 million at March 31, 2012 (of which $705,000 was covered by FDIC loss sharing agreements).

Operating Results

Net interest income decreased $1.9 million, or 10.7%, to $16.2 million for the quarter ended June 30, 2012 compared to $18.2 million for the same period in 2011. Net interest income decreased $848,000, or 2.5%, to $32.9 million for the six months ended June 30, 2012 compared to $33.8 million during the same period in the prior year.

Heritage’s net interest margin for the quarter ended June 30, 2012 decreased to 5.25% from 5.93% for the same period in 2011 and from 5.35% in the linked-quarter ended March 31, 2012. The net interest margin for the six months ended June 30, 2012 decreased to 5.30% from 5.50% in the same period in 2011.

The effect on the net interest margin of discount accretion on the acquired loan portfolio for the quarter ended June 30, 2012 was approximately 55 basis points compared to 104 basis points in the same quarter of the prior year and 49 basis points for the linked quarter ended March 31, 2012. Interest reversals on nonaccrual originated loans impacting the net interest margin for the quarter ended June 30, 2012 were approximately eight basis points compared to 13 basis points for the same quarter in the prior year and eight basis points for the linked quarter ended March 31, 2012.

The provision for loan losses on originated loans decreased to $200,000 for the quarter ended June 30, 2012 compared to $2.0 million for the quarter ended June 30, 2011. For the six months ended June 30, 2012, the provision for loan losses on originated loans decreased to $200,000 from $4.6 million for the six months ended June 30, 2011. The decrease in provision expense was substantially due to improving credit quality metrics. The Company had net charge-offs of $1.9 million for the quarter ended June 30, 2012 compared to net recoveries of $246,000 for the quarter ended March 31, 2012 and net charge-offs of $1.4 million for the quarter ended June 30, 2011. For the six months ended June 30, 2012, the Company had net charge-offs of $1.7 million compared to $4.6 million for the six months ended June 30, 2011.

The provision for loan losses on purchased loans totaled $419,000 for the quarter ended June 30, 2012 compared to $1.5 million for the comparable period in the prior year and $(109,000) for the linked quarter ended March 31, 2012. For the six months ended June 30, 2012, the provision for loan losses on purchased loans was $310,000 compared to $3.3 million for the six months ended June 30, 2011. 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 previously estimated, additional provisions for loan losses on the purchased loan portfolios will be recognized immediately into earnings. To the extent actual or projected cash flows are more than previously estimated, the increase in cash flows is recognized immediately as a recapture of provision for loan losses (if a provision had previously been recognized for that pool of loans) or prospectively recognized in interest income as a yield adjustment (if a provision had not previously been recognized for that pool of loans).

Cash flows on pools of acquired loans are re-estimated on a quarterly basis. As reflected in the table below, incremental accretion income was $1.7 million for the quarter ended June 30, 2012 compared to $1.5 million for the quarter ended March 31, 2012 and $3.2 million for the quarter ended June 30, 2011. For the six months ended June 30, 2012, incremental accretion income was $3.2 million compared to $4.2 million for the six months ended June 30, 2011.

For the quarter ended June 30, 2012, the Company recognized $(19,000) of change in FDIC indemnification asset compared to $(176,000) and $(1.7) million for the quarters ended March 31, 2012 and June 30, 2011, respectively. For the six months ended June 30, 2012, the Company recognized $(195,000) of change in FDIC indemnification asset compared to $(912,000) for the six months ended June 30, 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, “Due to marginal declines in estimated cash flows on our purchased non-covered loan portfolio, we recognized a $419,000 provision for loan losses on purchased loans. Partially offsetting this provision was a slight increase in incremental accretion on the acquired portfolios. The overall pre-tax earnings impact of the acquired loan portfolios for the quarter ended June 30, 2012 was $1.27 million compared to $1.46 million for the prior quarter ended March 31, 2012. We have begun to see lessening volatility in the quarterly earnings impact of the acquired portfolios. Although there still may be periodic volatility, we expect the overall trend of improvement to continue.”

Non-interest income was $2.1 million for the quarter ended June 30, 2012 compared to $251,000 for the same period in 2011 and $1.9 million for the linked-quarter ended March 31, 2012. For the six months ended June 30, 2012, non-interest income increased $812,000 to $4.0 million from $3.2 million for the six months ended June 30, 2010.

The increases are primarily due to the change in FDIC indemnification asset. Merchant Visa income and merchant Visa expense are now reported net in non-interest income (merchant Visa expense was previously reported as non-interest expense). For comparability purposes, prior year amounts have also been netted.

Non-interest expense was $12.9 million for the quarter ended June 30, 2012 compared to $12.6 million for the quarter ended June 30, 2011 and for the linked-quarter ended March 31, 2012. The increase for the three months ended June 30, 2012 compared to the same period in the prior year was due to increased professional services expense in the amount of $215,000, increased salaries and employee benefits expense of $212,000 and increased other real estate owned expense in the amount of $148,000 partially offset by a $169,000 decrease in the federal deposit insurance premium expense. For the six months ended June 30, 2012, non-interest expense was $25.5 million compared to $25.7 million for the six months ended June 30, 2011.

Dividend

On July 25, 2012, the Company’s Board of Directors declared a dividend of $0.08 per share payable on August 24, 2012 to shareholders of record on August 10, 2012.

Earnings Conference Call

The Company will hold a telephone conference call to discuss this earnings release on July 26, 2012, at 11:00 a.m. Pacific time. To access the call, please dial (800) 230-1085 a few minutes prior to 11:00 a.m. Pacific time. The call will be available for replay through August 9, 2012, by dialing (800) 475-6701 — access code 252253.

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.HeritageBankNW.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.

Contact:

Brian L. Vance, President & Chief Executive Officer, (360) 943-1500

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 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 and of our bank subsidiaries by the Federal Deposit Insurance Corporation, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance 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 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 and stock price performance.

HERITAGE FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollar amounts in thousands; unaudited)

HERITAGE FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(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)

HERITAGE FINANCIAL CORPORATION

FINANCIAL STATISTICS

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