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Heritage Financial (HFWA) investor relations material

Heritage Financial M&A Announcement summary

Complete event summary combining all related documents: earnings call transcript, report, and slide presentation.
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M&A Announcement summary26 Sep, 2025

Deal rationale and strategic fit

  • The merger creates a leading community bank in the Puget Sound region, expanding into Kitsap, Jefferson, and Clallam counties, and building scale and density in key markets.

  • Combined entity will be the largest community bank in Kitsap County and second largest in the Kitsap and Olympic Peninsulas, with about 14% deposit market share and a pro forma asset base of $9 billion.

  • Both banks have a long history, clean credit portfolios, and a community-focused, relationship banking culture.

  • The deal enhances market presence, strengthens the core deposit base, and supports strong community commitments.

  • Opportunity to deploy excess liquidity into loans, enhancing profitability.

Financial terms and conditions

  • All-stock transaction with a fixed exchange ratio of 45 shares of acquirer stock per target share, valued at $176.6 million, with approximately 7.2 million new shares to be issued.

  • Price represents 151% of tangible book value (103% excluding AOCI); price/2025E core EPS of 20.4x, dropping to 7.8x with cost savings.

  • Target shareholders will own about 17.4% of the combined company post-closing; acquirer shareholders will own 82.6%.

  • Closing expected in Q1 2026, subject to shareholder and regulatory approvals.

  • Boards of both companies have unanimously approved the merger and agreed to vote in favor.

Synergies and expected cost savings

  • Targeting 35% cost savings from operational efficiencies, mainly from back-office and systems consolidation.

  • $8.1 million in cost savings expected in 2026, with $18.7 million in 2027; 45% realized in 2026, full realization by 2027.

  • Minimal branch overlap means limited closures; savings focus on systems and personnel.

  • Transaction expected to enhance profitability, efficiency ratios, and balance sheet liquidity.

  • Approximately 18% EPS accretion anticipated after full realization of operating efficiencies.

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Q3 202523 Oct, 2025
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Frequently asked questions

Heritage Financial Corporation is a bank holding company operating through its subsidiary, Heritage Bank. It offers a range of financial services, including personal and commercial banking, mortgage lending, and wealth management. The company serves individuals and businesses across Washington and Oregon. Heritage Financial Corporation is headquartered in Olympia, Washington, and its shares are listed on the NASDAQ.

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