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Investing.com - Keefe, Bruyette & Woods raised its price target on Heritage Financial (NASDAQ:HFWA) to $28.00 from $26.00 while maintaining a Market Perform rating.
The price target increase follows Heritage Financial’s announced acquisition of Olympic Bancorp, the holding company of Kitsap Bank, which has $1.7 billion in assets. KBW noted that Kitsap is a "high-quality institution" with a 1.09% cost of deposits and only 1 basis point of non-performing assets. Heritage Financial has demonstrated consistent shareholder returns, maintaining dividend payments for 15 consecutive years with a current yield of 3.86%.
KBW highlighted that the acquisition expands Heritage Financial into the western side of the Puget Sound region and aligns with the company’s relationship banking focus and disciplined underwriting approach.
The research firm raised its 2026 earnings estimate by 7% to $2.40 per share and established a 2027 estimate of $2.85 per share, representing a 19% year-over-year increase.
KBW projects that the transaction will improve Heritage Financial’s profitability, with return on tangible common equity reaching 13.6% in 2026 and 14.6% in 2027, while providing "plenty of runway for organic growth ahead with improved scale for both institutions."
In other recent news, Heritage Financial Corporation reported its second-quarter 2025 earnings, showcasing a mixed financial performance. The company exceeded analyst expectations with an earnings per share (EPS) of $0.53, compared to the forecasted $0.50. However, its revenue of $56.5 million fell short of the anticipated $63.54 million, highlighting a discrepancy that may concern investors. Additionally, Heritage Financial announced its intention to acquire Olympic Bancorp in an all-stock deal valued at approximately $176.6 million. Olympic shareholders are set to receive 45 shares of Heritage common stock for each share they hold, ultimately owning about 17.4% of the combined company. This acquisition is expected to bolster Heritage Financial’s presence in the Puget Sound region. Following this announcement, DA Davidson reiterated its Buy rating on Heritage Financial, maintaining a price target of $28.00. These developments reflect significant strategic moves for Heritage Financial in its growth trajectory.
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