Street Calls of the Week
OLYMPIA/PORT ORCHARD, Wash. - Heritage Financial Corporation (NASDAQ:HFWA), currently valued at $831.85 million and maintaining a solid financial health score according to InvestingPro data, announced Thursday it will acquire Olympic Bancorp, the parent company of Kitsap Bank, in an all-stock transaction valued at approximately $176.6 million based on Heritage’s closing stock price on September 24.
Under the agreement, Olympic shareholders will receive 45 shares of Heritage common stock for each Olympic share. Upon completion, Olympic shareholders will own approximately 17.4% of the combined company. Heritage’s stock currently trades near its 52-week high of $27.57, with analysts setting price targets ranging from $26 to $34 per share. According to InvestingPro analysis, the stock appears to be trading close to its Fair Value.
The merger will create a financial institution with approximately $8.8 billion in total assets, $5.7 billion in loans, and $7.2 billion in deposits. Heritage indicated it will become the second largest community bank serving the Kitsap and Olympic Peninsulas with approximately 14% combined deposit market share.
"Kitsap Bank is one of the longest tenured banks in Washington state, and we have deep respect for the banking institution they have built over the last 117 years," said Bryan McDonald, President and CEO of Heritage and Heritage Bank, in the press release statement.
Kitsap Bank, established in 1908, currently operates 17 banking offices with $1.7 billion in total assets, $941.6 million in loans and $1.4 billion in deposits as of June 30, 2025.
Heritage plans to continue operating with the Kitsap Bank name in certain markets on the Kitsap and Olympic peninsulas following the acquisition.
The transaction has been unanimously approved by the boards of both companies but remains subject to regulatory approvals and shareholder votes from both institutions. The deal is expected to close in the first quarter of 2026.
D.A. Davidson & Co. served as financial advisor to Heritage, while Piper Sandler & Co. advised Olympic on the transaction.
In other recent news, Heritage Financial Corporation reported its second-quarter 2025 earnings, showcasing a mixed financial performance. The company achieved an earnings per share (EPS) of $0.53, exceeding analyst expectations of $0.50. However, Heritage Financial’s revenue did not meet forecasts, coming in at $56.5 million compared to the anticipated $63.54 million. This revenue shortfall has raised some investor concerns. There are no updates regarding any mergers or acquisitions involving Heritage Financial. Additionally, there have been no recent analyst upgrades or downgrades reported for the company. These developments highlight the company’s current financial standing and market perception.
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