Heritage Financial (HFWA) to Acquire Olympic Bancorp in $176.6 Million Deal

Heritage Financial (HFWA) has announced a definitive agreement to acquire Olympic Bancorp, the parent company of Kitsap Bank, in an all-stock transaction valued at approximately $176.6 million. This strategic move will grant Olympic shareholders 45 shares of Heritage for each of their shares, resulting in a 17.4% stake in the new entity. The acquisition is set to position Heritage with $8.8 billion in total assets and elevate its market share in the Kitsap and Olympic Peninsulas to 14%. The transaction is anticipated to close in early 2026, with expected financial gains including an 18% EPS accretion.

Heritage Financial Corp is a bank holding company that, through its subsidiary, provides commercial lending and deposit relationships with small businesses and their owners in its market areas. The company attracts deposits from the general public and offers various deposit products, such as noninterest demand accounts, money market accounts, savings accounts, and certificates of deposit. Additionally, Heritage Financial engages in real estate construction loans, land development loans, and consumer loans, primarily originating first mortgage loans on residential properties within its market area.

With a market capitalization of approximately $835.25 million, Heritage Financial operates within the financial services sector, specifically in the banking industry. The company is traded on the NASDAQ exchange under the ticker HFWA.

Financial Health Analysis

Heritage Financial’s financial health is reflected in several key metrics:

Despite a decline in revenue per share over the past three years, the company’s Piotroski F-Score of 9 indicates a very healthy financial situation. The Beneish M-Score of -2.33 suggests that the company is unlikely to be a manipulator.

Valuation & Market Sentiment

Heritage Financial’s valuation metrics provide insight into its market positioning:

• P/E Ratio: 17.2, compared to a historical range with a high of 30.92 and a low of 6.55.
• P/S Ratio: 3.78, with historical highs and lows of 6.23 and 2.07, respectively.
• P/B Ratio: 0.94, close to its 2-year high of 1.03.

Analyst recommendations suggest a moderate buy with a recommendation score of 2.7. The RSI (14) stands at 52.89, indicating a neutral market sentiment.

Risk Assessment

Heritage Financial’s risk profile is shaped by several factors:

• Beta: 0.83, suggesting lower volatility compared to the market.
• Sector-specific risks include regulatory changes and economic fluctuations impacting the banking industry.
• Institutional ownership is high at 84.78%, with insider ownership at 5.81%.

Overall, Heritage Financial’s strategic acquisition of Olympic Bancorp is poised to enhance its market position and financial performance, while its current financial metrics and valuation suggest a stable outlook within the banking sector.