Heritage Financial Corporation · NASDAQ:HFWA
Heritage Financial — Merger or Acquisition (September 2025)
16 slides from Heritage Financial's merger presentation, Sep 25, 2025
Slide 1: Strategic Expansion in the Puget Sound Region
+ Strategic Expansion in the Puget Sound Region September 25th, 2025
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intend
Slide 3: Strategically Compelling Expansion in the Puget Sound
Strategically Compelling Expansion in the Puget Sound Heritage Financial Corporation (NASDAQ: HFWA) to acquire Olympic Bancorp, Inc., the holding company for Kitsap Bank Company Highlights – Kitsap Bank Pro Forma Balance Sheet All dollars in billions $1.7B $1.4B 1.09% $7.1 $8.8 $8.8 $7.2 $7.1 $5.7 $
Slide 4: Merger Rationale
Merger Rationale Strategic ▪ Positions HFWA as the leading community bank in the Puget Sound region Expansion ▪ Entering new markets with strong position – Pro forma rank as #1 market share for a community bank in Kitsap County (Bremerton-Silverdale-Port Orchard MSA) which is a $4.3 billion deposit
Slide 5: Geographic Fit and Strong Market Share
Geographic Fit and Strong Market Share ▪ Kitsap Bank is headquartered in Port Orchard, WA and has 17 banking offices (16 branches and 1 LPO in Bellevue) ▪ Extends HFWA footprint into adjacent markets of Kitsap, Jefferson and Clallam counties ▪ Market overlap with HFWA in 2 counties (Pierce and Mason
Slide 6: Attractive Demographics
Attractive Demographics Deposits and Demographics by MSA Population Median Household Income Deposits Market Change Proj. Change MSA Branches ($MM) % of Total Deposits Share Rank 2025 2010 - 2025 2025 2025 - 2030 Seattle-Tacoma-Bellevue 22 $ 2,545 44.0% 1.8% 10 4,098,018 19.1% $ 113,456 9.9% Portland
Slide 7: Transaction Structure and Overview
Transaction Structure and Overview ▪ Olympic Bancorp, Inc. (“Olympic”) will merge into Heritage Financial Corporation (“HFWA”) Structure ▪ Kitsap Bank (“Kitsap”) will merge into Heritage Bank (“HB”) ▪ 100% stock consideration Consideration ▪ Approximately 7.2 million shares of HFWA issued to Olympic
Slide 8: Key Transaction Assumptions
Key Transaction Assumptions ▪ CECL reserve of $11.4 million, or 1.10% of total loans (no double count with credit marks) CECL ▪ Allocation of 79% non-PCD and 21% PCD Investment ▪ AFS securities write-down of $69.0 million, no impact to equity at close (accreted over 5 years) Securities ▪ HTM securit
Slide 9: Historical Growth – Organic and Acquisitive
Historical Growth – Organic and Acquisitive ▪ HFWA has long history of successful organic growth and strategic M&A Announced acquisition of Kitsap Bank in Q3 2025 Acquired Puget Sound Bancorp with $556M in assets $1.7 and Premier Commercial Bancorp with $382MM Assets Merger with Washington Banking C
Slide 10: Concluding Observations
Concluding Observations Logical geographic expansion into adjacent markets Attractive financial returns Positioned for continued growth in Kitsap Bank’s Increases HFWA’s operating scale with footprint assets of $9 billion, pro forma Further strengthens core deposit base Low risk transaction Cultural
Slide 11: Appendix
APPENDIX
Slide 12: Due Diligence Process
Due Diligence Process Process ✓ ✓ Conducted a thorough review of all key operating areas of Kitsap Bank Due diligence led by HFWA executive leadership and department heads, along with 3rd parties for fair value analysis Overview ✓ Performed an in-depth loan file review on credit quality with signifi
Slide 13: Deposit Mix
Deposit Mix Heritage Kitsap Pro Forma Nonint.-Bearing NOW & Int.- Nonint.-Bearing Nonint.-Bearing NOW & Demand Bearing Demand Demand Int.-Bearing 27.4% Demand 30.7% NOW & Int.- 28.0% Demand 25.7% Bearing 25.3% Demand 23.8% CDs CDs CDs >$100k >$100k >$100k 12.0% 11.6% 11.9% CDs CDs CDs <$100k MMDA &
Slide 14: Loan Portfolio Mix
Loan Portfolio Mix Heritage Kitsap Pro Forma NOO CRE NOO CRE NOO CRE 28.7% 36.6% 30.0% OO CRE OO CRE 20.9% OO CRE 20.4% 18.2% Multifam. Multifam. 8.1% Multifam. 8.3% 9.1% C&I C&I 1-4 Fam. 1-4 Fam. 13.1% 1-4 Fam. C&I 13.8% 14.0% 12.8% 6.9% 17.7% Farm & Ag. Farm & Ag. 1.2% Farm & Ag. C&D C&D 0.0% C&D
Slide 15: Pristine Asset Quality
Pristine Asset Quality Net Charge-Offs / Average Loans (%) 2.55% 2.56% 2.05% 1.49% 1.57% 1.41% 1.25% 1.10% 1.10% 0.69% 0.68% 0.58% 0.64% 0.49% 0.50% 0.48% 0.51% 0.50% 0.52% 0.46% 0.44% 0.47% 0.59% 0.31% 0.30% 0.25% 0.27% 0.15% 0.38% 0.10% 0.14% 0.12% 0.07% 0.06% 0.09% 0.07% 0.06% 0.06% 0.03% 0.20% -
Slide 16: Non-GAAP Reconciliation
Non-GAAP Reconciliation HFWA Olympic ($ in thousands) Q2 2025 Q2 2025 Total stockholders' equity (GAAP) (a) $ 888,212 $ 133,812 Less: intangible assets $ 243,487 $ 17,105 Tangible common equity (non-GAAP) (b) $ 644,725 $ 116,707 Shares outstanding (c) 33,953,194 159,280 Book value per share (GAAP) (
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