Heritage Financial Corporation · NASDAQ:HFWA
Heritage Financial — Merger or Acquisition (September 2025)
16 slides from Heritage Financial's merger presentation, Sep 26, 2025
Slide 1: Strategic Expansion in the Puget Sound Region
September 25th, 2025 Strategic Expansion in the Puget Sound Region +
Slide 2: Cautionary Note Regarding Forward-Looking Statements
2 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,” “inte
Slide 3: Strategically Compelling Expansion in the Puget Sound
3 18% EPS Accretion in 2027 20% Internal Rate of Return 3 years TBV Earnback (crossover method) $1.7B $1.4B 1.09% Total Assets Total Deposits Cost of Deposits 6.96% 68% 0.01% TCE Ratio1,2 Loans / Deposits NPAs / Assets Strategically Compelling Expansion in the Puget Sound Company Highlights – Kitsap
Slide 4: Strategic Expansion and Scarcity Value of Kitsap Bank
4 Strategic Expansion ▪ Positions HFWA as the leading community bank in the Puget Sound region ▪ 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 market ▪ $9 bil
Slide 5: Geographic Fit and Strong Market Share
5 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 Mas
Slide 6: Attractive Demographics
6 Attractive Demographics ▪ Growth in these markets supported by diverse economy, fueled by government entities, technology companies and private enterprise ▪ Connected to Seattle with regular ferry service into Bainbridge Island and Bremerton ▪ U.S. Navy is largest employer in Kitsap County with th
Slide 7: Transaction Structure and Overview
7 Transaction Structure and Overview Structure ▪ Olympic Bancorp, Inc. (“Olympic”) will merge into Heritage Financial Corporation (“HFWA”) ▪ Kitsap Bank (“Kitsap”) will merge into Heritage Bank (“HB”) Consideration ▪ 100% stock consideration ▪ Approximately 7.2 million shares of HFWA issued to Olymp
Slide 8: Key Transaction Assumptions
8 Key Transaction Assumptions CECL ▪ CECL reserve of $11.4 million, or 1.10% of total loans (no double count with credit marks) ▪ Allocation of 79% non-PCD and 21% PCD Investment Securities ▪ AFS securities write-down of $69.0 million, no impact to equity at close (accreted over 5 years) ▪ HTM secur
Slide 9: Historical Growth – Organic and Acquisitive
9 $0.9 $0.9 $1.0 $0.8 $1.4 $1.3 $1.4 $1.8 $3.7 $3.9 $4.1 $4.4 $5.6 $6.6 $7.4 $7.0 $7.2 $7.1 $7.1 $0.6 $0.3 $1.7 $0.9 $1.7 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Q2 2025 Organic Acquired Olympic Bancorp Source: S&P Capital IQ Pro Note: All dollars in
Slide 10: Concluding Observations
10 Concluding Observations ➢ Completed 7 bank acquisitions since 2010 ➢ Closed or consolidated 18 branches since 2015 ➢ Track record of successful M&A integration Attractive financial returns Increases HFWA’s operating scale with assets of $9 billion, pro forma Low risk transaction Logical geographi
Slide 11: Appendix
APPENDIX
Slide 12: Due Diligence Process
12 Due Diligence Process Process Overview ✓ 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 ✓ Performed an in-depth loan file review on credit quality with sign
Slide 13: Deposit Mix
13 Source: S&P Capital IQ Pro, as of the quarter ended 6/30/2025 Note: All dollars in thousands Deposit Mix Heritage Kitsap Pro Forma Balance % of Balance % of Balance % of ($000s) Total ($000s) Total ($000s) Total Noninterest-Bearing Demand 1,584,231$ 27.4% Noninterest-Bearing Demand 424,402$ 30.7%
Slide 14: Loan Portfolio Mix
14 C&D 7.1% 1-4 Fam. 14.0% Multifam. 8.1% NOO CRE 28.7% OO CRE 20.9% C&I 13.1% Farm & Ag. 1.2% Consumer 0.4% Other 6.5% C&D 10.7% 1-4 Fam. 6.9% Multifam. 9.1% NOO CRE 36.6% OO CRE 18.2% C&I 17.7% Farm & Ag. 0.0% Consumer 0.4% Other 0.5% C&D 7.7% 1-4 Fam. 12.8% Multifam. 8.3% NOO CRE 30.0% OO CRE 20.
Slide 15: Pristine Asset Quality
15Source: S&P Capital IQ Pro, FDIC Quarterly Banking Profile as of 6/30/2025 Pristine Asset Quality Net Charge-Offs / Average Loans (%) 0.07% 0.30% 1.10% 2.05% 0.58% 0.46% 0.31% 0.15% 0.10% 0.14% 0.12% 0.06% 0.09% 0.07% 0.01% -0.03% -0.01% 0.06% 0.03% 0.03% 0.20% 1.25% 1.49% 0.38% 0.17% 0.03% 0.11%
Slide 16: Non-GAAP Reconciliation
16Note: All dollars in thousands, except per share 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,
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