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In a move set to reshape the Puget Sound banking landscape, Heritage Financial Corp., the parent company of Heritage Bank, announced it will acquire Olympic Bancorp Inc., the holding company of Kitsap Bank, in an all-stock transaction valued at nearly $177 million.

Deal Structure and Shareholder Impact

The agreement, revealed Thursday, outlines that Olympic shareholders will receive 45 shares of Heritage common stock for each share of Olympic stock under a fixed exchange ratio. With Heritage stock closing at $24.46 on Wednesday, the transaction’s value totals approximately $176.6 million.

Once finalized—expected in the first quarter of 2026—Olympic shareholders will own roughly 17.4% of the merged entity.

Kitsap’s Legacy Meets Heritage’s Growth

Founded in Port Orchard, Washington, Kitsap Bank operates 17 branches with $1.7 billion in total assets. Following the merger, Heritage’s total assets are projected to climb to $8.8 billion, giving the combined institution a stronger foothold in the region.

The merger is forecast to boost Heritage’s profitability and efficiency ratios while delivering about 18% earnings-per-share accretion after full cost synergies are realized.

Leadership Voices on the Transaction

Heritage President and CEO Bryan McDonald praised Kitsap’s deposit franchise, calling it “exceptionally high-quality” and “low-cost.” He added that the union will create “a more robust banking platform for communities across the Puget Sound region.”

Olympic and Kitsap’s CEO Steve Politakis echoed the sentiment, noting: “This combination provides the scale and capabilities of a larger bank while preserving the high-touch community bank approach our customers value.”

Advisers Behind the Deal

Heritage turned to Barack Ferrazzano Kirschbaum & Nagelberg LLP for legal counsel and DA Davidson & Co. as financial adviser. Olympic was advised by Otteson Shapiro LLP and financial adviser Piper Sandler & Co.

The deal underscores a broader trend of consolidation in regional banking, with community lenders joining forces to weather industry headwinds and strengthen competitiveness in a rapidly evolving financial market.