Olympia’s Heritage Financial Corporation, along with Washington Banking Company of Oak Harbor, announced today that the two companies will enter a strategic merger.
The move will result in one of the largest bank mergers between two Washington banks, with a transaction valued at approximately $265.1 million.
The deal is expected to close in the first half of 2014.
The news comes on the same day that Heritage – parent company to Heritage Bank – announced its third quarter results, with a net income of $3.3 million for the months of July through September. That’s an increase from both the $2.9 million net income from the same quarter last year, and the $2.7 million net income of 2013’s Q2.
In commenting about the quarter, Heritage President and CEO Brian L. Vance mentioned another trio of recent acquisitions for the company.
“We are beginning to see the tangible results from our acquisitions of Northwest Commercial Bank and Valley Bank and the merger of our Central Valley Bank subsidiary into Heritage Bank,” said Vance.
“Our capital ratios continue to be very strong and we feel that we are in a good position to grow organically and to continue to be able to take advantage of acquisition opportunities that we believe still exists.”
Washington Banking Company is the sixth merger or acquisition for Heritage in the last four years. The acquisitions of Northwest Commercial and Valley Bank were finalized in January and July of this year, respectively, and Heritage merged with Yakima-based subsidiary Central Valley Bank this past June. Heritage acquired Cowlitz Commercial Bank, previously based in Longview, and Pierce Commercial Bank, headquartered in Tacoma, in July and November of 2010, respectively.
As for Washington Banking, most of its branches will adopt the Heritage Bank name, save six Whidbey Island branches that will continue to operate under the Whidbey Island Bank name. The combined company will have 73 locations across Washington and Oregon.
“We are very excited about this partnership between two of Western Washington’s strongest community banks and we believe the combined company is better positioned for continued growth and success within our respective markets,” said Jack Wagner, president and CEO of Washington Banking. “The contiguous branch footprints along the I-5 corridor and complementary business models make this combination a natural fit.”
Upon completion of the deal, Washington Banking shareholders will own roughly 46 percent of the new company, while Heritage shareholders will own approximately 54 percent.
Vance will serve as CEO of the combined company, which, based on financial results as of Sept. 30, will have approximately $3.3 billion in total assets, $2.9 billion in total deposits and $2.3 billion in total loans. Wagner will serve as special advisor to the company; Vance, along with three executives apiece from Heritage and Washington Banking will serve as the leadership team.
The board of directors will be made up of eight directors from Heritage and seven from Washington Banking, with current Washington Banking chair Tom Pickering to serve as chair.
The corporate headquarters of the combined company will be in Olympia.