The parent company of Olympia-based Heritage Bank announced Thursday the company is set to acquire Puget Sound Bancorp of Bellevue in an all-stock deal valued at $126.1 million.
The deal is expected to close in the first quarter of 2018. Once it does, Puget Sound Bancorp shareholders will own 13.4 percent of the combined company, according to a news release.
Formed in 2005, Puget Sound Bancorp, which operates Puget Sound Bank, is a business bank with one branch in downtown Bellevue. It has total assets of $567 million and 60 percent of its loan portfolio is in commercial loans.
Heritage also adds 60 people to its staff with the deal, increasing employment to about 800.
The acquisition announcement is the latest for Heritage Financial, which has acquired five banks since 2010. Thursday’s deal will boost Heritage’s assets to $4.6 billion, with more than $3 billion in total loans and deposits.
The deal makes sense for Heritage because it has increasingly sought to do more business in King County’s booming economy, Heritage President and Chief Executive Brian Vance said Thursday.
Heritage has a branch in Seattle and one in Bellevue, but two years ago began hiring more lenders. That decision has paid off, with Heritage generating $475 million in loans over that period, he said.
“Our forte is small-business lending,” Vance said.
A prior merger with Washington Banking Co. (Whidbey Island Bank) provided enough capital that Heritage now feels comfortable lending as much as $30 million per customer.
Businesses are using those loans to invest in equipment, secure operating capital and invest in property, such as a warehouse or a manufacturing facility, he said.
Heritage’s stock, which trades under the ticker symbol HFWA, closed down 20 cents to $26.95 a share on Thursday.