Heritage Financial in Olympia, Wash., has agreed to buy Puget Sound Bancorp in Bellevue, Wash.

The $4 billion-asset Heritage said in a press release late Wednesday that it will pay $126.1 million in stock for the $567 million-asset Puget Sound. The deal, which is expected to close in the first quarter, prices Puget Sound at 243.5% of its tangible book value.

Brian Vance, president and CEO of Heritage Financial in Olympia, Wash.
Heritage Financial, led by CEO Brian Vance, is buying one of the few remaining banks based in the Seattle area.

Puget Sound is a business bank with one branch, $371 million in loans and $505 million in deposits.

“Puget Sound is a premier banking institution which has focused on serving the needs of small- and medium-sized businesses in the vibrant Seattle-Bellevue economy,” Brian Vance, Heritage’s president and CEO, said in the release.

Jim Mitchell, Puget Sound’s CEO, will stay with Heritage as a market president.

Heritage said it expects to cut about $4.8 million in costs, 35% of Puget Sound’s annual noninterest expenses. It expects to incur about $9 million in merger-related expenses.

D.A. Davidson, Breyer & Associates and Silver, Freedman, Taff & Tiernan advised Heritage. Sandler O'Neill and Keller Rohrback advised Puget Sound.

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