HERITAGE FINANCIAL CORP /WA/

Other than as set forth below, there have been no material changes to the risk factors set forth in Item 1A of the Company’s 2024 Annual Form 10-K.

Risks Related to the Proposed Merger

Litigation may be Filed Against the Company or Olympic (or their Respective Boards of Directors) that Could Prevent or Delay the Consummation of the Merger or Result in the Payment of Damages Following Consummation of the Merger.

It is possible that, in connection with the merger of Olympic Bancorp, Inc. (“Olympic”) with and into the Company (the “Olympic Merger”), shareholders may file demands or putative class action lawsuits against the Company or Olympic (or their respective boards of directors). Among other remedies, these shareholders could seek financial damages or to enjoin the Olympic Merger. The outcome of any such litigation is uncertain. Additionally, one of the conditions to the closing of the Olympic Merger is that there must be no order, injunction, decree, statute, rule, regulation or other legal restraint or prohibition preventing or making illegal the consummation of the Olympic Merger or any of the other transactions contemplated by the merger agreement between the Company and Olympic (the “Merger Agreement”). If a dismissal is not granted or a settlement is not reached and any plaintiff were successful in obtaining an injunction prohibiting the Company or Olympic from completing the Olympic Merger or any of the other transactions contemplated by the Merger Agreement, then such injunction may delay or prevent the effectiveness of the Olympic Merger and could result in significant costs to the Company or Olympic, including any cost associated with the indemnification of directors and officers of each company. The defense or settlement of any lawsuit or claim that remains unresolved at the time the Olympic Merger is consummated may adversely affect the combined company’s business, financial condition, results of operations and cash flows and the market price of the combined company.

Issuance of Shares of the Company’s Common Stock Pursuant to the Merger Agreement May Adversely Affect the Market Price of the Company’s Common Stock.

Pursuant to the Merger Agreement, the Company expects to issue approximately 7,167,600 shares of the Company’s common stock to Olympic shareholders. The dilution caused by the issuance of a large number of new shares of the Company’s common stock may result in fluctuations in the market price of the Company’s common stock, including a potential stock price decrease.

The Company May Fail to Realize the Anticipated Benefits of the Olympic Merger.

The Company and Olympic have operated and, until the consummation of the Olympic Merger, will continue to operate, independently. The success of the Olympic Merger, including anticipated benefits and cost savings, will depend on, among other things, the Company’s ability to combine the businesses of the Company and Olympic in a manner that permits growth opportunities, including, among other things, enhanced revenues and revenue synergies, an expanded market reach and operating efficiencies, and does not materially disrupt the existing customer relationships of the Company or Olympic, nor result in decreased revenues due to any loss of customers. If the Company is not able to successfully achieve these objectives, the anticipated benefits of the Olympic Merger may not be realized fully or at all or may take longer to realize than expected. Failure to achieve these anticipated benefits could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy and could have an adverse effect on the surviving corporation’s business, financial condition, operating results, prospects and stock price.

While individuals employed by Olympic or Kitsap Bank, the wholly-owned banking subsidiary of Olympic, immediately prior to the effective time will automatically become employees of the Company or Heritage Bank following the Olympic Merger, certain employees may not be retained by the Company after the merger. In addition, certain employees that the Company wishes to retain may elect to terminate their employment as a result of the Olympic Merger, which could delay or disrupt the integration process. It is possible that the integration process could result in the disruption of the Company’s or Olympic’s ongoing businesses or cause inconsistencies in standards, controls, procedures and policies that adversely affect the ability of the Company or Olympic to maintain relationships with customers and employees or to achieve the anticipated benefits and cost savings of the Olympic Merger.

Among the factors considered by the boards of directors of both the Company and Olympic in connection with their respective approvals of the Merger Agreement were the anticipated benefits that could result from the Olympic Merger. There can be no assurance that these benefits will be realized within the time periods contemplated or at all.

Before the transactions contemplated in the Merger Agreement can be consummated, various approvals must be obtained from the bank regulatory and other governmental authorities. In deciding whether to grant regulatory clearances, the relevant governmental entities will consider a variety of factors, including the regulatory standing of each of the parties. An adverse condition or development in either party’s regulatory standing or other factors could result in an inability to obtain one or more of the required regulatory approvals, or delay their receipt. The terms and conditions of the approvals that are granted may impose requirements, limitations or costs, or may place restrictions on the conduct of the combined company’s business.

The Company and Olympic believe that the Olympic Merger should not raise significant regulatory concerns, and that the parties will be able to obtain all requisite regulatory approvals in a timely manner. Despite the parties’ commitments to use their reasonable best efforts to comply with conditions imposed by regulatory entities, under the terms of the Merger Agreement, the Company and Olympic will not be required to consummate the Olympic Merger if any such approvals would reasonably be expected to materially restrict or burden the Company following the merger. There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions, or that such conditions, terms, obligations or restrictions will not have the effect of delaying the consummation of the Olympic Merger, imposing additional material costs on or materially limiting the revenues of the combined company following the Olympic Merger or otherwise reduce the anticipated benefits of the Olympic

Merger if the Olympic Merger were consummated successfully within the expected timeframe. In addition, neither the Company nor Olympic can provide assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the Olympic Merger. The consummation of the Olympic Merger is further conditioned on the absence of certain orders, injunctions or decrees by any court or regulatory agency of competent jurisdiction that would prohibit or make illegal the consummation of the Olympic Merger.