Heritage Financial Corporation (NasdaqGS:HFWA) entered into a letter of intent to acquire Puget Sound Bancorp, Inc. (OTCPK:PUGB) for approximately $120 million on May 25, 2017. Under the terms of the transaction, Puget Sound shareholders will receive 1.32 shares of Heritage common stock for each share of Puget Sound common stock, subject to potential adjustment. Heritage Financial Corporation signed a definitive agreement to acquire Puget Sound Bancorp, Inc. on July 26, 2017. The value of the merger consideration will fluctuate until closing based on the value of Heritage's stock price and subject to a cap and collar in certain circumstances. Upon closing, Puget Sound will be merged with and into Heritage with Heritage as surviving corporation and immediately thereafter Puget Sound's bank subsidiary, Puget Sound Bank, will be merged with and into the Heritage's subsidiary bank, Heritage Bank. Upon consummation, the shareholders of Puget Sound will own approximately 13.4% of the combined company. The merger agreement also contains non-solicitation provisions. In the event the agreement is terminated under certain specified circumstances in connection with a competing transaction, Puget Sound will be required to pay Heritage a termination fee of $4.25 million in cash. One Director of Puget Sound will join Heritage's Board of Directors following the completion of the Merger. Jim Mitchell, Chief Executive Officer of Puget, will be retained as King County Market President, Sean Brennan, President and Chief Lending Officer of Puget, will be retained as Commercial Banking Regional Manager for Heritage Financial. Employment agreement has been entered into with Tony Chalfant, Chief Credit Officer/ Chief Operating Officer of Puget, Sean Brennan, Jim Mitchell and two key team leaders. A confidentiality agreement was entered into between Heritage and Puget Sound on February 24, 2017. The transaction is subject to regulatory approvals, third party consents, condition that dissenting shares shall be less than 10%, the shares of Heritage common stock to be issued shall have been approved for listing on the NASDAQ, S-4 effectiveness, approval by Puget Sound shareholders and certain other customary closing conditions. All of the Directors and Executive Officers of Puget Sound have agreed to vote their shares of Puget Sound common stock in favor of approval of the agreement. The transaction has been unanimously approved by the Boards of Directors of Heritage and Puget Sound. As of November 17, 2017, Washington Department of Financial Institutions and the Federal Deposit Insurance Corporation have approved the transaction. Federal Reserve Board also granted Heritage’s requested waiver from its application filing requirements. The transaction is expected to be completed in the first quarter of 2018. The transaction is expected to be accretive. D.A. Davidson & Co. served as financial advisor and provided a fairness opinion to Heritage's board, and John F. Breyer, Jr. of Breyer & Associates PC and Silver, Freedman, Taff & Tiernan, LLP served as legal counsel to Heritage. Adam Keefer of Sandler O'Neill + Partners, L.P. served as financial advisor and provided a fairness opinion to Puget Sound and will receive a fees for its services in an amount equal to 1.25% of the aggregate purchase price or approximately $1.6 million. Glen P. Garrison of Keller Rohrback L.L.P. served as legal counsel to Puget Sound. Computershare, Inc. acted as transfer agent to Heritage Financial Corporation. Advantage Proxy acted as the proxy solicitor for Puget Sound and will be paid a fee of $4,250, including out-of-pocket expenses, plus $3.82 per vote transmitted using the Broadridge QuickVote proxy voting application, for its services. Barack Ferrazzano Kirschbaum & Nagelberg LLP acted as the legal advisor to Heritage. Heritage Financial Corporation (NasdaqGS:HFWA) completed the acquisition of Puget Sound Bancorp, Inc. (OTCPK:PUGB) for approximately $110 million on January 16, 2018. Heritage will issue an aggregate of 4.112 million shares of its common stock and shareholders of Puget Sound immediately prior to the merger will receive 1.1688 shares of Heritage's common stock. Founding member of the Puget Sound Board of Directors Stephen A. Dennis joined Boards of Directors of Heritage and Heritage Bank.