HERITAGE FINANCIAL CORP /WA/HFWA

HERITAGE FINANCIAL CORP /WA/ Goodwill & Intangibles Disclosure

10-KFiled Feb 27, 20262 min read
Goodwill and Other Intangible Assets
(a) Goodwill
The Company’s goodwill represents the excess of the purchase price over the fair value of net assets acquired in the following mergers: Premier Commercial Bancorp and Puget Sound Bancorp in 2018; Washington Banking Company in 2014; Valley Community Bancshares in 2013; Western Washington Bancorp in 2006; and North Pacific Bank in 1998. The Company’s goodwill is assigned to the Bank and is evaluated for impairment at the Bank level (reporting unit). There were no additions to goodwill during the years ended December 31, 2025, 2024, and 2023. On January 31, 2026, the Company completed its acquisition of Olympic Bancorp, Inc., which resulted in an increase in the Company’s goodwill. Refer to Footnote 22 Subsequent Merger Transactions for additional information related to the acquisition.
At December 31, 2025, the Company's analysis concluded the fair value of the reporting unit exceeded the carrying value so the Company's goodwill was not considered impaired. Similarly, no goodwill impairment charges were recorded for the years ended December 31, 2024 and 2023. Even though there was no goodwill impairment at December 31, 2025, changes in economic environment, operations of the reporting unit or other adverse events could result in future impairment charges which could have a material impact on the Company's operating results.
(b) Other Intangible Assets
Other intangible assets represent core deposit intangibles acquired in business combinations with estimated useful lives of ten years. There were no additions during the years ended December 31, 2025, 2024, and 2023.
The following table presents the changes in carrying value of other intangible assets at the dates indicated:
Year Ended December 31,
 20252024
 (Dollars in thousands)
Gross Carrying Value
$30,455 30,455 
Accumulated amortization
(28,476)(27,302)
Net carrying value
$1,979 $3,153 
The following table presents the estimated aggregate amortization of other intangible assets at the dates indicated:
December 31, 2025
Estimated amortization expense
2026$1,005 
2027821 
2028153 
Total$1,979 

Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2024Feb 27, 2025
2022Feb 24, 2023
2021Feb 25, 2022
2019Feb 28, 2020
2018Mar 1, 2019
2017Feb 28, 2018
2016Mar 9, 2017
2015Mar 10, 2016

About Goodwill & Intangibles Disclosures

Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.

Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.

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