SecProbe.io

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 Document December 2, 2025 VIA EDGAR United States Securities and Exchange Commission Division of Corporation Finance 100 F Street, N.E. Washington, D.C. 20549 Attention: Aisha Adegbuyi Re: Heritage Financial Corporation Request for Acceleration of Effectiveness of Form S-4 SEC File No. 333-291538 (“Registration Statement”) Dear Ms. Adegbuyi: On behalf of Heritage Financial Corporation, as registrant, the undersigned officer hereby requests that the effective date for the Registration Statement be accelerated so that it will become effective at 2:00 p.m. (Washington, D.C. time) on Thursday, December 4, 2025, or as soon as practicable thereafter. Feel free to contact Joseph T. Ceithaml of Barack Ferrazzano Kirschbaum & Nagelberg LLP, the registrant’s legal counsel, at (312) 629-5143 with any questions or comments. Very truly yours, Heritage Financial Corporation /s/ Bryan McDonald                     Bryan McDonald President and Chief Executive Officer

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[LETTERHEAD OF HERITAGE FINANCIAL CORPORATION]

May 7, 2018

Via EDGAR and Email

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, D.C.  20549

Re:          Heritage Financial Corporation, Olympia, Washington

Registration Statement on Form S-4 (Commission File No. 333-224326)

Request for Acceleration of Effectiveness

Ladies and Gentlemen:

Pursuant to Rule 461 of Regulation C of the Securities Act of 1933, as amended, and in connection with the above-referenced Registration Statement, Heritage Financial Corporation (the "Company") hereby respectfully requests that the above-referenced Registration Statement be declared effective at 4:00 p.m. Eastern Time on Wednesday, May 9, 2018, or as soon thereafter as practicable.

We request that we be notified of such effectiveness by a telephone call to Mr. John F. Breyer, Jr. of Breyer & Associates PC at (703) 883-1100.

Sincerely,

/s/Kaylene Lahn

Kaylene Lahn

Senior Vice President and

Corporate Secretary

cc: Christopher Dunham, Esquire, Division of Corporation Finance, Securities and Exchange

     Commission

Mail Stop 4720

April 23, 2018

Kaylene M. Lahn
Senior Vice President and Corporate Secretary
Heritage Financial Corporation
201 Fifth Avenue SW
Olympia, WA 98501

Re: Heritage Financial Corporation
  Registration Statement on Form S-4
Filed  April 18, 2018
  File No.  333-224326

Dear Ms. Lahn :

This is to advise you that we have not  reviewed and will not review your registration
statement .

Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.

Please  contact Christopher Dunham, Staff Attorney, at (202) 551 -3783  with any
questions .

Sincerely,

 /s/ Era Anagnosti

Era Anagnosti
Acting Assistant Director
Office of Financial Services

cc: John F. Breyer, Jr., Esq.

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[LETTERHEAD OF HERITAGE FINANCIAL CORPORATION]

November 9, 2017

Via EDGAR and Email

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, D.C.  20549

Re:          Heritage Financial Corporation, Olympia, Washington

Registration Statement on Form S-4 (Commission File No. 333-221013)

Request for Acceleration of Effectiveness

Ladies and Gentlemen:

Pursuant to Rule 461 of Regulation C of the Securities Act of 1933, as amended, and in connection with the above-referenced Registration Statement, Heritage Financial Corporation (the "Company") hereby respectfully requests that the above-referenced Registration Statement be declared effective at 4:00 p.m. Eastern Time on Monday, November 13, 2017, or as soon thereafter as practicable.

We request that we be notified of such effectiveness by a telephone call to Mr. John F. Breyer, Jr. of Breyer & Associates PC at (703) 883-1100.

Sincerely,

/s/Kaylene Lahn

Kaylene Lahn

Senior Vice President and

Corporate Secretary

cc: Christopher Dunham, Esquire, Division of Corporation Finance, Securities and Exchange

     Commission

Mail Stop 4720

October 26, 2017

Kaylene M. Lahn
Senior Vice President and Corporate Secretary
Heritage Financial Corporation
201 Fifth Avenue SW
Olympia, WA 98501

Re: Heritage Financial Corporation
  Registration Statement on Form  S-4
Filed  October 19, 2017
  File No.  333-221013

Dear Ms. Lahn :

This is to advise you that we have not  reviewed and will not review your registration
statement .

Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.

Please  contact Christopher Dunham, Staff Attorney, at (202) 551 -3783  with any
questions .

Sincerely,

 /s/ Era Anagnosti

Era Anagnosti
Legal Branch Chief
Office of Financial Services

cc: John F. Breyer, Jr., Esq.

March 4, 2014

Via E -mail
Kaylene M. Lahn
Senior Vice President
Heritage Financial Corporation
201 Fifth Avenue SW
Olympia, WA 98501

Re: Heritage Financial Corporation
Form  10-K for Year Ended December 31, 2012
Filed March 6, 2013
File No. 000-29480

Dear Ms. Lahn :

We have completed our review of your filing .  We remind you that our comments or
changes to disclosure in response to our comments do not foreclose the Commission from taking
any action with respect to the company or the filing and the company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.  We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the
information the Securities Exchange Act of 1934 and all applicable rules require.

Sincerely,

 /s/ Michael Clampitt

Michael Clampitt
Senior Counsel

cc:  Via E -mail
 John F. Breyer, Jr., Esq.

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Acceleration Request

 [Heritage Financial Corporation Letterhead]

February 27, 2014

 Via EDGAR and
Email

 Securities and Exchange Commission

 Division
of Corporation Finance

 100 F Street, NE

 Washington, D.C.
20549

Re:
Heritage Financial Corporation, Olympia, Washington

 Registration Statement on Form S-4
(Commission File No. 333-192985)

 Request for Acceleration of Effectiveness

Ladies and Gentlemen:

 Pursuant to Rule 461 of
Regulation C of the Securities Act of 1933, as amended, and in connection with the above-referenced Registration Statement, Heritage Financial Corporation (the “Company”) hereby respectfully requests that the above-referenced Registration
Statement be declared effective at 12:00 Noon on Tuesday, March 4, 2014, or as soon thereafter as practicable.

 Furthermore, the
Company hereby acknowledges:

•

should the Securities and Exchange Commission (the “Commission”) or the staff, acting pursuant to delegated authority, declare the Registration Statement effective, it does not foreclose the Commission from
taking any action with respect to the Registration Statement;

•

the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the Registration Statement effective, does not relieve the Company from its full responsibility for the adequacy and
accuracy of the disclosure in the Registration Statement; and

•

the Company may not assert the staff comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

 We request that we be notified of such effectiveness by a telephone call to Mr. John F. Breyer, Jr. of Breyer & Associates PC
at (703) 883-1100.

Sincerely,

/s/ Brian L. Vance

Brian L. Vance

President and Chief Executive Officer

cc:
Christopher Dunham, Esquire, Division of Corporation Finance, Securities and Exchange Commission

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SEC Letter

 [Breyer & Associates PC Letterhead]

February 27, 2014

 Via EDGAR and Hand
Delivery

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 100 F Street, N.E.

Washington, D.C. 20549

 Attn: Christopher Dunham, Staff Attorney

Re:
Heritage Financial Corporation

 Amendment No. 3 to Registration Statement on Form S-4

 File No. 333-192985

 Dear Mr. Dunham:

 On behalf of Heritage Financial Corporation, Olympia, Washington (“Company”), enclosed is a copy of pre-effective Amendment
No. 3 (“Amendment No. 3”) to the Company’s Registration Statement on Form S-4 (“Form S-4”), including exhibits, which is being filed today via EDGAR.

The revisions contained in Amendment No. 3 were made primarily in response to comments received from the Staff of the Securities and
Exchange Commission (“SEC”) on February 24, 2014. All changes have been marked.

 Amendment No. 2 to Registration Statement on Form
S-4 Filed February 14, 2014

 The Merger, page 45

1.
We note your revisions and response to comments 4, 5, and 6 in our comment letter dated February 7, 2014 and reissue. For example, revise to disclose:

•

Washington Banking’s price target and range, in the first full paragraph on page 48, as well as any developments that lead to acceptance of a price outside of that range;

•

Which side suggested the 0.89 exchange ratio, how it was reached internally, and whether there was any negotiation over the exchange ratio;

•

How the agreed upon 0.89 exchange ratio affected to the composition of shareholder compensation to be received in cash and stock, which until that point is only discussed in terms of a percentage and not as an exchange
ratio;

•

The reasoning behind both sides’ position seeking to alter the relative mix of shareholder compensation in stock and cash, as opposed to maximizing or minimizing, as applicable, the total deal price; and

•

How and when the outstanding Washington Banking options and restricted stock units were addressed and then negotiated over, including every position either side took in the negotiations and the development of any
changes from these positions.

 Response: We have revised the discussion on pages 47 through 50 to respond to the first
four bullets of this comment. No revisions have been made to this discussion in response to the fifth bullet of this comment as no negotiations with respect to this item occurred. The initial draft of

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 February 27, 2014

Page 2

the merger agreement provided that the equity awards would be exchanged for the merger consideration or as otherwise provided in the Washington Banking plans and that has not changed. In
addition, Washington Banking has only a non-material amount of options and restricted stock outstanding.

 Heritage’s Reason for the merger…,
page 53

2.
We note your response to comment three in our letter dated February 7, 2014 where D.A. Davidson confirmed that “there are not any items in the fairness materials…provided to the Heritage Board that did
not support a recommendation to proceed.” However, we also note your disclosure on page 65 that Washington Banking’s ratio of loan loss reserves to nonperforming loans was significantly below other target banks as compared to precedential
transactions, both nationwide and in the Western U.S. Please explain why these items do “support a recommendation to proceed,” otherwise revise to disclose that the Board noted these analyses and explain why, despite these analyses, it
still recommended the transaction.

 Response: We have revised the discussion on page 54 in response to this comment.

 Additionally, in response to the Staff’s request, the Company acknowledges that (i) it is responsible for the adequacy of the
disclosure in its filings; (ii) Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the Company’s filings; and (iii) the Company may not assert
Staff comments as a defense in any proceedings initiated by the Commission or any person under the federal securities laws of the United States.

*****

 Any questions regarding
the responses to the accounting comments should be directed to Donald J. Hinson, Chief Financial Officer, Heritage Financial Corporation [telephone: (360) 570-7379, Fax: (360) 705-9166 and email: Don.Hinson@HeritageBankNW.com].

We appreciate the Staff’s assistance in reviewing Amendment No. 3, and request that the Staff direct any questions concerning the
responses to the legal comments to the undersigned.

Sincerely,

/s/ John F. Breyer, Jr.

John F. Breyer, Jr.

 JFB/ktr/1317

 Enclosures

cc:
Michael Clampitt, Senior Counsel, Division of Corporation Finance, Securities and Exchange Commission

Christina Harley, Staff Accountant, Division of Corporation Finance, Securities and Exchange Commission

John Nolan, Senior Assistant Chief Accountant, Division of Corporation Finance, Securities and Exchange Commission

Brian L. Vance, Chief Executive Officer, Heritage Bank

Jeffrey J. Deuel, President and Chief Operating Officer, Heritage Bank

Andrew H. Ognall, Esq., Lane Powell PC

February 24 , 2014

Via E -mail
Kaylene M. Lahn
Senior Vice President
Heritage Financial Corporation
201 Fifth Avenue SW
Olympia, WA 98501

Re: Heritage Financial Corporation
Amendment No. 2 to Registration Statement on Form S-4
Filed February 1 4, 2014
  File No. 333 -192985

Dear Ms. Lahn :

We have reviewed your amended registration statement , related response letter, and the
material confidentially provided,  and have the following comments.  In some of our comments,
we may ask you to provide us with information so we may better understand your disclosure.

Please respond to this letter by amending your registration statement and providing the
requested informati on.  If you do not believe our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.

After reviewing any amendment to your registration statement and the information you
provid e in response to these  comments, we may have  additional comments.

Amendment No. 2 to Registration Statement on Form S -4 Filed February 1 4, 2014

The Merger, page 45

1. We note your revisions and response to comments 4, 5, and 6 in our comment letter dated
February 7, 2014 and reissue. For example, revise to disclose:

 Washington Banking’s price target and range, in the first full paragraph on page
48, as well as any developments that lead to acceptance of a price outside of that
range;
 Which side suggested  the 0.89 exchange ratio, how it was reached internally, and
whether there was any negotiation over the exchange ratio;
 How the agreed upon 0.89 exchange ratio affected to the composition of
shareholder compensation to be received in cash and stock, which until that point
is only discussed in terms of a percentage and not as an exchange ratio;

Kaylene M. Lahn
Heritage Financial Corporation
February 24 , 2014
Page 2

  The reasoning behind both sides’ position seeking to alter the relative mix of
shareholder compensation in stock and cash, as opposed to maximizing or
minimizing, as applicable, the total deal price; and
 How and when the outstanding Washington Banking options and restricted stock
units were addressed and then negotiated over, including every position either
side took in the negotiations and the development of any chang es from these
positions.

Heritage’s Reason for the merger…, page 53

2. We note your response to comment three in our letter dated February 7, 2014 where D.A.
Davidson confirmed that “there are not any items in the fairness materials…provided to
the Heritage  Board that did not support a recommendation to proceed.” However, we also
note your disclosure on  page 65 that Washington Banking’s ratio of loan loss reserves to
nonperforming loans was significantly below other target banks as compared to
precedential t ransactions, both nationwide and in the Western U.S. Please explain why
these items do “support a recommendation to proceed,” otherwise revise to di sclose that
the Board noted these analyses and explain why, despite these analyses, it still
recommended the  transaction.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Act of 193 3 and
all applicable Securities  Act rules require.   Since the company and its management are in
possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

Notwithstanding our comments, in the event  you request acceleration of the effective date
of the pending regist ration statement please provide  a written statement from the company
acknowledging that:

 should the Commission or the staff, acting pursuant to delegated authority, declare the
filing ef fective, it does not foreclose the Commission from taking any action with respect
to the filing;

 the action of the Commission or the staff, acting pursuant to delegated authority, in
declaring the filing effective, does not relieve the company from its f ull responsibility for
the adequacy and accuracy of the disclosure in the filing; and

 the company may not assert staff comments and the declaration of effectiveness as a
defense in any proceeding initiated by the Commission or any person under the federa l
securities laws of the United States.

Please refer to Rules 460 and 461 regarding requests for  acceleration .  We will consider a
written request for acceleration of the effective date of the registration statement as confirmation

Kaylene M. Lahn
Heritage Financial Corporation
February 24 , 2014
Page 3

 of the fact that those  requesting acceleration are aware of their respective responsibilities under
the Securities Act of 1933 and the Securities Exchange Act of 1934 as they relate to the proposed
public offering of the securities specified in the above registration statement.   Please allow
adequate time  for us to review any amendment prior to the requested effective date of the
registration statement.

You may contact Christopher Dunham  at (202) 551 -3783  or me at (202) 551 -3434  with
any other questions.

Sincerely,

 /s/ Michael Clampitt

Michael Clampitt
Senior Counsel

cc:  Via E -mail
 John F. Breyer, Jr., Esq.

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Correspondence

 [Breyer & Associates PC Letterhead]

February 14, 2014

 Via EDGAR and Hand
Delivery

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 100 F Street, N.E.

Washington, D.C. 20549

 Attn: Christopher Dunham, Staff Attorney

Re:
Heritage Financial
Corporation

Amendment Number 2 to Registration Statement on Form S-4
File No. 333-192985

Dear Mr. Dunham:

 On behalf of Heritage
Financial Corporation, Olympia, Washington (“Company”), enclosed is a copy of pre-effective Amendment No. 2 (“Amendment No. 2”) to the Company’s Registration Statement on
Form S-4 (“Form S-4”), including exhibits, which is being filed today via EDGAR.

The revisions contained in Amendment No. 2 were made primarily in response to comments received from the Staff of the Securities and
Exchange Commission (“SEC”) on February 7, 2014. All changes have been marked.

 Amendment No. 1 to Registration Statement on Form
S-4 Filed January 24, 2014

 Summary, page 9

1.
We note your response to comment 7 in our letter dated January 16, 2014, and reissue in part. Please consider including mathematical formulas that clearly define your calculations and their basic variables, as well
as corresponding formulas demonstrating the calculation for your chosen hypothetical value.

 Response: The disclosure
with regard to the Stock Options and Restricted Stock Units on pages 12 and 13 have been expanded to include in the examples the mathematical formulas used in the calculations and to demonstrate how these formulas are applied in the given examples.

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 February 14, 2014

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 2

 Washington Banking’s Executive Officers and Directors Have Financial Interests…, page 14

2.
Please revise the bullets to disclose:

•

the aggregate possible severance payments in the first bullet;

•

the aggregate number of unvested restricted stock units that will vest; and,

•

any increase in compensation in bullets three through six

 Response: We have added the
aggregate and individual possible severance payments and the aggregate number of unvested restricted stock units that will vest.

 With
respect to the third bullet point above:

•

Messrs. McDonald and Eng are not receiving any increase in base compensation and we believe the employee benefit packages to be provided by Heritage to Messrs. McDonald and Eng are substantially comparable to those
currently provided by Washington Banking. As described in detail on page 82 of the joint proxy statement / prospectus, Mr. McDonald is entitled to a special bonus (paid monthly as long as he continues to be employed by Heritage) and Messrs.
McDonald and Eng will receive one-time restricted stock grants with a grant date fair values of $50,000 and $75,000, respectively; we have added disclosure of these two items to bullets three and four.

•

Mr. Wagner will not receive any increase in compensation.

•

The sixth bullet point on page 15 discloses the fact that seven Washington Banking directors will join the Heritage board; none of the seven directors will receive any special benefits as a result of joining the
Heritage board. The new directors will be compensated consistent with the director compensation paid to current Heritage directors. A review of total director compensation, which depends in part on the number of meetings attended and the value of
stock awards on the date of grant, for Heritage and Washington Banking indicates that director compensation is very similar and differences in amounts immaterial. Average total 2012 director compensation was $58,940.17 at Washington Banking and
$59,586.33 at Heritage (excluding partial year service).

 The Merger, page 45

3.
Confirm to the staff that every D.A. Davidson & Co. and Sandler & Co. line-item analysis support the board’s recommendation. If not, revise to disclose that the Board noted this analysis and
explain why, despite this analysis, it still recommended the transaction. In addition, please confirm that your supplemental response contains all of the non-public projections that Heritage provided to Sandler, and that Washington Banking provided
to Davidson. If not, please provide us with these projections.

 Response: D.A. Davidson & Co. has confirmed
that there are not any items in the fairness materials that they provided to the Heritage Board that did not support a recommendation to proceed. As disclosed on page 71 of the joint proxy statement / prospectus, Sandler O’Neill &
Partners, L.P., believes that its analyses must be considered as a whole and that selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all
such factors and analyses, could create an

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 February 14, 2014

 Page
 3

incomplete view of the evaluation process underlying its opinion. Sandler did not single out specific items as either supportive or not.

We also are providing under separate cover, confidential non-public information, which includes Heritage projections, that was provided by
Heritage to Sandler O’Neill & Partners, L.P.

 Background of the Merger, page 45

4.
Please revise to more completely disclose the terms and development of your merger negotiations. Disclose every position each side took on the material terms of the transaction and the reason for any changes from this
initial position. Your next amendment should fully account for total shareholder compensation, the ratio of such compensation to be paid in stock or cash, and the treatment of Washington Banking’s options or restricted stock units.

 Response: This section has been revised to provide specific detail regarding the terms and development of the merger
negotiations, including details regarding total shareholders compensation and the ratio of the compensation to be paid in stock or cash, and the treatment of Washington Banking’s options or restricted stock units.

With respect to the treatment of Washington Banking’s option and restricted stock units, initially the model provided by D.A. Davidson
anticipated the payout occurring at the closing of the transaction. Under the terms of the merger agreement each Washington Banking stock award that is outstanding immediately prior to the merger (collectively, the “Washington Banking Stock
Awards”), including each stock option and restricted stock unit award under the Washington Banking 1998 Stock Option and Restricted Stock Award Plan and the Washington Banking 2005 Stock Incentive Plan (together, the “Washington Banking
Stock Plans”), would vest in accordance with the terms of the plan under which it was granted and the applicable award agreement. As a result, all Washington Banking Stock Awards would become fully vested as a result of the
merger. Heritage and Washington Banking determined further that all Washington Banking Stock Awards would be converted into equivalent Heritage stock awards at the time of the merger based on the option exchange ratio, which treatment was also
in accordance with the Washington Banking Stock Plans and applicable award agreements. Reference is made to the section entitled “Summary—What Holders of Washington Banking Stock Options and Restricted Stock Unit Awards Will
Receive” on pages 12 and 13 of the joint proxy statement/prospectus for a more detailed description of this conversion.

5.
Revise the entirety of this section to provide context for the “additional development[s]” or “various items” that were the topic of nebulous “discussions,” and add representative examples
when the topics covered are too numerous or immaterial to be succinctly identified.

 Response: This section has been
revised to eliminate general references and to add context and detail to this discussion.

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 February 14, 2014

 Page
 4

6.
We note your disclosure on page 46 that a merger would require “careful consideration of numerous structural and financial issues in order to be acceptable to both” you and Washington Banking. Please revise to
specify these issues.

 Response: This disclosure has been expanded to include additional details regarding the
numerous structural and financial issues that were considered in connection with the discussions between Heritage and Washington Banking.

7.
We note your disclosure on page 46 that Washington Banking was considering a potential “acquisition of a smaller financial institution” during the summer of 2013. Please revise to generally explain the
features of this potential acquisition, as well as when and why the board decided a merger with Heritage was preferable to this opportunity. Further disclose the substance of the other “number of strategic opportunities and merger and
acquisition possibilities for Washington Banking,” discussed by the Washington Banking management between August 13, 2013 and August 23, 2013, and the evaluations of those discussions.

Response: We have revised the disclosure on pages 45 through page 48 to provide additional information regarding Washington
Banking’s discussions and strategic opportunities. Washington Banking remains subject to a confidentiality agreement with the target referred to as the “acquisition of a smaller financial institution,” and cannot provide the name of
the target or information that would make the target easy to identify. With respect to other strategic opportunities, Washington Banking entered into five confidentiality agreements with potential acquisition targets from July 2012 to the August
2013 meetings and conducted varying levels of due diligence on such targets, and also generally discussed the merger and acquisition climate in the Pacific Northwest. None of the five opportunities moved beyond initial due diligence.

8.
Revise to disclose the reason for the proposal for mutual exclusivity, first mentioned during the September 9, 2013 meeting, the risks of such a proposal that were considered by either party, and the reason that
Washington Banking agreed to be bound. To the extent material, explain this timeline, including why Heritage did not execute the agreement until September 16, 2013, and Washington Banking did not execute the agreement until September 19,
2013.

 Response: This discussion has been revised to clarify the timing of the signing of the exclusivity agreement,
the reasons Washington Banking agreed to be bound to the exclusivity agreement and the matters that were considered by Washington Banking.

 Opinion of
Sandler O’Neill…, page 68

9.
We note your response to comment 9 in our letter dated January 16, 2014. Please revise your description of the Sandler opinion on page 70, and make corresponding changes throughout your filing, to reflect that
Washington Banking’s board of directors retains the right to request an update to Sandler’s opinion, pursuant to the terms of its engagement letter with Sandler. Disclose the material terms of this right to request an update.

 Response: We have revised the relevant disclosures on pages 71, 77 and 78 of the joint proxy statement/prospectus to
refer to the right to request an update. Please note that if an update is requested, the date of the update will be as close as practicable to the date of the final joint proxy statement and each of the relevant disclosures will be updated to refer
to the October 23 opinion and the update, and we would propose to remove

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 February 14, 2014

 Page
 5

references to the ability to request an update. There are no additional material terms to disclose as there is no fee associated with the update.

The Merger Agreement, page 88

10.
We note your deletions on page 45, 58, and 67 of your amended registration statement in response to comment 13 of our letter dated January 16, 2014. Please make corresponding changes on page 88, as well as on pages
34, 85, 87, 101, 125, and 126.

 Response: We have revised the disclosure on pages 89 and on pages 34, 86, 87, 103,
126, and 127 so that the disclosure on these pages is no longer qualified.

 Unaudited Pro Forma Combined Condensed Consolidated Financial Information

 Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Information

Note 2 – Purchase Price, page 109

11.
Please revise the consideration value exchanged for the Washington Banking stock options and restricted stock unit awards to refer to the approximation of $2.9 million based on the $16.72 Heritage common stock share
price at December 20, 2013 consistent with the amount disclosed in Note 3 – Allocation of Purchase Price of Washington Banking.

Response: We have revised the consideration value exchanged for the Washington Banking stock options and restricted stock unit award to
$2.9 million, which is consistent with the amount disclosed in Note 3.

 Note 3 – Allocation of Purchase Price of Washington Banking, page 110

12.
Please revise the pro forma purchase price of Washington Banking line item titled total pro forma purchase price to be $276,776 consistent with the tabular information provided.

Response: We have revised the total pro forma purchase price to be $276,776, which is the sum of the forms of consideration listed above
the total.

13.
Please revise the presentation to remove goodwill from the fair value of assets acquired. In this regard, present two line item totals as follows: fair value of net assets acquired and excess of consideration paid over
the net assets and identifiable intangibles acquired.

 Response: We have revised the presentation of the table in Note
3 to exclude goodwill from the fair value of assets acquired. We have additionally added two line items below the total pro forma purchase price: (1) Fair value of net assets and identifiable intangible assets acquired and (2) Excess of
consideration to be paid over the net assets and identifiable intangible assets acquired.

 Note 4 – Pro Forma Combined Condensed Consolidated
Financial Information Adjustments, pages 110 -113

14.
 We have reviewed your response to our prior comment twenty of our letter dated January 16, 2014. The staff notes that the adjustments to interest
expense: junior subordinated debentures are

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 February 14, 2014

 Page
 6

$185 and $88 for the nine months ended September 30, 2013 and the year ended December 31, 2012. Thus, the adjustment for the nine months ended September 30, 2013 is greater than
the adjustment for the year ended December 31, 2012. In addition, the adjustments on the face of the unaudited pro forma combined condensed consolidated statements of income are $85 and $88 for the nine months ended September 30, 2013 and
for the year ended December 31, 2012, respectively. Please advise or revise.

 Response: The amounts as presented
in the unaudited pro forma combined condensed consolidated statements of income for the pro forma adjustment related to interest expense on the junior subordinated debentures (Adjustment N) for the nine months ended September 30, 2013 and for
the year ended December 30, 2012 were properly reported as $85 and $88, respectively. The Adjustment N in Note 4 was revised such that the adjustment for the nine months ended September 30, 2013 is $85. Thus, the adjustment for the nine
months ended September 30, 2013 is less than the adjustment for the year ended December 31, 2012.

 Additionally, in response to
the Staff’s request, the Company acknowledges that (i) it is responsible for the adequacy of the disclosure in its filings; (ii) Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission
from taking any action with respect to the Company’s filings; and (iii) the Company may not assert Staff comments as a de

February 7, 2014

Via E -mail
Kaylene M. Lahn
Senior Vice President
Heritage Financial Corporation
201 Fifth Avenue SW
Olympia, WA 98501

Re: Heritage Financial Corporation
Amendment No. 1 to Registration Statement on Form S-4
Filed January 24, 2014
  File No. 333 -192985

Dear Ms. Lahn :

We have reviewed your amended registration statement , related response letter, and the
material confidentially provided,  and have the following comments.  In some of our comments,
we may ask you to provide us with information so we may better understand your disclosure.

Please respond to this letter by amending your registration statement and providing the
requested informati on.  If you do not believe our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.

After reviewing any amendment to your registration statement and the information you
provide in response to these  comments, we may have  additional comments.

Amendment No. 1 to Registration Statement on Form S -4 Filed January 24, 2014

Summary, page 9

1. We note your response to comment 7 in our letter dated January 16,  2014, and reissue in
part. Please consider including mathematical formulas that clearly define your
calculations and their basic variables, as well as corresponding formulas demonstrating
the calculation for your chosen hypothetical value.

Kaylene M. Lahn
Heritage Financial Corporation
February 7, 2014
Page 2

 Washingt on Banking’s Executive O fficers  and Directors Have Financial Interests …, page 14

2. Please revise the bullets to disclose :
 the aggregate possible severance payments in the first bullet;
 the aggregate number of unvested restricted stock units that will vest; and,
 any increase in compensation in bullets three through six

The Merger, page 45

3. Confirm to the staff that every D.A. Davidson & Co. and Sandler & Co. line -item
analysis support the board’s recommendation. If not, revise to disclose that the Board
noted this analysis and explain why, despite this analysis, it still recommended the
transaction. In addition, please confirm that your supplemental response contains all of
the non -public projections that Heritage provided to Sandler, and that Washington
Bank ing provided to Davidson. If not, please provide us with these projections.

Background of the Merger, page 45

4. Please revise to more completely disclose  the terms and development of your merger
negotiations. Disclose every position each side took on the material terms of the
transaction and the reason for any changes from this initial position. Your next
amendment should fully account for total shareholde r compensation, the ratio of such
compensation to be paid in stock or cash, and the treatment of Washington Banking’s
options or restricted stock units.

5. Revise the entirety of this section to provide context for the “additional development[s]”
or “various  items” that were the topic of nebulous “discussions,” and add representative
examples when the topics covered are too numerous or immaterial to be succinctly
identified.

6. We note your disclosure on page 46 that a merger would require “careful consideratio n of
numerous structural and financial issues in order to be acceptable to both” you and
Washington Banking. Please revise to specify these issues.

7. We note your disclosure on page 46 that Washington Banking was considering a
potential “acquisition of a sm aller financial institution” during the summer of 2013.
Please revise to generally explain the features of this potential acquisition, as well as
when and why the board decided a merger with Heritage was preferable to this
opportunity. Further disclose the  substance of the other “number of strategic
opportunities and merger and acquisition possibilities for Washington Banking,”
discussed by the Washington Banking management between August 13, 2013 and August
23, 2013, and the evaluations of those discussion s.

Kaylene M. Lahn
Heritage Financial Corporation
February 7, 2014
Page 3

 8. Revise to disclose the reason for the proposal for mutual exclusivity, first mentioned
during the September 9, 2013 meeting, the risks of such a proposal that were considered
by either party, and the reason that Washington Banking agreed to be bound. T o the
extent material, explain this timeline, including why Heritage did not execute the
agreement until September 16, 2013, and Washington Banking did not execute the
agreement until September 19, 2013.

Opinion of Sandler O’Neill…, page 68

9. We note your response to comment 9 in our letter dated January 16, 2014. Please revise
your description of the Sandler opinion on page 70, and make corresponding changes
throughout your filing, to reflect that Washington Banking’s board of directors retains the
right t o request an update to Sandler’s opinion, pursuant to the terms of its engagement
letter with Sandler. Disclose the material terms of this right to request an update.

The Merger Agreement, page 88

10. We note your deletions on page 45, 58, and 67 of your amended registration statement in
response to comment 13 of our letter dated January 16, 2014. Please make corresponding
changes on page 88, as well as on pages 34, 85, 87, 101, 125, and 126.

Unaudited Pro Forma Combined Condensed Consolidated Financial I nformation

Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Information

Note 2 – Purchase Price, page 109

11. Please revise the consideration value exchanged for the Washington Banking stock
options and restricted stock unit awards to refer to the approximation of $2.9 million
based on the $16.72 Heritage common stock share price at December 20, 2013 consistent
with the amount disclosed in Note 3 – Allocation of Purchase Price of Washington
Banking.

Note 3 – Allocation of Purchase Pric e of Washington Banking, page 110

12. Please revise the pro forma purchase price of Washington Banking line item titled total
pro forma purchase price to be $276,776 consistent with the tabular information
provided.

13. Please revise the presentation to remove g oodwill from the fair value of assets acquired.
In this regard, present two line item totals as follows: fair value of net assets acquired and
excess of consideration paid over the net assets and identifiable intangibles acquired.

Kaylene M. Lahn
Heritage Financial Corporation
February 7, 2014
Page 4

 Note 4 – Pro Forma Combi ned Condensed Consolidated Financial Information Adjustments,
pages 110 -113

14. We have reviewed your response to our prior comment twenty of our letter dated January
16, 2014. The staff notes that the adjustments to interest expense: junior subordinated
debentures are $185 and $88 for the nine months ended September 30, 2013 and the year
ended December 31, 2012. Thus, the adjustment for the nine months ended September
30, 2103 is greater than the adjustment for the year ended December 31, 2012. In
addition, the adjustments on the face of the unaudited pro  forma combined condensed
consolidated statements of income are $85 and $88 for the nine months ended September
30, 2013 and for the year ended December 31, 2012, respectively. Please advise or revise.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Act of 193 3 and
all applicable Securities  Act rules require.   Since the company and its management are in
possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

Notwithstanding our comments, in the event you request acceleration of the effective date
of the pending regist ration statement please provide  a written statement from the company
acknowledging that:

 should the Commission or the staff, acting pursuant to delegated authority, declare the
filing effective, it does not foreclose the Commissi on from taking any action with respect
to the filing;

 the action of the Commission or the staff, acting pursuant to delegated authority, in
declaring the filing effective, does not relieve the company from its full responsibility for
the adequacy and acc uracy of the disclosure in the filing; and

 the company may not assert staff comments and the declaration of effectiveness as a
defense in any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.

Please refer to Rules 460 and 461 regarding requests for  acceleration .  We will consider a
written request for acceleration of the effective date of the registration statement as confirmation
of the fact that those requesting acceleration are aware of their  respective responsibilities under
the Securities Act of 1933 and the Securities Exchange Act of 1934 as they relate to the proposed
public offering of the securities specified in the above registration statement.  Please allow
adequate time  for us to revi ew any amendment prior to the requested effective date of the
registration statement.

Kaylene M. Lahn
Heritage Financial Corporation
February 7, 2014
Page 5

 You may contact Christina Harley at (202) 551 -3695  or John Nolan, Senior Assistant
Chief Accountant,  at (202) 551 -3492  if you have questions regarding comments on the financial
statements and related matters.  Please contact Christopher Dunham  at (202) 551 -3783  or me at
(202) 551 -3434  with any other questions.

Sincerely,

 /s/ Michael Clampitt

Michael Clampitt
Senior Counsel

cc:  Via E -mail
 John F. Breyer, Jr., Esq.

CORRESP
1
filename1.htm

SEC Letter

 [BREYER & ASSOCIATES PC LETTERHEAD]

January 24, 2014

 Via EDGAR and Hand
Delivery

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 100 F Street, N.E.

Washington, D.C. 20549

 Attn: Christopher Dunham, Staff Attorney

Re:

 Heritage Financial
Corporation

 Amendment Number 1 to
Registration Statement on Form S-4

 File No. 333-192985

 Dear Mr. Dunham:

On behalf of Heritage Financial Corporation, Olympia, Washington (“Company”), enclosed is a copy of pre-effective Amendment
No. 1 (“Amendment No. 1”) to the Company’s Registration Statement on Form S-4 (“Form S-1”), including exhibits, which is being filed today via EDGAR.

The revisions contained in Amendment No. 1 were made primarily in response to comments received from the Staff of the Securities and
Exchange Commission (“SEC”). All changes have been marked.

 Registration Statement on Form S-4 Filed December 20, 2013

General

1.
Please supplementarily provide the staff with the board books prepared for each board.

Response – The board books prepared by D.A. Davidson & Co. (“Davidson”) and Sandler O’Neill &
Partners, L.P. (“Sandler”) for Heritage’s and Washington Banking’s respective boards are being provided under separate cover and were delivered via messenger on January 24, 2014.

2.
Noting the disclosures on pages 57 (bullets 2, 3 and 4) and 69 (first full paragraph) regarding financial projections for Washington Banking and Heritage, supplementally provide the staff with those projections. We may
have further comment.

 Response: The projections by Davidson for Heritage in connection with the disclosures on page
59 (bullets 2, 3 and 4) are being provided under separate cover and were delivered via messenger on January 24, 2014 in response to this comment. The projections by Sandler for Washington Banking are included in the Sandler board book provided
under separate cover in response to Comment 1 above.

 Securities and Exchange Commission

January 24, 2014

  Page
 2

3.
Please include page citations for all internal cross references in your next amendment.

Response – We have revised the joint proxy statement/prospectus to include page citations for all internal cross
references.

 Questions and Answers…, page 1

4.
Noting the dissenters’ rights referenced in the last Q&A on page 6, revise either the Shareholder Letter or Notice to Shareholders to inform Washington Banking shareholders that they must notify the Company
prior to the vote of their intent to dissent and add a cross-reference to a section in the proxy where information discloses how to perfect their right to dissent.

Response: In response to this comment, additional language has been added to the second page of the Washington Banking Notice to
Shareholders to inform Washington Banking shareholders wishing to exercise dissenters rights of the requirement to notify Washington Banking prior to the vote on the merger and adding a cross-reference to the section in the joint proxy
statement/prospectus entitled “The Merger – Washington Banking Shareholder Dissenters’ Rights.”

 Summary, page 9

5.
Please move the disclosures on page 33 (the historical and pro forma per share data), to the Summary, as required by Item 3(f) of Form S-4.

Response: We have moved the historical and pro forma per share data on page 33 to page 20 in the Summary.

6.
Revise the disclosures on pages 12 and 13 with regard to the Stock Options and Restricted Stock Units to add an example for each.

Response: The disclosures on pages 12 and 13 have been revised to add an example for Stock Options and Restricted Stock Units in
response to this comment.

7.
Please revise your disclosure on page 17 to briefly explain the material changes to the rights of Washington Banking shareholders upon completion of the merger.

Response: The disclosure on page 17 has been revised to briefly explain the material changes to the rights of Washington Banking
shareholders upon completion of the merger.

8.
We note your disclosure on page 18 that multiple shareholder class action lawsuits have been filed attempting to enjoin the proposed merger. Please describe any specific factual accusations included in the
plaintiffs’ complaints and tell us whether the Washington Banking or Heritage boards, as applicable, were aware of these facts when they approved the merger agreement.

Response: Two lawsuits were filed challenging the merger, which have been consolidated with a single operative complaint naming as
defendants Washington Banking, its directors, and Heritage. Essentially, the plaintiffs allege that the merger consideration is insufficient. The plaintiffs allege that Washington Banking’s directors have breached their fiduciary duties
because: (1) they will enjoy benefits not shared equally with all shareholders, (2) they have not adequately informed themselves of the true value of Washington Banking, (3) they have agreed to provisions in the merger agreement that
could prevent or discourage competing bids, and (4) they have not disclosed all material information in the joint proxy statement/prospectus. The plaintiffs allege that Heritage aided and abetted these alleged breaches.

 Securities and Exchange Commission

January 24, 2014

  Page
 3

 The unique benefits the plaintiffs allege consist of the list of items disclosed in the joint
proxy statement/prospectus in the section “The Merger – Interests of Washington Banking’s Directors and Executive Officers in the Merger” on page 78. Plaintiffs allege that the Washington Banking directors failed to inform
themselves of the true value of Washington Banking by allowing Mr. Wagner and members of Washington Banking management to “control the sales process” and by failing to conduct a “market check” or auction process prior to
entering the merger agreement. Plaintiffs allege that Washington Banking’s directors agreed to unfair “deal protection devices” including a “no-solicitation” provision, an agreement to notify Heritage of superior
unsolicited offers, and a termination fee. Finally, plaintiffs allege that Washington Banking’s directors have failed to disclose three categories of information in the joint proxy statement/prospectus: (1) the internal financial
projections of Washington Banking and Heritage, (2) certain additional details regarding the various valuation analyses performed by the companies’ respective financial advisers, Sandler and Davidson, and (3) certain additional
details regarding the history of the merger, especially the history of the negotiations and the deliberations of Washington Banking’s directors.

Washington Banking and its directors believe the claims and allegations lack merit. Washington Banking’s directors were aware of the
matters alleged in the consolidated complaint but do not believe that they constitute any wrongful conduct. Washington Banking’s directors were aware of the impact on their stock incentive plan, Washington Banking’s restricted stock
units, and Mr. Wagner’s agreements that would result from a change of control transaction. They were aware that seven Washington Banking directors were to become directors of the resulting entity and that Mr. Wagner would be
retained as a consultant. They were aware of the history of the negotiations of the merger, as well as the terms of the merger agreement, including the “deal protection devices.”

Heritage believes that the aiding and abetting claim against it also lacks merit, as plaintiffs fail adequately to allege the required elements
of an aiding and abetting claim. Instead, plaintiffs allege nothing more than that Heritage engaged in discussions and negotiations leading up to the merger. The aiding and abetting claim also is deficient because the primary claim of breach of
fiduciary duty, on which aiding and abetting liability is premised, is deficient.

 The Washington Banking defendants and
Heritage separately have filed motions to dismiss the claims against them.

 Risk Factors, page 19

9.
We note reference to a “Sandler update” on page 20, and your disclosure elsewhere, including on page 68 that “Sandler has not undertaken to update…its opinion…after the date of this
opinion.” Please disclose the substance or terms of this update and update your prospectus accordingly.

Response: In response to this comment, the Washington Banking board of directors may, pursuant to the terms of the engagement letter
with Sandler, request an update to the Sandler opinion, but has not done so. If the Washington Banking board of directors decides to request an update, we will provide additional information to clarify the update of Sandler’s opinion where
such opinion is referenced, including the sections referenced in the staff’s comment. In addition, we have deleted the reference to an updated opinion on page 29.

 Securities and Exchange Commission

January 24, 2014

  Page
 4

 Comparative Unaudited Pro Forma Per Share Data, page 33

10.
Please expand the disclosure to provide a note to the column titled Pro Forma Combined Amounts for Heritage to state the amounts of stockholders’ equity and shares of common stock outstanding after the merger used
for the book value calculations per common share at September 30, 2013 and December 31, 2012. In this regard, you may provide a cross-reference to the Unaudited Pro Forma Combined Condensed Consolidated Statement of Financial Condition and
Note 2 – Purchase Price used to calculate the pro forma combined amount for Heritage book value per common share at September 30, 2013.

Response: The disclosure on page 27 has been revised as requested. We have added footnote (3) that contains the book value and
common share amounts at September 30, 2103 and December 31, 2012. We have also added a cross-reference to the “Unaudited Pro Forma Combined Condensed Consolidated Financial Information” on page 103 and “Note 2 –
Purchase Price” on pages 108 and 109 to explain how the September 30, 2013 values were derived.

 The Merger, page 44

11.
Please revise this section to specify the material terms that were discussed and the positions taken by both sides throughout the merger negotiations.

Response: In response to this comment, pages 45 through 52 of this section have been revised to provide information regarding the
material terms that were discussed and the positions taken by the parties during the merger negotiations.

12.
We note that Washington Banking executives met with its financial advisor multiple times in advance of the August 27, 2013 informal meeting between Mr. Vance and Mr. Wagner. However, it appears from your
disclosure on page 45 that Mr. Wagner was not informed that Mr. Vance arranged the meeting to initiate informal merger discussions until the meeting itself. Please revise to explain.

Response: The disclosure on page 46 has been revised to clarify the nature of discussions between Mr. Wagner and Mr. Vance and
internal discussions at Washington Banking with Sandler, the board and management.

 The Merger Agreement, page 87

13.
Please do not qualify your discussion in this section. Although you may refer investors to the merger agreement for more detailed information, you must provide all of the material terms of the agreement in this section.
Similarly revise the qualification of your disclosure on the top of page 44, in the second paragraph on page 57, and the first partial paragraph on page 67.

Response: We have revised the disclosures on pages 45, 58 and 68 so that the disclosure on those pages is no longer qualified by
reference to the merger agreement.

 Unaudited Pro Forma Combined Condensed Consolidated Financial Information, pages 102-103

14.
 We note your disclosure that for purposes of the accompanying pro forma information, the closing price of Heritage common stock as of October 23,
2013, the business day on which the merger agreement was subsequently publically announced was used for purposes of presenting the pro forma combined condensed consolidated statement of financial condition as of September 30, 2013. Under ASC
805, the most recent stock price at the time of filing should be

 Securities and Exchange Commission

January 24, 2014

  Page
 5

used for determining the value of stock to be issued in a transaction that has not yet consummated. Please revise accordingly. In addition, please expand the notes to the unaudited pro forma
combined condensed consolidated statement of financial condition to state the date at which the stock price was determined and present a sensitivity analysis for the range of possible outcomes based on percentage increases and decreases in the
recent stock price.

 Response: The Unaudited Pro Forma Combined Condensed Consolidated Financial Information on pages
103 through 114 has been revised to change the stock price from $15.89 (the October 23, 2013 announcement date) to $16.72 (the December 20, 2013 Form S-4 filing date). We have also included a sensitivity schedule in Note 2 – Purchase
Price on page 109 to show possible range of outcomes and effects on total consideration and goodwill.

15.
We note the disclosure appearing in the 4th paragraph. Please expand the discussion to state management’s estimate of how these merger costs are expected to impact the liquidity of the newly combined companies
going forward and clearly identify this disclosure as forward-looking information.

 Response: We have included
additional disclosure in “Note 5 – Merger Costs” (last paragraph) on page 114 which provides information regarding the impact of the merger cost on the liquidity of the combined company. This paragraph also includes a cross reference
to the forward-looking statements included in “Cautionary Statement Regarding Forward-Looking Statements” on page 33. This section also provides a detailed definition of what constitutes forward-looking statements and we have included as
the fourth bullet a liquidity forward-looking statement.

 Washington Banking Company Unaudited Pro Forma Combined Condensed Consolidated Statements of
Income, pages 105-106

16.
The staff notes the line item titled other income under the heading Noninterest income for the nine months ended September 30, 2013 and the year ended December 31, 2012.

Please revise to include gains and losses on sales of OREO as well as any write-downs within other expense pursuant to Rule 9-04
(14) (d) of Regulation S-X.

 Response: We have reviewed Washington Banking’s historical financial statements and
underlying support and determined that included in the historical “Gain on disposition of covered assets” caption were gains related to the disposition of Washington Banking’s covered OREO. We have identified these amounts and
reclassified them to the combined company’s “Noninterest expense: Other real estate owned, net” caption. The remaining activity in the “Gain on disposition of covered assets” caption relates to the recognition of the
existing loan discount on acquired loans following resolution of the loans. We have included the remaining activity in this Washington Banking caption in “Noninterest income: Other income” for the combined company on pages 106 and 107.

17.
The staff notes the disclosure that certain historical data of Washington Banking has been reclassified on a pro forma basis to conform to Heritage’s classifications. With a view toward expanded disclosure please
tell us the amount and basis for these reclassifications for the nine months ended September 30, 2013 and the year ended December 31, 2012.

Response: The Company combined certain noninterest income and noninterest expense captions for each company, which were below the
threshold of Article 11-02 (b)(3) of Regulation S-X, into “Other income” and “Other expense”, respectively.

 Securities and Exchange Commission

January 24, 2014

  Page
 6

 In addition, we reviewed both companies’ general ledgers and accumulation of general
ledger accounts to determine if there were any inconsistencies in prese

January 16, 2014

Via E -mail
Kaylene M. Lahn
Senior Vice President
Heritage Financial Corporation
201 Fifth Avenue SW
Olympia, WA 98501

Re: Heritage Financial Corporation
Registration Statement on Form S-4
Filed December 20, 2013
  File No. 333 -192985

Dear Ms. Lahn :

We have reviewed your registration statement  and have the following comments.  In
some of our comments, we may ask you to provide us with information so we may better
understand your disclosure.

Please respond to this letter by amending your registration statement and providing the
requested information .  If you do not believe our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.

After reviewing any amendment to your registration statement and the information you
provide in response to these  comments, we may have  additional comments.

Registration Statement on Form S -4 Filed December 20, 2013

General

1. Please supplementarily provide the staff with the board books prepared for each board.

2. Noting the disclosures on pages 57 (bullets 2, 3 and 4) and 69 (first full paragraph)
regarding financial projections  for Washington Banking and Heritage, supplementally
provide the staff with those projections. We may have further comment.

3. Please include page citations for all internal cross references in your next  amendment .

Kaylene M. Lahn
Heritage Financial Corporation
January 16, 2014
Page 2

 Questions and Answers…, page 1

4. Noting the dissenters’ rights referenced in the last Q&A on page 6, revise either the
Shareholder Letter or Notice to Shareholders to inform Washington Banking share holder s
that they must notify the Company prior  to the vote of their intent to dissent and add a
cross -reference t o a section in the proxy where information discloses how to perfect their
right to dissent.

Summary, page 9

5. Please move the disclosures on page 33 (the historical and pro forma per share data), to
the Summary, as required by Item 3(f) of Form S -4.

6. Revise the disclosures on pages 12 and 13 with regard to the Stock Options and
Restricted Stock Units to add an example for each.

7. Please revise your disclosure on page 17 to briefly explain the material changes to the
rights of Washington Banking shareholders upon completion of the merger.

8. We note your disclosure on page 18 that multiple shareholder class action lawsuits have
been filed attempting to enjoin the proposed merger. Please describe any specific factual
accusations included in the plain tiffs’ complaints and tell us whether the Washington
Banking or Heritage boards, as applicable, were aware of these facts when they approved
the merger agreement.

Risk Factors, page 19

9. We note reference to a “Sandler update” on page 20, and your disclosu re elsewhere,
including on page 68 that “Sandler has not undertaken to update…its opinion…after the
date of this opinion.” Please disclose the substance or terms of this update and upd ate
your prospectus accordingly.

Comparative Unaudited Pro Forma Per Sh are Data, page 33

10. Please expand the disclosure to provide a note to the column titled Pro Forma Combined
Amounts for Heritage to state the amounts of stockholders’ equity and shares of common
stock outstanding after the merger used for the book value calc ulations per common share
at September 30, 2013 and December 31, 2012. In this regard, you may provide a cross -
reference to the Unaudited Pro Forma Combined Condensed Consolidated Statement of
Financial Condition and Note 2 – Purchase Price used to calcula te the pro forma
combined amount for Heritage book value per common share at September 30, 2013.

Kaylene M. Lahn
Heritage Financial Corporation
January 16, 2014
Page 3

 The Merger, page 44

11. Please revise this section to specify the material terms that were discussed and the
positions taken by both sides throughout the merge r negotiations.

12. We note that Washington Banking executives met with its financial advisor multiple
times in advance of the August 27, 2013 informal meeting between Mr. Vance and Mr.
Wagner. However, it appears from your disclosure on page 45 that Mr. Wagn er was not
informed that Mr. Vance arranged the meeting to initiate informal merger discussions
until the meeting itself. Please revise to explain.

The Merger Agreement, page 87

13. Please do not qualify your discussion in this section. Although you may refer investors to
the merger agreement for more detailed information, you must provide all of the material
terms of the agreement in this section.  Similarly revise the qualification o f your
disclosure on the top of page 44, in the second paragraph on page 57, and the first partial
paragraph on page 67 .

Unaudited Pro Forma Combined Condensed Consolidated Financial Information, pages 102 -103

14. We note your disclosure that for purposes o f the accompanying pro forma information,
the closing price of Heritage common stock as of October 23, 2013, the business day on
which the merger agreement was subsequently publically announced was used for
purposes of presenting the pro forma combined con densed consolidated statement of
financial condition as of September 30, 2013. Under ASC 805, the most recent stock
price at the time of filing should be used for determining the value of stock to be issued in
a transaction that has not yet consummated. Pl ease revise accordingly. In addition, please
expand the notes to the unaudited pro forma combined condensed consolidated statement
of financial condition to state the date at which the stock price was determined and
present a sensitivity analysis for the r ange of possible outcomes based on percentage
increases and decreases in the recent stock price.

15. We note the disclosure appearing in the 4th paragraph. Please expand the discussion to
state management’s estimate of how these merger costs are expected to  impact the
liquidity of the newly combined companies going forward and clearly identify this
disclosure as forward -looking information.

Washington Banking Company Unaudited Pro Forma Combined Condensed Consolidated
Statements of Income, pages 105 -106

16. The staff notes the line item titled other income under the heading Noninterest income for
the nine months ended September 30, 2013 and the year ended December 31, 2012.

Kaylene M. Lahn
Heritage Financial Corporation
January 16, 2014
Page 4

 Please revise to include gains and losses on sales of OREO as well as any write -downs
within other expense pursuant to Rule 9 -04 (14) (d) of Regulation S -X.

17. The staff notes the disclosure that certain historical data of Washington Banking has been
reclassified on a pro forma basis to conform to Heritage’s classifications. With a view
toward expanded disclosure please tell us the amount and basis for these reclassifications
for the nine months ended September 30, 2013 and the year ended December 31, 2012.

Note 3 – Allocation of Purchase Price of Washington Banking, page 108

18. Please expand the  note to disclose how you determined the amount of premiums and
discounts and the relevant assumptions.

Note 4 – Pro Forma Combined Condensed Consolidated Financial Information Adjustments,
pages 109 -111

19. With a view toward expanded disclosure in Adjustme nt M, please state how you derived
the accretion of interest component of the loan discount resulting from the pro forma loan
fair value adjustment of $58,435 amortized over a weighted average life of 3.33 years for
the nine months ended September 30, 2013  and for the year ended December 31, 2012.

20. With a view toward expanded disclosure in Adjustment N, please state how you derived
the amortization of the discount  resulting from the pro forma junior subordinated
debenture adjustment of $8,196 amortized over  the remaining 24 year life of the
debentures for the nine months ended September 30, 2013 and for the year ended
December 31, 2012. In this regard, it is unclear how the amortization expense for the nine
months ended September 30, 2013 is greater than the  amortization expense for the year
ended December 31, 2012.

21. With a view toward expanded disclosure in Adjustment O, please state the components of
professional services by company that you have determined are direct costs incurred in
connection with the m erger.

22. With a view toward expanded disclosure in Adjustment P, please state how you derived
the amortization of the CDI resulting from the merger based on an amortization period of
10 years for the nine months ended September 30, 2013 and for the year ended December
31, 2012. In addition, state the accelerated method of amortization used.

23. With regard to note (1) to Adjustment Q, tell us why you have stated that due to
impractability, the effect of the historical interest marks incurred in the Washingto n
Banking covered loan portfolio for the nine months ended September 30, 2013 and for
the year ended December 31, 2012 have not been eliminated.

Kaylene M. Lahn
Heritage Financial Corporation
January 16, 2014
Page 5

 24. You state that no adjustments are shown for the amortization of adjustments for the FDIC
indemnification asset , premises and equipment and clawback liability for the nine months
ended September 30, 2013 and for the year ended December 31, 2012 as the net effect
would be insignificant for the respective periods. Please revise to present these
adjustments gross on t he face of the pro forma statements. Alternatively, a more detailed
explanation of the components of the adjustments may be presented in the notes to the
pro forma statements.

25. Please consider expanding the disclosure to provide a note to present the esti mated
amortization/accretion of acquisition accounting adjustments reflected in the pro forma
financial statements on the future pre -tax net income on Heritage Financial Corporation
after the merger with Washington Banking Company for the 5 year periods en ded
December 31, 2018.

Where You Can Find More Information, pages 129 -131

26. Please expand the section titled Where You Can Find More Information appearing on
page 130 to note all documents incorporated by reference filed after the date of the filing.

Exhibit Index

27. Revise your incorporation by reference of Exhibits 3.1 and 3.2 to comply with Item 10(d)
of Regulation S -K.

Heritage Financial Corporation’s Annual Report on Form 10 -K for Year Ended December 31,
2012

Part II

Item 5. Market for the Registran t’s Common Equity…, page 39

28. We note your dividend activities for the 2012 fiscal year. In future filings, please include
dividend activity for the two most recent fiscal years and any subsequent interim period
as required by Item 201(c)(1) of Regulation S-K.

Part IV

Signatures, page 66

29. We note that Mr. Hinson  has not identified himself as the principal accounting officer on
the signature page as  is required. Please revise future filings in accordance with  General
Instruction D of Form 10 -K.

Kaylene M. Lahn
Heritage Financial Corporation
January 16, 2014
Page 6

 We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Act of 193 3 and
all applicable Securities  Act rules require.   Since the company and its management are in
possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

Notwithstanding our comments, in the event you request acceleration of the effective date
of the pending regist ration statement please provide  a written statement from the company
acknowledging that:

 should the Commission or the staff, acting pursuant to delegated authority, declare the
filing effective, it does not foreclose the Commissi on from taking any action with respect
to the filing;

 the action of the Commission or the staff, acting pursuant to delegated authority, in
declaring the filing effective, does not relieve the company from its full responsibility for
the adequacy and acc uracy of the disclosure in the filing; and

 the company may not assert staff comments and the declaration of effectiveness as a
defense in any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.

Please refer to Rules 460 and 461 regarding requests for  acceleration .  We will consider a
written request for acceleration of the effective date of the registration statement as confirmation
of the fact that those requesting acceleration are aware of thei r respective responsibilities under
the Securities Act of 1933 and the Securities Exchange Act of 1934 as they relate to the proposed
public offering of the securities specified in the above registration statement.  Please allow
adequate time  for us to rev iew any amendment prior to the requested effective date of the
registration statement.

You may contact Christina Harley at (202) 551 -3695  or John Nolan, Senior Assistant
Chief Accountant,  at (202) 551 -3492  if you have questions regarding comments on the financial
statements and related matters.  Please contact Christopher Dunham  at (202) 551 -3783  or me at
(202) 551 -3434  with any other questions.

Sincerely,

 /s/ Michael Clampitt

Michael Clampitt
Senior Counsel

cc:  Via E -mail
 John F. Breyer, Jr., Esq.

DIVISION OF
CORPORATION FINANCE   UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

June 18, 2009

Donald J. Hinson Senior Vice President and  Chief Financial Officer  Heritage Financial Corporation 201 Fifth Avenue SW Olympia, Washington 98501
 Re:  Heritage Financial Corporation
Form 10-K for the Fiscal Year Ended December 31, 2008
Filed February 27, 2009 Form 8-K filed April 30, 2009
  File No. 000-29480

Dear Mr. Hinson:
We have completed our review of your Form 10-K and related filings and have no
further comments at this time.

Sincerely,

 Mark Webb Legal Branch Chief

CORRESP
1
filename1.htm

Correspondence

 May 21, 2009

 Via Edgar,
Telecopy and Overnight Mail

 Mr. Mark Webb

 Legal Branch
Chief

 Securities and Exchange Commission

 Division of
Corporation Finance

 Mail Stop 4561

 100 F Street N.E.

 Washington, D.C. 20549

Re:
Heritage Financial Corporation

Form 10-K for the Fiscal Year Ended December 31, 2008

Filed February 27, 2009

Form 8-K filed April 30, 2009

File No. 000-29480

 Dear Mr. Webb:

 This letter sets forth the responses of Heritage Financial Corporation (the “Company” or “Heritage”) to the additional comments received from the
staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) by letter dated May 7, 2009 in connection with the Staff’s review of the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2008 and Form 8-K filed on April 30, 2009.

 The relevant text of the Staff’s comments has been included in this letter.
The numbering of the Company’s responses corresponds to the numbering in the Staff’s letter.

 Form 10-K for the Fiscal Year Ended
December 31, 2008

Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

 Critical Accounting Policies

 Goodwill, page 29

 1. We have reviewed your response to prior comment three from our letter dated April 6, 2009. In your response, you indicate that you are using a
“shortcut” method to try to approximate the fair value of your reporting unit. Specifically, your test assumes that since the book value of your Heritage Bank reporting unit represents 90% of the Company’s total book value, that 90%
of the

 1

market capitalization of the Company (plus a 20% control premium) approximates the fair value of your Heritage Bank reporting unit. Your response indicates
that you do try to determine whether any specific facts would indicate that the fair value of your Heritage Bank reporting unit would differ substantially from the relative percentage of the Company’s fair value, but your response does not
elaborate on what these considerations were and the specific factors evaluated. The staff acknowledges that there may be certain circumstances where a less robust determination of fair value may be reasonable, such as circumstances where it is
clearly evident that the reporting unit is not impaired and there are no triggers for interim impairment testing (for example, see paragraph 27 of SFAS 142), but this does not appear to be the case in the Company’s fact pattern. In this regard,
the staff notes that the Company’s market capitalization is below book and has been for a significant period of time, the market capitalization of the Company continues to decrease and the Company has reduced income due to higher provisions and
impairment charges. Therefore, the staff believes that a more robust fair value determination is required in order to comply with the impairment testing and fair value measurement guidance in SFAS 142. Specifically, please address the following:

•

 Tell us all of the factors evaluated and considerations made in reaching the conclusion that it was reasonable to assume that because the Heritage Bank reporting
unit represented 90% of the book value of the Company that it also represented 90% of the fair value of the Company;

•

 Provide us with any analyst reports supporting your conclusion, particularly any reports that may indicate growth rate assumptions at your different reporting
units;

•

 Discuss the nature of the assets and liabilities in your other reporting units;

•

 Tell us whether you have ever tried to sell your other reporting unit(s) separately; and

•

 Tell us whether you perform cash flow projections for the different reporting units for management purposes.

 Management Response:

 Heritage Financial Corporation has two
bank subsidiaries, Heritage Bank and Central Valley Bank. Each of the banks is considered a reporting unit. The parent company conducts no business outside of the subsidiaries. Both subsidiaries are Washington state-chartered commercial banks. The
nature of their assets and liabilities are very similar. The assets of both banks consist substantially of loans (mostly commercial loans) and the liabilities of both banks consist primarily of customer deposits. The main differences between the two
banks are size and market areas. Heritage Bank is the significantly larger institution. As of December 31, 2008, Heritage Bank’s total assets were $808 million compared to total assets of $137 million for Central Valley Bank.

As for market areas, Heritage Bank is located in the south Puget Sound region of the state. This portion of the state is relatively highly populated and has many
types of industries. It also includes two large military bases, two shipping ports and as well as numerous state government offices. Central Valley Bank is located in the central portion of the state. This portion of the state is lower populated and
much of the economy focuses on agriculture. The area within Heritage Bank’s market area (primarily Thurston and Pierce Counties) has been and is forecasted (per the Washington State Office of Financial Management) to be a faster growing area
than the Central Valley Bank market area (primarily Yakima County).

 2

 Core deposits growth is an indicator of economic growth of a region as well as being a factor in the valuation of a bank
(as calculated through core deposit premiums). From December 31, 2004 to December 31, 2008, Heritage Banks grew its core deposits (total deposits less time deposits over $100,000) at a cumulative annual growth rate of 8.5%. Over the same
period, Central Valley Bank grew its core deposits at a cumulative annual growth rate of 3.6%.

 For the goodwill impairment analysis as of
December 31, 2008, the Company did not engage any consultants or analysts regarding growth rate assumptions. In addition, the Company did not perform cash flow projections for the different reporting units nor have we attempted to sell either
of the reporting units.

 Heritage Bank’s total common equity was 86.19% of the Company’s common equity (“approximately 90%” was stated
in the previous response to the Commission, however, 86.19% was used for the actual analysis as of December 31, 2008). This approach was considered reasonable considering the similarities between the Company and Heritage Bank. Heritage Bank is
the most significant asset of the Company.

 Management believes that the approach used at December 31, 2008 was reasonable. Management used what we
believed to be conservative measures such as a 20% control premium when an analysis prepared by a market analyst of purchase premiums paid from 2004 to 2006 for peer banks up to $400 million market capitalization showed this was low (mean average
one-day purchase premium was 27.29% and median average was 23.64%). Furthermore, we did not give Heritage Bank an additional premium for being the reporting unit with the higher growth potential. This approach still resulted in an analysis showing a
9% excess of fair value over book value of Heritage Bank at December 31, 2008.

 2. It appears that your market capitalization remains significantly
below the book value of your equity. Please advise us whether you performed an interim impairment test as of March 31, 2009. If not, explain how you analyzed the difference to conclude that an interim impairment test is not necessary. If you
have performed an interim impairment test, provide us with a summary of your results in Step 1 and Step 2, if applicable.

 Management Response:

 Due to the fact that the market value of our stock remained below our book value, we performed an interim impairment test for the quarter ended
March 31, 2009. We began by performing Step 1. Step 2 would be performed only if impairment was noted as a result of Step 1. Management engaged a valuation consultant to assist in the analysis.

 In examining the fair value of Heritage Bank, the consultant considered the indicated valuation results utilizing the following three approaches:

1.
The Comparable Transactions Approach was based on Level 2 inputs pursuant to SFAS No. 157. In the application of this approach, the consultant reviewed the acquisition
multiples or ratios relative to reported earnings, book value, tangible book value, assets and core deposits paid for other bank franchises in recent periods. They then applied such multiples to the Heritage Bank’s financial data to determine a
range of value. In the derivation of such pricing multiples or ratios which were applied to Heritage Bank, they made various qualitative valuation adjustments pertaining to Heritage Bank to take into account the various similarities and differences
between Heritage Bank and the companies included among the comparable transactions groups selected.

 3

2.
The Control Premium Approach was based on a combination of Level 1 inputs (the quoted price for the Company’s stock as a proxy for Heritage Bank’s value) and Level 2
inputs (an estimated control premium based on comparable transactions as applied to Heritage Bank’s estimated public equivalent value). Since Heritage Bank’s assets, equity and earnings comprise the substantial majority of the
Company’s consolidated financial results; the consultant used the trading price of the Company’s stock and its implied market value as a basis for this approach.

3.
The Discounted Cash Flow Approach was based on Level 3 inputs including future projections based on assumptions derived from Heritage Bank’s budget and estimates by the
consultant.

 All approaches were considered in the determination of fair value. The results indicated the fair value of Heritage Bank
exceeded the carrying value of Heritage Bank by approximately $14 million or 17%. Management reviewed the consultant’s valuation analysis and concurred with the results. Since the fair value of the reporting unit exceeded the carrying amount,
there was no goodwill impairment noted in Step 1. Therefore, Step 2 was not performed.

Item 8.
Financial Statements

 Notes to Consolidated Financial
Statements

 Note 4 - Investment Securities, page F-17

 3. We have reviewed your proposed disclosures in response to prior comment four from our letter dated April 6, 2009. You state that based upon your assessment of expected credit losses of your collateralized
mortgage obligations, given the performance of the underlying collateral compared to your credit enhancement, you concluded these securities were not other-than-temporarily impaired as of December 31, 2008. To help us better understand your
assessment of OTTI for these collateralized mortgage obligations, please provide us with the following additional information:

•

 Tell us the amount and number of securities under each of your impairment models (i.e., those assessed under SFAS 115, EITF 99-20, etc.);

•

 Tell us the amount of unrealized losses less than twelve months and greater than twelve months at December 31, 2008;

•

 Tell us how you concluded that some of the securities were impaired as of December 31, 2008, while others were not;

•

 Tell us the credit ratings for the securities deemed other than temporarily impaired and for the securities deemed not other than temporarily impaired as of
December 31, 2008;

•

 Tell us whether any of these securities were downgraded subsequent to December 31, 2008 and explain how that impacted your other that temporary impairment
analysis at year end; and

•

 Tell us whether you recorded any other than temporary impairment charges on these securities as of March 31, 2009.

 4

 Management Response:

 We obtained all of the private collateralized mortgage obligations in the July 2008 redemption-in-kind of the AMF Ultra Short Mortgage Fund. All of these securities were marked to market at that time. Therefore, as of December 31,
2008, all of the unrealized losses were less than twelve months.

 Our conclusion as to impairment of some securities and not others was based on analysis
performed by management. Management reviewed all of the securities for potential other-than-temporary impairment. Since the unrealized losses were less than six months in duration and management had the intent and ability to retain its investment in
the securities for a period of time sufficient to allow for any anticipated recovery in market value, management focused on the financial condition and future cash flows of the security. The following steps were performed:

1.
The current Moodys and S&P ratings for all private collateral mortgage obligations (“CMOs”) were reviewed. Any securities rated below investment grade were selected
for specific analysis. In addition, any securities with unrealized losses greater than $25,000 and 25% of book value were also selected for specific analysis. This resulted in 23 securities with $1.49 million of unrealized losses being evaluated out
of a total of 66 securities with $1.83 million of unrealized losses for the entire private CMO portfolio. Management evaluated nineteen of these securities under EITF 99-20 and four under SFAS 115. Due to a lack of materiality, no further analysis
was performed on the remaining 43 securities with aggregate unrealized losses of $340,000 as of December 31, 2008.

2.
Losses factored into the book value were calculated for each selected security. This is the percentage the book value is less than the par value. Management views this as the
percentage of losses in par value the security can realize without the Company experiencing losses in its investment. The Company recognized an impairment of these securities previously in the form of a June 2008 OTTI charge of the AMF Ultra Short
Mortgage Fund and an additional charge at the time of the July 2008 redemption-in-kind. As a result, for many securities, the book value subsequent to the redemption-in-kind was much less than the par value. The Company considers the book value
obtained in the redemption-in-kind as its carrying value. For example, if a security had a market price that was 70% of par value at the time of the redemption, a 30% loss could be realized by this tranche before the Company would realize a loss to
the carrying value of the security.

3.
A loss probability analysis was performed on each security to calculate whether the estimated losses of the security were greater than the losses factored into the book value of the
security. The analysis compared market loss projections (a projection issued by third-party publications of the amount of loss the CMO issuance projected to incur) to a breakeven loss analysis (the amount of loss our tranche within the CMO issuance
could sustain before impacting our carrying value). From this comparison, if the projected losses were less than the breakeven loss threshold for the Company’s investment in the security, then the security impairment was considered temporary
since the ultimate credit loss was less than our carrying value and was going to be recovered as the Company had the intent and ability to hold to recovery. However, if it appeared the losses were going to be greater than the breakeven loss
threshold for the Company’s investment in the security, then the security impairment was considered other-than-temporary.

 5

 Following are the credit ratings for the private collateralized mortgage obligations (percentages based on pre-OTTI
amortized cost):

Credit Rating as of December 31, 2008

AAA

AA

A

BB

B

CCC

 Securities deemed other than temporarily impaired

0
%

55
%

5
%

0
%

12
%

28
%

 Securities not deemed other than temporarily impaired

30
%

20
%

31
%

4
%

15
%

0
%

 We performed our year-end 2008 OTTI analysis in January 2009. As part of our analysis, we reviewed the securities
for any changes in credit ratings during the month of January. In connection with our review, there were no securities downgraded during the month of January 2009.

 Based on our methodology, in the first quarter ended March 31, 2009

DIVISION OF
CORPORATION FINANCE   UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

May 7, 2009

Donald J. Hinson Senior Vice President and  Chief Financial Officer  Heritage Financial Corporation 201 Fifth Avenue SW Olympia, Washington 98501
 Re:  Heritage Financial Corporation
Form 10-K for the Fiscal Year Ended December 31, 2008
Filed February 27, 2009 Form 8-K filed April 30, 2009
  File No. 000-29480

Dear Mr. Hinson:
We have reviewed the above referenced filings and related materials and your
response letter dated April 23, 2009 and have the following comments.  Where indicated, we think your documents should be revised.  If you disagree, we will consider your explanation as to why our comments are inapplicable or a revision is unnecessary.  Please be as detailed as necessary in your explanation.  In your response, please indicate your intent to include the requested revision in future filings and provide a draft of your proposed disclosure.  In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.  After reviewing this information, we may raise additional comments.

 Please understand that the purpose of our review process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filings.  We look forward to working with you in these respects.  We welcome any questions you may have about our comments or any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Donald J. Hinson
Heritage Financial Corporation
May 7, 2009 Page 2  Form 10-K for the Fiscal Year Ended December 31, 2008

 Item 7.  Management’s Discussion and Analys is of Financial Condition and Results of
Operations
 Critical Accounting Policies

 Goodwill, page 29

 1. We have reviewed your response to prior comment three from our letter dated April 6, 2009.  In your response, you indicate that you are using a “shortcut” method to try to approximate the fair value of your reporting unit.  Specifically, your test assumes that since the book value of your Heritage Bank reporting unit represents 90% of the Company’s total book value, that 90% of the market capitalization of the Company (plus a 20% control premium) approximates the fair value of your Heritage Bank reporting unit.  Your response indicates that you do try to determine whether any specific facts would indicate that the fair value of your Heritage Bank reporting unit would differ substantially from the relative percentage of the Company’s fair value, but your response does not elaborate on what these considerations were and the specific factors evaluated.  The staff acknowledges that there may be certain circumstances where a less robust determination of fair value may be reasonable, such as circumstances where it is clearly evident that the reporting unit is not impaired and there are no triggers for interim impairment testing (for example, see paragraph 27 of SFAS 142), but this does not appear to be the case in the Company’s fact pattern.  In this regard, the staff notes that the Company’s market capitalization is below book and has been for a significant period of time, the market capitalization of the Company continues to decrease and the Company has reduced income due to higher provisions and impairment charges.  Therefore, the staff believes that a more robust fair value determination is required in order to comply with the impairment testing and fair value measurement guidance in SFAS 142.  Specifically, please address the following:

• Tell us all of the factors evaluated and considerations made in reaching the conclusion that it was reasonable to assume that because the Heritage Bank reporting unit represented 90% of the book value of the Company that it also represented 90% of the fair value of the Company;
• Provide us with any analyst reports supporting your conclusion, particularly any reports that may indicate growth rate assumptions at your different reporting units;
• Discuss the nature of the assets and liabilities in your other reporting unit(s);
• Tell us whether you have ever tried to sell your other reporting unit(s) separately; and
 2

Donald J. Hinson
Heritage Financial Corporation
May 7, 2009 Page 3
• Tell us whether you perform cash flow projections for the different reporting units for management purposes.
 2. It appears that your market capitalization remains significantly below the book value of your equity.  Please advise us whether you performed an interim impairment test as of March 31, 2009.  If not, explain how you analyzed the difference to conclude that an interim impairment test is not necessary.  If you have performed an interim impairment test, provide us with a summary of your results in Step 1 and Step 2, if applicable.

Item 8.  Financial Statements

Notes to Consolidated Financial Statements

Note 4 - Investment Securities, page F-17
 3. We have reviewed your proposed disclosures in response to prior comment four from our letter dated April 6, 2009.  You state that based upon your assessment of expected credit losses of your collateralized mortgage obligations, given the performance of the underlying collateral compared to your credit enhancement, you concluded these securities were not other-than-temporarily impaired as of December 31, 2008.  To help us better understand your assessment of OTTI for these collateralized mortgage obligations, please provide us with the following additional information:

• Tell us the amount and number of securities under each of your impairment models (i.e., those assessed under SFAS 115, EITF 99-20, etc.);
• Tell us the amount of unrealized losses less than twelve months and greater than twelve months at December 31, 2008;
• Tell us how you concluded that some of the securities were impaired as of December 31, 2008, while others were not;
• Tell us the credit ratings for the securities deemed other than temporarily impaired and for the securities deemed not other than temporarily impaired as of December 31, 2008;
• Tell us whether any of these securities were downgraded subsequent to December 31, 2008 and explain how that impacted your other that temporary impairment analysis at year end; and
• Tell us whether you recorded any other than temporary impairment charges on these securities as of March 31, 2009.
 4. We have reviewed your proposed disclosures in response to prior comment five from our letter dated April 6, 2009.  In light of the significant unrealized losses on your collateralized mortgage obligations, please consider disaggregating the
 3

Donald J. Hinson
Heritage Financial Corporation
May 7, 2009 Page 4
percentage of investments with credit ratings included in the “other” category in your future filings to, at a minimum, disclose the percentage of investments with credit ratings below investment grade.  Provide us with your proposed future disclosure.
 Item 11.  Executive Compensation

 Definitive Proxy Statement on Schedule 14A

 Compensation Discussion and Analysis, page 12

 5. We note your response to prior comment eight from our letter dated April 6, 2009 regarding performance targets.  You have not provided an analysis supporting your conclusion that disclosure of the performance targets utilized in determining incentive bonus amounts for your named executive officers for the 2008 fiscal year is not required.  Please tell us what those performance targets were.  We refer you again to Item 402(b) of Regulation S- K, Instruction 4 thereto and Regulation
S-K Compliance and Disclosure Interpretation 118.04.
 6. We note in your response to prior comment nine from our letter dated April 6, 2009 that, historically, the Compensation Committee has not engaged in benchmarking of total compensation.  Please address the comment with respect to any material element of compensation.  Also, please tell us how the Compensation Committee used the industry surveys, disclosed on page 12 of the proxy statement, of compensation for comparable positions with similar institutions in the State of Washington, the Pacific Northwest and the United States.

Compensation Committee Report, page 23

7. We note your response to prior comment ten from our letter dated April 6, 2009.  Please explain the basis for your conclusion that inclusion of the Compensation Committee certification in the Compensation Committee Report in your proxy statement was not appropriate or required.  We note that the Compensation Committee was required to review incentive compensation arrangements with your senior risk officers within 90 days of your Capital Purchase Program Transaction.  We also note that the Compensation Committee certification relates to those reviews and that the Compensation Committee certification is not contingent on any certifications your Chief Executive Officer must make related to your Capital Purchase Program transaction.

 4

Donald J. Hinson
Heritage Financial Corporation
May 7, 2009 Page 5  Item 15.  Exhibits and Financial Statement Schedules, page 43

 8. We note your response to prior comment twelve from our letter dated April 6, 2009.  Please amend your 10-K to include the letter of understanding and the Incentive Plan in the exhibit index.  File the letter of understanding and the Incentive Plan as exhibits.  Refer to Item 601(b)(10) of Regulation S-K.
 Form 8-K filed April 30, 2009

 9. We note your presentation of “average tangible equity” and “tangible book value per common share.”   These ratios appear to be non-GAAP measures as defined by Regulation G and Item 10(e) of Regul ation S-K as they are not required by
GAAP, Commission Rules, or banking regulatory requirements.  To the extent you plan to provide these non-GAAP ratios in the future, the staff notes the following:

• To the extent these ratios are disclosed in future filings with the Commission, you should comply with all of the requirements in Item 10(e) of Regulation S-K, including clearly labeling the ratios as non-GAAP measures and complying with all of the disclosure requirements.
• To the extent that you plan to disclose these ratios in future Item 2.02 Form 8-Ks, you should provide all of the disclosures required by Item 10(e)(1)(i) of Regulation S-K as required by Instruction 2 to Item 2.02 of Form 8-K.
• To the extent you disclose or release publicly any material information that includes a non-GAAP measure, you should be cognizant of the requirements in Regulation G to label the measure as non-GAAP and provide a reconciliation to the most closely comparable GAAP measure.
 10. We note reference to the four town hall meetings held during the fourth quarter of 2008 at which customers, prospective customers and shareholders were present.  Please tell us if any material nonpublic information regarding Heritage Financial Corporation or its securities was disclosed at any of those meetings.
 Closing Comments

 Please respond to these comments within ten business days or tell us when you
will provide us with a response.  Please furnish a letter that keys your response to our comments and provides any requested information.  Please file your letter on EDGAR as correspondence.   Please understand that we may have additional comments after reviewing your response to our comments.   We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all information required under
 5

Donald J. Hinson
Heritage Financial Corporation May 7, 2009 Page 6
 6the Securities Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision.  Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.     In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in the filing;
• staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.  In addition, please be advised that the Division of Enforcement has access to all
information you provide to the staff of the Di vision of Corporation Finance in our review
of your filing or in response to our comments on your filing.
You may contact William J. Schroeder, Staff Accountant, at (202) 551-3294, or
Sharon Blume, Assistant Chief Accountant,  at (202) 551-3474 if you have questions
regarding any matters relating to the financial statements and related matters.  Please contact Michael Seaman at (202) 551-3366 or me at (202) 551-3698 with any other questions.

 Sincerely,

 Mark Webb Legal Branch Chief

CORRESP
1
filename1.htm

Correspondence

 April 23, 2009

 United
States

 Securities and Exchange Commission

 Division of
Corporation Finance

 100 F. Street N.E.

 Washington, D.C. 20549

Re:
Heritage Financial Corporation

Form 10-K for the Fiscal Year Ended December 31, 2008

Filed February 27, 2009

File No. 0-29480

 Dear Ms. Blume, Mr. Schroeder, Mr. Webb
and Mr. Seaman:

 We are responding to your comment letter dated April 6, 2009. We have addressed all of your comments below. On
April 16, 2009, our attorney, J. Franklin McCreary, confirmed in separate phone conversations with Staff Accountant William J. Schroeder and Staff Attorney Michael Seaman that no amendments to the Form 10-K or the Definitive Proxy Statement on
Schedule 14A are required or requested, and that all necessary disclosures may be addressed in future filings.

Item 1.
Business Supervision and Regulation - Emergency Economic Stabilization Act,. page 17

 1. Please delete the last paragraph of this section.

 Management Response:

 Pursuant to the Staff’s comment, we will delete the last paragraph of the “Emergency Economic Stabilization Act” from future filings.

Item 5.
Market for the Registrant’s Common Equity .... , page 24

 2. Revise the stock repurchase table to include only shares repurchased during the periods covered by the table in the “Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs” column.

 Management Response:

 The stock repurchase table will
be revised in future filings to show only the shares that were repurchased in any of the three months of the quarter reported.

Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Policies Goodwill, page 29

 3. It appears that your market capitalization is significantly below the book value of your equity and has been for consecutive quarters. Please tell us when you
completed your annual impairment test. Additionally, advise us whether you have performed an interim impairment test in each of these periods. If not, please explain how you analyzed the difference to conclude that an impairment test is not
necessary. Please explain any qualitative and quantitative factors you considered (e.g. reconciliation). If you have performed an interim impairment test, please provide us with a summary of your results in Step 1 and Step 2, if applicable. We may
have further comment.

 Management Response:

 Goodwill is tested for impairment annually and between annual tests if an event occurs or circumstances change that might indicate the Company’s recorded value is more than its implied value. The Company’s goodwill is assigned to
Heritage Bank and is evaluated for impairment at the Heritage Bank level (reporting unit).

 Our goodwill impairment test involves a two-step process, when
required. The first test for goodwill impairment is done by comparing the reporting units’ aggregate fair value to its carrying value. Absent other indicators of impairment, if the aggregate fair value exceeds the carrying value goodwill is not
considered impaired and no additional analysis is necessary. If the carrying value of the reporting unit were to exceed the aggregate fair value a second test would be preformed to measure the amount of impairment loss, if any. To measure any
impairment loss the implied fair value would be determined in the same manner as if the Company were being acquired in a business combination. If the implied fair value of goodwill were less than the recorded goodwill an impairment charge would be
recorded for the difference.

 We utilize the Company’s fair value as an indicator as it is readily available and Heritage Bank represents
approximately 90% of the Company’s total common equity. We then determine if there are any specific factors that would indicate the Heritage Bank fair value would be substantially different than its relative percentage of the Company’s
fair value.

 For the quarters ending June 30, 2008 and September 30, 2008, due to poor overall economic conditions and declines in the
Company’s stock price, we determined triggering events had occurred and conducted interim impairment tests of goodwill. The first test for the interim periods ending June 30 and September 30, 2008 and the first test for the annual
period ending December 31, 2008 at the Company level were as follows:

12/31/2008

09/30/2008

06/30/2008

(000’s)

(000’s)

(000’s)

 Aggregate Fair Value (Market Capitalization)

$
82,069

$
83,465

$
106,049

 Common Book Value of the Company

89,780

88,807

87,295

 Market Capitalization over (under) Book Value

$
(7,711
)

$
(5,342
)

$
18,754

 2

 Despite the book value being in excess of the market capitalization in the above test for the quarters ending
September 30, 2008 and December 31, 2008 we did not consider goodwill impaired due to current market volatility and control purchase premiums in the banking industry. Additionally, there were no specific factors identified that would
indicate the Heritage Bank fair value would be substantially different than its relative percentage of the Company’s fair value at June 30, 2008, September 30, 2008 and December 31, 2008.

 The mean average one-day purchase premium was 27.29% and the median average was 23.64% for known purchase premiums paid from 2004 to 2006 for deals under $400 million
(activity in 2007 and 2008 was not used since there was not significant activity in those years). The following table uses a 30-day average (business days and 30 days used to reduce the volatility in the market due to short term swings in prices)
market value and a 20% purchase premium to calculate excess market cap:

12/31/2008

09/30/2008

(000’s)

(000’s)

 Aggregate Fair Value (Market Capitalization) a

$
98,081

$
106,513

 Common Book Value of the Company

89,780

88,807

 Market Capitalization over (under) Book Value

$
8,301

$
17,706

a.
The market capitalization calculation uses a 30-day average (business days) from 11/25/2008 to 01/08/2009 ($12.20) for the period ending 12/31/2008 and a 30-day average (business
days) from 09/03/2008 to 10/14/2008 ($13.26) for the period ending 09/30/2008.

 Based on our analysis, we concluded that the reporting unit
passed step 1 and there was no potential impairment of goodwill.

Item 8.
Financial Statements Notes to Consolidated Financial Statements Note (4)-Investment Securities, page F - 17

 4. We note in June 2008, the Company recorded an other than temporary impairment charge of $1.1 million relating to its $9.6 million investment in the AMF Ultra Short
Mortgage Fund (the “Fund”). Further, we note in July 2008, the Company redeemed its shares in the Fund for cash and securities and that in December 2008, the Company recorded an additional impairment charge of $668k related to credit
downgrades of specific securities acquired in the redemption. Please tell us and revise your future filings to disclose:

•

 the amount of shares in the Fund redeemed in cash vs. securities;

•

 the type and accounting classification (HFS, HTM) of securities received;

•

 the type, carrying value and fair value of securities deemed other than temporarily impaired at December 31, 2008; and

•

 the type, carrying value and fair value of securities not deemed other than temporarily impaired at December 31, 2008 and why they were not also deemed other
than temporarily impaired.

 3

 Management Response:

 To address your comments, we propose including the following disclosure in future filings (dollars in thousands).

 At
June 30, 2008, the Company recorded an other-than-temporary impairment charge of $1,112 relating to its $9,600 investment in the AMF Ultra Short Mortgage Fund (the “Fund”). The net asset value of the Fund had declined primarily as a
result of the uncertainty in spreads in the bond market for private label mortgage-related securities and credit downgrades to a small percentage of the underlying securities. In July 2008, the Company redeemed its 1,080,114 shares in the Fund for
$1,629 in cash and securities with a fair value of $7,865. This redemption resulted in a loss of $147. The securities received, which were mortgage-backed securities and private collateralized mortgage obligations, were classified as “held to
maturity” as the Company had the positive intent and ability to hold these securities until they matured. In December 2008, due to continued declines in market value and credit downgrades of specific securities acquired in the redemption, the
Company recorded an additional impairment charge of $668 on private collateralized mortgage obligations with a carrying value of $856 and a fair value of $188. In total during 2008, the Company recorded losses of $1,927 relating to the Fund and the
securities received in the redemption of the shares in the Fund.

 The amortized cost and fair value as of December 31, 2008 of securities obtained in
the Fund redemption are as follows:

Amortized
Cost

Fair
Value

 Mortgage-backed securities and collateralized mortgage obligations by issuer:

 U.S. Government agencies

$
2,580

$
2,643

 Private issuers

4,278

3,117

 Totals

$
6,858

$
5,760

 The unrealized losses associated with private collateralized mortgage obligations are related to securities backed
by residential mortgages. We estimate loss projections for each security by assessing individual loans collateralizing the security and determining expected default rates and loss severities. Based upon our assessment of expected credit losses of
the security given the performance of the underlying collateral compared to our credit enhancement, we concluded that these securities were not other-than-temporarily impaired at December 31, 2008.

 5. We note gross unrealized losses on your collateralized mortgage obligations increased significantly from $0.2 million at December 31, 2007 to $1.1 million at
December 31,2008. Please revise your future filings to disclose the nature and type of assets underlying these securities, for example, the types of loans (subprime, Alt-A, or home equity lines of credit) and the years of issuance as well as
information about the credit ratings of the securities, including changes or potential changes to those ratings. Provide us with your proposed future disclosure.

 4

 Management Response:

 In future filings we will add a disclosure that will segregate private Collateral Mortgage Obligations (CMOs) (see #4 above for our private CMO portfolio) into type, year of issuance and credit ratings as well as
year-to-date and cumulative impairment losses and year-to-date change in unrealized losses. See proposed future disclosure below.

Par

Amortized

Fair

Aggregate
Unrealized

Year-to-date
Change in
Unrealized

Year-to-date
Impairment

Life-to-date
Impairment

Ratings

Value

Cost

Value

Gain/(Loss)

Gain/(Loss)

Charge

Charge (a)

AAA

AA

A

Other

 Alt-A

 2007

$
x

$
x

$
x

$
x

$
x

$
x

$
x

X
%

X
%

X
%

X
%

 2006

x

x

x

x

x

x

x

X
%

X
%

X
%

X
%

 2005

x

x

x

x

x

x

x

X
%

X
%

X
%

X
%

 2004 and earlier

x

x

x

x

x

x

x

X
%

X
%

X
%

X
%

 Total Alt-A

x

x

x

x

x

x

x

X
%

X
%

X
%

X
%

 Prime

 2008

X

X

X

X

X

X

X

X
%

X
%

X
%

X
%

 2007

X

X

X

X

X

X

X

X
%

X
%

X
%

X
%

 2006

X

X

X

X

X

X

X

X
%

X
%

X
%

X
%

 2005

X

X

X

X

X

X

X

X
%

X
%

X
%

X
%

 2004 and earlier

X

X

X

X

X

X

X

X
%

X
%

X
%

X
%

 Total Prime

x

x

x

X

X

X

X

X
%

X
%

X
%

X
%

 Total

$
x

$
x

$
x

$
x

$
x

$
x

$
x

x
%

x
%

x
%

x
%

(a)
Life-to-date impairment charge represents impairment charges recognized subsequent to redemption of the Fund.

 Note 7- FHLB Advances and Stock, page F-19

 6. Please tell us
and revise your future filings to disclose whether you believe your investment in FHLB Seattle stock is other than temporarily impaired. Discuss the various positive and negative factors considered when making this determination. For example,
regarding your December 31, 2008 analysis, discuss how you considered the fact that the FHLB Seattle is subject to a regulatory order that generally requires approval prior to redeeming or paying dividends on common stock and the fact that they
incurred a net loss for the three months ended September 30, 2008.

 Management Response:

 Consistent with our accounting policy and SOP 01-6, management reviewed its investment in FHLB stock at December 31, 2008 for other than temporary impairment. As
indicated by the pronouncement:

 “when evaluating FHLB stock for impairment, its value should be determined based on the ultimate
recoverability of the par value rather than by recognizing temporary declines in value. The determination of whether the decline affects the ultimate recoverability is influenced by criteria such as the following:

•

 The significance of the decline in net assets of the FHLBs as compared to the capital stock amount for the FHLBs and the length of time this situation has persisted

•

 Commitments by the FHLBs to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLBs

 5

•

 The impact of legislative and regulatory changes on the institutions and, accordingly, on the customer base of the FHLBs

•

 The liquidity position of the FHLBs”

 The
evaluation of whether a decline is temporary or whether it affects the ultimate recoverability of the FHLB stock is ultimately made by the member institution based on the facts at the time. This consideration is influenced by (a) the
materiality of the carrying amount to the member institution and (b) whether an assessment of the institution’s operational needs for the foreseeable future allow management to retain the stock until the value has been recovered.”

 In our review for impairment, we considered the recent negative developments impacting the FHLB-Seattle, including the negative earnings report for the
third quarter of 2008 referred to in the Staff’s comment, the reduced capital position of the FHLB-Seattle and the regulatory order in place at the FHLB-Seattle. We concluded that our investment in FHLB-Seattle stock was not other than
temporarily impaired as of December 31, 2008 based on the following principal considerations:

•

 The negative developments affecting the FHLB-Seattle had existed for a relatively short period of time (less than 6 months) in relation to the long-term nature of
our investment.

•

 Our stock position in the FHLB-Seattle is restricted in nature since the shares can only be redeemed by the FHLB-Seattle at par or sold by us to another
participating (member) institution. In practice, the only market for this stock has been through redemption by the FHLB-Seattle at par. While there is currently a temporary restriction on the FHLB-Seattle’s ability to redeem its stock, we
understand that the FHLB-Seattle has worked with its regulator on a capital and earnings plan that is acceptable to the regulator and it is our view that the restriction on redemptions is temporary in nature.

•

 This investment is regulatory driven and long-term in nature.

•

 The Company intends to hold this investment at least until the shares once again are redeemable at par and believes it has sufficient liquidity to hold the shares
for that period of time.

•

 The liquidity position of the FHLB-Seattle remains strong and a significant portion of the reduced earnings and capital of the FHLB-Seattle was due to non-cash
impairment charges associated with long-term investments in debt securities. We understand that the impairment charges significantly exceed the amount of credit losses (cash flow shortfalls) the
 FHLB-Seattle expects to incur on these securities.
Additional time is necessary to determine the ultimate impact these impairment charges will have on the capital and liquidity of the FHLB-Seattle (and, consequently, whether our investment in
 FHLB-Seattle stock might become other than
t

DIVISION OF
CORPORATION FINANCE   UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

  Mail Stop 4561

April 6, 2009

Donald J. Hinson Senior Vice President and  Chief Financial Officer  Heritage Financial Corporation 201 Fifth Avenue SW Olympia, Washington 98501
 Re:  Heritage Financial Corporation
Form 10-K for the Fiscal Year Ended December 31, 2008
Filed February 27, 2009
  File No. 0-29480

Dear Mr. Hinson:
We have reviewed your filing and have the following comments.  We have
limited our review to only your financial statements and related disclosures and do not intend to expand our review to other portions of your documents.  Where indicated, we think you should revise your document in response to these comments in future filings.  If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary.  Please be as detailed as necessary in your explanation.  In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.  After reviewing this information, we may raise additional comments.

 Please understand that the purpose of our review process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing.  We look forward to working with you in these respects.  We welcome any questions you may have about our comments or any other aspect of our review.  Feel free to call us at the telephone number listed at the end of this letter.

Donald J. Hinson
Heritage Financial Corporation
April 6, 2009 Page 2  Heritage Financial Corporation

Form 10-K for the Fiscal Year Ended December 31, 2008
 Item 1.  Business

Supervision and Regulation −  Emergency Economic Stabilization Act, page 17
 1. Please delete the last paragraph of this section.
 Item 5.  Market for the Registrant’s Common Equity...., page 24

 2. Revise the stock repurchase table to include only shares repurchased during the periods covered by the table in the “Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs” column.
 Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations, Critical Accounting Policies
Goodwill, page 29
 3. It appears that your market capitalization is significantly below the book value of your equity and has been for consecutive quarters.  Please tell us when you completed your annual impairment test.  Additionally, advise us whether you have performed an interim impairment test in each of these periods.  If not, please explain how you analyzed the difference to conclude that an impairment test is not necessary.  Please explain any qualitative and quantitative factors you considered (e.g. reconciliation).  If you have performed an interim impairment test, please provide us with a summary of your results in Step 1 and Step 2, if applicable. We may have further comment.

Item 8.  Financial Statements

Notes to Consolidated Financial Statements
Note (4)-Investment Securities, page F-17

4. We note in June 2008, the Company recorded an other than temporary impairment charge of $1.1 million relating to its $9.6 million investment in the AMF Ultra Short Mortgage Fund (the “Fund”).  Further, we note in July 2008, the Company redeemed its shares in the Fund for cash and securities and that in December 2008, the Company recorded an additional impairment charge of $668k related to credit downgrades of specific securities acquired in the redemption.  Please tell us and revise your future filings to disclose:

• the amount of shares in the Fund redeemed in cash vs. securities;
• the type and accounting classification (HFS, HTM) of securities received;
 2

Donald J. Hinson
Heritage Financial Corporation
April 6, 2009 Page 3
• the type, carrying value and fair value of securities deemed other than temporarily impaired at December 31, 2008; and
• the type, carrying value and fair value of securities not deemed other than temporarily impaired at December 31, 2008 and why they were not also deemed other than temporarily impaired.
 5. We note gross unrealized losses on your collateralized mortgage obligations increased significantly from $0.2 million at December 31, 2007 to $1.1 million at December 31, 2008.  Please revise your future filings to disclose the nature and type of assets underlying these securities, for example, the types of loans (sub-prime, Alt-A, or home equity lines of credit) and the years of issuance as well as information about the credit ratings of the securities, including changes or potential changes to those ratings.  Provide us with your proposed future disclosure.
 Note 7- FHLB Advances and Stock, page F-19

 6. Please tell us and revise your future filings to disclose whether you believe your investment in FHLB Seattle stock is other than temporarily impaired.  Discuss the various positive and negative factors considered when making this determination.  For example, regarding your December 31, 2008 analysis, discuss how you considered the fact that the FHLB Seattle is subject to a regulatory order that generally requires approval prior to redeeming or paying dividends on common stock and the fact that they incurred a net loss for the three months ended September 30, 2008.
 Item 9A.  Controls and Procedures

Changes in Internal Control Over Financial Reporting, page 41
 7. Amend your disclosure to address any change in your internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, your internal control over financial reporting.

Item 11.  Executive Compensation

Definitive Proxy Statement on Schedule 14A
Compensation Discussion and Analysis, page 12

8. Please tell us why you have not disclosed the performance targets utilized in determining the annual incentive bonus amounts for your named executive officers for the 2008 fiscal year.  For example, you have not disclosed the specific net income targets that were used.  To the extent you believe that disclosure of the historical performance targets is not required because it would result in competitive harm such that the targets could be excluded under Instruction 4 to
 3

Donald J. Hinson
Heritage Financial Corporation
April 6, 2009 Page 4
Item 402(b) of Regulation S-K, please provide a detailed supplemental analysis supporting your conclusion.  In particular, your competitive harm analysis should clearly explain the nexus between disclosure of the performance objectives and the competitive harm that is likely to result from disclosure.  Refer to Item 402(b)(2)(v) of Regulation S-K and Regulation S-K Compliance and Disclosure Interpretation 118.04.
 9. Please tell us whether you engaged in any benchmarking of total compensation, or any material element of compensation, identifying the benchmark and, if applicable, its components.  If so, identify the component companies that make up the compensation peer group and the basis for selecting the peer group.  In addition, describe how the compensation committee used comparative compensation information in determining compensation or compensation ranges for each of the compensation components.  Please also disclose whether the compensation committee deviated from peer group benchmarks in setting executive compensation, and if so, state the reasons for such deviation.  Refer to Item 402(b)(2)(xiv) of Regulation S-K and Regulation S-K Compliance and Disclosure Interpretation 118.05.
 Compensation Committee Report, page 23

 10. We note that the Compensation Committee Report does not include the compensation committee’s certification that it has reviewed with senior risk officers the senior executive officers’ incentive compensation arrangements and has made reasonable efforts to ensure that such arrangements do not encourage senior executive officers to take unnecessary and excessive risks that threaten the value of the financial institution.  Please tell us why you have not included this certification.  Refer to TARP Capital Purchase Program, Interim Final Rule, 73 FR 62205, October 20, 2008.

Item 13.  Certain Relationships and Related Transactions

Definitive Proxy Statement on Schedule 14A
Interest of Management in Certain Transactions, page 25
 4

Donald J. Hinson
Heritage Financial Corporation
April 6, 2009 Page 5
11. We note the disclosure that transactions with directors and executive officers
were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons.  Please confirm, and revise future filings to disclose, if accurate, that all such transactions were loans and that the loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender.  Refer to Instruction 4(c) to Item 404(a) of Regulation S-K.  In addition, delete the “in the opinion of management” qualification from the last sentence of that paragraph.
 Item 15.  Exhibits and Financial Statement Schedules, page 43

 12. We note disclosure in your definitive proxy statement regarding a non-binding letter of understanding with Donald V. Rhodes pursuant to which Mr. Rhodes receives an annual salary of $75,000.  We also note disclosure regarding an Incentive Plan pursuant to which executives may receive cash bonus awards.  Please tell us why those documents are not listed in your exhibit index.  Additionally, it appears that your entry into the letter of understanding and your adoption of the Incentive Plan were never reported on Form 8-K.  Please tell us why you concluded that it was not necessary to report those events.
 Exhibit 31

 13. We note that your certifications included as Exhibit 31 to the Form 10-K contain modifications of the exact form of certifi cation as set forth in Item 601(b)(31) of
Regulation S-K.  In particular, the word “annual” has been added to paragraphs 2, 3 and 4 and the language “(or persons performing the equivalent functions)” has been deleted from paragraph 5.  In future filings, please ensure that the certifications are in the exact form as set forth in Item 601(b)(31) of Regulation S-K, except as otherwise indicated in Commission statements or staff interpretations.

Please respond to these comments within 10 business days or tell us when you
will provide us with a response.  Please furnish a letter that keys your response to our comments and provides any requested information.  Please file your letter on EDGAR as correspondence.   Please understand that we may have additional comments after reviewing your response to our comments.   We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all information required under the Securities Exchange Act of 1934 and that they have provided all information investors require for an informed investment decision.  Since the company and its
 5

Donald J. Hinson
Heritage Financial Corporation April 6, 2009 Page 6
 6management are in possession of all facts relating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.     In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in the filing;
• staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.  In addition, please be advised that the Division of Enforcement has access to all
information you provide to the staff of the Di vision of Corporation Finance in our review
of your filing or in response to our comments on your filing.     If you have any questions, you may contact me at (202) 551-3474 or William J. Schroeder, Staff Accountant, at (202) 551-3294 if you have questions regarding any
matters relating to the financial statements and related matters.  Please contact Mark Webb, Legal Branch Chief, at (202) 551-3698 or Michael Seaman, Staff Attorney, at (202) 551-3366 with any other questions.

 Sincerely,

 Sharon M. Blume Assistant Chief Accountant