OLYMPIA, Wash., Jan. 27 /PRNewswire-FirstCall/ -- Heritage Financial Corporation (Nasdaq: HFWA), The Board of Directors of Heritage Financial Corporation, parent company of Heritage Bank and Central Valley Bank, declared a cash dividend of $0.10 per share payable on February 20, 2009 to common shareholders of record on February 5, 2009.

The Company has paid cash dividends for forty-four consecutive quarters since the Company's stock began trading on the Nasdaq National Market on January 9, 1998. In order to maintain appropriate capital levels in these challenging economic times, the Company determined it prudent to reduce the cash dividend from the $0.14 per share declared in the prior quarter.

President and CEO, Brian Vance stated that, "Our cash dividend analysis and decision considers two primary variables: capital adequacy and the dividend payout ratio. Although we consider dividend yield as well, it is a secondary consideration. Due to the current economic volatility, we believe it is absolutely necessary to preserve our strong capital position. We anticipate the current economic recession will further impact community bank profitability and therefore want to ensure the dividend payout ratio is reasonable in relation to our profitability levels."

Mr. Vance added, "We remain committed to our shareholders with a competitive dividend strategy and yet must consider the importance of capital adequacy during these difficult times. Our strong capital position gives us the ability to continue our local lending efforts and protect our depositors, which we know is vitally critical to the health and recovery of our communities".

Heritage Financial Corporation is a $900 million bank holding company headquartered in Olympia, Washington. The Company operates two community banks, Heritage Bank and Central Valley Bank. Heritage Bank serves Pierce, Thurston, Mason and south King Counties in the South Puget Sound region of Washington through its fourteen full-service banking offices and its Online Banking Website http://www.HeritageBankWA.com. Central Valley Bank serves Yakima and Kittitas Counties in central Washington through its six full- service banking offices and its Online Banking Website http://www.CVBankWA.com.

Additional information about Heritage Financial Corporation is available on its Internet Website http://www.HF-WA.com

SOURCE Heritage Financial Corporation