Heritage Financial (HFWA)

Risks

• The outbreak of COVID-19 has adversely affected certain industries in which our customers operate and may impair their ability to fulfill their obligations to us. Further, the spread of the outbreak has disrupted banking and other financial activity in the areas in which we operate, could lead to an economic recession or other additional severe disruptions in the U.S. economy, and could potentially create business continuity issues for us.
• Our strategy of pursuing acquisitions and de novo branching exposes us to financial and operational risks that could adversely affect us.
• Our business strategy includes significant growth plans, and our financial condition and results of operations could be negatively affected if we are not successful in executing this strategy or if we fail to grow or manage our growth effectively.
• Our loan portfolio is concentrated in loans with a higher risk of loss.
• Our ACL on loans may prove to be insufficient to absorb losses in our loan portfolio.
• If our ACL on loans is not sufficient to cover actual loan losses our earnings could decrease.
• The current economic condition in the market areas we serve may adversely impact our earnings and could increase the credit risk associated with our loan portfolio.
• Changes in the United States government and its agencies’ monetary or fiscal policies, including stimulus enacted in response to the COVID-19 Pandemic, could adversely affect our results of operations and financial condition.
• Fluctuating interest rates can adversely affect our profitability.
• Our investment securities portfolio may be negatively impacted by fluctuations in market value and interest rates.
• Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions and limit our ability to get regulatory approval of acquisitions.
• We rely on other companies to provide key components of our business infrastructure.
• If our enterprise risk management framework is not effective at mitigating risk and loss to us, we could suffer unexpected losses and our results of operations could be materially adversely affected.
• We are subject to certain risks in connection with our data management or aggregation.
• Our business may be adversely affected by an increasing prevalence of fraud and other financial crimes.
• Managing reputational risk is important to attracting and maintaining customers, investors and employees.
• We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects.
• Our ability to sustain or improve upon existing performance is dependent upon our ability to respond to technological change, and we may have fewer resources than some of our competitors to continue to invest in technological improvements.
• New or changing tax, accounting, and regulatory rules and interpretations could significantly impact strategic initiatives, results of operations, cash flows, and financial condition.
• If the goodwill we have recorded in connection with acquisitions becomes impaired, our earnings and capital could be reduced.
• We will be required to transition from the use of the London Interbank Offered Rate ("LIBOR") in the future.
• Decreased volumes and lower gains on sales of mortgage loans sold could adversely impact our noninterest income.
• Ineffective liquidity management could adversely affect our financial results and condition.
• Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.
• Our growth or future losses may require us to raise additional capital in the future, but that capital may not be available when it is needed or the cost of that capital may be very high; further, the resulting dilution of our equity may adversely affect the market price of our common stock.
• We rely on dividends from the Bank for substantially all of our revenue at the holding company level.