Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 01, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | HERITAGE FINANCIAL CORP /WA/ | |
Entity Central Index Key | 1,046,025 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 29,929,106 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
ASSETS | ||
Cash on hand and in banks | $ 82,905 | $ 77,117 |
Interest earning deposits | 28,353 | 26,628 |
Cash and cash equivalents | 111,258 | 103,745 |
Investment securities available for sale, at fair value | 800,060 | 794,645 |
Loans held for sale | 5,368 | 11,662 |
Loans receivable, net | 2,797,513 | 2,640,749 |
Allowance for loan losses | (31,400) | (31,083) |
Total loans receivable, net | 2,766,113 | 2,609,666 |
Other real estate owned | 523 | 754 |
Premises and equipment, net | 60,457 | 63,911 |
Federal Home Loan Bank stock, at cost | 9,343 | 7,564 |
Bank owned life insurance | 71,474 | 70,355 |
Accrued interest receivable | 12,295 | 10,925 |
Prepaid expenses and other assets | 87,728 | 79,351 |
Other intangible assets, net | 6,408 | 7,374 |
Goodwill | 119,029 | 119,029 |
Total assets | 4,050,056 | 3,878,981 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Deposits | 3,320,818 | 3,229,648 |
Federal Home Loan Bank advances | 117,400 | 79,600 |
Junior subordinated debentures | 19,936 | 19,717 |
Securities sold under agreement to repurchase | 28,668 | 22,104 |
Accrued expenses and other liabilities | 55,626 | 46,149 |
Total liabilities | 3,542,448 | 3,397,218 |
Stockholders’ equity: | ||
Preferred stock, no par value, 2,500,000 shares authorized; no shares issued and outstanding at September 30, 2017 and December 31, 2016 | 0 | 0 |
Common stock, no par value, 50,000,000 shares authorized; 29,929,106 and 29,954,931 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 360,113 | 359,060 |
Retained earnings | 145,677 | 125,309 |
Accumulated other comprehensive income (loss), net | 1,818 | (2,606) |
Total stockholders’ equity | 507,608 | 481,763 |
Total liabilities and stockholders’ equity | $ 4,050,056 | $ 3,878,981 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Financial Condition (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in usd per share) | ||
Preferred stock, shares authorized | 2,500,000 | 2,500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in usd per share) | ||
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 29,929,106 | 29,954,931 |
Common stock, shares outstanding | 29,929,106 | 29,954,931 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
INTEREST INCOME | ||||
Interest and fees on loans | $ 32,595 | $ 30,915 | $ 94,580 | $ 91,595 |
Taxable interest on investment securities | 3,117 | 2,888 | 9,307 | 8,522 |
Nontaxable interest on investment securities | 1,354 | 1,235 | 3,926 | 3,599 |
Interest and dividends on other interest earning assets | 258 | 76 | 461 | 225 |
Total interest income | 37,324 | 35,114 | 108,274 | 103,941 |
INTEREST EXPENSE | ||||
Deposits | 1,628 | 1,269 | 4,301 | 3,765 |
Junior subordinated debentures | 261 | 221 | 748 | 647 |
Other borrowings | 444 | 18 | 908 | 78 |
Total interest expense | 2,333 | 1,508 | 5,957 | 4,490 |
Net interest income | 34,991 | 33,606 | 102,317 | 99,451 |
Provision for loan losses | 884 | 1,495 | 2,882 | 3,754 |
Net interest income after provision for loan losses | 34,107 | 32,111 | 99,435 | 95,697 |
NONINTEREST INCOME | ||||
Service charges and other fees | 4,769 | 3,630 | 13,408 | 10,462 |
Gain on sale of investment securities, net | 44 | 345 | 161 | 1,106 |
Gain on sale of loans, net | 1,229 | 3,435 | 6,562 | 5,406 |
Interest rate swap fees | 328 | 742 | 743 | 1,105 |
Other income | 2,024 | 1,715 | 5,532 | 5,354 |
Total noninterest income | 8,394 | 9,867 | 26,406 | 23,433 |
NONINTEREST EXPENSE | ||||
Compensation and employee benefits | 15,823 | 15,633 | 48,119 | 45,652 |
Occupancy and equipment | 3,979 | 3,926 | 11,607 | 11,873 |
Data processing | 2,090 | 1,943 | 6,007 | 5,564 |
Marketing | 933 | 745 | 2,545 | 2,254 |
Professional services | 1,453 | 830 | 3,515 | 2,508 |
State and local taxes | 640 | 820 | 1,828 | 2,031 |
Federal deposit insurance premium | 433 | 296 | 1,090 | 1,316 |
Other real estate owned, net | (88) | (142) | (36) | 330 |
Amortization of intangible assets | 319 | 359 | 966 | 1,057 |
Other expense | 2,373 | 2,408 | 7,346 | 7,079 |
Total noninterest expense | 27,955 | 26,818 | 82,987 | 79,664 |
Income before income taxes | 14,546 | 15,160 | 42,854 | 39,466 |
Income tax expense | 3,922 | 4,121 | 11,086 | 10,441 |
Net income | $ 10,624 | $ 11,039 | $ 31,768 | $ 29,025 |
Basic earnings per common share (in usd per share) | $ 0.35 | $ 0.37 | $ 1.06 | $ 0.97 |
Diluted earnings per common share (in usd per share) | 0.35 | 0.37 | 1.06 | 0.97 |
Dividends declared per common share (in usd per share) | $ 0.13 | $ 0.12 | $ 0.38 | $ 0.35 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 10,624 | $ 11,039 | $ 31,768 | $ 29,025 |
Change in fair value of investment securities available for sale, net of tax of $157, $(570), $2,442 and $4,983, respectively | 289 | (1,055) | 4,528 | 9,223 |
Reclassification adjustment for net gain from sale of investment securities available for sale included in income, net of tax of $(16), $(121), $(57) and $(388), respectively | (28) | (224) | (104) | (718) |
Other comprehensive income (loss) | 261 | (1,279) | 4,424 | 8,505 |
Comprehensive income | $ 10,885 | $ 9,760 | $ 36,192 | $ 37,530 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Change in fair value of securities available for sale, tax | $ 157 | $ (570) | $ 2,442 | $ 4,983 |
Reclassification adjustment of net gain from sale of investment securities included in income, tax | $ (16) | $ (121) | $ (57) | $ (388) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common stock | Retained earnings | Accumulated other comprehensive income (loss), net |
Beginning balance, shares at Dec. 31, 2015 | 29,975,000 | |||
Beginning balance at Dec. 31, 2015 | $ 469,970 | $ 359,451 | $ 107,960 | $ 2,559 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Restricted and unrestricted stock awards issued, net of forfeitures, shares | 111,000 | |||
Restricted stock awards forfeited | $ 0 | |||
Exercise of stock options (including excess tax benefits from nonqualified stock options), shares | 27,867 | 28,000 | ||
Exercise of stock options (including excess tax benefits from nonqualified stock options) | $ 421 | $ 421 | ||
Stock-based compensation expense | 1,367 | 1,367 | ||
Net excess tax benefits from vesting of restricted stock | 99 | $ 99 | ||
Common stock repurchased, shares | (167,000) | |||
Common stock repurchased | (2,887) | $ (2,887) | ||
Net income | 29,025 | 29,025 | ||
Other comprehensive income, net of tax | 8,505 | 8,505 | ||
Cash dividends declared on common stock | (10,488) | (10,488) | ||
Ending balance, shares at Sep. 30, 2016 | 29,947,000 | |||
Ending balance at Sep. 30, 2016 | 496,012 | $ 358,451 | 126,497 | 11,064 |
Beginning balance, shares at Dec. 31, 2016 | 29,955,000 | |||
Beginning balance at Dec. 31, 2016 | 481,763 | $ 359,060 | 125,309 | (2,606) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Restricted and unrestricted stock awards issued, net of forfeitures, shares | (10,000) | |||
Restricted stock awards forfeited | $ 0 | |||
Exercise of stock options (including excess tax benefits from nonqualified stock options), shares | 12,304 | 12,000 | ||
Exercise of stock options (including excess tax benefits from nonqualified stock options) | $ 159 | $ 159 | ||
Stock-based compensation expense | 1,568 | $ 1,568 | ||
Common stock repurchased, shares | (28,000) | |||
Common stock repurchased | (674) | $ (674) | ||
Net income | 31,768 | 31,768 | ||
Other comprehensive income, net of tax | 4,424 | 4,424 | ||
Cash dividends declared on common stock | (11,400) | (11,400) | ||
Ending balance, shares at Sep. 30, 2017 | 29,929,000 | |||
Ending balance at Sep. 30, 2017 | $ 507,608 | $ 360,113 | $ 145,677 | $ 1,818 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares | Jul. 25, 2017 | Apr. 25, 2017 | Jan. 25, 2017 | Oct. 26, 2016 | Jul. 20, 2016 | Apr. 20, 2016 | Jan. 27, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Statement of Stockholders' Equity [Abstract] | |||||||||||
Cash dividends declared on common stock (in usd per share) | $ 0.13 | $ 0.13 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.11 | $ 0.13 | $ 0.12 | $ 0.38 | $ 0.35 |
Condensed Consolidated Stateme9
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 31,768 | $ 29,025 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 8,117 | 9,543 |
Changes in net deferred loan costs, net of amortization | (656) | (971) |
Provision for loan losses | 2,882 | 3,754 |
Net change in accrued interest receivable, prepaid expenses and other assets, accrued expenses and other liabilities | 8,315 | (193) |
Stock-based compensation expense | 1,568 | 1,367 |
Net excess tax benefit from exercise of stock options and vesting of restricted stock | 0 | (119) |
Amortization of intangible assets | 966 | 1,057 |
Origination of loans held for sale | (82,767) | (99,513) |
Proceeds from sale of loans | 91,576 | 101,574 |
Earnings on bank owned life insurance | (1,108) | (1,086) |
Valuation adjustment on other real estate owned | 0 | 383 |
Gain on sale of loans, net | (6,562) | (5,406) |
Gain on sale of investment securities, net | (161) | (1,106) |
Gain on sale of assets held for sale | (53) | 0 |
Gain on sale of other real estate owned, net | (111) | (173) |
Loss on sale or write-off of furniture, equipment and leasehold improvements | 12 | 107 |
Net cash provided by operating activities | 53,786 | 38,243 |
Cash flows from investing activities: | ||
Loans originated, net of principal payments | (178,800) | (190,798) |
Maturities of other interest earning deposits | 0 | 1,248 |
Maturities, calls and payments of investment securities available for sale | 75,800 | 94,328 |
Purchase of investment securities available for sale | (101,017) | (188,164) |
Purchase of premises and equipment | (2,221) | (5,128) |
Proceeds from sales of other loans | 24,142 | 12,931 |
Proceeds from sales of other real estate owned | 374 | 2,486 |
Proceeds from sales of investment securities available for sale | 21,850 | 94,380 |
Proceeds from sale of assets held for sale | 265 | 0 |
Proceeds from redemption of Federal Home Loan Bank stock | 21,788 | 15,416 |
Purchases of Federal Home Loan Bank stock | (23,567) | (16,356) |
Proceeds from sale of premises and equipment | 0 | 659 |
Purchase of bank owned life insurance | 0 | (8,000) |
Capital contribution to low-income housing tax credit partnership | (8,506) | (3,315) |
Net cash used in investing activities | (169,892) | (190,313) |
Cash flows from financing activities: | ||
Net increase in deposits | 91,170 | 134,134 |
Federal Home Loan Bank advances | 582,500 | 403,100 |
Repayments of Federal Home Loan Bank advances | (544,700) | (385,400) |
Common stock cash dividends paid | (11,400) | (10,488) |
Net increase (decrease) in securities sold under agreement to repurchase | 6,564 | (789) |
Proceeds from exercise of stock options | 159 | 401 |
Net excess tax benefit from exercise of stock options and vesting of restricted stock | 0 | 119 |
Repurchase of common stock | (674) | (2,887) |
Net cash provided by financing activities | 123,619 | 138,190 |
Net increase (decrease) in cash and cash equivalents | 7,513 | (13,880) |
Cash and cash equivalents at beginning of period | 103,745 | 126,640 |
Cash and cash equivalents at end of period | 111,258 | 112,760 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 6,024 | 4,533 |
Cash paid for income taxes | 1,500 | 9,000 |
Supplemental non-cash disclosures of cash flow information: | ||
Transfers of loans receivable to other real estate owned | 32 | 677 |
Transfers of premises and equipment, net to prepaid expenses and other assets for properties held for sale | 2,687 | 0 |
Investment in low income housing tax credit partnership and related funding commitment | $ 14,267 | $ 19,663 |
Description of Business, Basis
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements | Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements (a) Description of Business Heritage Financial Corporation ("Heritage" or the “Company”) is a bank holding company that was incorporated in the State of Washington in August 1997. The Company is primarily engaged in the business of planning, directing and coordinating the business activities of its wholly-owned subsidiary, Heritage Bank (the “Bank”). The Bank is a Washington-chartered commercial bank and its deposits are insured by the FDIC. The Bank is headquartered in Olympia, Washington and conducts business from its 59 branch offices located throughout Washington State and the greater Portland, Oregon area. The Bank’s business consists primarily of commercial lending and deposit relationships with small businesses and their owners in its market areas and attracting deposits from the general public. The Bank also makes real estate construction and land development loans, consumer loans and originates first mortgage loans on residential properties primarily located in its market areas. On July 26, 2017, the Company announced the execution of a definitive agreement to purchase Puget Sound Bancorp, Inc., ("Puget Sound"), the holding company of Puget Sound Bank, a business bank headquartered in downtown Bellevue, Washington with one branch location and $567.2 million in total assets, $366.6 million in total loans receivables, net and $505.1 million in total deposits as of June 30, 2017. Upon consummation of the merger, the shareholders of Puget Sound will own approximately 13.5% of the combined company and Puget Sound will be merged into Heritage Bank. For additional information regarding the proposed transaction, see Note (16), Definitive Agreement. (b) Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. It is recommended that these unaudited Condensed Consolidated Financial Statements and accompanying Notes be read with the audited Consolidated Financial Statements and the accompanying Notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 (“ 2016 Annual Form 10-K”). In management's opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 . In preparing the unaudited Condensed Consolidated Financial Statements, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Management believes that the judgments, estimates and assumptions used in the preparation of the financial statements are appropriate based on the facts and circumstances at the time. Actual results, however, could differ significantly from those estimates. (c) Significant Accounting Policies The significant accounting policies used in preparation of the Company's Condensed Consolidated Financial Statements are disclosed in the 2016 Annual Form 10-K. There have not been any material changes in the Company's significant accounting policies from those contained in the 2016 Annual Form 10-K, except for accounting policies for stock-based compensation relating to the issuance of restricted stock units, including grants subject to performance-based and market-based vesting conditions, adopted January 1, 2017 as discussed below. Stock-Based Compensation Compensation cost is recognized for stock options, restricted stock awards and restricted stock units issued to employees and directors, based on the fair value of these awards at the date of grant. Compensation cost is recognized over the requisite service period, generally defined as the vesting period, on a straight-line basis. Compensation cost for restricted stock units with market-based vesting is recognized over the service period to the extent the restricted stock units are expected to vest. With the adoption of FASB Accounting Standards Update ("ASU" or "Update") 2016-09 on January 1, 2017, forfeitures are recognized as they occur. The market price of the Company’s common stock at the date of grant is used to determine the fair value of the restricted stock awards and restricted stock units. The fair value of stock options granted is estimated based on the date of grant using the Black-Scholes-Merton option pricing model. Certain restricted stock unit grants are subject to performance-based vesting as well as other approved vesting conditions and cliff vest based on those conditions, and the fair value is estimated using a Monte Carlo simulation pricing model. The assumptions used in the Black-Scholes-Merton option pricing model and the Monte Carlo simulation pricing model include the expected term based on the valuation date and the remaining contractual term of the award; the risk-free interest rate based on the U.S. Treasury curve at the valuation date of the award; the expected dividend yield based on expected dividends being payable to the holders; and the expected stock price volatility over the expected term based on the historical volatility over the equivalent historical term. (d) Recently Issued Accounting Pronouncements FASB ASU 2014-09 , Revenue from Contracts with Customers , was issued in May 2014. Under this Update, FASB created a new Topic 606 which is in response to a joint initiative of FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and international financial reporting standards that would: • Remove inconsistencies and weaknesses in revenue requirements. • Provide a more robust framework for addressing revenue issues. • Improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. • Provide more useful information to users of financial statements through improved disclosure requirements. • Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. The original effective date for this Update was deferred in FASB ASU 2015-14 below. FASB ASU 2015-14 , Revenue from Contracts with Customers (Topic 606) , was issued in August 2015 and defers the effective date of the above-mentioned FASB ASU 2014-09 for certain entities. Public business entities, certain not-for-profit entities and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is now permitted, but only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company expects to adopt the revenue recognition guidance on January 1, 2018 using the modified retrospective approach. A significant amount of the Company’s revenues are derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance. With respect to noninterest income and related disclosures, the Company is in its preliminary stages of identifying and evaluating the revenue streams and underlying revenue contracts within the scope of the guidance. To date, the Company has not yet identified any significant changes in the timing of revenue recognition when considering the amended accounting guidance; however, the Company’s implementation efforts are ongoing and such assessments may change prior to the January 1, 2018 implementation date. The Company expects to develop processes and procedures to ensure it is fully compliant with these amendments at the adoption date. FASB ASU 2016-01 , Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10) , was issued in January 2016, to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. This Update contains several provisions, including but not limited to 1) requiring equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income; 2) simplifying the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) eliminating the requirement to disclose the method(s) and significant assumptions used to estimate fair value; and 4) requiring separate presentation of financial assets and liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. The Update also changes certain financial statement disclosure requirements, including requiring disclosures of the fair value of financial instruments be made on the basis of exit price. The Update is effective for public entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect the adoption of this Update will have a significant impact on the Company’s statements of financial condition or income. Management is in the planning stages of developing processes and procedures to comply with the disclosures requirements of this Update, which could impact the disclosures the Company makes related to fair value of its financial instruments. FASB ASU 2016-02 , Leases (Topic 842) was originally issued in February 2016, to increase transparency and comparability of leases among organizations and to disclose key information about leasing arrangements. The Update sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The Update requires lessees to apply a dual approach, classifying leases as either a finance or operating lease. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. All cash payments will be classified within operating activities in the statement of cash flows. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Update is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company anticipates adopting the Update on January 1, 2019. Upon adoption of the guidance, the Company expects to report increased assets and increased liabilities on its Condensed Consolidated Statements of Financial Condition as a result of recognizing right-of-use assets and lease liabilities related to certain banking offices and certain equipment under noncancelable operating lease agreements, which currently are not reflected in its Condensed Consolidated Statements of Financial Condition. During 2017, management began its evaluation of its leasing contracts and activities. Management is in the initial stages of developing its methodology to estimate the right-of use assets and lease liabilities. The Company anticipates electing an accounting policy to not recognize lease assets and lease liabilities for leases with a term of twelve months or less. The Company was committed to $14.7 million of minimum lease payments under noncancelable operating lease agreements at December 31, 2016. The Company does not expect the adoption of this amendment will have a significant impact to its Condensed Consolidated Financial Statements. FASB ASU 2016-08 , Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations , was issued in March 2016 and it clarifies the implementation guidance of the above-mentioned FASB ASU 2014-09 as it relates to principal versus agent considerations. The Update addresses identifying the unit of account and nature of the goods or services as well as applying the control principle and interactions with the control principle. The amendments to the Update do not change the core principle of the guidance. The effective date, transition requirements and impact on the Company's Condensed Consolidated Financial Statements for this Update are the same as those described in FASB ASU 2015-14 above. FASB ASU 2016-09 , Stock Compensation (Topic 718) , issued in March 2016, is intended to simplify several aspects of the accounting for share-based payment award transactions. For public business entities, the guidance is effective for annual periods after December 15, 2016, including interim periods within those annual periods with early adoption permitted. Certain amendments are required to be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Other amendments are applied retroactively (such as presentation of employee taxes paid on the statement of cash flows) or prospectively (such as recognition of excess tax benefits on the income statement). The Company adopted this standard effective January 1, 2017. The Company made an accounting policy election to account for forfeitures as they occur and this change resulted in a cumulative adjustment that was immaterial to all periods presented. Changes to the statement of cash flows have been applied prospectively and the Company recorded excess tax benefits in its income tax expense. Adoption of all other changes under this Update did not have a material impact on the Condensed Consolidated Financial Statements. FASB ASU 2016-10 , Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , was issued in April 2016 which clarifies the implementation guidance of the above-mentioned FASB ASU 2014-09 as it relates to identifying performance obligations and licensing. The effective date, transition requirements and impact on the Company's Condensed Consolidated Financial Statements for this Update are the same as those described in FASB ASU 2015-14 above. FASB ASU 2016-12 , Revenue from Contracts with Customers (Topic 606): Narrow-scope Improvements and Practical Expedients , was issued in May 2016. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update affect only the narrow aspects of Topic 606. The effective date, transition requirements and impact on the Company's Condensed Consolidated Financial Statements for this Update are the same as those described in FASB ASU 2015-14 above. FASB ASU 2016-13 , Financial Instruments: Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , was issued in June 2016. Commonly referred to as the current expected credit loss model ("CECL"), this Update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses is based on relevant information about past events including historical experience, current conditions and reasonable and supportable forecasts that affect the collectibility of the reported amount. The amendment affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables and any other financial asset not excluded from the scope that have the contractual right to receive cash. The Update replaces the incurred loss impairment methodology, which generally only considered past events and current conditions, with a methodology that reflects the expected credit losses and required consideration of a broader range of reasonable and supportable information to estimate all expected credit losses. The Update additionally addresses purchased assets and introduces the purchased financial asset with a more-than-insignificant amount of credit deterioration since origination ("PCD"). The accounting for these PCD assets is similar to the existing accounting guidance of FASB Accounting Standards Codification ("ASC") 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality , for purchased credit impaired ("PCI") assets, except the subsequent improvements in estimated cash flows will be immediately recognized into income, similar to the immediate recognition of subsequent deteriorations in cash flows. Current guidance only allows for the prospective recognition of these cash flow improvements. Because the terminology has been changed to a "more-than-insignificant" amount of credit deterioration, the presumption is that more assets might qualify for this accounting under the Update than those under current guidance. For public business entities, the Update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years with early adoption permitted for fiscal years after December 15, 2018. An entity will apply the Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. A prospective transition approach is required for debt securities. An entity that has previously applied the guidance of FASB ASC 310-30 will prospectively apply the guidance in this Update for PCD assets. A prospective transition approach should be used for PCD assets where upon adoption, the amortized cost basis should be adjusted to reflect the addition of the allowance for credit losses. The Company is anticipating adopting the Update on January 1, 2020. Upon adoption, the Company expects a change in the processes, internal controls and procedures to calculate the allowance for loan losses, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. The new guidance may result in an increase in the allowance for loan losses which will also reflect the new requirement to include the nonaccretable principal differences on PCI loans; however, the Company is still in the process of determining the magnitude of the increase and its impact on the Condensed Consolidated Financial Statements. In addition, the current accounting policy and procedures for other-than-temporary impairment on investment securities available for sale will be replaced with an allowance approach. During 2017, the Company's management created a CECL steering committee which will begin developing and implementing processes and procedures to ensure it is fully compliant with the amendments at the adoption date. To date, the CECL steering committee has reviewed proposals from several vendors to assist the Company in the adoption. FASB ASU 2016-15 , Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , was issued in August 2016. The Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted and must be applied using a retrospective transitional method to each period presented. The Company has evaluated the new guidance and does not anticipate that its adoption of this Update on January 1, 2018 will have a significant impact on its Condensed Consolidated Financial Statements. FASB ASU 2017-03 , Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update) , was issued in January 2017. The SEC staff view is that a registrant should evaluate FASB ASC Updates that have not yet been adopted to determine the appropriate financial disclosures about the potential material effects of the updates on the financial statements when adopted. If a registrant does not know or cannot reasonably estimate the impact of an update, then in addition to making a statement to that effect, the registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact. The staff expects the additional qualitative disclosures to include a description of the effect of the accounting policies expected to be applied compared to current accounting policies. Also, the registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. The amendments specifically addressed recent FASB ASC amendments to Topic 326, Financial Instruments - Credit Losses; Topic 842, Leases; and Topic 606, Revenue from Contracts with Customers; although, the amendments apply to any subsequent amendments to guidance in the FASB ASC. The Company adopted the amendments in this Update during the fourth quarter of 2016 and appropriate disclosures have been included in this Note for each recently issued accounting standard. FASB ASU 2017-04 , Goodwill (Topic 350) , was issued in January 2017 and eliminates Step 2 from the goodwill impairment test. Under the amendments, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized, however, should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Update is effective for annual periods or any interim goodwill impairment tests beginning after December 15, 2019 using a prospective transition method and early adoption is permitted. The Company does not expect the Update will have a material impact on its Condensed Consolidated Financial Statements. FASB ASU 2017-08 , Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities was issued in March 2017 and changes the accounting for certain purchased callable debt securities held at a premium to shorten the amortization period for the premium to the earliest call date rather than to the maturity date. Accounting for purchased callable debt securities held at a discount does not change. The discount would continue to amortize to the maturity date. The updated is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company does not expect the Update will have a material impact on its Condensed Consolidated Financial Statements as the Company had been accounting for premiums as prescribed under this guidance. The Company anticipates early adopting this Update in January 2018. FASB ASU 2017-09 , Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting was issued in May 2017 to provide clarity as to when to apply modification accounting when there is a change in the terms or conditions of a share-based payment award. According to this Update, an entity should account for the effects of a modification unless the fair value, vesting conditions and balance sheet classification of the award is the same after the modification as compared to the original award prior to the modification. The Update is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not expect the Update will have a material impact on its Condensed Consolidated Financial Statements. |
Investment Securities
Investment Securities | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment Securities | Investment Securities The Company’s investment policy is designed primarily to provide and maintain liquidity, generate a favorable return on assets without incurring undue interest rate and credit risk, and complement the Bank’s lending activities. (a) Securities by Type and Maturity The amortized cost, gross unrealized gains, gross unrealized losses and fair values of investment securities available for sale at the dates indicated were as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (In thousands) September 30, 2017 U.S. Treasury and U.S. Government-sponsored agencies $ 9,464 $ 12 $ (73 ) $ 9,403 Municipal securities 248,420 5,429 (1,043 ) 252,806 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 275,128 879 (1,646 ) 274,361 Commercial 214,793 699 (2,209 ) 213,283 Collateralized loan obligations 6,007 15 — 6,022 Corporate obligations 15,583 247 — 15,830 Other securities 27,850 505 — 28,355 Total $ 797,245 $ 7,786 $ (4,971 ) $ 800,060 December 31, 2016 U.S. Treasury and U.S. Government-sponsored agencies $ 1,563 $ 6 $ — $ 1,569 Municipal securities 237,305 2,427 (2,476 ) 237,256 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 310,391 985 (2,200 ) 309,176 Commercial 211,259 599 (3,540 ) 208,318 Collateralized loan obligations 10,505 4 (31 ) 10,478 Corporate obligations 16,611 104 (9 ) 16,706 Other securities 11,005 156 (19 ) 11,142 Total $ 798,639 $ 4,281 $ (8,275 ) $ 794,645 (1) Issued and guaranteed by U.S. Government-sponsored agencies. There were no securities classified as trading or held to maturity at September 30, 2017 or December 31, 2016 . The amortized cost and fair value of investment securities available for sale at September 30, 2017 , by contractual maturity, are set forth below. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Cost Fair Value (In thousands) Due in one year or less $ 6,556 $ 6,595 Due after one year through five years 121,518 122,740 Due after five years through ten years 248,291 248,603 Due after ten years 420,835 421,972 Investment securities with no stated maturities 45 150 Total $ 797,245 $ 800,060 (b) Unrealized Losses and Other-Than-Temporary Impairments The following table shows the gross unrealized losses and fair value of the Company's investment securities available for sale that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that the individual securities have been in continuous unrealized loss positions as of September 30, 2017 and December 31, 2016 : Less than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (In thousands) September 30, 2017 U.S. Treasury and U.S. Government-sponsored agencies $ 6,484 $ (73 ) $ — $ — $ 6,484 $ (73 ) Municipal securities 24,415 (362 ) 23,629 (681 ) 48,044 (1,043 ) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 135,648 (1,111 ) 23,937 (535 ) 159,585 (1,646 ) Commercial 112,595 (1,478 ) 38,099 (731 ) 150,694 (2,209 ) Total $ 279,142 $ (3,024 ) $ 85,665 $ (1,947 ) $ 364,807 $ (4,971 ) December 31, 2016 Municipal securities $ 90,188 $ (2,476 ) $ — $ — $ 90,188 $ (2,476 ) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 181,562 (2,148 ) 10,854 (52 ) 192,416 (2,200 ) Commercial 157,055 (3,446 ) 12,597 (94 ) 169,652 (3,540 ) Collateralized loan obligations 2,976 (1 ) 2,969 (30 ) 5,945 (31 ) Corporate obligations 4,032 (9 ) — — 4,032 (9 ) Other securities 6,998 (19 ) — — 6,998 (19 ) Total $ 442,811 $ (8,099 ) $ 26,420 $ (176 ) $ 469,231 $ (8,275 ) (1) Issued and guaranteed by U.S. Government-sponsored agencies. The Company has evaluated these investment securities available for sale as of September 30, 2017 and December 31, 2016 and has determined that the decline in their value is temporary. The unrealized losses are primarily due to increases in market interest rates and larger spreads in the market for mortgage-related products. The fair value of these securities is expected to recover as the securities approach their maturity date and/or as the pricing spreads narrow on mortgage-related securities. None of the underlying issuers of the municipal securities had credit ratings that were below investment grade levels at September 30, 2017 or December 31, 2016 . The Company has the ability and intent to hold the investments until recovery of the securities' amortized cost, which may be the maturity date of the securities. For the three and nine months ended September 30, 2017 and 2016 , there were no investment securities determined to be other-than-temporarily impaired. (c) Pledged Securities The following table summarizes the amortized cost and fair value of investment securities available for sale that are pledged as collateral for the following obligations at September 30, 2017 and December 31, 2016 : September 30, 2017 December 31, 2016 Amortized Cost Fair Value Amortized Cost Fair Value (In thousands) Washington and Oregon state to secure public deposits $ 40,997 $ 40,772 $ 214,834 $ 215,247 Repurchase agreements 12,620 12,724 29,481 29,294 Other securities pledged 201,783 203,482 3,557 3,546 Total $ 255,400 $ 256,978 $ 247,872 $ 248,087 |
Loans Receivable
Loans Receivable | 9 Months Ended |
Sep. 30, 2017 | |
Loans and Leases Receivable Disclosure [Abstract] | |
Loans Receivable | Loans Receivable The Company originates loans in the ordinary course of business and has also acquired loans through FDIC-assisted and open bank transactions. Disclosures related to the Company's recorded investment in loans receivable generally exclude accrued interest receivable and net deferred costs because they are insignificant. Loans acquired in a business combination are further classified as “purchased” loans. Loans purchased with evidence of credit deterioration since origination for which it is probable that not all contractually required payments will be collected are accounted for under FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality . These loans are identified as "PCI" loans. Loans purchased that are not accounted for under FASB ASC 310-30 are accounted for under FASB ASC 310-20, Receivables—Nonrefundable Fees and Other Costs, and are referred to as "non-PCI" loans. (a) Loan Origination/Risk Management The Company categorizes loans in one of the four segments of the total loan portfolio: commercial business, one-to-four family residential, real estate construction and land development and consumer. Within these segments are classes of loans for which management monitors and assesses credit risk in the loan portfolios. The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming and potential problem loans. The Company also conducts internal loan reviews and validates the credit risk assessment on a periodic basis and presents the results of these reviews to management. The loan review process complements and reinforces the risk identification and assessment decisions made by loan officers and credit personnel, as well as the Company’s policies and procedures. A discussion of the risk characteristics of each loan portfolio segment is as follows: Commercial Business : There are three significant classes of loans in the commercial business portfolio segment: commercial and industrial, owner-occupied commercial real estate and non-owner occupied commercial real estate. The owner and non-owner occupied commercial real estate are both considered commercial real estate loans. As the commercial and industrial loans carry different risk characteristics than the commercial real estate loans, they are discussed separately below. Commercial and industrial. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may include a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. Commercial and industrial loans carry more risk than other loans because the borrowers’ cash flow is less predictable, and in the event of a default, the amount of loss is potentially greater and more difficult to quantify because the value of the collateral securing these loans may fluctuate, may be uncollectible, or may be obsolete or of limited use, among other things. Commercial real estate. The Company originates commercial real estate loans primarily within its primary market areas. These loans are subject to underwriting standards and processes similar to commercial and industrial loans in that these loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate properties. Commercial real estate lending typically involves higher loan principal amounts and payments on loans, and repayment is dependent on successful operation and management of the properties. The value of the real estate securing these loans can be adversely affected by conditions in the real estate market or the economy. There is little difference in risk between owner-occupied commercial real estate loans and non-owner occupied commercial real estate loans. One-to-Four Family Residential : The majority of the Company’s one-to-four family residential loans are secured by single-family residences located in its primary market areas. The Company’s underwriting standards require that single-family portfolio loans generally are owner-occupied and do not exceed 80% of the lower of appraised value at origination or cost of the underlying collateral. Terms of maturity typically range from 15 to 30 years. The Company sells most of its single-family loans in the secondary market and retains a smaller portion in its loan portfolio. Real Estate Construction and Land Development : The Company originates construction loans for one-to-four family residential and for five or more family residential and commercial properties. The one-to-four family residential construction loans generally include construction of custom homes whereby the home buyer is the borrower. The Company also provides financing to builders for the construction of pre-sold homes and, in selected cases, to builders for the construction of speculative residential property. Substantially all construction loans are short-term in nature and priced with variable rates of interest. Construction lending can involve a higher level of risk than other types of lending because funds are advanced partially based upon the value of the project, which is uncertain prior to the project’s completion. Because of the uncertainties inherent in estimating construction costs as well as the market value of a completed project and the effects of governmental regulation of real property, the Company’s estimates with regard to the total funds required to complete a project and the related loan-to-value ratio may vary from actual results. As a result, construction loans often involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project and the ability of the borrower to sell or lease the property or refinance the indebtedness. If the Company’s estimate of the value of a project at completion proves to be overstated, it may have inadequate security for repayment of the loan and may incur a loss if the borrower does not repay the loan. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being dependent upon successful completion of the construction project, interest rate changes, government regulation of real property, general economic conditions and the availability of long-term financing. Consumer : The Company originates consumer loans and lines of credit that are both secured and unsecured. The underwriting process for these loans ensures a qualifying primary and secondary source of repayment. Underwriting standards for home equity loans are significantly influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage of 80% , collection remedies, the number of such loans a borrower can have at one time and documentation requirements. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed. The majority of consumer loans are for relatively small amounts disbursed among many individual borrowers which reduces the credit risk for this type of loan. To further reduce the risk, trend reports are reviewed by management on a regular basis. The Company also originates indirect consumer loans. These loans are for new and used automobile and recreational vehicles that are originated indirectly by selected dealers located in the Company's market areas. The Company has limited its purchase of indirect loans primarily to dealerships that are established and well-known in their market areas and to applicants that are not classified as sub-prime. Loans receivable at September 30, 2017 and December 31, 2016 consisted of the following portfolio segments and classes: September 30, 2017 December 31, 2016 (In thousands) Commercial business: Commercial and industrial $ 665,582 $ 637,773 Owner-occupied commercial real estate 602,238 558,035 Non-owner occupied commercial real estate 930,188 880,880 Total commercial business 2,198,008 2,076,688 One-to-four family residential 81,422 77,391 Real estate construction and land development: One-to-four family residential 51,451 50,414 Five or more family residential and commercial properties 122,981 108,764 Total real estate construction and land development 174,432 159,178 Consumer 340,643 325,140 Gross loans receivable 2,794,505 2,638,397 Net deferred loan costs 3,008 2,352 Loans receivable, net 2,797,513 2,640,749 Allowance for loan losses (31,400 ) (31,083 ) Total loans receivable, net $ 2,766,113 $ 2,609,666 (b) Concentrations of Credit Most of the Company’s lending activity occurs within its primary market areas which are concentrated along the I-5 corridor from Whatcom County to Clark County in Washington State and Multnomah County in Oregon, as well as other contiguous markets. The majority of the Company’s loan portfolio consists of (in order of balances at September 30, 2017 ) non-owner occupied commercial real estate, commercial and industrial and owner-occupied commercial real estate. As of September 30, 2017 and December 31, 2016 , there were no concentrations of loans related to any single industry in excess of 10% of the Company’s total loans. (c) Credit Quality Indicators As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk grade of the loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) nonperforming loans and (v) the general economic conditions of the United States of America, and specifically the states of Washington and Oregon. The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 10. A description of the general characteristics of the risk grades is as follows: • Grades 1 to 5: These grades are considered “pass grade” and include loans with negligible to above average but acceptable risk. These borrowers generally have strong to acceptable capital levels and consistent earnings and debt service capacity. Loans with the higher grades within the “pass” category may include borrowers who are experiencing unusual operating difficulties, but have acceptable payment performance to date. Increased monitoring of financial information and/or collateral may be appropriate. Loans with this grade show no immediate loss exposure. • Grade 6: This grade includes "Watch" loans and is considered a “pass grade”. The grade is intended to be utilized on a temporary basis for pass grade borrowers where a potentially significant risk-modifying action is anticipated in the near term. • Grade 7: This grade includes “Other Assets Especially Mentioned” (“OAEM”) loans in accordance with regulatory guidelines, and is intended to highlight loans with elevated risks. Loans with this grade show signs of deteriorating profits and capital, and the borrower might not be strong enough to sustain a major setback. The borrower is typically higher than normally leveraged, and outside support might be modest and likely illiquid. The loan is at risk of further decline unless active measures are taken to correct the situation. • Grade 8: This grade includes “Substandard” loans in accordance with regulatory guidelines, which the Company has determined have a high credit risk. These loans also have well-defined weaknesses which make payment default or principal exposure likely, but not yet certain. The borrower may have shown serious negative trends in financial ratios and performance. Such loans may be dependent upon collateral liquidation, a secondary source of repayment or an event outside of the normal course of business. Loans with this grade can be placed on accrual or nonaccrual status based on the Company’s accrual policy. • Grade 9: This grade includes “Doubtful” loans in accordance with regulatory guidelines, and the Company has determined these loans to have excessive credit risk. Such loans are placed on nonaccrual status and may be dependent upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty. Additionally, these loans generally have a specific valuation allowance or have been partially charged-off for the amount considered uncollectible. • Grade 10: This grade includes “Loss” loans in accordance with regulatory guidelines, and the Company has determined these loans have the highest risk of loss. Such loans are charged-off or charged-down when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. “Loss” is not intended to imply that the loan or some portion of it will never be paid, nor does it in any way imply that there has been a forgiveness of debt. Numerical loan grades for loans are established at the origination of the loan. Loan grades are reviewed on a quarterly basis, or more frequently if necessary, by the credit department. The Bank follows the FDIC’s Uniform Retail Credit Classification and Account Management Policy for subsequent classification in the event of payment delinquencies or default. Typically, an individual loan grade will not be changed from the prior period unless there is a specific indication of credit deterioration or improvement. Credit deterioration is evidenced by delinquency, direct communications with the borrower, or other borrower information that becomes known to management. Credit improvements are evidenced by known facts regarding the borrower or the collateral property. The loan grades relate to the likelihood of losses in that the higher the grade, the greater the loss potential. Loans with a pass grade may have some estimated inherent losses, but to a lesser extent than the other loan grades. The OAEM loan grade is transitory in that the Company is waiting on additional information to determine the likelihood and extent of the potential loss. The likelihood of loss for OAEM graded loans, however, is greater than Watch graded loans because there has been measurable credit deterioration. Loans with a Substandard grade are generally loans for which the Company has individually analyzed for potential impairment. For Doubtful and Loss graded loans, the Company is almost certain of the losses, and the outstanding principal balances are generally charged-off to the realizable value. The following tables present the balance of the loans receivable by credit quality indicator as of September 30, 2017 and December 31, 2016 . September 30, 2017 Pass OAEM Substandard Doubtful/Loss Total (In thousands) Commercial business: Commercial and industrial $ 625,387 $ 11,067 $ 29,128 $ — $ 665,582 Owner-occupied commercial real estate 576,313 8,305 17,620 — 602,238 Non-owner occupied commercial real estate 897,677 15,790 16,721 — 930,188 Total commercial business 2,099,377 35,162 63,469 — 2,198,008 One-to-four family residential 79,882 — 1,540 — 81,422 Real estate construction and land development: One-to-four family residential 48,101 273 3,077 — 51,451 Five or more family residential and commercial properties 121,854 722 405 — 122,981 Total real estate construction and land development 169,955 995 3,482 — 174,432 Consumer 335,073 — 5,045 525 340,643 Gross loans receivable $ 2,684,287 $ 36,157 $ 73,536 $ 525 $ 2,794,505 December 31, 2016 Pass OAEM Substandard Doubtful/Loss Total (In thousands) Commercial business: Commercial and industrial $ 601,273 $ 5,048 $ 31,452 $ — $ 637,773 Owner-occupied commercial real estate 532,585 4,437 21,013 — 558,035 Non-owner occupied commercial real estate 841,383 14,573 24,924 — 880,880 Total commercial business 1,975,241 24,058 77,389 — 2,076,688 One-to-four family residential 76,020 — 1,371 — 77,391 Real estate construction and land development: One-to-four family residential 44,752 500 5,162 — 50,414 Five or more family residential and commercial properties 105,723 1,150 1,891 — 108,764 Total real estate construction and land development 150,475 1,650 7,053 — 159,178 Consumer 320,140 — 5,000 — 325,140 Gross loans receivable $ 2,521,876 $ 25,708 $ 90,813 $ — $ 2,638,397 Potential problem loans are loans classified as OAEM or worse that are currently accruing interest and are not considered impaired, but which management is monitoring because the financial information of the borrower causes concern as to their ability to meet their loan repayment terms. Potential problem loans may include PCI loans as these loans continue to accrete loan discounts established at acquisition based on the guidance of FASB ASC 310-30. Potential problem loans as of September 30, 2017 and December 31, 2016 were $84.1 million and $87.8 million , respectively. The balance of potential problem loans guaranteed by a governmental agency, which guarantee reduces the Company's credit exposure, was $1.7 million and $1.1 million as of September 30, 2017 and December 31, 2016 , respectively. (d) Nonaccrual Loans Nonaccrual loans, segregated by segments and classes of loans, were as follows as of September 30, 2017 and December 31, 2016 : September 30, 2017 December 31, 2016 (In thousands) Commercial business: Commercial and industrial $ 4,056 $ 3,531 Owner-occupied commercial real estate 3,720 3,728 Non-owner occupied commercial real estate 1,907 1,321 Total commercial business 9,683 8,580 One-to-four family residential 84 94 Real estate construction and land development: One-to-four family residential 869 2,008 Consumer 316 227 Nonaccrual loans $ 10,952 $ 10,909 The Company had $2.5 million and $2.8 million of nonaccrual loans guaranteed by governmental agencies at September 30, 2017 and December 31, 2016 , respectively. PCI loans are not included in the nonaccrual loan table above because these loans are accounted for under FASB ASC 310-30, which provides that accretable yield is calculated based on a loan's expected cash flow even if the loan is not performing under its contractual terms. (e) Past due loans The Company performs an aging analysis of past due loans using the categories of 30-89 days past due and 90 or more days past due. This policy is consistent with regulatory reporting requirements. The balances of past due loans, segregated by segments and classes of loans, as of September 30, 2017 and December 31, 2016 were as follows: September 30, 2017 30-89 Days 90 Days or Greater Total Past Due Current Total (In thousands) Commercial business: Commercial and industrial $ 790 $ 1,014 $ 1,804 $ 663,778 $ 665,582 Owner-occupied commercial real estate 498 1,270 1,768 600,470 602,238 Non-owner occupied commercial real estate — 2,085 2,085 928,103 930,188 Total commercial business 1,288 4,369 5,657 2,192,351 2,198,008 One-to-four family residential — — — 81,422 81,422 Real estate construction and land development: One-to-four family residential 1,038 309 1,347 50,104 51,451 Five or more family residential and commercial properties 366 — 366 122,615 122,981 Total real estate construction and land development 1,404 309 1,713 172,719 174,432 Consumer 1,738 657 2,395 338,248 340,643 Gross loans receivable $ 4,430 $ 5,335 $ 9,765 $ 2,784,740 $ 2,794,505 December 31, 2016 30-89 Days 90 Days or Greater Total Past Due Current Total (In thousands) Commercial business: Commercial and industrial $ 2,687 $ 1,733 $ 4,420 $ 633,353 $ 637,773 Owner-occupied commercial real estate 1,807 2,915 4,722 553,313 558,035 Non-owner occupied commercial real estate 733 — 733 880,147 880,880 Total commercial business 5,227 4,648 9,875 2,066,813 2,076,688 One-to-four family residential 523 — 523 76,868 77,391 Real estate construction and land development: One-to-four family residential 90 2,008 2,098 48,316 50,414 Five or more family residential and commercial properties — 377 377 108,387 108,764 Total real estate construction and land development 90 2,385 2,475 156,703 159,178 Consumer 2,292 105 2,397 322,743 325,140 Gross loans receivable $ 8,132 $ 7,138 $ 15,270 $ 2,623,127 $ 2,638,397 There were no loans 90 days or more past due that were still accruing interest as of September 30, 2017 or December 31, 2016 , excluding PCI loans. (f) Impaired loans Impaired loans include nonaccrual loans and performing troubled debt restructured ("TDR") loans. The balances of impaired loans as of September 30, 2017 and December 31, 2016 are set forth in the following tables. September 30, 2017 Recorded Investment With No Specific Valuation Allowance Recorded Investment With Specific Valuation Allowance Total Recorded Investment Unpaid Contractual Principal Balance Related Specific Valuation Allowance (In thousands) Commercial business: Commercial and industrial $ 3,131 $ 8,581 $ 11,712 $ 12,060 $ 1,254 Owner-occupied commercial real estate 1,082 4,676 5,758 6,068 767 Non-owner occupied commercial real estate 4,749 6,034 10,783 10,927 895 Total commercial business 8,962 19,291 28,253 29,055 2,916 One-to-four family residential — 304 304 311 96 Real estate construction and land development: One-to-four family residential 1,347 — 1,347 2,305 — Five or more family residential and commercial properties — 658 658 658 39 Total real estate construction and land development 1,347 658 2,005 2,963 39 Consumer 160 274 434 457 60 Total $ 10,469 $ 20,527 $ 30,996 $ 32,786 $ 3,111 December 31, 2016 Recorded Investment With No Specific Valuation Allowance Recorded Investment With Specific Valuation Allowance Total Recorded Investment Unpaid Contractual Principal Balance Related Specific Valuation Allowance (In thousands) Commercial business: Commercial and industrial $ 1,739 $ 10,636 $ 12,375 $ 13,249 $ 1,199 Owner-occupied commercial real estate 1,150 3,574 4,724 5,107 511 Non-owner occupied commercial real estate 4,905 6,413 11,318 11,386 797 Total commercial business 7,794 20,623 28,417 29,742 2,507 One-to-four family residential — 321 321 325 97 Real estate construction and land development: One-to-four family residential 2,243 828 3,071 3,755 6 Five or more family residential and commercial properties — 1,079 1,079 1,079 60 Total real estate construction and land development 2,243 1,907 4,150 4,834 66 Consumer 48 262 310 325 64 Total $ 10,085 $ 23,113 $ 33,198 $ 35,226 $ 2,734 The Company had governmental guarantees of $3.9 million and $3.5 million related to the impaired loan balances at September 30, 2017 and December 31, 2016 , respectively. The average recorded investment of impaired loans for the three and nine months ended September 30, 2017 and 2016 are set forth in the following table. Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (In thousands) Commercial business: Commercial and industrial $ 11,171 $ 9,625 $ 11,190 $ 9,750 Owner-occupied commercial real estate 5,289 4,553 5,049 4,560 Non-owner occupied commercial real estate 11,037 12,107 11,198 12,232 Total commercial business 27,497 26,285 27,437 26,542 One-to-four family residential 307 265 312 267 Real estate construction and land development: One-to-four family residential 2,157 3,177 2,530 3,253 Five or more family residential and commercial properties 860 1,619 967 1,746 Total real estate construction and land development 3,017 4,796 3,497 4,999 Consumer 346 885 328 907 Total $ 31,167 $ 32,231 $ 31,574 $ 32,715 For the three and nine months ended September 30, 2017 and 2016 , no interest income was recognized subsequent to a loan’s classification as nonaccrual. For the three and nine months ended September 30, 2017 , the Bank recorded $366,000 and $1.0 million , respectively, of interest income related to performing TDR loans. For the three and nine months ended September 30, 2016 , the Bank recorded $156,000 and $501,000 , respectively, of interest income related to performing TDR loans. (g) Troubled Debt Restructured Loans A TDR loan is a restructuring in which the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. TDRs are considered impaired and are separately measured for impairment under FASB ASC 310-10-35, whether on accrual ("performing") or nonaccrual ("nonperforming") status. The Company has more stringent definitions of concessions and impairment measures for PCI loans as these loans have known credit deterioration and are generally accreting income at a lower discounted rate as compared to the contractual note rate based on the guidance of FASB ASC 310-30. The majority of the Bank’s TDR loans are a result of granting extensions of maturity on troubled credits which have already been adversely classified. The Bank grants such extensions to reassess the borrower’s financial status and to develop a plan for repayment. The second most prevalent concessions are certain modifications with extensions that also include interest rate reductions. Certain TDRs were additionally re-amortized over a longer period of time. These modifications would all be considered a concession for a borrower that could not obtain similar financing terms from another source other than from the Bank. The financial effects of each modification will vary based on the specific restructure. For the majority of the Bank’s TDR loans, the loans were interest-only with a balloon payment at maturity. If the interest rate is not adjusted and the modified terms are consistent with other similar credits being offered, the Bank may not experience any loss associated with the restructure. If, however, the restructure involves forbearance agreements or interest rate modifications, the Bank may not collect all the principal and interest based on the original contractual terms. The Bank estimates the necessary allowance for loan losses on TDRs using the same guidance as used for other impaired loans. The recorded investment balance and related allowance for loan losses of performing and nonaccrual TDR loans as of September 30, 2017 and December 31, 2016 were as follows: September 30, 2017 December 31, 2016 Performing TDRs Nonaccrual TDRs Performing TDRs Nonaccrual (In thousands) TDR loans $ 20,044 $ 5,903 $ 22,288 $ 6,900 Allowance for loan losses on TDR loans 2,136 555 1,965 437 The unfunded commitment to borrowers related to TDRs was $160,000 and $249,000 at September 30, 2017 and December 31, 2016 , respectively. Loans that were modified as TDRs during the three and nine months ended September 30, 2017 and 2016 are set forth in the following tables: Three Months Ended September 30, 2017 2016 Number of Contracts (1) Outstanding Number of Contracts (1) Outstanding Principal Balance (1)(2) (Dollars in thousands) Commercial business: Commercial and industrial 4 $ 1,353 8 $ 2,324 Owner-occupied commercial real estate 2 1,299 2 576 Non-owner occupied commercial real estate 1 655 1 818 Total commercial business 7 3,307 11 3,718 Real estate construction and land development: One-to-four family residential — — 5 2,274 Five or more family residential and commercial properties — — 1 1,606 Total real estate construction and land development — — 6 3,880 Consumer 4 52 2 26 Total TDR loans 11 $ 3,359 19 $ 7,624 Nine Months Ended September 30, 2017 2016 Number of Contracts (1) Outstanding Number of Contracts (1) Outstanding Principal Balance (1)(2) (Dollars in thousands) Commercial business: Commercial and industrial 13 $ 5,564 15 $ 2,915 Owner-occupied commercial real estate 3 1,351 2 576 Non-owner occupied commercial real estate 2 1,596 1 818 Total commercial business 18 8,511 18 4,309 Real estate construction and land development: One-to-four family residential 2 1,038 5 2,274 Five or more family residential and commercial properties — — 1 1,606 Total real estate construction and land development 2 1,038 6 3,880 Consumer 5 60 6 70 Total TDR loans 25 $ 9,609 30 $ 8,259 (1) Number of contracts and outstanding principal balance represent loans which have balances as of period end as certain loans may have been paid-down or charged-off during the three and nine months ended September 30, 2017 and 2016 . (2) Includes subsequent payments after modifications and reflects the balance as of period end. As the Bank did not forgive any principal or interest balance as part of the loan modification, the Bank’s recorded investment in each loan at the date of modification (pre-modification) did not change as a result of the modification (post-modification). Of the 11 loans modified during the three months ended September 30, 2017 , seven loans with a total outstanding principal balance of $2.1 million had no prior modifications. Of the 25 loans modified during the nine months ended September 30, 2017 , 15 loans with a total outstanding principal balance of $5.0 million had no prior modifications. Of the 19 loans modified during the three months ended September 30, 2016 , eight loans with a total outstanding principal balance of $1.4 million had no prior modifications. Of the 30 loans modified during the nine months ended September 30, 2016 , 15 loans with a total outstanding principal balance of $1.7 million had no prior modifications. The remaining loans included in the table above for the three and nine months ended September 30, 2017 and 2016 were previously reported as TDRs. The Bank typically grants shorter extension periods to continually monitor these TDRs despite the fact that the extended date might not be the date the Bank expects sufficient cash flow from these borrowers. The Company does not consider these modifications a subsequent default of a TDR as new loan terms, specifically new maturity dates, were granted. The potential losses related to these loans would have been considered in the period the loan was first reported as a TDR and are adjusted, as necessary, in the current period based on more recent information. The related specific valuation allowance at September 30, 2017 was $1.1 million for loans that were modified as TDRs during the nine months ended September 30, 2017 . There was one commercial and industrial loan totaling $234,000 at September 30, 2017 that was modified during the previous twelve months that subsequently defaulted during the three and nine months ended September 30, 2017 because the borrower was more than 90 days delinquent on their scheduled loan payments. There were no loans that were modified during the previous twelve months that subsequently defaulted during the three and nine months ended September 30, 2016 . (h) Purchased Credit Impaired Loans The Company acquired loans and designated them as PCI loans, which are accounted for under FASB ASC 310-30, in the Washington Banking Merger on May 1, 2014 and in previously completed acquisitions, including the FDIC-assisted acquisitions of Cowlitz Bank ("Cowlitz") and Pierce Commercial Bank ("Pierce") on July 30, 2010 and November 8, 2010, respectively, and the acquisitions of Northwest Commercial Bank ("NCB") on January 9, 2013 and Valley Community Bancshares, Inc. ("Valley") on July 15, 2013. The following table reflects the outstanding principal balance and recorded investment of the PCI loans at September 30, 2017 and December 31, 2016 : September 30, 2017 December 31, 2016 Outstanding Principal Recorded Investment Outstanding Principal Recorded Investment (In thousands) Commercial business: Commercial and industrial $ 9,220 $ 5,001 $ 13,067 $ 9,317 Owner-occupied commercial real estate 14,059 12,492 17,639 15,973 Non-owner occupied commercial real estate 15,026 13,058 25,037 23,360 Total commercial business 38,305 30,551 55,743 48,650 One-to-four family residential 4,426 3,983 5,120 4,905 Real estate construction and land development: One-to-four family residential 2,928 1,749 2,958 2,123 Five or more family residential and commercial properties 2,392 2,284 |
Allowance for Loan Losses
Allowance for Loan Losses | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses is maintained at a level deemed appropriate by management to provide for probable incurred credit losses in the loan portfolio. The following tables detail the activity in the allowance for loan losses disaggregated by segment and class for the three and nine months ended September 30, 2017 : Balance at Beginning of Period Charge-offs Recoveries Provision for Loan Losses Balance at End of Period (In thousands) Three Months Ended September 30, 2017 Commercial business: Commercial and industrial $ 10,651 $ (3 ) $ 4 $ (772 ) $ 9,880 Owner-occupied commercial real estate 4,154 (1,494 ) 4 1,397 4,061 Non-owner occupied commercial real estate 7,709 — — (415 ) 7,294 Total commercial business 22,514 (1,497 ) 8 210 21,235 One-to-four family residential 1,073 (15 ) — (21 ) 1,037 Real estate construction and land development: One-to-four family residential 821 (556 ) 191 337 793 Five or more family residential and commercial properties 1,666 — — (271 ) 1,395 Total real estate construction and land development 2,487 (556 ) 191 66 2,188 Consumer 5,710 (478 ) 112 453 5,797 Unallocated 967 — — 176 1,143 Total $ 32,751 $ (2,546 ) $ 311 $ 884 $ 31,400 Nine Months Ended September 30, 2017 Commercial business: Commercial and industrial $ 10,968 $ (361 ) $ 679 $ (1,406 ) $ 9,880 Owner-occupied commercial real estate 3,661 (1,579 ) 155 1,824 4,061 Non-owner occupied commercial real estate 7,753 — — (459 ) 7,294 Total commercial business 22,382 (1,940 ) 834 (41 ) 21,235 One-to-four family residential 1,015 (15 ) 1 36 1,037 Real estate construction and land development: One-to-four family residential 797 (556 ) 201 351 793 Five or more family residential and commercial properties 1,359 — — 36 1,395 Total real estate construction and land development 2,156 (556 ) 201 387 2,188 Consumer 5,024 (1,419 ) 329 1,863 5,797 Unallocated 506 — — 637 1,143 Total $ 31,083 $ (3,930 ) $ 1,365 $ 2,882 $ 31,400 The following table details the allowance for loan losses disaggregated on the basis of the Company's impairment method as of September 30, 2017 . Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Allowance for Loan Losses (In thousands) Commercial business: Commercial and industrial $ 1,254 $ 7,589 $ 1,037 $ 9,880 Owner-occupied commercial real estate 767 2,434 860 4,061 Non-owner occupied commercial real estate 895 5,389 1,010 7,294 Total commercial business 2,916 15,412 2,907 21,235 One-to-four family residential 96 740 201 1,037 Real estate construction and land development: One-to-four family residential — 568 225 793 Five or more family residential and commercial properties 39 1,259 97 1,395 Total real estate construction and land development 39 1,827 322 2,188 Consumer 60 4,991 746 5,797 Unallocated — 1,143 — 1,143 Total $ 3,111 $ 24,113 $ 4,176 $ 31,400 The following table details the recorded investment balance of the loan receivables disaggregated on the basis of the Company’s impairment method as of September 30, 2017 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Gross Loans Receivable (In thousands) Commercial business: Commercial and industrial $ 11,712 $ 648,869 $ 5,001 $ 665,582 Owner-occupied commercial real estate 5,758 583,988 12,492 602,238 Non-owner occupied commercial real estate 10,783 906,347 13,058 930,188 Total commercial business 28,253 2,139,204 30,551 2,198,008 One-to-four family residential 304 77,135 3,983 81,422 Real estate construction and land development: One-to-four family residential 1,347 48,355 1,749 51,451 Five or more family residential and commercial properties 658 120,039 2,284 122,981 Total real estate construction and land development 2,005 168,394 4,033 174,432 Consumer 434 335,080 5,129 340,643 Total $ 30,996 $ 2,719,813 $ 43,696 $ 2,794,505 The following tables detail activity in the allowance for loan losses disaggregated by segment and class for the three and nine months ended September 30, 2016 . Balance at Beginning of Period Charge-offs Recoveries Provision for Loan Losses Balance at End of Period (In thousands) Three Months Ended September 30, 2016 Commercial business: Commercial and industrial $ 9,970 $ (240 ) $ 993 $ 182 $ 10,905 Owner-occupied commercial real estate 3,578 (88 ) — 222 3,712 Non-owner occupied commercial real estate 6,924 — — 303 7,227 Total commercial business 20,472 (328 ) 993 707 21,844 One-to-four family residential 950 — — 26 976 Real estate construction and land development: One-to-four family residential 754 — — 96 850 Five or more family residential and commercial properties 1,277 — — 5 1,282 Total real estate construction and land development 2,031 — — 101 2,132 Consumer 4,816 (572 ) 197 665 5,106 Unallocated 157 — — (4 ) 153 Total $ 28,426 $ (900 ) $ 1,190 $ 1,495 $ 30,211 Nine Months Ended September 30, 2016 Commercial business: Commercial and industrial $ 9,972 $ (2,810 ) $ 1,352 $ 2,391 $ 10,905 Owner-occupied commercial real estate 4,370 (538 ) — (120 ) 3,712 Non-owner occupied commercial real estate 7,722 (350 ) — (145 ) 7,227 Total commercial business 22,064 (3,698 ) 1,352 2,126 21,844 One-to-four family residential 1,157 — 2 (183 ) 976 Real estate construction and land development: One-to-four family residential 1,058 (100 ) 83 (191 ) 850 Five or more family residential and commercial properties 813 (54 ) — 523 1,282 Total real estate construction and land development 1,871 (154 ) 83 332 2,132 Consumer 4,309 (1,370 ) 496 1,671 5,106 Unallocated 345 — — (192 ) 153 Total $ 29,746 $ (5,222 ) $ 1,933 $ 3,754 $ 30,211 The following table details the allowance for loan losses disaggregated on the basis of the Company's impairment method as of December 31, 2016 . Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Allowance for Loan Losses (In thousands) Commercial business: Commercial and industrial $ 1,199 $ 8,048 $ 1,721 $ 10,968 Owner-occupied commercial real estate 511 1,834 1,316 3,661 Non-owner occupied commercial real estate 797 5,142 1,814 7,753 Total commercial business 2,507 15,024 4,851 22,382 One-to-four family residential 97 643 275 1,015 Real estate construction and land development: One-to-four family residential 6 538 253 797 Five or more family residential and commercial properties 60 1,168 131 1,359 Total real estate construction and land development 66 1,706 384 2,156 Consumer 64 3,912 1,048 5,024 Unallocated — 506 — 506 Total $ 2,734 $ 21,791 $ 6,558 $ 31,083 The following table details the recorded investment balance of the loan receivables disaggregated on the basis of the Company’s impairment method as of December 31, 2016 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Gross Loans Receivable (In thousands) Commercial business: Commercial and industrial $ 12,375 $ 616,081 $ 9,317 $ 637,773 Owner-occupied commercial real estate 4,724 537,338 15,973 558,035 Non-owner occupied commercial real estate 11,318 846,202 23,360 880,880 Total commercial business 28,417 1,999,621 48,650 2,076,688 One-to-four family residential 321 72,165 4,905 77,391 Real estate construction and land development: One-to-four family residential 3,071 45,220 2,123 50,414 Five or more family residential and commercial properties 1,079 105,197 2,488 108,764 Total real estate construction and land development 4,150 150,417 4,611 159,178 Consumer 310 318,548 6,282 325,140 Total $ 33,198 $ 2,540,751 $ 64,448 $ 2,638,397 |
Other Real Estate Owned
Other Real Estate Owned | 9 Months Ended |
Sep. 30, 2017 | |
Real Estate [Abstract] | |
Other Real Estate Owned | Other Real Estate Owned Changes in other real estate owned during the three and nine months ended September 30, 2017 and 2016 were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (In thousands) Balance at the beginning of the period $ 786 $ 1,560 $ 754 $ 2,019 Additions — 25 32 677 Proceeds from dispositions (374 ) (1,716 ) (374 ) (2,486 ) Gain on sales, net 111 131 111 173 Valuation adjustment — — — (383 ) Balance at the end of the period $ 523 $ — $ 523 $ — At September 30, 2017 , the carrying amount of other real estate owned that was the result of foreclosure and obtaining physical possession of residential real estate properties was $523,000 . At September 30, 2017 , the recorded investment of consumer mortgage loans secured by residential real estate properties (included in the one-to-four family residential loan class in Note (3) Loans Receivable) for which formal foreclosure proceedings were in process was $657,000 . |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets (a) Goodwill The Company’s goodwill represents the excess of the purchase price over the fair value of net assets acquired in the Washington Banking Merger on May 1, 2014, and the acquisitions of Valley on July 15, 2013, Western Washington Bancorp in 2006 and North Pacific Bank in 1998. The Company’s goodwill is assigned to the Bank and is evaluated for impairment at the Bank level (reporting unit). There were no additions to goodwill during the three and nine months ended September 30, 2017 and 2016 . At September 30, 2017 , the Company’s step-one analysis concluded that the reporting unit’s fair value was greater than its carrying value and therefore no goodwill impairment charges were required, or recorded, for the three and nine months ended September 30, 2017 . Similarly, no goodwill impairment charges were required, or recorded, for the three and nine months ended September 30, 2016 . Even though there was no goodwill impairment at September 30, 2017 , adverse events may impact the recoverability of goodwill and could result in a future impairment charge which could have a material impact on the Company’s operating results. (b) Other Intangible Assets The other intangible assets represent the core deposit intangible ("CDI") acquired in business combinations. The useful life of the CDI related to the Washington Banking Merger, the acquisitions of Valley, NCB and Cowlitz were estimated to be ten , ten , five and nine years, respectively. The following table presents the change in the other intangible assets for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (In thousands) Balance at the beginning of the period $ 6,727 $ 8,091 $ 7,374 $ 8,789 Less: Amortization 319 359 966 1,057 Balance at the end of the period $ 6,408 $ 7,732 $ 6,408 $ 7,732 |
Other Borrowings
Other Borrowings | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Other Borrowings | Other Borrowings (a) Federal Home Loan Bank Advances The Federal Home Loan Bank ("FHLB") of Des Moines functions as a member-owned cooperative providing credit for member financial institutions. Advances are made pursuant to several different programs. Each credit program has its own interest rate and range of maturities. Limitations on the amount of advances are based on a percentage of the Bank's assets or on the FHLB’s assessment of the institution’s creditworthiness. At September 30, 2017 , the Bank maintained a credit facility with the FHLB of Des Moines for $662.4 million and had short-term FHLB advances outstanding of $117.4 million with maturity dates within 30 days. At December 31, 2016 there were FHLB advances outstanding of $79.6 million . The following table sets forth the details of FHLB advances during the three and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (Dollars in thousands) Average balance during the period $ 111,293 $ 5,618 $ 106,553 $ 11,608 Maximum month-end balance during the period $ 126,200 $ 17,700 $ 137,450 $ 57,300 Weighted average rate during the period 1.53 % 0.57 % 1.09 % 0.54 % Advances from the FHLB are collateralized by a blanket pledge on FHLB stock owned by the Bank, deposits at the FHLB, certain one-to-four single family residential loans or other assets, principally investment securities which are obligations of or guaranteed by the United States or other assets. In accordance with the pledge agreement, the Company must maintain unencumbered collateral in an amount equal to varying percentages ranging from 100% to 160% of outstanding advances depending on the type of collateral. (b) Federal Funds Purchased The Bank maintains advance lines with Wells Fargo Bank, US Bank, The Independent Bankers Bank and Pacific Coast Bankers’ Bank to purchase federal funds of up to $90.0 million as of September 30, 2017 . The lines generally mature annually or are reviewed annually. As of September 30, 2017 and December 31, 2016 , there were no federal funds purchased. (c) Credit facilities The Bank maintains a credit facility with the Federal Reserve Bank of San Francisco for $50.6 million as of September 30, 2017 , of which there were no borrowings outstanding as of September 30, 2017 or December 31, 2016 . Any advances on the credit facility would have to be first secured by the Bank's investment securities or loans receivable. |
Junior Subordinated Debentures
Junior Subordinated Debentures | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Junior Subordinated Debentures | Junior Subordinated Debentures As part of the Washington Banking Merger, the Company assumed trust preferred securities and junior subordinated debentures with a total fair value of $18.9 million at the May 1, 2014 merger date. Washington Banking Master Trust, a Delaware statutory business trust, was a wholly-owned subsidiary of Washington Banking created for the exclusive purposes of issuing and selling capital securities and utilizing sale proceeds to acquire junior subordinated debt issued by Washington Banking. During 2007, the Trust issued $25.0 million of trust preferred securities with a 30 -year maturity, callable after the fifth year by Washington Banking. The trust preferred securities have a quarterly adjustable rate based upon the three-month London Interbank Offered Rate (“LIBOR”) plus 1.56% . On the Washington Banking Merger date of May 1, 2014, the Company acquired the Trust, which retained the Washington Banking Master Trust name, and assumed the performance and observance of the covenants under the indenture related to the trust preferred securities. The adjustable rate of the trust preferred securities at September 30, 2017 was 2.89% . The weighted average rate of the junior subordinated debentures was 5.20% and 5.05% for the three and nine months ended September 30, 2017 , respectively, and 4.49% and 4.43% for the three and nine months ended September 30, 2016 , respectively. The weighted average rate includes the accretion of the discount established at the merger date which is amortized over the life of the trust preferred securities. The junior subordinated debentures are the sole assets of the Trust and payments under the junior subordinated debentures are the sole revenues of the Trust. At September 30, 2017 and December 31, 2016 , the balance of the junior subordinated debentures, net of unaccreted discount, was $19.9 million and $19.7 million , respectively. All of the common securities of the Trust are owned by the Company. Heritage has fully and unconditionally guaranteed the capital securities along with all obligations of the Trust under the trust agreements. |
Repurchase Agreements
Repurchase Agreements | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Repurchase Agreements [Abstract] | |
Repurchase Agreements | Repurchase Agreements The Company utilizes repurchase agreements with one -day maturities as a supplement to funding sources. Repurchase agreements are secured by pledged investment securities available for sale. Under the repurchase agreements, the Company is required to maintain an aggregate market value of securities pledged greater than the balance of the repurchase agreements. The Company is required to pledge additional securities to cover any declines below the balance of the repurchase agreements. For additional information on the total value of investment securities pledged for repurchase agreements see Note (2) Investment Securities. The following table presents the Company's repurchase agreement obligations by class of collateral pledged: September 30, 2017 December 31, 2016 (In thousands) U.S. Treasury and U.S. Government-sponsored agencies $ — $ 2,944 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 12,336 5,191 Commercial 16,332 13,969 Total repurchase agreements $ 28,668 $ 22,104 (1) Issued and guaranteed by U.S. Government-sponsored agencies. |
Derivative Financial Instrument
Derivative Financial Instruments (Notes) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company has entered into certain interest rate swap contracts that are not designated as hedging instruments. The purpose of these derivative contracts is primarily to provide commercial business loan customers the ability to convert their loans from variable to fixed interest rates. Upon the origination of a derivative contract with a customer, the Company simultaneously enters into an offsetting derivative contract with a third party in order to offset its exposure on the variable and fixed rate components of the customer agreement. The Company recognizes immediate income based upon the difference in the bid/ask spread of the underlying transactions with its customers and the third party, which is recorded in interest rate swap fees on the Condensed Consolidated Statements of Income. Because the Company acts only as an intermediary for its customer, subsequent changes in the fair value of the underlying derivative contracts offset each other and do not significantly impact the Company’s results of operations. The notional amounts and estimated fair values of interest rate derivative contracts outstanding at September 30, 2017 and December 31, 2016 are presented in the following table. September 30, 2017 December 31, 2016 Notional Amounts Estimated Fair Value Notional Amounts Estimated Fair Value (In thousands) Non-hedging interest rate derivatives Interest rate swaps with customer (1) $ 134,295 $ 74 $ 102,709 $ (1,099 ) Interest rate swap with third party (1) 134,295 (74 ) 102,709 1,099 (1) The estimated fair value of the derivative included in prepaid and other assets on the Condensed Consolidated Statements of Financial Condition was $3.3 million and $2.8 million as of September 30, 2017 and December 31, 2016 , respectively. The estimated fair value of the derivative included in accrued expenses and other liabilities on the Condensed Consolidated Statements of Financial Condition was $3.3 million and $2.8 million as of September 30, 2017 and December 31, 2016 , respectively. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity (a) Earnings Per Common Share The following table illustrates the reconciliation of weighted average shares used for earnings per common share computations for the three and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (Dollars in thousands) Net income: Net income $ 10,624 $ 11,039 $ 31,768 $ 29,025 Less: Dividends and undistributed earnings allocated to participating securities (64 ) (102 ) (228 ) (280 ) Net income allocated to common shareholders $ 10,560 $ 10,937 $ 31,540 $ 28,745 Basic: Weighted average common shares outstanding 29,929,721 29,962,270 29,940,276 29,968,034 Less: Restricted stock awards (146,425 ) (277,495 ) (192,186 ) (292,832 ) Total basic weighted average common shares outstanding 29,783,296 29,684,775 29,748,090 29,675,202 Diluted: Basic weighted average common shares outstanding 29,783,296 29,684,775 29,748,090 29,675,202 Effect of potentially dilutive common shares (1) 107,414 11,031 86,004 12,543 Total diluted weighted average common shares outstanding 29,890,710 29,695,806 29,834,094 29,687,745 (1) Represents the effect of the assumed exercise of stock options and vesting of restricted stock units. Potential dilutive shares are excluded from the computation of earnings per share if their effect is anti-dilutive. For the three and nine months ended September 30, 2017 and the three months ended September 30, 2016 , there were no anti-dilutive shares outstanding related to options to acquire common stock. For the nine months ended September 30, 2016 , anti-dilutive shares outstanding related to options to acquire common stock totaled 580 as the assumed proceeds from exercise price, tax benefits and future compensation were in excess of the market value. (b) Dividends The timing and amount of cash dividends paid on the Company's common stock depends on the Company’s earnings, capital requirements, financial condition and other relevant factors. Dividends on common stock from the Company depend substantially upon receipt of dividends from the Bank, which is the Company’s predominant source of income. The following table summarizes the dividend activity for the nine months ended September 30, 2017 and calendar year 2016 . Declared Cash Dividend per Share Record Date Paid Date January 27, 2016 $0.11 February 10, 2016 February 24, 2016 April 20, 2016 $0.12 May 5, 2016 May 19, 2016 July 20, 2016 $0.12 August 4, 2016 August 18, 2016 October 26, 2016 $0.12 November 8, 2016 November 22, 2016 October 26, 2016 $0.25 November 8, 2016 November 22, 2016 * January 25, 2017 $0.12 February 9, 2017 February 23, 2017 April 25, 2017 $0.13 May 10, 2017 May 24, 2017 July 25, 2017 $0.13 August 10, 2017 August 24, 2017 * Denotes a special dividend. The FDIC and the Washington State Department of Financial Institutions, Division of Banks have the authority under their supervisory powers to prohibit the payment of dividends by the Bank to the Company. Additionally, current guidance from the Board of Governors of the Federal Reserve System ("Federal Reserve Board") provides, among other things, that dividends per share on the Company’s common stock generally should not exceed earnings per share, measured over the previous four fiscal quarters. Current regulations allow the Company and the Bank to pay dividends on their common stock if the Company’s or the Bank’s regulatory capital would not be reduced below the statutory capital requirements set by the Federal Reserve Board and the FDIC. (c) Stock Repurchase Program The Company has had various stock repurchase programs since March 1999. On October 23, 2014, the Company's Board of Directors authorized the repurchase of up to 5% of the Company's outstanding common shares, or approximately 1,513,000 shares, under the eleventh stock repurchase plan. The number, timing and price of shares repurchased will depend on business and market conditions and other factors, including opportunities to deploy the Company's capital. The following table provides total repurchased shares and average share prices under the plan for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Plan Total (1) Eleventh Plan Repurchased shares — 38,000 — 138,000 579,996 Stock repurchase average share price $ — $ 17.46 $ — $ 17.16 $ 16.76 (1) Represents shares repurchased and average price per share paid during the duration of the plan. In addition to the stock repurchases disclosed in the table above, the Company repurchased shares to pay withholding taxes on the vesting of restricted stock. During the three and nine months ended September 30, 2017 , the Company repurchased 344 and 27,711 shares of common stock at an average price per share of $25.80 and $24.61 to pay withholding taxes on the vesting of restricted stock that vested during the respective periods. During the three and nine months ended September 30, 2016 , the Company repurchased 5,276 and 29,206 shares of common stock at an average price per share of $18.64 and $17.77 to pay withholding taxes on the vesting of restricted stock that vested during the respective periods. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income The changes in accumulated other comprehensive income (loss) (“AOCI”) by component, during the three and nine months ended September 30, 2017 and 2016 are as follows: Three Months Ended September 30, 2017 (1) Nine Months Ended September 30, 2017 (1) (In thousands) Balance of AOCI at the beginning of period $ 1,557 $ (2,606 ) Other comprehensive income before reclassification 289 4,528 Amounts reclassified from AOCI for gain on sale of investment securities included in net income (28 ) (104 ) Net current period other comprehensive income 261 4,424 Balance of AOCI at the end of period $ 1,818 $ 1,818 (1) All amounts are due to the changes in fair value of available for sale securities and are net of tax. Three Months Ended September 30, 2016 (1) Nine Months Ended September 30, 2016 (1) (In thousands) Balance of AOCI at the beginning of period $ 12,343 $ 2,559 Other comprehensive income before reclassification (1,055 ) 9,223 Amounts reclassified from AOCI for gain on sale of investment securities available for sale included in net income (224 ) (718 ) Net current period other comprehensive income (1,279 ) 8,505 Balance of AOCI at the end of period $ 11,064 $ 11,064 (1) All amounts are due to the changes in fair value of available for sale securities and are net of tax. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock options generally vest ratably over three years and expire five years after they become exercisable or vest ratably over four years and expire ten years from date of grant. Restricted stock awards issued generally have a four -year cliff vesting or four -year ratable vesting schedule. Restricted stock units vest ratably over three years. Performance restricted stock units issued generally have a three -year cliff vesting schedule. Additionally, performance restricted stock unit grants may be subject to performance-based vesting as well as other approved vesting conditions. The Company issues new shares of common stock to satisfy share option exercises, restricted stock awards and restricted stock units. On July 24, 2014, the Company's shareholders approved the Heritage Financial Corporation 2014 Omnibus Equity Plan (the "Plan") that provides for the issuance of 1,500,000 shares of the Company's common stock in the form of stock options, stock appreciation rights, stock awards (which includes restricted stock units, restricted stock, performance units, performance shares or bonus shares) and cash incentive awards. Under the Company's stock-based compensation plans, 1,073,146 shares remain available for future issuance as of September 30, 2017 . (a) Stock Option Awards For the three and nine months ended September 30, 2017 and 2016 , the Company did no t recognize any compensation expense or related tax benefit related to stock options as all of the compensation expense related to the outstanding stock options had been previously recognized. The intrinsic value and cash proceeds from options exercised during the nine months ended September 30, 2017 was $156,000 and $159,000 , respectively. The intrinsic value and cash proceeds from options exercised during the nine months ended September 30, 2016 was $99,000 and $401,000 , respectively. The following table summarizes the stock option activity for the nine months ended September 30, 2017 and 2016 : Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding at December 31, 2015 79,408 $ 14.19 Exercised (27,867 ) 14.37 Forfeited or expired (4,200 ) 16.80 Outstanding at September 30, 2016 47,341 $ 13.85 2.80 $ 194 Outstanding at December 31, 2016 37,495 $ 13.77 Exercised (12,304 ) 12.92 Forfeited or expired (1,308 ) 13.53 Outstanding, vested and expected to vest and exercisable at September 30, 2017 23,883 $ 14.23 2.45 $ 365 (b) Restricted Stock Awards For the three and nine months ended September 30, 2017 , the Company recognized compensation expense related to restricted stock awards of $292,000 and $1.1 million , respectively, and a related tax benefit of $102,000 and $384,000 , respectively. For the three and nine months ended September 30, 2016 , the Company recognized compensation expense related to restricted stock awards of $494,000 and $1.4 million , respectively, and a related tax benefit of $173,000 and $479,000 , respectively. As of September 30, 2017 , the total unrecognized compensation expense related to non-vested restricted stock awards was $1.8 million and the related weighted average period over which the compensation expense is expected to be recognized is approximately 1.78 years. The vesting date fair value of the restricted stock awards that vested during the nine months ended September 30, 2017 and 2016 was $2.7 million and $2.0 million , respectively. The following table summarizes the restricted stock award activity for the nine months ended September 30, 2017 and 2016 : Shares Weighted-Average Grant Date Fair Value Nonvested at December 31, 2015 264,521 $ 15.92 Granted 119,939 17.53 Vested (111,357 ) 15.62 Forfeited (9,216 ) 16.57 Nonvested at September 30, 2016 263,887 $ 16.76 Nonvested at December 31, 2016 261,296 $ 16.80 Granted — — Vested (107,202 ) 16.49 Forfeited (10,418 ) 16.80 Nonvested at September 30, 2017 143,676 $ 17.02 (c) Restricted Stock Units For the three and nine months ended September 30, 2017 , the Company recognized compensation expense related to restricted stock units of $236,000 and $472,000 , respectively, and a related tax benefit of $83,000 and $165,000 , respectively. As of September 30, 2017 , the total unrecognized compensation expense related to non-vested restricted stock units was $1.8 million and the related weighted average period over which the compensation expense is expected to be recognized is approximately 2.26 years. The following table summarizes the restricted stock unit activity for the nine months ended September 30, 2017 : Shares Weighted-Average Grant Date Fair Value Nonvested at December 31, 2016 — $ — Granted 92,019 25.29 Vested — — Forfeited (1,812 ) 25.35 Nonvested at September 30, 2017 90,207 $ 25.29 The following table summarizes the assumptions used in the Monte Carlo model for restricted stock unit grants with market-based conditions during the nine months ended September 30, 2017 : Shares Expected Term in Years Weighted-Average Risk Free Interest Rate Expected Volatility Expected Dividend Yield Weighted-Average Fair Value 6,089 2.85 1.40 % 21.8 % — % $ 24.39 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 : Valuations for assets and liabilities traded in active exchange markets, or interest in open-end mutual funds that allow the Company to sell its ownership interest back to the fund at net asset value on a daily basis. Valuations are obtained from readily available pricing sources for market transactions involving identical assets, liabilities, or funds. Level 2 : Valuations for assets and liabilities traded in less active dealer or broker markets, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or valuations using methodologies with observable inputs. Level 3 : Valuations for assets and liabilities that are derived from other valuation methodologies, such as option pricing models, discounted cash flow models and similar techniques using unobservable inputs, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. (a) Recurring and Nonrecurring Basis The Company used the following methods and significant assumptions to measure the fair value of certain assets on a recurring and nonrecurring basis: Investment Securities Available for Sale : The fair values of all investment securities are based upon the assumptions that market participants would use in pricing the security. If available, fair values of investment securities are determined by quoted market prices (Level 1). For investment securities where quoted market prices are not available, fair values are calculated based on market prices on similar securities (Level 2). For investment securities where quoted prices or market prices of similar securities are not available, fair values are calculated by using observable and unobservable inputs such as discounted cash flows or other market indicators (Level 3). Security valuations are obtained from third party pricing services for comparable assets or liabilities. Impaired Loans : At the time a loan is considered impaired, its impairment is measured based on either the present value of expected future cash flows discounted at the loan’s effective interest rate, the observable market price, or the fair market value of the collateral if the loan is collateral-dependent. Impaired loans for which impairment is measured using the discounted cash flow approach are not considered to be measured at fair value because the loan’s effective interest rate is generally not a fair value input, and for the purposes of fair value disclosures, the fair value of these loans are measured commensurate with non-impaired loans. If the Company utilizes the fair market value of the collateral method, the fair value used to measure impairment is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value based on the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation and management’s expertise and knowledge of the client and client’s business (Level 3). Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. Other Real Estate Owned : Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in Level 3 classification of the inputs for determining fair value. Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers for commercial properties or certified residential appraisers for residential properties whose qualifications and licenses have been reviewed and verified by the Company. Once received, the Company reviews the assumptions and approaches utilized in the appraisal as well as the resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On a quarterly basis, the Company compares the actual selling price of collateral that has been liquidated to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value. Derivative Financial Instruments: The Company obtains broker or dealer quotes to value its interest rate derivative contracts, which use valuation models using observable market data as of the measurement date (Level 2). The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 . September 30, 2017 Total Level 1 Level 2 Level 3 (In thousands) Assets Investment securities available for sale: U.S. Treasury and U.S. Government-sponsored agencies $ 9,403 $ — $ 9,403 $ — Municipal securities 252,806 — 252,806 — Mortgage-backed securities and collateralized mortgage obligations: Residential 274,361 — 274,361 — Commercial 213,283 — 213,283 — Collateralized loan obligations 6,022 — 6,022 — Corporate obligations 15,830 — 15,830 — Other securities 28,355 150 28,205 — Total investment securities available for sale 800,060 150 799,910 — Derivative assets - interest rate swaps 3,308 — 3,308 — Liabilities Derivative liabilities - interest rate swaps $ 3,308 $ — $ 3,308 $ — December 31, 2016 Total Level 1 Level 2 Level 3 (In thousands) Assets Investment securities available for sale: U.S. Treasury and U.S. Government-sponsored agencies $ 1,569 $ — $ 1,569 $ — Municipal securities 237,256 — 237,256 — Mortgage-backed securities and collateralized mortgage obligations: Residential 309,176 — 309,176 — Commercial 208,318 — 208,318 — Collateralized loan obligations 10,478 — 10,478 — Corporate obligations 16,706 — 16,706 — Other securities 11,142 123 11,019 — Total investment securities available for sale 794,645 123 794,522 — Derivative assets - interest rate swaps 2,804 — 2,804 — Liabilities Derivative liabilities - interest rate swaps $ 2,804 $ — $ 2,804 $ — There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2017 and 2016 . The Company may be required to measure certain financial assets and liabilities at fair value on a nonrecurring basis. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. The tables below represent assets measured at fair value on a nonrecurring basis at September 30, 2017 and December 31, 2016 and the net losses (gains) recorded in earnings during three and nine months ended September 30, 2017 and 2016 . Basis (1) Fair Value at September 30, 2017 Total Level 1 Level 2 Level 3 Net Losses Recorded in Earnings During the Three Months Ended September 30, 2017 Net Losses (Gains) Recorded in Earnings During the Nine Months Ended September 30, 2017 (In thousands) Impaired loans: Commercial business: Commercial and industrial $ 172 $ 163 $ — $ — $ 163 $ — $ 7 Owner-occupied commercial real estate 182 179 — — 179 — 8 Total commercial business 354 342 — — 342 — 15 Total assets measured at fair value on a nonrecurring basis $ 354 $ 342 $ — $ — $ 342 $ — $ 15 (1) Basis represents the unpaid principal balance of impaired loans. Basis (1) Fair Value at December 31, 2016 Total Level 1 Level 2 Level 3 Net Losses (Gains) Recorded in Earnings During the Three Months Ended September 30, 2016 Net Losses (Gains) Recorded in Earnings During the Nine Months Ended September 30, 2016 (In thousands) Impaired loans: Commercial business: Commercial and industrial $ 205 $ 200 $ — $ — $ 200 $ 24 $ 25 Owner-occupied commercial real estate 780 603 — — 603 23 (2 ) Total commercial business 985 803 — — 803 47 23 Real estate construction and land development: One-to-four family residential 828 822 — — 822 (13 ) (26 ) Total real estate construction and land development 828 822 — — 822 (13 ) (26 ) Consumer 16 9 — — 9 — — Total assets measured at fair value on a nonrecurring basis $ 1,829 $ 1,634 $ — $ — $ 1,634 $ 34 $ (3 ) (1) Basis represents the unpaid principal balance of impaired loans. The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2017 and December 31, 2016 . September 30, 2017 Fair Value Valuation Technique(s) Unobservable Input(s) Range of Inputs; Weighted Average (Dollars in thousands) Impaired loans $ 342 Market approach Adjustment for differences between the comparable sales (23.8%) - 23.0%; (2.8%) December 31, 2016 Fair Value Valuation Technique(s) Unobservable Input(s) Range of Inputs; Weighted Average (Dollars in thousands) Impaired loans $ 1,634 Market approach Adjustment for differences between the comparable sales (23.8%) - 63.9%; 20.4% (b) Fair Value of Financial Instruments Because broadly traded markets do not exist for most of the Company’s financial instruments, the fair value calculations attempt to incorporate the effect of current market conditions at a specific time. These determinations are subjective in nature, involve uncertainties and matters of significant judgment and do not include tax ramifications; therefore, the results cannot be determined with precision, substantiated by comparison to independent markets and may not be realized in an actual sale or immediate settlement of the instruments. There may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results. For all of these reasons, the aggregation of the fair value calculations presented herein do not represent, and should not be construed to represent, the underlying value of the Company. The tables below present the carrying value amount of the Company’s financial instruments and their corresponding estimated fair values at the dates indicated. September 30, 2017 Carrying Value Fair Value Fair Value Measurements Using: Level 1 Level 2 Level 3 (In thousands) Financial Assets: Cash and cash equivalents $ 111,258 $ 111,258 $ 111,258 $ — $ — Investment securities available for sale 800,060 800,060 150 799,910 — Federal Home Loan Bank stock 9,343 N/A N/A N/A N/A Loans held for sale 5,368 5,553 — 5,553 — Total loans receivable, net 2,766,113 2,772,338 — — 2,772,338 Accrued interest receivable 12,295 12,295 3 3,770 8,522 Derivative assets - interest rate swaps 3,308 3,308 — 3,308 — Financial Liabilities: Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts 2,925,637 2,925,637 2,925,637 — — Certificate of deposit accounts 395,181 394,164 — 394,164 — Federal Home Loan Bank advances 117,400 117,400 — 117,400 — Securities sold under agreement to repurchase 28,668 28,668 28,668 — — Junior subordinated debentures 19,936 15,250 — — 15,250 Accrued interest payable 148 148 42 73 33 Derivative liabilities - interest rate swaps 3,308 3,308 — 3,308 — December 31, 2016 Carrying Value Fair Value Fair Value Measurements Using: Level 1 Level 2 Level 3 (In thousands) Financial Assets: Cash and cash equivalents $ 103,745 $ 103,745 $ 103,745 $ — $ — Investment securities available for sale 794,645 794,645 123 794,522 — Federal Home Loan Bank stock 7,564 N/A N/A N/A N/A Loans held for sale 11,662 11,988 — 11,988 — Loans receivable, net of allowance for loan losses 2,609,666 2,675,811 — — 2,675,811 Accrued interest receivable 10,925 10,925 3 3,472 7,450 Derivative assets - interest rate swaps 2,804 2,804 — 2,804 — Financial Liabilities: Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts $ 2,872,247 $ 2,872,247 $ 2,872,247 $ — $ — Certificate of deposit accounts 357,401 357,536 — 357,536 — Federal Home Loan Bank advances 79,600 79,600 — 79,600 — Securities sold under agreement to repurchase 22,104 22,104 22,104 — — Junior subordinated debentures 19,717 15,000 — — 15,000 Accrued interest payable 215 215 44 142 29 Derivative liabilities - interest rate swaps 2,804 2,804 — 2,804 — The methods and assumptions, not previously presented, used to estimate fair value are described as follows: Cash and Cash Equivalents: The fair value of financial instruments that are short-term or reprice frequently and that have little or no risk are considered to have a fair value equal to carrying value (Level 1). Federal Home Loan Bank Stock : FHLB stock is not publicly traded; thus, it is not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. Loans Held for Sale : The fair value of loans held for sale is estimated based upon binding contracts or quotes from third party investors for similar loans. (Level 2). Loans Receivable : Except for certain impaired loans discussed previously, fair value is based on discounted cash flows using current market rates applied to the estimated life (Level 3). While these methodologies are permitted under U.S. GAAP, they are not based on the exit price concept of the fair value required under FASB ASC 820-10, Fair Value Measurements and Disclosures , and generally produce a higher value. Accrued Interest Receivable/Payable : The fair value of accrued interest receivable/payable balances approximates the carrying value. The fair value measurements are commensurate with the asset or liability from which the accrued interest is generated (Level 1, Level 2 and Level 3). Deposits : For deposits with no contractual maturity, the fair value is assumed to equal the carrying value (Level 1). The fair value of certificate of deposit accounts is based on discounted cash flows using the difference between the deposit rate and the rates offered by the Company for deposits of similar remaining maturities (Level 2). Federal Home Loan Bank advances : The fair value of FHLB advances is estimated based on discounting the future cash flows using the market rate currently offered (Level 2). Securities Sold Under Agreement to Repurchase : Securities sold under agreement to repurchase are short-term in nature and they reprice on a daily basis. Fair value financial instruments that are short-term or reprice frequently and that have little or no risk are considered to have a fair value equal to carrying value (Level 1). Junior Subordinated Debentures: The fair value is estimated using discounted cash flow analysis based on current rates for similar types of debt, which many be unobservable, and considering recent trading activity of similar instruments in markets which can be inactive (Level 3). Off-Balance Sheet Financial Instruments : The majority of our commitments to extend credit, standby letters of credit and commitments to sell mortgage loans carry current market interest rates if converted to loans. As such, no premium or discount was ascribed to these commitments (Level 1). They are excluded from the preceding tables. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In June 2016, the Company received preliminary findings from the Washington State Department of Revenue ("DOR") regarding its business and occupation ("B&O") tax audit on the B&O tax returns of Whidbey Island Bank for the years 2010-2014. The state B&O tax is a gross receipts tax and is calculated on the gross income from activities. It is measured on the value of products, gross proceeds of sale, or gross income of the business. A substantial portion of the preliminary findings related to the receipt of FDIC shared-loss payments from the FDIC to Washington Banking Company in connection with its acquisitions of City Bank in April 2010 and North County Bank in September 2010. In their preliminary findings, the DOR is considering those payments as taxable for B&O tax purposes. The total amount of this preliminary finding, along with calculated back interest, is approximately $1.6 million . Management is in discussions with the DOR as to whether these payments should be taxable for B&O tax purposes. Given the uncertainty of the outcome of these discussions, management's estimates of the Company's ultimate liability, if any, involve significant judgment and are based on currently available information and an assessment of the validity of facts and calculations assumed by the DOR. Management does not believe a material loss is probable at this time and there are significant factual and legal issues to be resolved. Management believes that it is reasonably possible that future changes to the Company's estimates of loss and the ultimate amount paid for resolution of this B&O audit could impact the Company's results of operations in future periods. Any such losses would be reported as a noninterest expense in the Company's Consolidated Statement of Income. |
Definitive Agreement
Definitive Agreement | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Definitive Agreement | On July 26, 2017 the Company announced the execution of a definitive agreement with Puget Sound under which Heritage will acquire Puget Sound in an all-stock transaction valued at approximately $126.1 million based on the closing price of Heritage common stock of $27.15 on July 26, 2017. Puget Sound is a business bank headquartered in Bellevue, Washington with one branch location. Under the terms of the agreement, Puget Sound shareholders will receive 1.320 shares of Heritage common stock for each share of Puget Sound common stock, subject to potential adjustment. The value of the consideration will fluctuate until closing based on the value of Heritage's stock price and may be adjusted by a cap and collar in certain circumstances. The definitive agreement has been unanimously approved by the boards of directors of both Heritage and Puget Sound. The merger is subject to regulatory approvals, approval by Puget Sound shareholders and certain other customary closing conditions and is expected to close in the first quarter of 2018. |
Description of Business, Basi26
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Heritage Financial Corporation ("Heritage" or the “Company”) is a bank holding company that was incorporated in the State of Washington in August 1997. The Company is primarily engaged in the business of planning, directing and coordinating the business activities of its wholly-owned subsidiary, Heritage Bank (the “Bank”). The Bank is a Washington-chartered commercial bank and its deposits are insured by the FDIC. The Bank is headquartered in Olympia, Washington and conducts business from its 59 branch offices located throughout Washington State and the greater Portland, Oregon area. The Bank’s business consists primarily of commercial lending and deposit relationships with small businesses and their owners in its market areas and attracting deposits from the general public. The Bank also makes real estate construction and land development loans, consumer loans and originates first mortgage loans on residential properties primarily located in its market areas. On July 26, 2017, the Company announced the execution of a definitive agreement to purchase Puget Sound Bancorp, Inc., ("Puget Sound"), the holding company of Puget Sound Bank, a business bank headquartered in downtown Bellevue, Washington with one branch location and $567.2 million in total assets, $366.6 million in total loans receivables, net and $505.1 million in total deposits as of June 30, 2017. Upon consummation of the merger, the shareholders of Puget Sound will own approximately 13.5% of the combined company and Puget Sound will be merged into Heritage Bank. For additional information regarding the proposed transaction, see Note (16), Definitive Agreement. |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. It is recommended that these unaudited Condensed Consolidated Financial Statements and accompanying Notes be read with the audited Consolidated Financial Statements and the accompanying Notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 (“ 2016 Annual Form 10-K”). In management's opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 . In preparing the unaudited Condensed Consolidated Financial Statements, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Management believes that the judgments, estimates and assumptions used in the preparation of the financial statements are appropriate based on the facts and circumstances at the time. Actual results, however, could differ significantly from those estimates. |
Stock-Based Compensation | Stock-Based Compensation Compensation cost is recognized for stock options, restricted stock awards and restricted stock units issued to employees and directors, based on the fair value of these awards at the date of grant. Compensation cost is recognized over the requisite service period, generally defined as the vesting period, on a straight-line basis. Compensation cost for restricted stock units with market-based vesting is recognized over the service period to the extent the restricted stock units are expected to vest. With the adoption of FASB Accounting Standards Update ("ASU" or "Update") 2016-09 on January 1, 2017, forfeitures are recognized as they occur. The market price of the Company’s common stock at the date of grant is used to determine the fair value of the restricted stock awards and restricted stock units. The fair value of stock options granted is estimated based on the date of grant using the Black-Scholes-Merton option pricing model. Certain restricted stock unit grants are subject to performance-based vesting as well as other approved vesting conditions and cliff vest based on those conditions, and the fair value is estimated using a Monte Carlo simulation pricing model. The assumptions used in the Black-Scholes-Merton option pricing model and the Monte Carlo simulation pricing model include the expected term based on the valuation date and the remaining contractual term of the award; the risk-free interest rate based on the U.S. Treasury curve at the valuation date of the award; the expected dividend yield based on expected dividends being payable to the holders; and the expected stock price volatility over the expected term based on the historical volatility over the equivalent historical term. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements FASB ASU 2014-09 , Revenue from Contracts with Customers , was issued in May 2014. Under this Update, FASB created a new Topic 606 which is in response to a joint initiative of FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and international financial reporting standards that would: • Remove inconsistencies and weaknesses in revenue requirements. • Provide a more robust framework for addressing revenue issues. • Improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. • Provide more useful information to users of financial statements through improved disclosure requirements. • Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. The original effective date for this Update was deferred in FASB ASU 2015-14 below. FASB ASU 2015-14 , Revenue from Contracts with Customers (Topic 606) , was issued in August 2015 and defers the effective date of the above-mentioned FASB ASU 2014-09 for certain entities. Public business entities, certain not-for-profit entities and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is now permitted, but only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company expects to adopt the revenue recognition guidance on January 1, 2018 using the modified retrospective approach. A significant amount of the Company’s revenues are derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance. With respect to noninterest income and related disclosures, the Company is in its preliminary stages of identifying and evaluating the revenue streams and underlying revenue contracts within the scope of the guidance. To date, the Company has not yet identified any significant changes in the timing of revenue recognition when considering the amended accounting guidance; however, the Company’s implementation efforts are ongoing and such assessments may change prior to the January 1, 2018 implementation date. The Company expects to develop processes and procedures to ensure it is fully compliant with these amendments at the adoption date. FASB ASU 2016-01 , Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10) , was issued in January 2016, to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. This Update contains several provisions, including but not limited to 1) requiring equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income; 2) simplifying the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) eliminating the requirement to disclose the method(s) and significant assumptions used to estimate fair value; and 4) requiring separate presentation of financial assets and liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. The Update also changes certain financial statement disclosure requirements, including requiring disclosures of the fair value of financial instruments be made on the basis of exit price. The Update is effective for public entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect the adoption of this Update will have a significant impact on the Company’s statements of financial condition or income. Management is in the planning stages of developing processes and procedures to comply with the disclosures requirements of this Update, which could impact the disclosures the Company makes related to fair value of its financial instruments. FASB ASU 2016-02 , Leases (Topic 842) was originally issued in February 2016, to increase transparency and comparability of leases among organizations and to disclose key information about leasing arrangements. The Update sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The Update requires lessees to apply a dual approach, classifying leases as either a finance or operating lease. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. All cash payments will be classified within operating activities in the statement of cash flows. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Update is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company anticipates adopting the Update on January 1, 2019. Upon adoption of the guidance, the Company expects to report increased assets and increased liabilities on its Condensed Consolidated Statements of Financial Condition as a result of recognizing right-of-use assets and lease liabilities related to certain banking offices and certain equipment under noncancelable operating lease agreements, which currently are not reflected in its Condensed Consolidated Statements of Financial Condition. During 2017, management began its evaluation of its leasing contracts and activities. Management is in the initial stages of developing its methodology to estimate the right-of use assets and lease liabilities. The Company anticipates electing an accounting policy to not recognize lease assets and lease liabilities for leases with a term of twelve months or less. The Company was committed to $14.7 million of minimum lease payments under noncancelable operating lease agreements at December 31, 2016. The Company does not expect the adoption of this amendment will have a significant impact to its Condensed Consolidated Financial Statements. FASB ASU 2016-08 , Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations , was issued in March 2016 and it clarifies the implementation guidance of the above-mentioned FASB ASU 2014-09 as it relates to principal versus agent considerations. The Update addresses identifying the unit of account and nature of the goods or services as well as applying the control principle and interactions with the control principle. The amendments to the Update do not change the core principle of the guidance. The effective date, transition requirements and impact on the Company's Condensed Consolidated Financial Statements for this Update are the same as those described in FASB ASU 2015-14 above. FASB ASU 2016-09 , Stock Compensation (Topic 718) , issued in March 2016, is intended to simplify several aspects of the accounting for share-based payment award transactions. For public business entities, the guidance is effective for annual periods after December 15, 2016, including interim periods within those annual periods with early adoption permitted. Certain amendments are required to be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Other amendments are applied retroactively (such as presentation of employee taxes paid on the statement of cash flows) or prospectively (such as recognition of excess tax benefits on the income statement). The Company adopted this standard effective January 1, 2017. The Company made an accounting policy election to account for forfeitures as they occur and this change resulted in a cumulative adjustment that was immaterial to all periods presented. Changes to the statement of cash flows have been applied prospectively and the Company recorded excess tax benefits in its income tax expense. Adoption of all other changes under this Update did not have a material impact on the Condensed Consolidated Financial Statements. FASB ASU 2016-10 , Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , was issued in April 2016 which clarifies the implementation guidance of the above-mentioned FASB ASU 2014-09 as it relates to identifying performance obligations and licensing. The effective date, transition requirements and impact on the Company's Condensed Consolidated Financial Statements for this Update are the same as those described in FASB ASU 2015-14 above. FASB ASU 2016-12 , Revenue from Contracts with Customers (Topic 606): Narrow-scope Improvements and Practical Expedients , was issued in May 2016. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update affect only the narrow aspects of Topic 606. The effective date, transition requirements and impact on the Company's Condensed Consolidated Financial Statements for this Update are the same as those described in FASB ASU 2015-14 above. FASB ASU 2016-13 , Financial Instruments: Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , was issued in June 2016. Commonly referred to as the current expected credit loss model ("CECL"), this Update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses is based on relevant information about past events including historical experience, current conditions and reasonable and supportable forecasts that affect the collectibility of the reported amount. The amendment affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables and any other financial asset not excluded from the scope that have the contractual right to receive cash. The Update replaces the incurred loss impairment methodology, which generally only considered past events and current conditions, with a methodology that reflects the expected credit losses and required consideration of a broader range of reasonable and supportable information to estimate all expected credit losses. The Update additionally addresses purchased assets and introduces the purchased financial asset with a more-than-insignificant amount of credit deterioration since origination ("PCD"). The accounting for these PCD assets is similar to the existing accounting guidance of FASB Accounting Standards Codification ("ASC") 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality , for purchased credit impaired ("PCI") assets, except the subsequent improvements in estimated cash flows will be immediately recognized into income, similar to the immediate recognition of subsequent deteriorations in cash flows. Current guidance only allows for the prospective recognition of these cash flow improvements. Because the terminology has been changed to a "more-than-insignificant" amount of credit deterioration, the presumption is that more assets might qualify for this accounting under the Update than those under current guidance. For public business entities, the Update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years with early adoption permitted for fiscal years after December 15, 2018. An entity will apply the Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. A prospective transition approach is required for debt securities. An entity that has previously applied the guidance of FASB ASC 310-30 will prospectively apply the guidance in this Update for PCD assets. A prospective transition approach should be used for PCD assets where upon adoption, the amortized cost basis should be adjusted to reflect the addition of the allowance for credit losses. The Company is anticipating adopting the Update on January 1, 2020. Upon adoption, the Company expects a change in the processes, internal controls and procedures to calculate the allowance for loan losses, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. The new guidance may result in an increase in the allowance for loan losses which will also reflect the new requirement to include the nonaccretable principal differences on PCI loans; however, the Company is still in the process of determining the magnitude of the increase and its impact on the Condensed Consolidated Financial Statements. In addition, the current accounting policy and procedures for other-than-temporary impairment on investment securities available for sale will be replaced with an allowance approach. During 2017, the Company's management created a CECL steering committee which will begin developing and implementing processes and procedures to ensure it is fully compliant with the amendments at the adoption date. To date, the CECL steering committee has reviewed proposals from several vendors to assist the Company in the adoption. FASB ASU 2016-15 , Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , was issued in August 2016. The Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted and must be applied using a retrospective transitional method to each period presented. The Company has evaluated the new guidance and does not anticipate that its adoption of this Update on January 1, 2018 will have a significant impact on its Condensed Consolidated Financial Statements. FASB ASU 2017-03 , Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update) , was issued in January 2017. The SEC staff view is that a registrant should evaluate FASB ASC Updates that have not yet been adopted to determine the appropriate financial disclosures about the potential material effects of the updates on the financial statements when adopted. If a registrant does not know or cannot reasonably estimate the impact of an update, then in addition to making a statement to that effect, the registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact. The staff expects the additional qualitative disclosures to include a description of the effect of the accounting policies expected to be applied compared to current accounting policies. Also, the registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. The amendments specifically addressed recent FASB ASC amendments to Topic 326, Financial Instruments - Credit Losses; Topic 842, Leases; and Topic 606, Revenue from Contracts with Customers; although, the amendments apply to any subsequent amendments to guidance in the FASB ASC. The Company adopted the amendments in this Update during the fourth quarter of 2016 and appropriate disclosures have been included in this Note for each recently issued accounting standard. FASB ASU 2017-04 , Goodwill (Topic 350) , was issued in January 2017 and eliminates Step 2 from the goodwill impairment test. Under the amendments, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized, however, should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Update is effective for annual periods or any interim goodwill impairment tests beginning after December 15, 2019 using a prospective transition method and early adoption is permitted. The Company does not expect the Update will have a material impact on its Condensed Consolidated Financial Statements. FASB ASU 2017-08 , Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities was issued in March 2017 and changes the accounting for certain purchased callable debt securities held at a premium to shorten the amortization period for the premium to the earliest call date rather than to the maturity date. Accounting for purchased callable debt securities held at a discount does not change. The discount would continue to amortize to the maturity date. The updated is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company does not expect the Update will have a material impact on its Condensed Consolidated Financial Statements as the Company had been accounting for premiums as prescribed under this guidance. The Company anticipates early adopting this Update in January 2018. FASB ASU 2017-09 , Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting was issued in May 2017 to provide clarity as to when to apply modification accounting when there is a change in the terms or conditions of a share-based payment award. According to this Update, an entity should account for the effects of a modification unless the fair value, vesting conditions and balance sheet classification of the award is the same after the modification as compared to the original award prior to the modification. The Update is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not expect the Update will have a material impact on its Condensed Consolidated Financial Statements. |
Investment Securities (Tables)
Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of securities available for sale | The amortized cost, gross unrealized gains, gross unrealized losses and fair values of investment securities available for sale at the dates indicated were as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (In thousands) September 30, 2017 U.S. Treasury and U.S. Government-sponsored agencies $ 9,464 $ 12 $ (73 ) $ 9,403 Municipal securities 248,420 5,429 (1,043 ) 252,806 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 275,128 879 (1,646 ) 274,361 Commercial 214,793 699 (2,209 ) 213,283 Collateralized loan obligations 6,007 15 — 6,022 Corporate obligations 15,583 247 — 15,830 Other securities 27,850 505 — 28,355 Total $ 797,245 $ 7,786 $ (4,971 ) $ 800,060 December 31, 2016 U.S. Treasury and U.S. Government-sponsored agencies $ 1,563 $ 6 $ — $ 1,569 Municipal securities 237,305 2,427 (2,476 ) 237,256 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 310,391 985 (2,200 ) 309,176 Commercial 211,259 599 (3,540 ) 208,318 Collateralized loan obligations 10,505 4 (31 ) 10,478 Corporate obligations 16,611 104 (9 ) 16,706 Other securities 11,005 156 (19 ) 11,142 Total $ 798,639 $ 4,281 $ (8,275 ) $ 794,645 (1) Issued and guaranteed by U.S. Government-sponsored agencies. |
Schedule of maturities of investment securities | The amortized cost and fair value of investment securities available for sale at September 30, 2017 , by contractual maturity, are set forth below. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Cost Fair Value (In thousands) Due in one year or less $ 6,556 $ 6,595 Due after one year through five years 121,518 122,740 Due after five years through ten years 248,291 248,603 Due after ten years 420,835 421,972 Investment securities with no stated maturities 45 150 Total $ 797,245 $ 800,060 |
Schedule of fair value and unrealized losses of available for sale investment securities | The following table shows the gross unrealized losses and fair value of the Company's investment securities available for sale that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that the individual securities have been in continuous unrealized loss positions as of September 30, 2017 and December 31, 2016 : Less than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (In thousands) September 30, 2017 U.S. Treasury and U.S. Government-sponsored agencies $ 6,484 $ (73 ) $ — $ — $ 6,484 $ (73 ) Municipal securities 24,415 (362 ) 23,629 (681 ) 48,044 (1,043 ) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 135,648 (1,111 ) 23,937 (535 ) 159,585 (1,646 ) Commercial 112,595 (1,478 ) 38,099 (731 ) 150,694 (2,209 ) Total $ 279,142 $ (3,024 ) $ 85,665 $ (1,947 ) $ 364,807 $ (4,971 ) December 31, 2016 Municipal securities $ 90,188 $ (2,476 ) $ — $ — $ 90,188 $ (2,476 ) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 181,562 (2,148 ) 10,854 (52 ) 192,416 (2,200 ) Commercial 157,055 (3,446 ) 12,597 (94 ) 169,652 (3,540 ) Collateralized loan obligations 2,976 (1 ) 2,969 (30 ) 5,945 (31 ) Corporate obligations 4,032 (9 ) — — 4,032 (9 ) Other securities 6,998 (19 ) — — 6,998 (19 ) Total $ 442,811 $ (8,099 ) $ 26,420 $ (176 ) $ 469,231 $ (8,275 ) (1) Issued and guaranteed by U.S. Government-sponsored agencies. |
Schedule of realized gains and losses on sale of securities available for sale | |
Scheduled of amortized cost and fair value of securities pledged as collateral | The following table summarizes the amortized cost and fair value of investment securities available for sale that are pledged as collateral for the following obligations at September 30, 2017 and December 31, 2016 : September 30, 2017 December 31, 2016 Amortized Cost Fair Value Amortized Cost Fair Value (In thousands) Washington and Oregon state to secure public deposits $ 40,997 $ 40,772 $ 214,834 $ 215,247 Repurchase agreements 12,620 12,724 29,481 29,294 Other securities pledged 201,783 203,482 3,557 3,546 Total $ 255,400 $ 256,978 $ 247,872 $ 248,087 |
Loans Receivable (Tables)
Loans Receivable (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Loans and Leases Receivable Disclosure [Abstract] | |
Schedule of loans receivable | Loans receivable at September 30, 2017 and December 31, 2016 consisted of the following portfolio segments and classes: September 30, 2017 December 31, 2016 (In thousands) Commercial business: Commercial and industrial $ 665,582 $ 637,773 Owner-occupied commercial real estate 602,238 558,035 Non-owner occupied commercial real estate 930,188 880,880 Total commercial business 2,198,008 2,076,688 One-to-four family residential 81,422 77,391 Real estate construction and land development: One-to-four family residential 51,451 50,414 Five or more family residential and commercial properties 122,981 108,764 Total real estate construction and land development 174,432 159,178 Consumer 340,643 325,140 Gross loans receivable 2,794,505 2,638,397 Net deferred loan costs 3,008 2,352 Loans receivable, net 2,797,513 2,640,749 Allowance for loan losses (31,400 ) (31,083 ) Total loans receivable, net $ 2,766,113 $ 2,609,666 |
Loans receivable by credit quality indicator | The following tables present the balance of the loans receivable by credit quality indicator as of September 30, 2017 and December 31, 2016 . September 30, 2017 Pass OAEM Substandard Doubtful/Loss Total (In thousands) Commercial business: Commercial and industrial $ 625,387 $ 11,067 $ 29,128 $ — $ 665,582 Owner-occupied commercial real estate 576,313 8,305 17,620 — 602,238 Non-owner occupied commercial real estate 897,677 15,790 16,721 — 930,188 Total commercial business 2,099,377 35,162 63,469 — 2,198,008 One-to-four family residential 79,882 — 1,540 — 81,422 Real estate construction and land development: One-to-four family residential 48,101 273 3,077 — 51,451 Five or more family residential and commercial properties 121,854 722 405 — 122,981 Total real estate construction and land development 169,955 995 3,482 — 174,432 Consumer 335,073 — 5,045 525 340,643 Gross loans receivable $ 2,684,287 $ 36,157 $ 73,536 $ 525 $ 2,794,505 December 31, 2016 Pass OAEM Substandard Doubtful/Loss Total (In thousands) Commercial business: Commercial and industrial $ 601,273 $ 5,048 $ 31,452 $ — $ 637,773 Owner-occupied commercial real estate 532,585 4,437 21,013 — 558,035 Non-owner occupied commercial real estate 841,383 14,573 24,924 — 880,880 Total commercial business 1,975,241 24,058 77,389 — 2,076,688 One-to-four family residential 76,020 — 1,371 — 77,391 Real estate construction and land development: One-to-four family residential 44,752 500 5,162 — 50,414 Five or more family residential and commercial properties 105,723 1,150 1,891 — 108,764 Total real estate construction and land development 150,475 1,650 7,053 — 159,178 Consumer 320,140 — 5,000 — 325,140 Gross loans receivable $ 2,521,876 $ 25,708 $ 90,813 $ — $ 2,638,397 |
Schedule of nonaccrual loans | Nonaccrual loans, segregated by segments and classes of loans, were as follows as of September 30, 2017 and December 31, 2016 : September 30, 2017 December 31, 2016 (In thousands) Commercial business: Commercial and industrial $ 4,056 $ 3,531 Owner-occupied commercial real estate 3,720 3,728 Non-owner occupied commercial real estate 1,907 1,321 Total commercial business 9,683 8,580 One-to-four family residential 84 94 Real estate construction and land development: One-to-four family residential 869 2,008 Consumer 316 227 Nonaccrual loans $ 10,952 $ 10,909 |
Past due financing receivables | The balances of past due loans, segregated by segments and classes of loans, as of September 30, 2017 and December 31, 2016 were as follows: September 30, 2017 30-89 Days 90 Days or Greater Total Past Due Current Total (In thousands) Commercial business: Commercial and industrial $ 790 $ 1,014 $ 1,804 $ 663,778 $ 665,582 Owner-occupied commercial real estate 498 1,270 1,768 600,470 602,238 Non-owner occupied commercial real estate — 2,085 2,085 928,103 930,188 Total commercial business 1,288 4,369 5,657 2,192,351 2,198,008 One-to-four family residential — — — 81,422 81,422 Real estate construction and land development: One-to-four family residential 1,038 309 1,347 50,104 51,451 Five or more family residential and commercial properties 366 — 366 122,615 122,981 Total real estate construction and land development 1,404 309 1,713 172,719 174,432 Consumer 1,738 657 2,395 338,248 340,643 Gross loans receivable $ 4,430 $ 5,335 $ 9,765 $ 2,784,740 $ 2,794,505 December 31, 2016 30-89 Days 90 Days or Greater Total Past Due Current Total (In thousands) Commercial business: Commercial and industrial $ 2,687 $ 1,733 $ 4,420 $ 633,353 $ 637,773 Owner-occupied commercial real estate 1,807 2,915 4,722 553,313 558,035 Non-owner occupied commercial real estate 733 — 733 880,147 880,880 Total commercial business 5,227 4,648 9,875 2,066,813 2,076,688 One-to-four family residential 523 — 523 76,868 77,391 Real estate construction and land development: One-to-four family residential 90 2,008 2,098 48,316 50,414 Five or more family residential and commercial properties — 377 377 108,387 108,764 Total real estate construction and land development 90 2,385 2,475 156,703 159,178 Consumer 2,292 105 2,397 322,743 325,140 Gross loans receivable $ 8,132 $ 7,138 $ 15,270 $ 2,623,127 $ 2,638,397 |
Schedule of impaired loans, including restructured | Impaired loans include nonaccrual loans and performing troubled debt restructured ("TDR") loans. The balances of impaired loans as of September 30, 2017 and December 31, 2016 are set forth in the following tables. September 30, 2017 Recorded Investment With No Specific Valuation Allowance Recorded Investment With Specific Valuation Allowance Total Recorded Investment Unpaid Contractual Principal Balance Related Specific Valuation Allowance (In thousands) Commercial business: Commercial and industrial $ 3,131 $ 8,581 $ 11,712 $ 12,060 $ 1,254 Owner-occupied commercial real estate 1,082 4,676 5,758 6,068 767 Non-owner occupied commercial real estate 4,749 6,034 10,783 10,927 895 Total commercial business 8,962 19,291 28,253 29,055 2,916 One-to-four family residential — 304 304 311 96 Real estate construction and land development: One-to-four family residential 1,347 — 1,347 2,305 — Five or more family residential and commercial properties — 658 658 658 39 Total real estate construction and land development 1,347 658 2,005 2,963 39 Consumer 160 274 434 457 60 Total $ 10,469 $ 20,527 $ 30,996 $ 32,786 $ 3,111 December 31, 2016 Recorded Investment With No Specific Valuation Allowance Recorded Investment With Specific Valuation Allowance Total Recorded Investment Unpaid Contractual Principal Balance Related Specific Valuation Allowance (In thousands) Commercial business: Commercial and industrial $ 1,739 $ 10,636 $ 12,375 $ 13,249 $ 1,199 Owner-occupied commercial real estate 1,150 3,574 4,724 5,107 511 Non-owner occupied commercial real estate 4,905 6,413 11,318 11,386 797 Total commercial business 7,794 20,623 28,417 29,742 2,507 One-to-four family residential — 321 321 325 97 Real estate construction and land development: One-to-four family residential 2,243 828 3,071 3,755 6 Five or more family residential and commercial properties — 1,079 1,079 1,079 60 Total real estate construction and land development 2,243 1,907 4,150 4,834 66 Consumer 48 262 310 325 64 Total $ 10,085 $ 23,113 $ 33,198 $ 35,226 $ 2,734 |
Schedule of average recorded investment impaired loans including restructuring loans | The average recorded investment of impaired loans for the three and nine months ended September 30, 2017 and 2016 are set forth in the following table. Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (In thousands) Commercial business: Commercial and industrial $ 11,171 $ 9,625 $ 11,190 $ 9,750 Owner-occupied commercial real estate 5,289 4,553 5,049 4,560 Non-owner occupied commercial real estate 11,037 12,107 11,198 12,232 Total commercial business 27,497 26,285 27,437 26,542 One-to-four family residential 307 265 312 267 Real estate construction and land development: One-to-four family residential 2,157 3,177 2,530 3,253 Five or more family residential and commercial properties 860 1,619 967 1,746 Total real estate construction and land development 3,017 4,796 3,497 4,999 Consumer 346 885 328 907 Total $ 31,167 $ 32,231 $ 31,574 $ 32,715 |
Recorded investment balance and related allowance for loan losses of accruing and non-accruing TDRs | The recorded investment balance and related allowance for loan losses of performing and nonaccrual TDR loans as of September 30, 2017 and December 31, 2016 were as follows: September 30, 2017 December 31, 2016 Performing TDRs Nonaccrual TDRs Performing TDRs Nonaccrual (In thousands) TDR loans $ 20,044 $ 5,903 $ 22,288 $ 6,900 Allowance for loan losses on TDR loans 2,136 555 1,965 437 |
Troubled debt restructurings on financing receivables | Loans that were modified as TDRs during the three and nine months ended September 30, 2017 and 2016 are set forth in the following tables: Three Months Ended September 30, 2017 2016 Number of Contracts (1) Outstanding Number of Contracts (1) Outstanding Principal Balance (1)(2) (Dollars in thousands) Commercial business: Commercial and industrial 4 $ 1,353 8 $ 2,324 Owner-occupied commercial real estate 2 1,299 2 576 Non-owner occupied commercial real estate 1 655 1 818 Total commercial business 7 3,307 11 3,718 Real estate construction and land development: One-to-four family residential — — 5 2,274 Five or more family residential and commercial properties — — 1 1,606 Total real estate construction and land development — — 6 3,880 Consumer 4 52 2 26 Total TDR loans 11 $ 3,359 19 $ 7,624 Nine Months Ended September 30, 2017 2016 Number of Contracts (1) Outstanding Number of Contracts (1) Outstanding Principal Balance (1)(2) (Dollars in thousands) Commercial business: Commercial and industrial 13 $ 5,564 15 $ 2,915 Owner-occupied commercial real estate 3 1,351 2 576 Non-owner occupied commercial real estate 2 1,596 1 818 Total commercial business 18 8,511 18 4,309 Real estate construction and land development: One-to-four family residential 2 1,038 5 2,274 Five or more family residential and commercial properties — — 1 1,606 Total real estate construction and land development 2 1,038 6 3,880 Consumer 5 60 6 70 Total TDR loans 25 $ 9,609 30 $ 8,259 |
Purchased impaired loans | The following table reflects the outstanding principal balance and recorded investment of the PCI loans at September 30, 2017 and December 31, 2016 : September 30, 2017 December 31, 2016 Outstanding Principal Recorded Investment Outstanding Principal Recorded Investment (In thousands) Commercial business: Commercial and industrial $ 9,220 $ 5,001 $ 13,067 $ 9,317 Owner-occupied commercial real estate 14,059 12,492 17,639 15,973 Non-owner occupied commercial real estate 15,026 13,058 25,037 23,360 Total commercial business 38,305 30,551 55,743 48,650 One-to-four family residential 4,426 3,983 5,120 4,905 Real estate construction and land development: One-to-four family residential 2,928 1,749 2,958 2,123 Five or more family residential and commercial properties 2,392 2,284 2,614 2,488 Total real estate construction and land development 5,320 4,033 5,572 4,611 Consumer 3,998 5,129 5,296 6,282 Gross PCI loans $ 52,049 $ 43,696 $ 71,731 $ 64,448 |
Schedule of impaired purchased loans accretable yield | The following table summarizes the accretable yield on the PCI loans for the three and nine months ended September 30, 2017 and 2016 . Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (In thousands) Balance at the beginning of the period $ 12,296 $ 15,359 $ 13,860 $ 17,592 Accretion (796 ) (1,178 ) (2,725 ) (3,900 ) Disposal and other (1,287 ) (491 ) (2,430 ) (2,921 ) Change in accretable yield 939 1,214 2,447 4,133 Balance at the end of the period $ 11,152 $ 14,904 $ 11,152 $ 14,904 |
Allowance for Loan Losses (Tabl
Allowance for Loan Losses (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Schedule of changes in allowance for loan losses | The following tables detail activity in the allowance for loan losses disaggregated by segment and class for the three and nine months ended September 30, 2016 . Balance at Beginning of Period Charge-offs Recoveries Provision for Loan Losses Balance at End of Period (In thousands) Three Months Ended September 30, 2016 Commercial business: Commercial and industrial $ 9,970 $ (240 ) $ 993 $ 182 $ 10,905 Owner-occupied commercial real estate 3,578 (88 ) — 222 3,712 Non-owner occupied commercial real estate 6,924 — — 303 7,227 Total commercial business 20,472 (328 ) 993 707 21,844 One-to-four family residential 950 — — 26 976 Real estate construction and land development: One-to-four family residential 754 — — 96 850 Five or more family residential and commercial properties 1,277 — — 5 1,282 Total real estate construction and land development 2,031 — — 101 2,132 Consumer 4,816 (572 ) 197 665 5,106 Unallocated 157 — — (4 ) 153 Total $ 28,426 $ (900 ) $ 1,190 $ 1,495 $ 30,211 Nine Months Ended September 30, 2016 Commercial business: Commercial and industrial $ 9,972 $ (2,810 ) $ 1,352 $ 2,391 $ 10,905 Owner-occupied commercial real estate 4,370 (538 ) — (120 ) 3,712 Non-owner occupied commercial real estate 7,722 (350 ) — (145 ) 7,227 Total commercial business 22,064 (3,698 ) 1,352 2,126 21,844 One-to-four family residential 1,157 — 2 (183 ) 976 Real estate construction and land development: One-to-four family residential 1,058 (100 ) 83 (191 ) 850 Five or more family residential and commercial properties 813 (54 ) — 523 1,282 Total real estate construction and land development 1,871 (154 ) 83 332 2,132 Consumer 4,309 (1,370 ) 496 1,671 5,106 Unallocated 345 — — (192 ) 153 Total $ 29,746 $ (5,222 ) $ 1,933 $ 3,754 $ 30,211 The following table details the allowance for loan losses disaggregated on the basis of the Company's impairment method as of December 31, 2016 . Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Allowance for Loan Losses (In thousands) Commercial business: Commercial and industrial $ 1,199 $ 8,048 $ 1,721 $ 10,968 Owner-occupied commercial real estate 511 1,834 1,316 3,661 Non-owner occupied commercial real estate 797 5,142 1,814 7,753 Total commercial business 2,507 15,024 4,851 22,382 One-to-four family residential 97 643 275 1,015 Real estate construction and land development: One-to-four family residential 6 538 253 797 Five or more family residential and commercial properties 60 1,168 131 1,359 Total real estate construction and land development 66 1,706 384 2,156 Consumer 64 3,912 1,048 5,024 Unallocated — 506 — 506 Total $ 2,734 $ 21,791 $ 6,558 $ 31,083 The following tables detail the activity in the allowance for loan losses disaggregated by segment and class for the three and nine months ended September 30, 2017 : Balance at Beginning of Period Charge-offs Recoveries Provision for Loan Losses Balance at End of Period (In thousands) Three Months Ended September 30, 2017 Commercial business: Commercial and industrial $ 10,651 $ (3 ) $ 4 $ (772 ) $ 9,880 Owner-occupied commercial real estate 4,154 (1,494 ) 4 1,397 4,061 Non-owner occupied commercial real estate 7,709 — — (415 ) 7,294 Total commercial business 22,514 (1,497 ) 8 210 21,235 One-to-four family residential 1,073 (15 ) — (21 ) 1,037 Real estate construction and land development: One-to-four family residential 821 (556 ) 191 337 793 Five or more family residential and commercial properties 1,666 — — (271 ) 1,395 Total real estate construction and land development 2,487 (556 ) 191 66 2,188 Consumer 5,710 (478 ) 112 453 5,797 Unallocated 967 — — 176 1,143 Total $ 32,751 $ (2,546 ) $ 311 $ 884 $ 31,400 Nine Months Ended September 30, 2017 Commercial business: Commercial and industrial $ 10,968 $ (361 ) $ 679 $ (1,406 ) $ 9,880 Owner-occupied commercial real estate 3,661 (1,579 ) 155 1,824 4,061 Non-owner occupied commercial real estate 7,753 — — (459 ) 7,294 Total commercial business 22,382 (1,940 ) 834 (41 ) 21,235 One-to-four family residential 1,015 (15 ) 1 36 1,037 Real estate construction and land development: One-to-four family residential 797 (556 ) 201 351 793 Five or more family residential and commercial properties 1,359 — — 36 1,395 Total real estate construction and land development 2,156 (556 ) 201 387 2,188 Consumer 5,024 (1,419 ) 329 1,863 5,797 Unallocated 506 — — 637 1,143 Total $ 31,083 $ (3,930 ) $ 1,365 $ 2,882 $ 31,400 The following table details the allowance for loan losses disaggregated on the basis of the Company's impairment method as of September 30, 2017 . Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Allowance for Loan Losses (In thousands) Commercial business: Commercial and industrial $ 1,254 $ 7,589 $ 1,037 $ 9,880 Owner-occupied commercial real estate 767 2,434 860 4,061 Non-owner occupied commercial real estate 895 5,389 1,010 7,294 Total commercial business 2,916 15,412 2,907 21,235 One-to-four family residential 96 740 201 1,037 Real estate construction and land development: One-to-four family residential — 568 225 793 Five or more family residential and commercial properties 39 1,259 97 1,395 Total real estate construction and land development 39 1,827 322 2,188 Consumer 60 4,991 746 5,797 Unallocated — 1,143 — 1,143 Total $ 3,111 $ 24,113 $ 4,176 $ 31,400 |
Schedule of loan receivables on the basis of impairment method | The following table details the recorded investment balance of the loan receivables disaggregated on the basis of the Company’s impairment method as of December 31, 2016 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Gross Loans Receivable (In thousands) Commercial business: Commercial and industrial $ 12,375 $ 616,081 $ 9,317 $ 637,773 Owner-occupied commercial real estate 4,724 537,338 15,973 558,035 Non-owner occupied commercial real estate 11,318 846,202 23,360 880,880 Total commercial business 28,417 1,999,621 48,650 2,076,688 One-to-four family residential 321 72,165 4,905 77,391 Real estate construction and land development: One-to-four family residential 3,071 45,220 2,123 50,414 Five or more family residential and commercial properties 1,079 105,197 2,488 108,764 Total real estate construction and land development 4,150 150,417 4,611 159,178 Consumer 310 318,548 6,282 325,140 Total $ 33,198 $ 2,540,751 $ 64,448 $ 2,638,397 The following table details the recorded investment balance of the loan receivables disaggregated on the basis of the Company’s impairment method as of September 30, 2017 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Gross Loans Receivable (In thousands) Commercial business: Commercial and industrial $ 11,712 $ 648,869 $ 5,001 $ 665,582 Owner-occupied commercial real estate 5,758 583,988 12,492 602,238 Non-owner occupied commercial real estate 10,783 906,347 13,058 930,188 Total commercial business 28,253 2,139,204 30,551 2,198,008 One-to-four family residential 304 77,135 3,983 81,422 Real estate construction and land development: One-to-four family residential 1,347 48,355 1,749 51,451 Five or more family residential and commercial properties 658 120,039 2,284 122,981 Total real estate construction and land development 2,005 168,394 4,033 174,432 Consumer 434 335,080 5,129 340,643 Total $ 30,996 $ 2,719,813 $ 43,696 $ 2,794,505 |
Other Real Estate Owned (Tables
Other Real Estate Owned (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Real Estate [Abstract] | |
Changes in other real estate owned | Changes in other real estate owned during the three and nine months ended September 30, 2017 and 2016 were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (In thousands) Balance at the beginning of the period $ 786 $ 1,560 $ 754 $ 2,019 Additions — 25 32 677 Proceeds from dispositions (374 ) (1,716 ) (374 ) (2,486 ) Gain on sales, net 111 131 111 173 Valuation adjustment — — — (383 ) Balance at the end of the period $ 523 $ — $ 523 $ — |
Goodwill and Other Intangible31
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Change in other intangible assets | The following table presents the change in the other intangible assets for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (In thousands) Balance at the beginning of the period $ 6,727 $ 8,091 $ 7,374 $ 8,789 Less: Amortization 319 359 966 1,057 Balance at the end of the period $ 6,408 $ 7,732 $ 6,408 $ 7,732 |
Other Borrowings (Tables)
Other Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of FHLB advances | The following table sets forth the details of FHLB advances during the three and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (Dollars in thousands) Average balance during the period $ 111,293 $ 5,618 $ 106,553 $ 11,608 Maximum month-end balance during the period $ 126,200 $ 17,700 $ 137,450 $ 57,300 Weighted average rate during the period 1.53 % 0.57 % 1.09 % 0.54 % |
Repurchase Agreements (Tables)
Repurchase Agreements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Repurchase Agreements [Abstract] | |
Repurchase agreement obligations by class of collateral pledged | The following table presents the Company's repurchase agreement obligations by class of collateral pledged: September 30, 2017 December 31, 2016 (In thousands) U.S. Treasury and U.S. Government-sponsored agencies $ — $ 2,944 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 12,336 5,191 Commercial 16,332 13,969 Total repurchase agreements $ 28,668 $ 22,104 (1) Issued and guaranteed by U.S. Government-sponsored agencies. |
Derivative Financial Instrume34
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of notional amounts and estimated fair values of interest rate derivative contracts | The notional amounts and estimated fair values of interest rate derivative contracts outstanding at September 30, 2017 and December 31, 2016 are presented in the following table. September 30, 2017 December 31, 2016 Notional Amounts Estimated Fair Value Notional Amounts Estimated Fair Value (In thousands) Non-hedging interest rate derivatives Interest rate swaps with customer (1) $ 134,295 $ 74 $ 102,709 $ (1,099 ) Interest rate swap with third party (1) 134,295 (74 ) 102,709 1,099 (1) The estimated fair value of the derivative included in prepaid and other assets on the Condensed Consolidated Statements of Financial Condition was $3.3 million and $2.8 million as of September 30, 2017 and December 31, 2016 , respectively. The estimated fair value of the derivative included in accrued expenses and other liabilities on the Condensed Consolidated Statements of Financial Condition was $3.3 million and $2.8 million as of September 30, 2017 and December 31, 2016 , respectively. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Schedule of earnings per share reconciliation | The following table illustrates the reconciliation of weighted average shares used for earnings per common share computations for the three and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (Dollars in thousands) Net income: Net income $ 10,624 $ 11,039 $ 31,768 $ 29,025 Less: Dividends and undistributed earnings allocated to participating securities (64 ) (102 ) (228 ) (280 ) Net income allocated to common shareholders $ 10,560 $ 10,937 $ 31,540 $ 28,745 Basic: Weighted average common shares outstanding 29,929,721 29,962,270 29,940,276 29,968,034 Less: Restricted stock awards (146,425 ) (277,495 ) (192,186 ) (292,832 ) Total basic weighted average common shares outstanding 29,783,296 29,684,775 29,748,090 29,675,202 Diluted: Basic weighted average common shares outstanding 29,783,296 29,684,775 29,748,090 29,675,202 Effect of potentially dilutive common shares (1) 107,414 11,031 86,004 12,543 Total diluted weighted average common shares outstanding 29,890,710 29,695,806 29,834,094 29,687,745 (1) Represents the effect of the assumed exercise of stock options and vesting of restricted stock units. |
Schedule of dividends activity | The following table summarizes the dividend activity for the nine months ended September 30, 2017 and calendar year 2016 . Declared Cash Dividend per Share Record Date Paid Date January 27, 2016 $0.11 February 10, 2016 February 24, 2016 April 20, 2016 $0.12 May 5, 2016 May 19, 2016 July 20, 2016 $0.12 August 4, 2016 August 18, 2016 October 26, 2016 $0.12 November 8, 2016 November 22, 2016 October 26, 2016 $0.25 November 8, 2016 November 22, 2016 * January 25, 2017 $0.12 February 9, 2017 February 23, 2017 April 25, 2017 $0.13 May 10, 2017 May 24, 2017 July 25, 2017 $0.13 August 10, 2017 August 24, 2017 * Denotes a special dividend. |
Schedule of repurchased shares | The following table provides total repurchased shares and average share prices under the plan for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Plan Total (1) Eleventh Plan Repurchased shares — 38,000 — 138,000 579,996 Stock repurchase average share price $ — $ 17.46 $ — $ 17.16 $ 16.76 (1) Represents shares repurchased and average price per share paid during the duration of the plan. |
Accumulated Other Comprehensi36
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Changes in accumulated other comprehensive income (AOCI) by component | The changes in accumulated other comprehensive income (loss) (“AOCI”) by component, during the three and nine months ended September 30, 2017 and 2016 are as follows: Three Months Ended September 30, 2017 (1) Nine Months Ended September 30, 2017 (1) (In thousands) Balance of AOCI at the beginning of period $ 1,557 $ (2,606 ) Other comprehensive income before reclassification 289 4,528 Amounts reclassified from AOCI for gain on sale of investment securities included in net income (28 ) (104 ) Net current period other comprehensive income 261 4,424 Balance of AOCI at the end of period $ 1,818 $ 1,818 (1) All amounts are due to the changes in fair value of available for sale securities and are net of tax. Three Months Ended September 30, 2016 (1) Nine Months Ended September 30, 2016 (1) (In thousands) Balance of AOCI at the beginning of period $ 12,343 $ 2,559 Other comprehensive income before reclassification (1,055 ) 9,223 Amounts reclassified from AOCI for gain on sale of investment securities available for sale included in net income (224 ) (718 ) Net current period other comprehensive income (1,279 ) 8,505 Balance of AOCI at the end of period $ 11,064 $ 11,064 (1) All amounts are due to the changes in fair value of available for sale securities and are net of tax. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | The following table summarizes the stock option activity for the nine months ended September 30, 2017 and 2016 : Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding at December 31, 2015 79,408 $ 14.19 Exercised (27,867 ) 14.37 Forfeited or expired (4,200 ) 16.80 Outstanding at September 30, 2016 47,341 $ 13.85 2.80 $ 194 Outstanding at December 31, 2016 37,495 $ 13.77 Exercised (12,304 ) 12.92 Forfeited or expired (1,308 ) 13.53 Outstanding, vested and expected to vest and exercisable at September 30, 2017 23,883 $ 14.23 2.45 $ 365 |
Schedule of restricted stock award activity | The following table summarizes the restricted stock award activity for the nine months ended September 30, 2017 and 2016 : Shares Weighted-Average Grant Date Fair Value Nonvested at December 31, 2015 264,521 $ 15.92 Granted 119,939 17.53 Vested (111,357 ) 15.62 Forfeited (9,216 ) 16.57 Nonvested at September 30, 2016 263,887 $ 16.76 Nonvested at December 31, 2016 261,296 $ 16.80 Granted — — Vested (107,202 ) 16.49 Forfeited (10,418 ) 16.80 Nonvested at September 30, 2017 143,676 $ 17.02 |
Schedule of restricted stock unit activity | The following table summarizes the restricted stock unit activity for the nine months ended September 30, 2017 : Shares Weighted-Average Grant Date Fair Value Nonvested at December 31, 2016 — $ — Granted 92,019 25.29 Vested — — Forfeited (1,812 ) 25.35 Nonvested at September 30, 2017 90,207 $ 25.29 |
Summary of assumptions used for restricted stock unit grants | The following table summarizes the assumptions used in the Monte Carlo model for restricted stock unit grants with market-based conditions during the nine months ended September 30, 2017 : Shares Expected Term in Years Weighted-Average Risk Free Interest Rate Expected Volatility Expected Dividend Yield Weighted-Average Fair Value 6,089 2.85 1.40 % 21.8 % — % $ 24.39 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements of assets on a recurring basis | The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 . September 30, 2017 Total Level 1 Level 2 Level 3 (In thousands) Assets Investment securities available for sale: U.S. Treasury and U.S. Government-sponsored agencies $ 9,403 $ — $ 9,403 $ — Municipal securities 252,806 — 252,806 — Mortgage-backed securities and collateralized mortgage obligations: Residential 274,361 — 274,361 — Commercial 213,283 — 213,283 — Collateralized loan obligations 6,022 — 6,022 — Corporate obligations 15,830 — 15,830 — Other securities 28,355 150 28,205 — Total investment securities available for sale 800,060 150 799,910 — Derivative assets - interest rate swaps 3,308 — 3,308 — Liabilities Derivative liabilities - interest rate swaps $ 3,308 $ — $ 3,308 $ — December 31, 2016 Total Level 1 Level 2 Level 3 (In thousands) Assets Investment securities available for sale: U.S. Treasury and U.S. Government-sponsored agencies $ 1,569 $ — $ 1,569 $ — Municipal securities 237,256 — 237,256 — Mortgage-backed securities and collateralized mortgage obligations: Residential 309,176 — 309,176 — Commercial 208,318 — 208,318 — Collateralized loan obligations 10,478 — 10,478 — Corporate obligations 16,706 — 16,706 — Other securities 11,142 123 11,019 — Total investment securities available for sale 794,645 123 794,522 — Derivative assets - interest rate swaps 2,804 — 2,804 — Liabilities Derivative liabilities - interest rate swaps $ 2,804 $ — $ 2,804 $ — |
Fair value measurements of assets on a nonrecurring basis | The tables below represent assets measured at fair value on a nonrecurring basis at September 30, 2017 and December 31, 2016 and the net losses (gains) recorded in earnings during three and nine months ended September 30, 2017 and 2016 . Basis (1) Fair Value at September 30, 2017 Total Level 1 Level 2 Level 3 Net Losses Recorded in Earnings During the Three Months Ended September 30, 2017 Net Losses (Gains) Recorded in Earnings During the Nine Months Ended September 30, 2017 (In thousands) Impaired loans: Commercial business: Commercial and industrial $ 172 $ 163 $ — $ — $ 163 $ — $ 7 Owner-occupied commercial real estate 182 179 — — 179 — 8 Total commercial business 354 342 — — 342 — 15 Total assets measured at fair value on a nonrecurring basis $ 354 $ 342 $ — $ — $ 342 $ — $ 15 (1) Basis represents the unpaid principal balance of impaired loans. Basis (1) Fair Value at December 31, 2016 Total Level 1 Level 2 Level 3 Net Losses (Gains) Recorded in Earnings During the Three Months Ended September 30, 2016 Net Losses (Gains) Recorded in Earnings During the Nine Months Ended September 30, 2016 (In thousands) Impaired loans: Commercial business: Commercial and industrial $ 205 $ 200 $ — $ — $ 200 $ 24 $ 25 Owner-occupied commercial real estate 780 603 — — 603 23 (2 ) Total commercial business 985 803 — — 803 47 23 Real estate construction and land development: One-to-four family residential 828 822 — — 822 (13 ) (26 ) Total real estate construction and land development 828 822 — — 822 (13 ) (26 ) Consumer 16 9 — — 9 — — Total assets measured at fair value on a nonrecurring basis $ 1,829 $ 1,634 $ — $ — $ 1,634 $ 34 $ (3 ) (1) Basis represents the unpaid principal balance of impaired loans. |
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2017 and December 31, 2016 . September 30, 2017 Fair Value Valuation Technique(s) Unobservable Input(s) Range of Inputs; Weighted Average (Dollars in thousands) Impaired loans $ 342 Market approach Adjustment for differences between the comparable sales (23.8%) - 23.0%; (2.8%) December 31, 2016 Fair Value Valuation Technique(s) Unobservable Input(s) Range of Inputs; Weighted Average (Dollars in thousands) Impaired loans $ 1,634 Market approach Adjustment for differences between the comparable sales (23.8%) - 63.9%; 20.4% |
Schedule of carrying value and fair value of financial instruments | The tables below present the carrying value amount of the Company’s financial instruments and their corresponding estimated fair values at the dates indicated. September 30, 2017 Carrying Value Fair Value Fair Value Measurements Using: Level 1 Level 2 Level 3 (In thousands) Financial Assets: Cash and cash equivalents $ 111,258 $ 111,258 $ 111,258 $ — $ — Investment securities available for sale 800,060 800,060 150 799,910 — Federal Home Loan Bank stock 9,343 N/A N/A N/A N/A Loans held for sale 5,368 5,553 — 5,553 — Total loans receivable, net 2,766,113 2,772,338 — — 2,772,338 Accrued interest receivable 12,295 12,295 3 3,770 8,522 Derivative assets - interest rate swaps 3,308 3,308 — 3,308 — Financial Liabilities: Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts 2,925,637 2,925,637 2,925,637 — — Certificate of deposit accounts 395,181 394,164 — 394,164 — Federal Home Loan Bank advances 117,400 117,400 — 117,400 — Securities sold under agreement to repurchase 28,668 28,668 28,668 — — Junior subordinated debentures 19,936 15,250 — — 15,250 Accrued interest payable 148 148 42 73 33 Derivative liabilities - interest rate swaps 3,308 3,308 — 3,308 — December 31, 2016 Carrying Value Fair Value Fair Value Measurements Using: Level 1 Level 2 Level 3 (In thousands) Financial Assets: Cash and cash equivalents $ 103,745 $ 103,745 $ 103,745 $ — $ — Investment securities available for sale 794,645 794,645 123 794,522 — Federal Home Loan Bank stock 7,564 N/A N/A N/A N/A Loans held for sale 11,662 11,988 — 11,988 — Loans receivable, net of allowance for loan losses 2,609,666 2,675,811 — — 2,675,811 Accrued interest receivable 10,925 10,925 3 3,472 7,450 Derivative assets - interest rate swaps 2,804 2,804 — 2,804 — Financial Liabilities: Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts $ 2,872,247 $ 2,872,247 $ 2,872,247 $ — $ — Certificate of deposit accounts 357,401 357,536 — 357,536 — Federal Home Loan Bank advances 79,600 79,600 — 79,600 — Securities sold under agreement to repurchase 22,104 22,104 22,104 — — Junior subordinated debentures 19,717 15,000 — — 15,000 Accrued interest payable 215 215 44 142 29 Derivative liabilities - interest rate swaps 2,804 2,804 — 2,804 — |
Description of Business, Basi39
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements (Details) $ in Thousands | Sep. 30, 2017USD ($)branch | Jul. 26, 2017 | Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) |
Business Description and Basis of Presentation [Line Items] | ||||
Total assets | $ 4,050,056 | $ 3,878,981 | ||
Total loans receivable, net | 2,766,113 | 2,609,666 | ||
Total deposits | $ 3,320,818 | 3,229,648 | ||
Minimum lease payments | $ 14,700 | |||
Puget Sound | ||||
Business Description and Basis of Presentation [Line Items] | ||||
Ownership percentage by shareholders | 13.50% | |||
Heritage Bank | ||||
Business Description and Basis of Presentation [Line Items] | ||||
Number of branches operating | branch | 59 | |||
Puget Sound Bank | ||||
Business Description and Basis of Presentation [Line Items] | ||||
Total assets | $ 567,200 | |||
Total loans receivable, net | 366,600 | |||
Total deposits | $ 505,100 |
Investment Securities - Amortiz
Investment Securities - Amortized Cost, Gross Unrealized Gains and Losses and Fair Values (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Investment Holdings [Line Items] | ||
Amortized Cost | $ 797,245 | $ 798,639 |
Gross Unrealized Gains | 7,786 | 4,281 |
Gross Unrealized Losses | (4,971) | (8,275) |
Fair Value | 800,060 | 794,645 |
U.S. Treasury and U.S. Government-sponsored agencies | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 9,464 | 1,563 |
Gross Unrealized Gains | 12 | 6 |
Gross Unrealized Losses | (73) | 0 |
Fair Value | 9,403 | 1,569 |
Municipal securities | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 248,420 | 237,305 |
Gross Unrealized Gains | 5,429 | 2,427 |
Gross Unrealized Losses | (1,043) | (2,476) |
Fair Value | 252,806 | 237,256 |
Residential | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 275,128 | 310,391 |
Gross Unrealized Gains | 879 | 985 |
Gross Unrealized Losses | (1,646) | (2,200) |
Fair Value | 274,361 | 309,176 |
Commercial | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 214,793 | 211,259 |
Gross Unrealized Gains | 699 | 599 |
Gross Unrealized Losses | (2,209) | (3,540) |
Fair Value | 213,283 | 208,318 |
Collateralized loan obligations | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 6,007 | 10,505 |
Gross Unrealized Gains | 15 | 4 |
Gross Unrealized Losses | 0 | (31) |
Fair Value | 6,022 | 10,478 |
Corporate obligations | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 15,583 | 16,611 |
Gross Unrealized Gains | 247 | 104 |
Gross Unrealized Losses | 0 | (9) |
Fair Value | 15,830 | 16,706 |
Other securities | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 27,850 | 11,005 |
Gross Unrealized Gains | 505 | 156 |
Gross Unrealized Losses | 0 | (19) |
Fair Value | $ 28,355 | $ 11,142 |
Investment Securities - Textual
Investment Securities - Textual (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($)loan | Sep. 30, 2016loan | Sep. 30, 2017USD ($)loan | Sep. 30, 2016loan | Dec. 31, 2016USD ($) | |
Investments, Debt and Equity Securities [Abstract] | |||||
Securities classified as trading | $ | $ 0 | $ 0 | $ 0 | ||
Mortgage backed securities evaluation non temporary decline number (securities) | loan | 0 | 0 | 0 | 0 |
Investment Securities - Contrac
Investment Securities - Contractual Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Amortized Cost | ||
Due in one year or less | $ 6,556 | |
Due after one year through five years | 121,518 | |
Due after five years through ten years | 248,291 | |
Due after ten years | 420,835 | |
Investment securities with no stated maturities | 45 | |
Amortized Cost | 797,245 | $ 798,639 |
Fair Value | ||
Due in one year or less | 6,595 | |
Due after one year through five years | 122,740 | |
Due after five years through ten years | 248,603 | |
Due after ten years | 421,972 | |
Investment securities with no stated maturities | 150 | |
Fair Value | $ 800,060 | $ 794,645 |
Investment Securities - Unreali
Investment Securities - Unrealized Losses (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value | ||
Less than 12 Months | $ 279,142 | $ 442,811 |
12 Months or Longer | 85,665 | 26,420 |
Total | 364,807 | 469,231 |
Unrealized Losses | ||
Less than 12 Months | (3,024) | (8,099) |
12 Months or Longer | (1,947) | (176) |
Total | (4,971) | (8,275) |
U.S. Treasury and U.S. Government-sponsored agencies | ||
Fair Value | ||
Less than 12 Months | 6,484 | |
12 Months or Longer | 0 | |
Total | 6,484 | |
Unrealized Losses | ||
Less than 12 Months | (73) | |
12 Months or Longer | 0 | |
Total | (73) | |
Municipal securities | ||
Fair Value | ||
Less than 12 Months | 24,415 | 90,188 |
12 Months or Longer | 23,629 | 0 |
Total | 48,044 | 90,188 |
Unrealized Losses | ||
Less than 12 Months | (362) | (2,476) |
12 Months or Longer | (681) | 0 |
Total | (1,043) | (2,476) |
Residential | ||
Fair Value | ||
Less than 12 Months | 135,648 | 181,562 |
12 Months or Longer | 23,937 | 10,854 |
Total | 159,585 | 192,416 |
Unrealized Losses | ||
Less than 12 Months | (1,111) | (2,148) |
12 Months or Longer | (535) | (52) |
Total | (1,646) | (2,200) |
Commercial | ||
Fair Value | ||
Less than 12 Months | 112,595 | 157,055 |
12 Months or Longer | 38,099 | 12,597 |
Total | 150,694 | 169,652 |
Unrealized Losses | ||
Less than 12 Months | (1,478) | (3,446) |
12 Months or Longer | (731) | (94) |
Total | $ (2,209) | (3,540) |
Collateralized loan obligations | ||
Fair Value | ||
Less than 12 Months | 2,976 | |
12 Months or Longer | 2,969 | |
Total | 5,945 | |
Unrealized Losses | ||
Less than 12 Months | (1) | |
12 Months or Longer | (30) | |
Total | (31) | |
Corporate obligations | ||
Fair Value | ||
Less than 12 Months | 4,032 | |
12 Months or Longer | 0 | |
Total | 4,032 | |
Unrealized Losses | ||
Less than 12 Months | (9) | |
12 Months or Longer | 0 | |
Total | (9) | |
Other securities | ||
Fair Value | ||
Less than 12 Months | 6,998 | |
12 Months or Longer | 0 | |
Total | 6,998 | |
Unrealized Losses | ||
Less than 12 Months | (19) | |
12 Months or Longer | 0 | |
Total | $ (19) |
Investment Securities - Amort44
Investment Securities - Amortized Cost and Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Scheduled of amortized cost and fair value of securities pledged as collateral | ||
Amortized Cost | $ 255,400 | $ 247,872 |
Fair Value | 256,978 | 248,087 |
Washington and Oregon state to secure public deposits | ||
Scheduled of amortized cost and fair value of securities pledged as collateral | ||
Amortized Cost | 40,997 | 214,834 |
Fair Value | 40,772 | 215,247 |
Repurchase agreements | ||
Scheduled of amortized cost and fair value of securities pledged as collateral | ||
Amortized Cost | 12,620 | 29,481 |
Fair Value | 12,724 | 29,294 |
Other securities pledged | ||
Scheduled of amortized cost and fair value of securities pledged as collateral | ||
Amortized Cost | 201,783 | 3,557 |
Fair Value | $ 203,482 | $ 3,546 |
Loans Receivable - Loan Origina
Loans Receivable - Loan Origination/Risk Management (Details) $ in Thousands | 9 Months Ended | |||||
Sep. 30, 2017USD ($)segment | Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Dec. 31, 2015USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Number of loan segments | segment | 4 | |||||
Maximum percentage consumer loans (percent) | 80.00% | |||||
Gross loans receivable | $ 2,794,505 | $ 2,638,397 | ||||
Net deferred loan costs | 3,008 | 2,352 | ||||
Loans receivable, net | 2,797,513 | 2,640,749 | ||||
Allowance for loan losses | (31,400) | $ (32,751) | (31,083) | $ (30,211) | $ (28,426) | $ (29,746) |
Total loans receivable, net | 2,766,113 | 2,609,666 | ||||
Commercial Business | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 2,198,008 | 2,076,688 | ||||
Allowance for loan losses | (21,235) | (22,514) | (22,382) | (21,844) | (20,472) | (22,064) |
Commercial Business | Commercial and Industrial | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 665,582 | 637,773 | ||||
Allowance for loan losses | (9,880) | (10,651) | (10,968) | (10,905) | (9,970) | (9,972) |
Commercial Business | Owner-occupied Commercial Real Estate | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 602,238 | 558,035 | ||||
Allowance for loan losses | (4,061) | (4,154) | (3,661) | (3,712) | (3,578) | (4,370) |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 930,188 | 880,880 | ||||
Allowance for loan losses | $ (7,294) | (7,709) | (7,753) | (7,227) | (6,924) | (7,722) |
One-to-four Family Residential | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Maximum percent of appraised value or underlying collateral mortgage (not to exceed 80%) residential loans (percent) | 80.00% | |||||
Gross loans receivable | $ 81,422 | 77,391 | ||||
Allowance for loan losses | (1,037) | (1,073) | (1,015) | (976) | (950) | (1,157) |
Real Estate Construction and Land Development | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 174,432 | 159,178 | ||||
Allowance for loan losses | (2,188) | (2,487) | (2,156) | (2,132) | (2,031) | (1,871) |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 51,451 | 50,414 | ||||
Allowance for loan losses | (793) | (821) | (797) | (850) | (754) | (1,058) |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 122,981 | 108,764 | ||||
Allowance for loan losses | (1,395) | (1,666) | (1,359) | (1,282) | (1,277) | (813) |
Consumer | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 340,643 | 325,140 | ||||
Allowance for loan losses | $ (5,797) | $ (5,710) | $ (5,024) | $ (5,106) | $ (4,816) | $ (4,309) |
Minimum | One-to-four Family Residential | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loan term | 15 years | |||||
Maximum | One-to-four Family Residential | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loan term | 30 years |
Loans Receivable - Concentratio
Loans Receivable - Concentrations of Credit (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016Loan | |
Receivables [Abstract] | ||
Concentration of loans greater than 10% | 0 | 0 |
Percentage of concentrations of loans in any industry (in excess of 10%) (percent) | 10.00% | 10.00% |
Loans Receivable - Credit Quali
Loans Receivable - Credit Quality Indicators (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | $ 2,684,287 | $ 2,521,876 |
OAEM | 36,157 | 25,708 |
Substandard | 73,536 | 90,813 |
Doubtful/Loss | 525 | 0 |
Total | 2,794,505 | 2,638,397 |
Potential problem loans receivable | 84,100 | 87,800 |
Government guaranteed potential problem loans | 1,700 | 1,100 |
Commercial Business | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 2,099,377 | 1,975,241 |
OAEM | 35,162 | 24,058 |
Substandard | 63,469 | 77,389 |
Doubtful/Loss | 0 | 0 |
Total | 2,198,008 | 2,076,688 |
Commercial Business | Commercial and Industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 625,387 | 601,273 |
OAEM | 11,067 | 5,048 |
Substandard | 29,128 | 31,452 |
Doubtful/Loss | 0 | 0 |
Total | 665,582 | 637,773 |
Commercial Business | Owner-occupied Commercial Real Estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 576,313 | 532,585 |
OAEM | 8,305 | 4,437 |
Substandard | 17,620 | 21,013 |
Doubtful/Loss | 0 | 0 |
Total | 602,238 | 558,035 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 897,677 | 841,383 |
OAEM | 15,790 | 14,573 |
Substandard | 16,721 | 24,924 |
Doubtful/Loss | 0 | 0 |
Total | 930,188 | 880,880 |
One-to-four Family Residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 79,882 | 76,020 |
OAEM | 0 | 0 |
Substandard | 1,540 | 1,371 |
Doubtful/Loss | 0 | 0 |
Total | 81,422 | 77,391 |
Real Estate Construction and Land Development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 169,955 | 150,475 |
OAEM | 995 | 1,650 |
Substandard | 3,482 | 7,053 |
Doubtful/Loss | 0 | 0 |
Total | 174,432 | 159,178 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 48,101 | 44,752 |
OAEM | 273 | 500 |
Substandard | 3,077 | 5,162 |
Doubtful/Loss | 0 | 0 |
Total | 51,451 | 50,414 |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 121,854 | 105,723 |
OAEM | 722 | 1,150 |
Substandard | 405 | 1,891 |
Doubtful/Loss | 0 | 0 |
Total | 122,981 | 108,764 |
Consumer | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 335,073 | 320,140 |
OAEM | 0 | 0 |
Substandard | 5,045 | 5,000 |
Doubtful/Loss | 525 | 0 |
Total | $ 340,643 | $ 325,140 |
Loans Receivable - Nonaccrual L
Loans Receivable - Nonaccrual Loans (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | $ 10,952 | $ 10,909 |
Nonaccrual originated loans guaranteed by governmental agencies | 2,500 | 2,800 |
Commercial Business | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 9,683 | 8,580 |
Commercial Business | Commercial and Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 4,056 | 3,531 |
Commercial Business | Owner-occupied Commercial Real Estate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 3,720 | 3,728 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 1,907 | 1,321 |
One-to-four Family Residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 84 | 94 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 869 | 2,008 |
Consumer | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | $ 316 | $ 227 |
Loans Receivable - Past Due Loa
Loans Receivable - Past Due Loans (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | $ 9,765,000 | $ 15,270,000 |
Current | 2,784,740,000 | 2,623,127,000 |
Total | 2,794,505,000 | 2,638,397,000 |
90 Days or More and Still Accruing | 0 | 0 |
30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 4,430,000 | 8,132,000 |
90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 5,335,000 | 7,138,000 |
Commercial Business | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 5,657,000 | 9,875,000 |
Current | 2,192,351,000 | 2,066,813,000 |
Total | 2,198,008,000 | 2,076,688,000 |
Commercial Business | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,288,000 | 5,227,000 |
Commercial Business | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 4,369,000 | 4,648,000 |
Commercial Business | Commercial and Industrial | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,804,000 | 4,420,000 |
Current | 663,778,000 | 633,353,000 |
Total | 665,582,000 | 637,773,000 |
Commercial Business | Commercial and Industrial | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 790,000 | 2,687,000 |
Commercial Business | Commercial and Industrial | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,014,000 | 1,733,000 |
Commercial Business | Owner-occupied Commercial Real Estate | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,768,000 | 4,722,000 |
Current | 600,470,000 | 553,313,000 |
Total | 602,238,000 | 558,035,000 |
Commercial Business | Owner-occupied Commercial Real Estate | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 498,000 | 1,807,000 |
Commercial Business | Owner-occupied Commercial Real Estate | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,270,000 | 2,915,000 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 2,085,000 | 733,000 |
Current | 928,103,000 | 880,147,000 |
Total | 930,188,000 | 880,880,000 |
Commercial Business | Non-owner Occupied Commercial Real Estate | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 0 | 733,000 |
Commercial Business | Non-owner Occupied Commercial Real Estate | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 2,085,000 | 0 |
One-to-four Family Residential | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 0 | 523,000 |
Current | 81,422,000 | 76,868,000 |
Total | 81,422,000 | 77,391,000 |
One-to-four Family Residential | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 0 | 523,000 |
One-to-four Family Residential | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 0 | 0 |
Real Estate Construction and Land Development | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,713,000 | 2,475,000 |
Current | 172,719,000 | 156,703,000 |
Total | 174,432,000 | 159,178,000 |
Real Estate Construction and Land Development | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,404,000 | 90,000 |
Real Estate Construction and Land Development | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 309,000 | 2,385,000 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,347,000 | 2,098,000 |
Current | 50,104,000 | 48,316,000 |
Total | 51,451,000 | 50,414,000 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,038,000 | 90,000 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 309,000 | 2,008,000 |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 366,000 | 377,000 |
Current | 122,615,000 | 108,387,000 |
Total | 122,981,000 | 108,764,000 |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 366,000 | 0 |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 0 | 377,000 |
Consumer | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 2,395,000 | 2,397,000 |
Current | 338,248,000 | 322,743,000 |
Total | 340,643,000 | 325,140,000 |
Consumer | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,738,000 | 2,292,000 |
Consumer | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | $ 657,000 | $ 105,000 |
Loans Receivable - Impaired Loa
Loans Receivable - Impaired Loans (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | $ 10,469,000 | $ 10,469,000 | $ 10,085,000 | ||
Recorded Investment With Specific Valuation Allowance | 20,527,000 | 20,527,000 | 23,113,000 | ||
Total Recorded Investment | 30,996,000 | 30,996,000 | 33,198,000 | ||
Unpaid Contractual Principal Balance | 32,786,000 | 32,786,000 | 35,226,000 | ||
Related Specific Valuation Allowance | 3,111,000 | 3,111,000 | 2,734,000 | ||
Government guarantee of originated impaired loans | 3,900,000 | 3,900,000 | 3,500,000 | ||
Average recorded investment on impaired loans | 31,167,000 | $ 32,231,000 | 31,574,000 | $ 32,715,000 | |
Nonaccrual | |||||
Financing Receivable, Impaired [Line Items] | |||||
Interest income recognized on impaired loans | 0 | 0 | 0 | 0 | |
Restructured Performing | |||||
Financing Receivable, Impaired [Line Items] | |||||
Interest income recognized on impaired loans | 366,000 | 156,000 | 1,000,000 | 501,000 | |
Commercial Business | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 8,962,000 | 8,962,000 | 7,794,000 | ||
Recorded Investment With Specific Valuation Allowance | 19,291,000 | 19,291,000 | 20,623,000 | ||
Total Recorded Investment | 28,253,000 | 28,253,000 | 28,417,000 | ||
Unpaid Contractual Principal Balance | 29,055,000 | 29,055,000 | 29,742,000 | ||
Related Specific Valuation Allowance | 2,916,000 | 2,916,000 | 2,507,000 | ||
Average recorded investment on impaired loans | 27,497,000 | 26,285,000 | 27,437,000 | 26,542,000 | |
Commercial Business | Commercial and Industrial | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 3,131,000 | 3,131,000 | 1,739,000 | ||
Recorded Investment With Specific Valuation Allowance | 8,581,000 | 8,581,000 | 10,636,000 | ||
Total Recorded Investment | 11,712,000 | 11,712,000 | 12,375,000 | ||
Unpaid Contractual Principal Balance | 12,060,000 | 12,060,000 | 13,249,000 | ||
Related Specific Valuation Allowance | 1,254,000 | 1,254,000 | 1,199,000 | ||
Average recorded investment on impaired loans | 11,171,000 | 9,625,000 | 11,190,000 | 9,750,000 | |
Commercial Business | Owner-occupied Commercial Real Estate | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 1,082,000 | 1,082,000 | 1,150,000 | ||
Recorded Investment With Specific Valuation Allowance | 4,676,000 | 4,676,000 | 3,574,000 | ||
Total Recorded Investment | 5,758,000 | 5,758,000 | 4,724,000 | ||
Unpaid Contractual Principal Balance | 6,068,000 | 6,068,000 | 5,107,000 | ||
Related Specific Valuation Allowance | 767,000 | 767,000 | 511,000 | ||
Average recorded investment on impaired loans | 5,289,000 | 4,553,000 | 5,049,000 | 4,560,000 | |
Commercial Business | Non-owner Occupied Commercial Real Estate | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 4,749,000 | 4,749,000 | 4,905,000 | ||
Recorded Investment With Specific Valuation Allowance | 6,034,000 | 6,034,000 | 6,413,000 | ||
Total Recorded Investment | 10,783,000 | 10,783,000 | 11,318,000 | ||
Unpaid Contractual Principal Balance | 10,927,000 | 10,927,000 | 11,386,000 | ||
Related Specific Valuation Allowance | 895,000 | 895,000 | 797,000 | ||
Average recorded investment on impaired loans | 11,037,000 | 12,107,000 | 11,198,000 | 12,232,000 | |
One-to-four Family Residential | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 0 | 0 | 0 | ||
Recorded Investment With Specific Valuation Allowance | 304,000 | 304,000 | 321,000 | ||
Total Recorded Investment | 304,000 | 304,000 | 321,000 | ||
Unpaid Contractual Principal Balance | 311,000 | 311,000 | 325,000 | ||
Related Specific Valuation Allowance | 96,000 | 96,000 | 97,000 | ||
Average recorded investment on impaired loans | 307,000 | 265,000 | 312,000 | 267,000 | |
Real Estate Construction and Land Development | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 1,347,000 | 1,347,000 | 2,243,000 | ||
Recorded Investment With Specific Valuation Allowance | 658,000 | 658,000 | 1,907,000 | ||
Total Recorded Investment | 2,005,000 | 2,005,000 | 4,150,000 | ||
Unpaid Contractual Principal Balance | 2,963,000 | 2,963,000 | 4,834,000 | ||
Related Specific Valuation Allowance | 39,000 | 39,000 | 66,000 | ||
Average recorded investment on impaired loans | 3,017,000 | 4,796,000 | 3,497,000 | 4,999,000 | |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 1,347,000 | 1,347,000 | 2,243,000 | ||
Recorded Investment With Specific Valuation Allowance | 0 | 0 | 828,000 | ||
Total Recorded Investment | 1,347,000 | 1,347,000 | 3,071,000 | ||
Unpaid Contractual Principal Balance | 2,305,000 | 2,305,000 | 3,755,000 | ||
Related Specific Valuation Allowance | 0 | 0 | 6,000 | ||
Average recorded investment on impaired loans | 2,157,000 | 3,177,000 | 2,530,000 | 3,253,000 | |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 0 | 0 | 0 | ||
Recorded Investment With Specific Valuation Allowance | 658,000 | 658,000 | 1,079,000 | ||
Total Recorded Investment | 658,000 | 658,000 | 1,079,000 | ||
Unpaid Contractual Principal Balance | 658,000 | 658,000 | 1,079,000 | ||
Related Specific Valuation Allowance | 39,000 | 39,000 | 60,000 | ||
Average recorded investment on impaired loans | 860,000 | 1,619,000 | 967,000 | 1,746,000 | |
Consumer | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 160,000 | 160,000 | 48,000 | ||
Recorded Investment With Specific Valuation Allowance | 274,000 | 274,000 | 262,000 | ||
Total Recorded Investment | 434,000 | 434,000 | 310,000 | ||
Unpaid Contractual Principal Balance | 457,000 | 457,000 | 325,000 | ||
Related Specific Valuation Allowance | 60,000 | 60,000 | $ 64,000 | ||
Average recorded investment on impaired loans | $ 346,000 | $ 885,000 | $ 328,000 | $ 907,000 |
Loans Receivable - TDR Loans, R
Loans Receivable - TDR Loans, Recorded Investment and Allowance (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | ||
Performing TDRs, TDR loans | $ 20,044 | $ 22,288 |
Nonaccrual TDRs, TDR loans | 5,903 | 6,900 |
Performing TDRs, Allowance for loan losses on TDR loans | 2,136 | 1,965 |
Nonaccrual TDRs, Allowance for loan losses on TDR loans | 555 | 437 |
Unfunded commitments related to credits classified as TDRs | $ 160 | $ 249 |
Loans Receivable - Modified TDR
Loans Receivable - Modified TDRs (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($)contract | Sep. 30, 2016USD ($)contract | Sep. 30, 2017USD ($)contract | Sep. 30, 2016USD ($)contract | Dec. 31, 2016USD ($) | |
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ 3,111 | $ 3,111 | $ 2,734 | ||
Commercial Business | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | 2,916 | 2,916 | 2,507 | ||
Commercial Business | Commercial and Industrial | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | 1,254 | 1,254 | 1,199 | ||
Commercial Business | Owner-occupied Commercial Real Estate | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | 767 | 767 | 511 | ||
Commercial Business | Non-owner Occupied Commercial Real Estate | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | 895 | 895 | 797 | ||
Real Estate Construction and Land Development | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | 39 | 39 | 66 | ||
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | 0 | 0 | 6 | ||
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | 39 | 39 | 60 | ||
Consumer | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ 60 | $ 60 | $ 64 | ||
Troubled Debt Restructured Loans | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 11 | 19 | 25 | 30 | |
Outstanding Principal Balance | $ 3,359 | $ 7,624 | $ 9,609 | $ 8,259 | |
Number of contracts with no modifications | contract | 7 | 8 | 15 | 15 | |
Total outstanding principal balance with no prior modifications | $ 2,100 | $ 1,400 | $ 5,000 | $ 1,700 | |
Number of contracts modified | contract | 0 | 0 | |||
Troubled Debt Restructured Loans | Modified During the Quarter | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ 1,100 | $ 1,100 | |||
Troubled Debt Restructured Loans | Commercial Business | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 7 | 11 | 18 | 18 | |
Outstanding Principal Balance | $ 3,307 | $ 3,718 | $ 8,511 | $ 4,309 | |
Troubled Debt Restructured Loans | Commercial Business | Commercial and Industrial | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 4 | 8 | 13 | 15 | |
Outstanding Principal Balance | $ 1,353 | $ 2,324 | $ 5,564 | $ 2,915 | |
Number of contracts modified | contract | 1 | 1 | |||
Outstanding principal balance of contracts modified | $ 234 | $ 234 | |||
Troubled Debt Restructured Loans | Commercial Business | Owner-occupied Commercial Real Estate | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 2 | 2 | 3 | 2 | |
Outstanding Principal Balance | $ 1,299 | $ 576 | $ 1,351 | $ 576 | |
Troubled Debt Restructured Loans | Commercial Business | Non-owner Occupied Commercial Real Estate | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 1 | 1 | 2 | 1 | |
Outstanding Principal Balance | $ 655 | $ 818 | $ 1,596 | $ 818 | |
Troubled Debt Restructured Loans | Real Estate Construction and Land Development | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 0 | 6 | 2 | 6 | |
Outstanding Principal Balance | $ 0 | $ 3,880 | $ 1,038 | $ 3,880 | |
Troubled Debt Restructured Loans | Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 0 | 5 | 2 | 5 | |
Outstanding Principal Balance | $ 0 | $ 2,274 | $ 1,038 | $ 2,274 | |
Troubled Debt Restructured Loans | Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 0 | 1 | 0 | 1 | |
Outstanding Principal Balance | $ 0 | $ 1,606 | $ 0 | $ 1,606 | |
Troubled Debt Restructured Loans | Consumer | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 4 | 2 | 5 | 6 | |
Outstanding Principal Balance | $ 52 | $ 26 | $ 60 | $ 70 |
Loans Receivable - Purchased Cr
Loans Receivable - Purchased Credit Impaired Loans (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | $ 52,049 | $ 71,731 |
Recorded Investment | 43,696 | 64,448 |
Commercial Business | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 38,305 | 55,743 |
Recorded Investment | 30,551 | 48,650 |
Commercial Business | Commercial and Industrial | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 9,220 | 13,067 |
Recorded Investment | 5,001 | 9,317 |
Commercial Business | Owner-occupied Commercial Real Estate | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 14,059 | 17,639 |
Recorded Investment | 12,492 | 15,973 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 15,026 | 25,037 |
Recorded Investment | 13,058 | 23,360 |
One-to-four Family Residential | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 4,426 | 5,120 |
Recorded Investment | 3,983 | 4,905 |
Real Estate Construction and Land Development | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 5,320 | 5,572 |
Recorded Investment | 4,033 | 4,611 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 2,928 | 2,958 |
Recorded Investment | 1,749 | 2,123 |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 2,392 | 2,614 |
Recorded Investment | 2,284 | 2,488 |
Consumer | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 3,998 | 5,296 |
Recorded Investment | $ 5,129 | $ 6,282 |
Loans Receivable - Change in Ac
Loans Receivable - Change in Accretable Yield (Details) - PCI Loans - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||||
Balance at the beginning of the period | $ 12,296 | $ 15,359 | $ 13,860 | $ 17,592 |
Accretion | (796) | (1,178) | (2,725) | (3,900) |
Disposal and other | (1,287) | (491) | (2,430) | (2,921) |
Change in accretable yield | 939 | 1,214 | 2,447 | 4,133 |
Balance at the end of the period | $ 11,152 | $ 14,904 | $ 11,152 | $ 14,904 |
Allowance for Loan Losses - Sum
Allowance for Loan Losses - Summary of Changes in Loan Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | $ 32,751 | $ 28,426 | $ 31,083 | $ 29,746 |
Charge-offs | (2,546) | (900) | (3,930) | (5,222) |
Recoveries | 311 | 1,190 | 1,365 | 1,933 |
Provision for Loan Losses | 884 | 1,495 | 2,882 | 3,754 |
Balance at End of Period | 31,400 | 30,211 | 31,400 | 30,211 |
Commercial Business | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 22,514 | 20,472 | 22,382 | 22,064 |
Charge-offs | (1,497) | (328) | (1,940) | (3,698) |
Recoveries | 8 | 993 | 834 | 1,352 |
Provision for Loan Losses | 210 | 707 | (41) | 2,126 |
Balance at End of Period | 21,235 | 21,844 | 21,235 | 21,844 |
Commercial Business | Commercial and Industrial | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 10,651 | 9,970 | 10,968 | 9,972 |
Charge-offs | (3) | (240) | (361) | (2,810) |
Recoveries | 4 | 993 | 679 | 1,352 |
Provision for Loan Losses | (772) | 182 | (1,406) | 2,391 |
Balance at End of Period | 9,880 | 10,905 | 9,880 | 10,905 |
Commercial Business | Owner-occupied Commercial Real Estate | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 4,154 | 3,578 | 3,661 | 4,370 |
Charge-offs | (1,494) | (88) | (1,579) | (538) |
Recoveries | 4 | 0 | 155 | 0 |
Provision for Loan Losses | 1,397 | 222 | 1,824 | (120) |
Balance at End of Period | 4,061 | 3,712 | 4,061 | 3,712 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 7,709 | 6,924 | 7,753 | 7,722 |
Charge-offs | 0 | 0 | 0 | (350) |
Recoveries | 0 | 0 | 0 | 0 |
Provision for Loan Losses | (415) | 303 | (459) | (145) |
Balance at End of Period | 7,294 | 7,227 | 7,294 | 7,227 |
One-to-four Family Residential | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 1,073 | 950 | 1,015 | 1,157 |
Charge-offs | (15) | 0 | (15) | 0 |
Recoveries | 0 | 0 | 1 | 2 |
Provision for Loan Losses | (21) | 26 | 36 | (183) |
Balance at End of Period | 1,037 | 976 | 1,037 | 976 |
Real Estate Construction and Land Development | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 2,487 | 2,031 | 2,156 | 1,871 |
Charge-offs | (556) | 0 | (556) | (154) |
Recoveries | 191 | 0 | 201 | 83 |
Provision for Loan Losses | 66 | 101 | 387 | 332 |
Balance at End of Period | 2,188 | 2,132 | 2,188 | 2,132 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 821 | 754 | 797 | 1,058 |
Charge-offs | (556) | 0 | (556) | (100) |
Recoveries | 191 | 0 | 201 | 83 |
Provision for Loan Losses | 337 | 96 | 351 | (191) |
Balance at End of Period | 793 | 850 | 793 | 850 |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 1,666 | 1,277 | 1,359 | 813 |
Charge-offs | 0 | 0 | 0 | (54) |
Recoveries | 0 | 0 | 0 | 0 |
Provision for Loan Losses | (271) | 5 | 36 | 523 |
Balance at End of Period | 1,395 | 1,282 | 1,395 | 1,282 |
Consumer | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 5,710 | 4,816 | 5,024 | 4,309 |
Charge-offs | (478) | (572) | (1,419) | (1,370) |
Recoveries | 112 | 197 | 329 | 496 |
Provision for Loan Losses | 453 | 665 | 1,863 | 1,671 |
Balance at End of Period | 5,797 | 5,106 | 5,797 | 5,106 |
Unallocated | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 967 | 157 | 506 | 345 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Provision for Loan Losses | 176 | (4) | 637 | (192) |
Balance at End of Period | $ 1,143 | $ 153 | $ 1,143 | $ 153 |
Allowance for Loan Losses - Act
Allowance for Loan Losses - Activity in Allowance for Losses Disaggregated on Basis of Impairment (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | $ 3,111 | $ 2,734 | ||||
Loans Collectively Evaluated for Impairment | 24,113 | 21,791 | ||||
PCI Loans | 4,176 | 6,558 | ||||
Total Allowance for Loan Losses | 31,400 | $ 32,751 | 31,083 | $ 30,211 | $ 28,426 | $ 29,746 |
Commercial Business | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 2,916 | 2,507 | ||||
Loans Collectively Evaluated for Impairment | 15,412 | 15,024 | ||||
PCI Loans | 2,907 | 4,851 | ||||
Total Allowance for Loan Losses | 21,235 | 22,514 | 22,382 | 21,844 | 20,472 | 22,064 |
Commercial Business | Commercial and Industrial | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 1,254 | 1,199 | ||||
Loans Collectively Evaluated for Impairment | 7,589 | 8,048 | ||||
PCI Loans | 1,037 | 1,721 | ||||
Total Allowance for Loan Losses | 9,880 | 10,651 | 10,968 | 10,905 | 9,970 | 9,972 |
Commercial Business | Owner-occupied Commercial Real Estate | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 767 | 511 | ||||
Loans Collectively Evaluated for Impairment | 2,434 | 1,834 | ||||
PCI Loans | 860 | 1,316 | ||||
Total Allowance for Loan Losses | 4,061 | 4,154 | 3,661 | 3,712 | 3,578 | 4,370 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 895 | 797 | ||||
Loans Collectively Evaluated for Impairment | 5,389 | 5,142 | ||||
PCI Loans | 1,010 | 1,814 | ||||
Total Allowance for Loan Losses | 7,294 | 7,709 | 7,753 | 7,227 | 6,924 | 7,722 |
One-to-four Family Residential | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 96 | 97 | ||||
Loans Collectively Evaluated for Impairment | 740 | 643 | ||||
PCI Loans | 201 | 275 | ||||
Total Allowance for Loan Losses | 1,037 | 1,073 | 1,015 | 976 | 950 | 1,157 |
Real Estate Construction and Land Development | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 39 | 66 | ||||
Loans Collectively Evaluated for Impairment | 1,827 | 1,706 | ||||
PCI Loans | 322 | 384 | ||||
Total Allowance for Loan Losses | 2,188 | 2,487 | 2,156 | 2,132 | 2,031 | 1,871 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 0 | 6 | ||||
Loans Collectively Evaluated for Impairment | 568 | 538 | ||||
PCI Loans | 225 | 253 | ||||
Total Allowance for Loan Losses | 793 | 821 | 797 | 850 | 754 | 1,058 |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 39 | 60 | ||||
Loans Collectively Evaluated for Impairment | 1,259 | 1,168 | ||||
PCI Loans | 97 | 131 | ||||
Total Allowance for Loan Losses | 1,395 | 1,666 | 1,359 | 1,282 | 1,277 | 813 |
Consumer | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 60 | 64 | ||||
Loans Collectively Evaluated for Impairment | 4,991 | 3,912 | ||||
PCI Loans | 746 | 1,048 | ||||
Total Allowance for Loan Losses | 5,797 | 5,710 | 5,024 | 5,106 | 4,816 | 4,309 |
Unallocated | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 0 | 0 | ||||
Loans Collectively Evaluated for Impairment | 1,143 | 506 | ||||
PCI Loans | 0 | 0 | ||||
Total Allowance for Loan Losses | $ 1,143 | $ 967 | $ 506 | $ 153 | $ 157 | $ 345 |
Allowance for Loan Losses - Rec
Allowance for Loan Losses - Recorded Investment Disaggregated on Basis of Impairment (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | $ 30,996 | $ 33,198 |
Loans Collectively Evaluated for Impairment | 2,719,813 | 2,540,751 |
PCI Loans | 43,696 | 64,448 |
Total Gross Loans Receivable | 2,794,505 | 2,638,397 |
Commercial Business | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 28,253 | 28,417 |
Loans Collectively Evaluated for Impairment | 2,139,204 | 1,999,621 |
PCI Loans | 30,551 | 48,650 |
Total Gross Loans Receivable | 2,198,008 | 2,076,688 |
Commercial Business | Commercial and Industrial | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 11,712 | 12,375 |
Loans Collectively Evaluated for Impairment | 648,869 | 616,081 |
PCI Loans | 5,001 | 9,317 |
Total Gross Loans Receivable | 665,582 | 637,773 |
Commercial Business | Owner-occupied Commercial Real Estate | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 5,758 | 4,724 |
Loans Collectively Evaluated for Impairment | 583,988 | 537,338 |
PCI Loans | 12,492 | 15,973 |
Total Gross Loans Receivable | 602,238 | 558,035 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 10,783 | 11,318 |
Loans Collectively Evaluated for Impairment | 906,347 | 846,202 |
PCI Loans | 13,058 | 23,360 |
Total Gross Loans Receivable | 930,188 | 880,880 |
One-to-four Family Residential | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 304 | 321 |
Loans Collectively Evaluated for Impairment | 77,135 | 72,165 |
PCI Loans | 3,983 | 4,905 |
Total Gross Loans Receivable | 81,422 | 77,391 |
Real Estate Construction and Land Development | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 2,005 | 4,150 |
Loans Collectively Evaluated for Impairment | 168,394 | 150,417 |
PCI Loans | 4,033 | 4,611 |
Total Gross Loans Receivable | 174,432 | 159,178 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 1,347 | 3,071 |
Loans Collectively Evaluated for Impairment | 48,355 | 45,220 |
PCI Loans | 1,749 | 2,123 |
Total Gross Loans Receivable | 51,451 | 50,414 |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 658 | 1,079 |
Loans Collectively Evaluated for Impairment | 120,039 | 105,197 |
PCI Loans | 2,284 | 2,488 |
Total Gross Loans Receivable | 122,981 | 108,764 |
Consumer | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 434 | 310 |
Loans Collectively Evaluated for Impairment | 335,080 | 318,548 |
PCI Loans | 5,129 | 6,282 |
Total Gross Loans Receivable | $ 340,643 | $ 325,140 |
Other Real Estate Owned (Detail
Other Real Estate Owned (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Loans and Leases Receivable Disclosure [Line Items] | ||||
Mortgage loans in process of foreclosure | $ 657 | $ 657 | ||
Changes in other real estate owned | ||||
Balance at the beginning of the period | 786 | $ 1,560 | 754 | $ 2,019 |
Additions | 0 | 25 | 32 | 677 |
Proceeds from dispositions | (374) | (1,716) | (374) | (2,486) |
Gain on sales, net | 111 | 131 | 111 | 173 |
Valuation adjustment | 0 | 0 | 0 | (383) |
Balance at the end of the period | 523 | $ 0 | 523 | $ 0 |
Residential Real Estate Properties | ||||
Changes in other real estate owned | ||||
Balance at the end of the period | $ 523 | $ 523 |
Goodwill and Other Intangible59
Goodwill and Other Intangible Assets - Textual (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill additions | $ 0 | $ 0 | $ 0 | $ 0 |
Goodwill impairment charges | $ 0 | $ 0 | $ 0 | $ 0 |
Core Deposits | Washington Banking | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Useful life | 10 years | |||
Core Deposits | Valley | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Useful life | 10 years | |||
Core Deposits | NCB | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Useful life | 5 years | |||
Core Deposits | Cowlitz | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Useful life | 9 years |
Goodwill and Other Intangible60
Goodwill and Other Intangible Assets - Change in Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Finite-lived Intangible Assets [Roll Forward] | ||||
Balance at the beginning of the period | $ 6,727 | $ 8,091 | $ 7,374 | $ 8,789 |
Less: Amortization | 319 | 359 | 966 | 1,057 |
Balance at the end of the period | $ 6,408 | $ 7,732 | $ 6,408 | $ 7,732 |
Other Borrowings - Textual (Det
Other Borrowings - Textual (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Federal Home Loan Bank, Advances [Line Items] | ||
Credit facility with the FHLB | $ 662,400,000 | |
FHLB advances outstanding | 117,400,000 | $ 79,600,000 |
Maximum federal funds purchases | 90,000,000 | |
Federal funds purchased | 0 | 0 |
Federal Reserve Bank Advances | ||
Federal Home Loan Bank, Advances [Line Items] | ||
Credit facility with the Federal Reserve Bank of San Francisco | 50,600,000 | |
Borrowings outstanding | $ 0 | $ 0 |
Minimum | ||
Federal Home Loan Bank, Advances [Line Items] | ||
Unencumbered collateral in amount equal to varying percentages | 100.00% | |
Maximum | ||
Federal Home Loan Bank, Advances [Line Items] | ||
Unencumbered collateral in amount equal to varying percentages | 160.00% |
Other Borrowings - Federal Fund
Other Borrowings - Federal Funds Purchased (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Debt Disclosure [Abstract] | ||||
Average balance during the period | $ 111,293 | $ 5,618 | $ 106,553 | $ 11,608 |
Maximum month-end balance during the period | $ 126,200 | $ 17,700 | $ 137,450 | $ 57,300 |
Weighted average rate during the period | 1.53% | 0.57% | 1.09% | 0.54% |
Junior Subordinated Debentures
Junior Subordinated Debentures (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2007 | Dec. 31, 2016 | May 01, 2014 | |
Debt Instrument [Line Items] | |||||||
Issued amount | $ 25,000,000 | ||||||
Debt term | 30 years | ||||||
Adjustable rate of trust preferred securities | 2.89% | 2.89% | |||||
Junior subordinated debentures | $ 19,936,000 | $ 19,936,000 | $ 19,717,000 | ||||
Junior Subordinated Debentures | |||||||
Debt Instrument [Line Items] | |||||||
Weighted average rate | 5.20% | 4.49% | 5.05% | 4.43% | |||
LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 1.56% | ||||||
Washington Banking | |||||||
Debt Instrument [Line Items] | |||||||
Assumed trust preferred securities and junior subordinated debentures, fair value | $ 18,900,000 |
Repurchase Agreements (Details)
Repurchase Agreements (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Disclosure of Repurchase Agreements [Abstract] | ||
Repurchase agreements, maturity period | 1 day | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Repurchase agreement obligations | $ 28,668 | $ 22,104 |
U.S. Treasury and U.S. Government-sponsored agencies | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Repurchase agreement obligations | 0 | 2,944 |
Residential | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Repurchase agreement obligations | 12,336 | 5,191 |
Commercial | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Repurchase agreement obligations | $ 16,332 | $ 13,969 |
Derivative Financial Instrume65
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Prepaid and other assets | ||
Derivative Asset | ||
Estimated Fair Value | $ 3,300 | $ 2,800 |
Accrued expenses and other liabilities | ||
Derivative Liability | ||
Estimated Fair Value | 3,300 | 2,800 |
Interest rate derivatives | Non-hedging interest rate swaps | ||
Derivative Asset | ||
Notional Amounts | 134,295 | 102,709 |
Estimated Fair Value | 74 | 1,099 |
Derivative Liability | ||
Notional Amounts | 134,295 | 102,709 |
Estimated Fair Value | $ 74 | $ 1,099 |
Stockholders' Equity - Reconcil
Stockholders' Equity - Reconciliation of Weighted Average Shares (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net income: | ||||
Net income | $ 10,624 | $ 11,039 | $ 31,768 | $ 29,025 |
Less: Dividends and undistributed earnings allocated to participating securities | (64) | (102) | (228) | (280) |
Net income allocated to common shareholders | $ 10,560 | $ 10,937 | $ 31,540 | $ 28,745 |
Basic: | ||||
Weighted average common shares outstanding (in shares) | 29,929,721 | 29,962,270 | 29,940,276 | 29,968,034 |
Less: Restricted stock awards (in shares) | (146,425) | (277,495) | (192,186) | (292,832) |
Total basic weighted average common shares outstanding (in shares) | 29,783,296 | 29,684,775 | 29,748,090 | 29,675,202 |
Diluted: | ||||
Basic weighted average common shares outstanding (in shares) | 29,783,296 | 29,684,775 | 29,748,090 | 29,675,202 |
Incremental shares from stock options (in shares) | 107,414 | 11,031 | 86,004 | 12,543 |
Total diluted weighted average common shares outstanding (in shares) | 29,890,710 | 29,695,806 | 29,834,094 | 29,687,745 |
Stockholders' Equity - Textual
Stockholders' Equity - Textual (Details) - $ / shares | Oct. 23, 2014 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 |
Stockholders Equity (Textual) [Abstract] | ||||||
Anti-dilutive securities excluded from computation (in shares) | 0 | 0 | 0 | 580 | ||
Shares Related to Withholding Taxes on the Vesting of Restricted Stock | ||||||
Stockholders Equity (Textual) [Abstract] | ||||||
Shares repurchased at an average price | 344 | 5,276 | 27,711 | 29,206 | ||
Withholding taxes average price per share (in usd per share) | $ 25.80 | $ 18.64 | $ 24.61 | $ 17.77 | ||
Eleventh Plan | ||||||
Stockholders Equity (Textual) [Abstract] | ||||||
Outstanding share percent | 5.00% | |||||
Outstanding common shares in the plan | 1,513,000 | |||||
Shares repurchased at an average price | 0 | 38,000 | 0 | 138,000 | 579,996 | |
Withholding taxes average price per share (in usd per share) | $ 0 | $ 17.46 | $ 0 | $ 17.16 | $ 16.76 |
Stockholders' Equity - Dividend
Stockholders' Equity - Dividends (Details) - $ / shares | Jul. 25, 2017 | Apr. 25, 2017 | Jan. 25, 2017 | Oct. 26, 2016 | Jul. 20, 2016 | Apr. 20, 2016 | Jan. 27, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Dividends Payable [Line Items] | |||||||||||
Declared | Jul. 25, 2017 | Apr. 25, 2017 | Jan. 25, 2017 | Oct. 26, 2016 | Jul. 20, 2016 | Apr. 20, 2016 | Jan. 27, 2016 | ||||
Cash Dividend per Share (in usd per share) | $ 0.13 | $ 0.13 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.11 | $ 0.13 | $ 0.12 | $ 0.38 | $ 0.35 |
Record Date | Aug. 10, 2017 | May 10, 2017 | Feb. 9, 2017 | Nov. 8, 2016 | Aug. 4, 2016 | May 5, 2016 | Feb. 10, 2016 | ||||
Paid Date | Aug. 24, 2017 | May 24, 2017 | Feb. 23, 2017 | Nov. 22, 2016 | Aug. 18, 2016 | May 19, 2016 | Feb. 24, 2016 | ||||
Special Dividend | |||||||||||
Dividends Payable [Line Items] | |||||||||||
Declared | Oct. 26, 2016 | ||||||||||
Cash Dividend per Share (in usd per share) | $ 0.25 | ||||||||||
Record Date | Nov. 8, 2016 | ||||||||||
Paid Date | Nov. 22, 2016 |
Stockholders' Equity - Shares R
Stockholders' Equity - Shares Repurchased (Details) - Eleventh Plan - $ / shares | 3 Months Ended | 9 Months Ended | 35 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Repurchased shares | 0 | 38,000 | 0 | 138,000 | 579,996 |
Stock repurchase average share price (in usd per share) | $ 0 | $ 17.46 | $ 0 | $ 17.16 | $ 16.76 |
Accumulated Other Comprehensi70
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Increase (Decrease) in Accumulated Other Comprehensive (Loss) Income [Roll Forward] | ||||
Balance of AOCI at the beginning of period | $ (2,606) | |||
Other comprehensive income (loss) | $ 261 | $ (1,279) | 4,424 | $ 8,505 |
Balance of AOCI at the end of the period | 1,818 | 1,818 | ||
Changes in Fair Value of Available for Sale Securities | ||||
Increase (Decrease) in Accumulated Other Comprehensive (Loss) Income [Roll Forward] | ||||
Balance of AOCI at the beginning of period | 1,557 | 12,343 | (2,606) | 2,559 |
Other comprehensive (loss) income before reclassification | 289 | (1,055) | 4,528 | 9,223 |
Amounts reclassified from AOCI for gain on sale of investment securities available for sale included in net income | (28) | (224) | (104) | (718) |
Other comprehensive income (loss) | 261 | (1,279) | 4,424 | 8,505 |
Balance of AOCI at the end of the period | $ 1,818 | $ 11,064 | $ 1,818 | $ 11,064 |
Stock-Based Compensation - Text
Stock-Based Compensation - Textual (Details) - shares | Jul. 24, 2014 | Sep. 30, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares remain available for future issuances under stock-based compensation plans | 1,073,146 | |
the Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized for issuance | 1,500,000 | |
Stock Options | Award 1 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Expiration period | 5 years | |
Stock Options | Award 2 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
Expiration period | 10 years | |
Restricted Stock Awards | Award 1 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
Restricted Stock Awards | Award 2 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Performance Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Awards, Textual (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Proceeds from exercise of stock options | $ 159,000 | $ 401,000 | ||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | $ 0 | $ 0 | 0 | 0 |
Intrinsic value of options exercised | 156,000 | 99,000 | ||
Proceeds from exercise of stock options | $ 159,000 | $ 401,000 |
Stock-Based Compensation - St73
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Shares | ||
Outstanding at beginning of period (in shares) | 37,495 | 79,408 |
Exercised (in shares) | (12,304) | (27,867) |
Forfeited or expired (in shares) | (1,308) | (4,200) |
Outstanding at end of period (in shares) | 23,883 | 47,341 |
Vested and expected to vest at end of period (in shares) | 23,883 | |
Exercisable at end of period (in shares) | 23,883 | |
Weighted-Average Exercise Price | ||
Outstanding at beginning of period (in usd per share) | $ 13.77 | $ 14.19 |
Exercised (in usd per share) | 12.92 | 14.37 |
Forfeited or expired (in usd per share) | 13.53 | 16.80 |
Outstanding at end of period (in usd per share) | 14.23 | $ 13.85 |
Vested and expected to vest at end of period (in usd per share) | 14.23 | |
Exercisable at end of period (in usd per share) | $ 14.23 | |
Weighted-Average Remaining Contractual Term, Outstanding | 2 years 5 months 12 days | 2 years 9 months 18 days |
Weighted-Average Remaining Contractual Term, Vested and expected to vest | 2 years 5 months 12 days | |
Weighted-Average Remaining Contractual Term, Exercisable | 2 years 5 months 12 days | |
Aggregate Intrinsic Value, Outstanding | $ 365 | $ 194 |
Aggregate Intrinsic Value, Vested and expected to vest | 365 | |
Aggregate Intrinsic Value, Exercisable | $ 365 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock, Textual (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting date fair value | $ 2,700 | $ 2,000 | ||
Restricted Stock Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | $ 292 | $ 494 | 1,100 | 1,400 |
Tax benefit from compensation expense | 102 | $ 173 | 384 | $ 479 |
Unrecognized compensation expense | 1,800 | $ 1,800 | ||
Compensation expense expected to be recognized, weighted average period | 1 year 9 months 10 days | |||
Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | 236 | $ 472 | ||
Tax benefit from compensation expense | 83 | 165 | ||
Unrecognized compensation expense | $ 1,800 | $ 1,800 | ||
Compensation expense expected to be recognized, weighted average period | 2 years 3 months 3 days |
Stock-Based Compensation - Re75
Stock-Based Compensation - Restricted Stock Activity (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Restricted Stock Awards | ||
Shares | ||
Nonvested at beginning of period (in shares) | 261,296 | 264,521 |
Shares | 0 | 119,939 |
Vested (in shares) | (107,202) | (111,357) |
Forfeited (in shares) | (10,418) | (9,216) |
Nonvested at end of period (in shares) | 143,676 | 263,887 |
Weighted-Average Grant Date Fair Value | ||
Nonvested at beginning of period (in usd per share) | $ 16.80 | $ 15.92 |
Granted (in usd per share) | 0 | 17.53 |
Vested (in usd per share) | 16.49 | 15.62 |
Forfeited (in usd per share) | 16.80 | 16.57 |
Nonvested at end of period (in usd per share) | $ 17.02 | $ 16.76 |
Restricted Stock Units | ||
Shares | ||
Nonvested at beginning of period (in shares) | 0 | |
Shares | 92,019 | |
Vested (in shares) | 0 | |
Forfeited (in shares) | (1,812) | |
Nonvested at end of period (in shares) | 90,207 | |
Weighted-Average Grant Date Fair Value | ||
Nonvested at beginning of period (in usd per share) | $ 0 | |
Granted (in usd per share) | 25.29 | |
Vested (in usd per share) | 0 | |
Forfeited (in usd per share) | 25.35 | |
Nonvested at end of period (in usd per share) | $ 25.29 |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair Value Assumptions (Details) - Market-based Restricted Stock Units | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares | shares | 6,089 |
Expected Term in Years | 2 years 10 months 6 days |
Weighted-Average Risk Free Interest Rate | 1.40% |
Expected Volatility (as a percent) | 21.80% |
Expected Dividend Yield (as a percent) | 0.00% |
Weighted-Average Fair Value (in usd per share) | $ / shares | $ 24.39 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Measurement on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | $ 800,060 | $ 794,645 |
Recurring | ||
Fair value measurements of assets on a recurring basis | ||
Total investment securities available for sale | 800,060 | 794,645 |
Derivative assets - interest rate swaps | 3,308 | 2,804 |
Derivative liabilities - interest rate swaps | 3,308 | 2,804 |
Recurring | U.S. Treasury and U.S. Government-sponsored agencies | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 9,403 | 1,569 |
Recurring | Municipal securities | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 252,806 | 237,256 |
Recurring | Residential | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 274,361 | 309,176 |
Recurring | Commercial | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 213,283 | 208,318 |
Recurring | Collateralized loan obligations | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 6,022 | 10,478 |
Recurring | Corporate obligations | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 15,830 | 16,706 |
Recurring | Other securities | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 28,355 | 11,142 |
Recurring | Level 1 | ||
Fair value measurements of assets on a recurring basis | ||
Total investment securities available for sale | 150 | 123 |
Derivative assets - interest rate swaps | 0 | 0 |
Derivative liabilities - interest rate swaps | 0 | 0 |
Recurring | Level 1 | U.S. Treasury and U.S. Government-sponsored agencies | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Municipal securities | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Residential | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Commercial | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Collateralized loan obligations | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Corporate obligations | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Other securities | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 150 | 123 |
Recurring | Level 2 | ||
Fair value measurements of assets on a recurring basis | ||
Total investment securities available for sale | 799,910 | 794,522 |
Derivative assets - interest rate swaps | 3,308 | 2,804 |
Derivative liabilities - interest rate swaps | 3,308 | 2,804 |
Recurring | Level 2 | U.S. Treasury and U.S. Government-sponsored agencies | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 9,403 | 1,569 |
Recurring | Level 2 | Municipal securities | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 252,806 | 237,256 |
Recurring | Level 2 | Residential | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 274,361 | 309,176 |
Recurring | Level 2 | Commercial | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 213,283 | 208,318 |
Recurring | Level 2 | Collateralized loan obligations | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 6,022 | 10,478 |
Recurring | Level 2 | Corporate obligations | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 15,830 | 16,706 |
Recurring | Level 2 | Other securities | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 28,205 | 11,019 |
Recurring | Level 3 | ||
Fair value measurements of assets on a recurring basis | ||
Total investment securities available for sale | 0 | 0 |
Derivative assets - interest rate swaps | 0 | 0 |
Derivative liabilities - interest rate swaps | 0 | 0 |
Recurring | Level 3 | U.S. Treasury and U.S. Government-sponsored agencies | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Municipal securities | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Residential | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Commercial | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Collateralized loan obligations | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Corporate obligations | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Other securities | ||
Fair value measurements of assets on a recurring basis | ||
Investment securities available for sale | $ 0 | $ 0 |
Fair Value Measurements - Textu
Fair Value Measurements - Textual (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | ||||
Fair value assets transfers between level 1 and level 2 transfer amount | $ 0 | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Fai79
Fair Value Measurements - Fair Value Measurement on Nonrecurring Basis (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Level 1 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | $ 0 | $ 0 | $ 0 | ||
Level 2 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | 0 | 0 | ||
Level 3 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 2,772,338 | 2,772,338 | 2,675,811 | ||
Nonrecurring | Commercial Business | Owner-occupied Commercial Real Estate | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 179 | 179 | |||
Nonrecurring | Commercial Business | Owner-occupied Commercial Real Estate | Level 1 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | 0 | |||
Nonrecurring | Commercial Business | Owner-occupied Commercial Real Estate | Level 2 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | 0 | |||
Nonrecurring | Commercial Business | Owner-occupied Commercial Real Estate | Level 3 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 179 | 179 | |||
Nonrecurring | Impaired Loans | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Basis | 354 | 354 | 1,829 | ||
Fair Value | 342 | 342 | 1,634 | ||
Net Losses (Gains) Recorded in Earnings | 0 | $ 34 | 15 | $ (3) | |
Nonrecurring | Impaired Loans | Level 1 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | 0 | 0 | ||
Nonrecurring | Impaired Loans | Level 2 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | 0 | 0 | ||
Nonrecurring | Impaired Loans | Level 3 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 342 | 342 | 1,634 | ||
Nonrecurring | Impaired Loans | Owner-occupied Commercial Real Estate | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Net Losses (Gains) Recorded in Earnings | 8 | ||||
Nonrecurring | Impaired Loans | Commercial Business | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Basis | 354 | 354 | 985 | ||
Fair Value | 342 | 342 | 803 | ||
Net Losses (Gains) Recorded in Earnings | 0 | 47 | 15 | 23 | |
Nonrecurring | Impaired Loans | Commercial Business | Level 1 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | 0 | 0 | ||
Nonrecurring | Impaired Loans | Commercial Business | Level 2 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | 0 | 0 | ||
Nonrecurring | Impaired Loans | Commercial Business | Level 3 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 342 | 342 | 803 | ||
Nonrecurring | Impaired Loans | Commercial Business | Commercial and Industrial | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Basis | 172 | 172 | 205 | ||
Fair Value | 163 | 163 | 200 | ||
Net Losses (Gains) Recorded in Earnings | 0 | 24 | 7 | 25 | |
Nonrecurring | Impaired Loans | Commercial Business | Commercial and Industrial | Level 1 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | 0 | 0 | ||
Nonrecurring | Impaired Loans | Commercial Business | Commercial and Industrial | Level 2 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | 0 | 0 | ||
Nonrecurring | Impaired Loans | Commercial Business | Commercial and Industrial | Level 3 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 163 | 163 | 200 | ||
Nonrecurring | Impaired Loans | Commercial Business | Owner-occupied Commercial Real Estate | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Basis | 182 | $ 182 | 780 | ||
Fair Value | 603 | ||||
Net Losses (Gains) Recorded in Earnings | $ 0 | 23 | (2) | ||
Nonrecurring | Impaired Loans | Commercial Business | Owner-occupied Commercial Real Estate | Level 1 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | ||||
Nonrecurring | Impaired Loans | Commercial Business | Owner-occupied Commercial Real Estate | Level 2 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | ||||
Nonrecurring | Impaired Loans | Commercial Business | Owner-occupied Commercial Real Estate | Level 3 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 603 | ||||
Nonrecurring | Impaired Loans | Real Estate Construction and Land Development | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Basis | 828 | ||||
Fair Value | 822 | ||||
Net Losses (Gains) Recorded in Earnings | (13) | (26) | |||
Nonrecurring | Impaired Loans | Real Estate Construction and Land Development | Level 1 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | ||||
Nonrecurring | Impaired Loans | Real Estate Construction and Land Development | Level 2 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | ||||
Nonrecurring | Impaired Loans | Real Estate Construction and Land Development | Level 3 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 822 | ||||
Nonrecurring | Impaired Loans | Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Basis | 828 | ||||
Fair Value | 822 | ||||
Net Losses (Gains) Recorded in Earnings | (13) | (26) | |||
Nonrecurring | Impaired Loans | Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | Level 1 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | ||||
Nonrecurring | Impaired Loans | Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | Level 2 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | ||||
Nonrecurring | Impaired Loans | Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | Level 3 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 822 | ||||
Nonrecurring | Impaired Loans | Consumer | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Basis | 16 | ||||
Fair Value | 9 | ||||
Net Losses (Gains) Recorded in Earnings | $ 0 | $ 0 | |||
Nonrecurring | Impaired Loans | Consumer | Level 1 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | ||||
Nonrecurring | Impaired Loans | Consumer | Level 2 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | 0 | ||||
Nonrecurring | Impaired Loans | Consumer | Level 3 | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Fair Value | $ 9 |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information, Level 3 (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Nonrecurring | Impaired Loans | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans | $ 342 | $ 1,634 |
Level 3 | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans | 2,772,338 | 2,675,811 |
Level 3 | Nonrecurring | Impaired Loans | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans | $ 342 | $ 1,634 |
Valuation Technique(s) | Market approach | Market approach |
Unobservable Input(s) | Adjustment for differences between the comparable sales | Adjustment for differences between the comparable sales |
Level 3 | Nonrecurring | Impaired Loans | Minimum | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Range of Inputs; Weighted Average | (23.80%) | (23.80%) |
Level 3 | Nonrecurring | Impaired Loans | Maximum | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Range of Inputs; Weighted Average | 23.00% | 63.90% |
Level 3 | Nonrecurring | Impaired Loans | Weighted Average | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Range of Inputs; Weighted Average | (2.80%) | 20.40% |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Value and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Level 1 | ||
Financial Assets: | ||
Cash and cash equivalents | $ 111,258 | $ 103,745 |
Investment securities available for sale | 150 | 123 |
Loans held for sale | 0 | 0 |
Total loans receivable, net | 0 | 0 |
Accrued interest receivable | 3 | 3 |
Derivative assets - interest rate swaps | 0 | 0 |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 2,925,637 | 2,872,247 |
Certificate of deposit accounts | 0 | 0 |
Federal Home Loan Bank advances | 0 | 0 |
Securities sold under agreement to repurchase | 28,668 | 22,104 |
Junior subordinated debentures | 0 | 0 |
Accrued interest payable | 42 | 44 |
Derivative liabilities - interest rate swaps | 0 | 0 |
Level 2 | ||
Financial Assets: | ||
Cash and cash equivalents | 0 | 0 |
Investment securities available for sale | 799,910 | 794,522 |
Loans held for sale | 5,553 | 11,988 |
Total loans receivable, net | 0 | 0 |
Accrued interest receivable | 3,770 | 3,472 |
Derivative assets - interest rate swaps | 3,308 | 2,804 |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 0 | 0 |
Certificate of deposit accounts | 394,164 | 357,536 |
Federal Home Loan Bank advances | 117,400 | 79,600 |
Securities sold under agreement to repurchase | 0 | 0 |
Junior subordinated debentures | 0 | 0 |
Accrued interest payable | 73 | 142 |
Derivative liabilities - interest rate swaps | 3,308 | 2,804 |
Level 3 | ||
Financial Assets: | ||
Cash and cash equivalents | 0 | 0 |
Investment securities available for sale | 0 | 0 |
Loans held for sale | 0 | 0 |
Total loans receivable, net | 2,772,338 | 2,675,811 |
Accrued interest receivable | 8,522 | 7,450 |
Derivative assets - interest rate swaps | 0 | 0 |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 0 | 0 |
Certificate of deposit accounts | 0 | 0 |
Federal Home Loan Bank advances | 0 | 0 |
Securities sold under agreement to repurchase | 0 | 0 |
Junior subordinated debentures | 15,250 | 15,000 |
Accrued interest payable | 33 | 29 |
Derivative liabilities - interest rate swaps | 0 | 0 |
Carrying Value | ||
Financial Assets: | ||
Cash and cash equivalents | 111,258 | 103,745 |
Investment securities available for sale | 800,060 | 794,645 |
Federal Home Loan Bank stock | 9,343 | 7,564 |
Loans held for sale | 5,368 | 11,662 |
Total loans receivable, net | 2,766,113 | 2,609,666 |
Accrued interest receivable | 12,295 | 10,925 |
Derivative assets - interest rate swaps | 3,308 | 2,804 |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 2,925,637 | 2,872,247 |
Certificate of deposit accounts | 395,181 | 357,401 |
Federal Home Loan Bank advances | 117,400 | 79,600 |
Securities sold under agreement to repurchase | 28,668 | 22,104 |
Junior subordinated debentures | 19,936 | 19,717 |
Accrued interest payable | 148 | 215 |
Derivative liabilities - interest rate swaps | 3,308 | 2,804 |
Fair Value | ||
Financial Assets: | ||
Cash and cash equivalents | 111,258 | 103,745 |
Investment securities available for sale | 800,060 | 794,645 |
Loans held for sale | 5,553 | 11,988 |
Total loans receivable, net | 2,772,338 | 2,675,811 |
Accrued interest receivable | 12,295 | 10,925 |
Derivative assets - interest rate swaps | 3,308 | 2,804 |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 2,925,637 | 2,872,247 |
Certificate of deposit accounts | 394,164 | 357,536 |
Federal Home Loan Bank advances | 117,400 | 79,600 |
Securities sold under agreement to repurchase | 28,668 | 22,104 |
Junior subordinated debentures | 15,250 | 15,000 |
Accrued interest payable | 148 | 215 |
Derivative liabilities - interest rate swaps | $ 3,308 | $ 2,804 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Sep. 30, 2017USD ($) |
B&O Tax Audit | |
Loss Contingencies [Line Items] | |
Estimate of possible loss | $ 1.6 |
Definitive Agreement (Details)
Definitive Agreement (Details) - Puget Sound $ / shares in Units, $ in Millions | Jul. 26, 2017USD ($)$ / sharesshares |
Business Acquisition [Line Items] | |
Amount of stock transaction in the acquisition | $ | $ 126.1 |
Basis of stock amount, closing price per share (in usd per share) | $ / shares | $ 27.15 |
Number of shares to be received for each share of common stock | shares | 1.320 |