Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 31, 2018 | |
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 | Jun. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 36,868,578 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
ASSETS | ||
Cash on hand and in banks | $ 94,210 | $ 78,293 |
Interest earning deposits | 35,733 | 24,722 |
Cash and cash equivalents | 129,943 | 103,015 |
Investment securities available for sale, at fair value | 873,670 | 810,530 |
Loans held for sale | 3,598 | 2,288 |
Loans receivable, net | 3,328,288 | 2,849,071 |
Allowance for loan losses | (33,972) | (32,086) |
Total loans receivable, net | 3,294,316 | 2,816,985 |
Other real estate owned | 434 | 0 |
Premises and equipment, net | 75,364 | 60,325 |
Federal Home Loan Bank stock, at cost | 8,616 | 8,347 |
Bank owned life insurance | 82,031 | 75,091 |
Accrued interest receivable | 13,482 | 12,244 |
Prepaid expenses and other assets | 104,718 | 99,328 |
Other intangible assets, net | 15,767 | 6,088 |
Goodwill | 187,549 | 119,029 |
Total assets | 4,789,488 | 4,113,270 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Deposits | 3,968,935 | 3,393,060 |
Federal Home Loan Bank advances | 75,500 | 92,500 |
Junior subordinated debentures | 20,156 | 20,009 |
Securities sold under agreement to repurchase | 22,168 | 31,821 |
Accrued expenses and other liabilities | 63,206 | 67,575 |
Total liabilities | 4,149,965 | 3,604,965 |
Stockholders’ equity: | ||
Preferred stock, no par value, 2,500,000 shares authorized; no shares issued and outstanding at June 30, 2018 and December 31, 2017 | 0 | 0 |
Common stock, no par value, 50,000,000 shares authorized; 34,021,094 and 29,927,746 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 491,026 | 360,590 |
Retained earnings | 159,803 | 149,013 |
Accumulated other comprehensive loss, net | (11,306) | (1,298) |
Total stockholders’ equity | 639,523 | 508,305 |
Total liabilities and stockholders’ equity | $ 4,789,488 | $ 4,113,270 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Financial Condition (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, no par value (in usd per share) | ||
Preferred stock, shares authorized (in shares) | 2,500,000 | 2,500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, no par value (in usd per share) | ||
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 34,021,094 | 29,927,746 |
Common stock, shares outstanding (in shares) | 34,021,094 | 29,927,746 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
INTEREST INCOME | ||||
Interest and fees on loans | $ 41,141 | $ 31,500 | $ 79,300 | $ 61,985 |
Taxable interest on investment securities | 4,068 | 3,141 | 7,597 | 6,190 |
Nontaxable interest on investment securities | 1,220 | 1,304 | 2,561 | 2,572 |
Interest on other interest earning assets | 242 | 96 | 460 | 143 |
Total interest income | 46,671 | 36,041 | 89,918 | 70,890 |
INTEREST EXPENSE | ||||
Deposits | 2,195 | 1,407 | 4,155 | 2,673 |
Junior subordinated debentures | 315 | 249 | 598 | 487 |
Other borrowings | 418 | 251 | 585 | 464 |
Total interest expense | 2,928 | 1,907 | 5,338 | 3,624 |
Net interest income | 43,743 | 34,134 | 84,580 | 67,266 |
Provision for loan losses | 1,750 | 1,131 | 2,902 | 1,998 |
Net interest income after provision for loan losses | 41,993 | 33,003 | 81,678 | 65,268 |
NONINTEREST INCOME | ||||
Service charges and other fees | 4,695 | 4,426 | 9,238 | 8,639 |
Gain on sale of investment securities, net | 18 | 117 | 53 | 117 |
Gain on sale of loans, net | 706 | 4,138 | 1,580 | 5,333 |
Interest rate swap fees | 309 | 282 | 360 | 415 |
Other income | 1,845 | 1,746 | 3,890 | 3,568 |
Total noninterest income | 7,573 | 10,709 | 15,121 | 18,072 |
NONINTEREST EXPENSE | ||||
Compensation and employee benefits | 19,321 | 16,272 | 40,688 | 32,296 |
Occupancy and equipment | 4,810 | 3,818 | 9,437 | 7,628 |
Data processing | 2,507 | 2,002 | 5,112 | 3,917 |
Marketing | 823 | 805 | 1,631 | 1,612 |
Professional services | 3,529 | 1,053 | 6,366 | 2,062 |
State and local taxes | 716 | 639 | 1,404 | 1,188 |
Federal deposit insurance premium | 375 | 357 | 730 | 657 |
Other real estate owned, net | 0 | 21 | 0 | 52 |
Amortization of intangible assets | 796 | 323 | 1,591 | 647 |
Other expense | 2,829 | 2,519 | 5,494 | 4,973 |
Total noninterest expense | 35,706 | 27,809 | 72,453 | 55,032 |
Income before income taxes | 13,860 | 15,903 | 24,346 | 28,308 |
Income tax expense | 2,003 | 4,075 | 3,402 | 7,164 |
Net income | $ 11,857 | $ 11,828 | $ 20,944 | $ 21,144 |
Basic earnings per common share (in usd per share) | $ 0.35 | $ 0.40 | $ 0.62 | $ 0.71 |
Diluted earnings per common share (in usd per share) | 0.35 | 0.40 | 0.62 | 0.71 |
Dividends declared per common share (in usd per share) | $ 0.15 | $ 0.13 | $ 0.3 | $ 0.25 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 11,857 | $ 11,828 | $ 20,944 | $ 21,144 |
Change in fair value of investment securities available for sale, net of tax of $(630), $1,491, $(2,638) and $2,285, respectively | (2,358) | 2,766 | (9,874) | 4,239 |
Reclassification adjustment for net gain from sale of investment securities available for sale included in income, net of tax of $(4), $(41), $(12) and $(41), respectively | (14) | (76) | (41) | (76) |
Other comprehensive (loss) income | (2,372) | 2,690 | (9,915) | 4,163 |
Comprehensive income | $ 9,485 | $ 14,518 | $ 11,029 | $ 25,307 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Change in fair value of securities available for sale, tax | $ (630) | $ 1,491 | $ (2,638) | $ 2,285 |
Reclassification adjustment of net gain from sale of investment securities included in income, tax | $ (4) | $ (41) | $ (12) | $ (41) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common stock | Retained earnings | Accumulated other comprehensive income (loss), net |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
ASU 2016-01 implementation | $ 0 | |||
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 stock awards forfeited, shares | (7,000) | |||
Restricted stock awards forfeited | $ 0 | |||
Exercise of stock options (including excess tax benefits from nonqualified stock options), shares | 8,372 | 8,000 | ||
Exercise of stock options | $ 109 | $ 109 | ||
Stock-based compensation expense | 1,040 | $ 1,040 | ||
Common stock repurchased, shares | (28,000) | |||
Common stock repurchased | (674) | $ (674) | ||
Net income | 21,144 | 21,144 | ||
Other comprehensive income, net of tax | 4,163 | 4,163 | ||
Common stock issued in business combination | 0 | |||
Cash dividends declared on common stock | (7,497) | (7,497) | ||
Ending balance, shares at Jun. 30, 2017 | 29,928,000 | |||
Ending balance at Jun. 30, 2017 | 500,048 | $ 359,535 | 138,956 | 1,557 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
ASU 2016-01 implementation | 0 | |||
Beginning balance at Mar. 31, 2017 | (1,133) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 11,828 | |||
Other comprehensive income, net of tax | 2,690 | 2,690 | ||
Ending balance, shares at Jun. 30, 2017 | 29,928,000 | |||
Ending balance at Jun. 30, 2017 | 500,048 | $ 359,535 | 138,956 | 1,557 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
ASU 2016-01 implementation | 0 | 93 | (93) | |
Beginning balance, shares at Dec. 31, 2017 | 29,928,000 | |||
Beginning balance at Dec. 31, 2017 | 508,305 | $ 360,590 | 149,013 | (1,298) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Restricted stock units vested, net of forfeitures of restricted stock awards, shares | 30,000 | |||
Restricted stock units vested, net of forfeitures of restricted stock awards | $ 0 | |||
Exercise of stock options (including excess tax benefits from nonqualified stock options), shares | 4,042 | 3,000 | ||
Exercise of stock options | $ 47 | $ 47 | ||
Stock-based compensation expense | 1,307 | $ 1,307 | ||
Common stock repurchased, shares | (52,000) | |||
Common stock repurchased | (1,688) | $ (1,688) | ||
Net income | 20,944 | 20,944 | ||
Other comprehensive income, net of tax | (9,915) | (9,915) | ||
Common stock issued in business combination, shares | 4,112,000 | |||
Common stock issued in business combination | 130,770 | $ 130,770 | ||
Cash dividends declared on common stock | (10,247) | (10,247) | ||
Ending balance, shares at Jun. 30, 2018 | 34,021,000 | |||
Ending balance at Jun. 30, 2018 | 639,523 | $ 491,026 | 159,803 | (11,306) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
ASU 2016-01 implementation | 0 | |||
Beginning balance at Mar. 31, 2018 | (8,934) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 11,857 | |||
Other comprehensive income, net of tax | (2,372) | (2,372) | ||
Ending balance, shares at Jun. 30, 2018 | 34,021,000 | |||
Ending balance at Jun. 30, 2018 | $ 639,523 | $ 491,026 | $ 159,803 | $ (11,306) |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares | Apr. 25, 2018 | Jan. 24, 2018 | Oct. 25, 2017 | Jul. 25, 2017 | Apr. 25, 2017 | Jan. 25, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Statement of Stockholders' Equity [Abstract] | ||||||||||
Cash dividends declared on common stock (in usd per share) | $ 0.15 | $ 0.15 | $ 0.13 | $ 0.13 | $ 0.13 | $ 0.12 | $ 0.15 | $ 0.13 | $ 0.3 | $ 0.25 |
Condensed Consolidated Stateme9
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 20,944 | $ 21,144 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 5,140 | 5,459 |
Changes in net deferred loan costs, net of amortization | (254) | (509) |
Provision for loan losses | 2,902 | 1,998 |
Net change in accrued interest receivable, prepaid expenses and other assets, accrued expenses and other liabilities | 419 | 3,482 |
Stock-based compensation expense | 1,307 | 1,040 |
Amortization of intangible assets | 1,591 | 647 |
Origination of loans held for sale | (40,048) | (54,449) |
Proceeds from sale of loans | 39,962 | 71,436 |
Earnings on bank owned life insurance | (666) | (747) |
Gain on sale of loans, net | (1,580) | (5,333) |
Gain on sale of investment securities, net | (53) | (117) |
Gain on sale of assets held for sale | 0 | (53) |
Impairment of assets held for sale | 75 | 0 |
Loss on sale or write-off of furniture, equipment and leasehold improvements | 0 | 12 |
Net cash provided by operating activities | 29,739 | 44,010 |
Cash flows from investing activities: | ||
Loans originated, net of principal payments | (96,127) | (135,709) |
Maturities, calls and payments of investment securities available for sale | 41,436 | 52,461 |
Purchase of investment securities available for sale | (147,360) | (57,972) |
Purchase of premises and equipment | (16,659) | (1,382) |
Proceeds from sales of other loans | 4,532 | 21,319 |
Proceeds from sales of investment securities available for sale | 107,579 | 15,032 |
Proceeds from sale of assets held for sale | 0 | 265 |
Proceeds from redemption of Federal Home Loan Bank stock | 22,138 | 16,456 |
Purchases of Federal Home Loan Bank stock | (21,784) | (17,975) |
Proceeds from sale of premises and equipment | 21 | 0 |
Capital contribution to low-income housing tax credit partnership | (8,169) | (7) |
Net cash received from acquisitions | 80,133 | 0 |
Net cash used in investing activities | (34,260) | (107,512) |
Cash flows from financing activities: | ||
Net increase in deposits | 69,990 | 61,602 |
Federal Home Loan Bank advances | 536,450 | 442,700 |
Repayments of Federal Home Loan Bank advances | (553,450) | (411,400) |
Common stock cash dividends paid | (10,247) | (7,497) |
Net decrease in securities sold under agreement to repurchase | (9,653) | (849) |
Proceeds from exercise of stock options | 47 | 109 |
Repurchase of common stock | (1,688) | (674) |
Net cash provided by financing activities | 31,449 | 83,991 |
Net increase in cash and cash equivalents | 26,928 | 20,489 |
Cash and cash equivalents at beginning of period | 103,015 | 103,745 |
Cash and cash equivalents at end of period | 129,943 | 124,234 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 5,302 | 3,688 |
Cash paid for income taxes | 2,724 | 1,007 |
Supplemental non-cash disclosures of cash flow information: | ||
Transfers of loans receivable to other real estate owned | 434 | 32 |
Transfers of loans receivable to loans held for sale | 0 | 5,779 |
Transfers of properties held for sale recorded in premises and equipment, net to prepaid expenses and other assets | 221 | 2,687 |
Purchases of investment securities available for sale not settled | 0 | 2,268 |
Business Combination: | ||
Common stock issued for business combinations | 130,770 | 0 |
Assets acquired (liabilities assumed) in acquisitions: | ||
Investment securities available for sale | 80,353 | 0 |
Loans receivable | 388,462 | 0 |
Premises and equipment | 732 | 0 |
Federal Home Loan Bank stock | 623 | 0 |
Accrued interest receivable | 1,448 | 0 |
Bank owned life insurance | 6,264 | 0 |
Prepaid expenses and other assets | 1,354 | 0 |
Other intangible assets | 11,270 | 0 |
Deposits | (505,885) | 0 |
Accrued expenses and other liabilities | $ (2,504) | $ 0 |
Description of Business, Basis
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2018 | |
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 Federal Deposit Insurance Corporation ("FDIC"). The Bank is headquartered in Olympia, Washington and conducts business from its 59 branch offices as of June 30, 2018 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 January 16, 2018, the Company completed the acquisition of Puget Sound Bancorp, Inc. (“Puget Sound”), the holding company for Puget Sound Bank, both of Bellevue, Washington (“Puget Sound Merger”). See Note (2) Business Combination for additional information on the merger. On March 8, 2018, the Company entered into a definitive agreement to acquire Premier Commercial Bancorp, ("Premier Commercial") and its wholly-owned bank subsidiary, Premier Community Bank, both of Hillsboro, Oregon (the "Premier Merger"). The Premier Merger was completed on July 2, 2018. See Note (17) Subsequent Event for additional information on the merger. (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, 2017 (“ 2017 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 six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 . 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 2017 Annual Form 10-K. There have not been any material changes in the Company's significant accounting policies from those contained in the 2017 Annual Form 10-K, except for the accounting policy relating to revenue from contracts with customers adopted January 1, 2018, as discussed below. Revenue from Contracts with Customers Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, (“ASC 606”), as amended, was adopted by the Company on January 1, 2018. ASC 606 applies to all contracts with customers to provide goods or services in the ordinary course of business, except for contracts that are specifically excluded from its scope. The Company's revenues are primarily composed of interest income on financial instruments, such as loans and investment securities, which are excluded from the scope of ASC 606. Descriptions of our revenue-generating activities that are within the scope ASC 606, which are presented in Service Charges and Other Fees and Other Income on the Company’s Condensed Consolidated Statement of Income, are as follows: • Service Charges on Deposit Accounts: The Company earns fees from its deposit customers from a variety of deposit products and services. Non-transaction based fees such as account maintenance fees and monthly statement fees are considered to be provided to the customer under a day-to-day contract with ongoing renewals. Revenues for these non-transaction fees are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Transaction-based fees such as non-sufficient fund charges, stop payment charges and wire fees are recognized at the time the transaction is executed as the contract duration does not extend beyond the service performed. • Wealth Management and Trust Services: The Company earns fees from contracts with customers for fiduciary and brokerage activities. Revenues are generally recognized on a monthly basis and are generally based on a percentage of the customer’s assets under management or based on investment or insurance solutions that are implemented for the customer. • Merchant Processing Services and Debit and Credit Card Fees: The Company earns fees from cardholder transactions conducted through third party payment network providers which consist of (i) interchange fees earned from the payment network as a debit card issuer, (ii) referral fee income, and (iii) ongoing merchant fees earned for referring customers to the payment processing provider. These fees are recognized when the transaction occurs, but may settle on a daily or monthly basis. (d) Recently Issued Accounting Pronouncements FASB ASU 2014-09 , Revenue from Contracts with Customers , (as amended by FASB ASU 2015-14; FASB ASU 2016-08; FASB ASU 2016-10 and FASB ASU 2016-12), was issued in May 2014. Under this Accounting Standard Update ("ASU" or "Update"), the Financial Accounting Standards Board ("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 Company adopted the revenue recognition guidance, as amended, on January 1, 2018 using the modified retrospective approach. A significant amount of the Company’s revenues are derived from interest income on financial assets, which are excluded from the scope of the amended guidance. With respect to noninterest income and related disclosures, the Company has identified and evaluated the revenue streams and underlying revenue contracts within the scope of the guidance. The Company did not identify any significant changes in the timing of revenue recognition when considering the amended accounting guidance. The adoption of the Update did not have a material impact on the Company's Condensed Consolidated Financial Statements, but the adoption did change certain disclosure requirements as described in Significant Accounting Policies above. 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 Company adopted this Update effective January 1, 2018 using the cumulative catch-up transition method. This change resulted in a cumulative adjustment of $93,000 from accumulated other comprehensive loss, net to retained earnings for the unrealized gain related to the Company's equity security. The Company's processes and procedures utilized to estimate the fair value of loans receivable and certificate of deposit accounts for disclosure requirements were additionally changed due to adoption of this Update. Previously, the Company valued these items using an entry price notion. This ASU emphasized that these instruments be measured using the exit price notion; accordingly, the Company refined its calculation as part of adopting this Update. Prior period information has not been updated to conform with the new guidance. See the Condensed Consolidated Statements of Stockholders' Equity and Note (14) Fair Value Measurements. 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 developed its methodology to estimate the right-of use assets and lease liabilities. The Company anticipates electing an exclusion accounting policy for lease assets and lease liabilities for leases with a term of twelve months or less. The Company was committed to $13.7 million of minimum lease payments under noncancelable operating lease agreements at June 30, 2018. The Company does not expect the adoption of this Update will have a significant impact to its Condensed Consolidated Financial Statements. 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 ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality , for 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 has begun 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 selected a vendor to assist the Company in the adoption and has completed the implementation discovery sessions. The CECL steering committee is in the process of selecting appropriate methodologies and refining key data points in an effort to complete a mock CECL model by fourth quarter 2018. 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 was effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and must be applied using a retrospective transitional method to each period presented. The Company adopted this Update on January 1, 2018. The adoption did not have a significant impact on its Condensed Consolidated Financial Statements as cash proceeds received from the settlement of bank-owned life insurance policies and cash payments for premiums on bank-owned life insurance policies were previously classified as cash inflows and outflows, respectively, from investing activities in the Condensed Consolidated Statements of Cash Flows. 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 Update is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company adopted this Update in January 2018. The adoption did not have a material impact on its Condensed Consolidated Financial Statements as the Company had been accounting for premiums as prescribed under this guidance. 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 was effective for reporting periods beginning after December 15, 2017. The Company adopted the Update on January 1, 2018. The adoption did not have a material impact on its Condensed Consolidated Financial Statements because no share-based payment award was modified during the six months ended June 30, 2018. The Company will apply this Update prospectively for any subsequent modifications of share-based payment awards. FASB ASU 2018-02 , Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income was issued to address the income tax accounting treatment of the stranded tax effects within other comprehensive income due to the prohibition of backward tracing due to an income tax rate change that was initially recorded in other comprehensive income. This issue came about from the enactment of the Tax Cuts and Jobs Act on December 22, 2017 ("Tax Cuts and Jobs Act") that changed the Company’s income tax rate from 35% to 21%. The Update changed current accounting whereby an entity may elect to reclassify the stranded tax effect from accumulated other comprehensive income to retained earnings. The Update is effective for periods beginning after December 15, 2018 although early adoption is permitted. The Company early adopted ASU 2018-02 effective December 31, 2017 and elected a portfolio policy to reclassify the stranded tax effects of the change in the federal corporate tax rate of the net unrealized gains on our available-for-sale investment securities from accumulated other comprehensive loss, net to retained earnings. FASB ASU 2018-05 , Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 was issued to provide guidance on the income tax accounting implications of the Tax Cuts and Jobs Act, and allows for entities to report provisional amounts for specific income tax effects of the Tax Cuts and Jobs Act for which the accounting under ASC Topic 740 was not yet complete but a reasonable estimate could be determined. A measurement period of one-year is allowed to complete the accounting effects under ASC Topic 740 and revise any previous estimates reported. Any provisional amounts or subsequent adjustments included in an entity’s financial statements during the measurement period should be included in income from continuing operations as an adjustment to tax expense in the reporting period the amounts are determined. The Company adopted this Update with the provisional adjustments as reported in the Consolidated Financial Statements on Form 10-K as of December 31, 2017. As of June 30, 2018, the Company did not incur any adjustments to the provisional recognition. |
Business Combination
Business Combination | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Business Combination | Business Combination On July 26, 2017, the Company, along with the Bank, and Puget Sound Bancorp, Inc. and its wholly owned subsidiary bank, Puget Sound Bank, jointly announced the signing of a definitive agreement. The Puget Sound Merger was effective on January 16, 2018. As of the acquisition date, Puget Sound merged into Heritage and Puget Sound Bank merged into Heritage Bank. The primary reason for the transaction was to create depth in the Company's geographic footprint consistent with its ongoing growth strategy, focused heavily on metro markets, and to achieve operational scale and realize efficiencies of a larger combined organization. Pursuant to the terms of the definitive agreement, all outstanding Puget Sound restricted stock awards became immediately vested prior to the Puget Sound Merger and Puget Sound shareholders received 1.1688 shares of Heritage common stock per share of Puget Sound stock. Heritage issued an aggregate of 4,112,258 shares of its common stock based on the January 12, 2018 closing price of Heritage Common stock of $31.80 for total fair value of common shares issued of $130.8 million and paid cash of $3,000 for fractional shares in the transaction for total consideration paid of $130.8 million . Total consideration includes $851,000 representing 26,741 shares which were forfeited by the Puget Sound shareholders to pay applicable taxes. The Puget Sound Merger resulted in $68.5 million of goodwill. This goodwill is not deductible for tax purposes. The Puget Sound Merger constitutes a business acquisition as defined by FASB ASC 805, Business Combinations. FASB ASC 805 establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired and the liabilities assumed. Heritage was considered the acquirer in this transaction. Accordingly, the preliminary estimates of fair values of the Puget Sound assets, including the identifiable intangible assets, and the assumed liabilities in the Puget Sound Merger were measured and recorded as of January 16, 2018. Fair values on the acquisition date are preliminary and represent management’s best estimates based on available information and facts and circumstances in existence on the acquisition date. Fair values are subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values becomes available. The Company expects to finalize the purchase price allocation by the third quarter of 2018 when the valuation of tax-related matters is complete. The preliminary fair value estimates of the assets acquired and liabilities assumed in the Puget Sound Merger were as follows: Puget Sound Merger (In thousands) Assets Cash and cash equivalents $ 25,889 Interest earning deposits 54,247 Investment securities available for sale 80,353 Loans receivable 388,462 Premises and equipment, net 732 Federal Home Loan Bank stock, at cost 623 Bank owned life insurance 6,264 Accrued interest receivable 1,448 Prepaid expenses and other assets 1,354 Other intangible assets 11,270 Total assets acquired $ 570,642 Liabilities Deposits $ 505,885 Accrued expenses and other liabilities 2,504 Total liabilities acquired $ 508,389 Fair value of net assets acquired $ 62,253 A summary of the net assets purchased and the preliminary estimated fair value adjustments and resulting goodwill recognized from the Puget Sound Merger are presented in the following tables. Goodwill represents the excess of the consideration transferred over the estimated fair value of the net assets acquired and liabilities assumed. Puget Sound Merger (In thousands) Cost basis of net assets on merger date $ 54,405 Consideration transferred (130,773 ) Fair value adjustments: Investment securities (348 ) Total loans receivable, net 1,400 Premises and equipment (121 ) Other intangible assets 9,207 Prepaid expenses and other assets (2,282 ) Deposits (62 ) Accrued expenses and other liabilities 54 Goodwill recognized from the Puget Sound Merger $ (68,520 ) The operating results of the Company for the three and six months ended June 30, 2018 include the operating results produced by the net assets acquired in the Puget Sound Merger since the January 16, 2018 merger date. The Company has considered the requirement of FASB ASC 805 related to the contribution of the Puget Sound Merger to the Company’s results of operations. The table below presents only the significant results for the acquired business since the January 16, 2018 merger date: Three Months Ended (1) Six Months Ended (1) June 30, 2018 (In thousands) Interest income: Interest and fees on loans (2) $ 6,130 $ 10,647 Interest income: Interest and fees on investments (3) — 59 Interest income: Other interest earning assets 25 113 Interest expense (180 ) (324 ) Provision for loan losses for loans (350 ) (550 ) Noninterest income 109 257 Noninterest expense (4) (2,092 ) (7,672 ) Net effect, pre-tax $ 3,642 $ 2,530 (1) The Puget Sound Merger was completed on January 16, 2018. (2) Includes the accretion of the discount on the purchased loans of $1.1 million and $1.5 million during the three and six months ended June 30, 2018 , respectively. (3) All securities were sold with trade date of January 16, 2018 and settlement dates on or before February 14, 2018. (4) Excludes certain compensation and employee benefits for management as it is impracticable to determine due to the integration of the operations for this merger. Also includes certain merger-related costs incurred by the Company. The Company also considered the pro forma requirements of FASB ASC 805 and deemed it not necessary to provide pro forma financial statements as required under the standard as the Puget Sound Merger is not material to the Company. The Company believes that the historical Puget Sound operating results are not considered of enough significance to be meaningful to the Company’s results of operations. During the three and six months ended June 30, 2018 , the Company incurred acquisition-related costs of approximately $551,000 and $5.0 million , respectively, related to the Puget Sound Merger. |
Investment Securities
Investment Securities | 6 Months Ended |
Jun. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment Securities | Investment Securities As a result of the adoption of ASU 2016-01 on January 1, 2018, equity investments (except for investments accounted for under the equity method of accounting) are now measured at fair value, with changes in fair value recognized in earnings. These investments were previously measured at fair value, with changes in fair value recognized in accumulated other comprehensive loss. Accordingly, these securities are no longer classified as investment securities available-for-sale and their presentation is not comparable to the presentation as of December 31, 2017. See Note (1) Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements, as well as Equity Securities section discussed below. Available for sale investment securities (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) June 30, 2018 U.S. Treasury and U.S. Government-sponsored agencies $ 52,256 $ 42 $ (234 ) $ 52,064 Municipal securities 202,918 1,366 (1,262 ) 203,022 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 319,492 352 (7,722 ) 312,122 Commercial 257,858 141 (7,778 ) 250,221 Collateralized loan obligations 2,253 3 — 2,256 Corporate obligations 25,617 153 (80 ) 25,690 Other asset-backed securities 27,603 692 — 28,295 Total $ 887,997 $ 2,749 $ (17,076 ) $ 873,670 December 31, 2017 U.S. Treasury and U.S. Government-sponsored agencies $ 13,460 $ 6 $ (24 ) $ 13,442 Municipal securities 247,358 3,720 (1,063 ) 250,015 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 282,724 422 (2,935 ) 280,211 Commercial 219,696 444 (3,061 ) 217,079 Collateralized loan obligations 4,561 19 — 4,580 Corporate obligations 16,594 220 (44 ) 16,770 Other securities (2) 27,781 652 — 28,433 Total $ 812,174 $ 5,483 $ (7,127 ) $ 810,530 (1) Issued and guaranteed by U.S. Government-sponsored agencies. (2) Primarily asset-backed securities. There were no securities classified as trading or held to maturity at June 30, 2018 or December 31, 2017 . The amortized cost and fair value of investment securities available for sale at June 30, 2018 , 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 $ 24,656 $ 24,690 Due after one year through five years 149,590 148,197 Due after five years through ten years 254,873 248,759 Due after ten years 458,878 452,024 Total $ 887,997 $ 873,670 (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 June 30, 2018 and December 31, 2017 : Less than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (In thousands) June 30, 2018 U.S. Treasury and U.S. Government-sponsored agencies $ 34,674 $ (223 ) $ 536 $ (11 ) $ 35,210 $ (234 ) Municipal securities 63,443 (552 ) 22,903 (710 ) 86,346 (1,262 ) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 178,865 (3,954 ) 78,330 (3,768 ) 257,195 (7,722 ) Commercial 128,298 (3,058 ) 94,847 (4,720 ) 223,145 (7,778 ) Corporate obligations 15,482 (80 ) — — 15,482 (80 ) Total $ 420,762 $ (7,867 ) $ 196,616 $ (9,209 ) $ 617,378 $ (17,076 ) December 31, 2017 U.S. Treasury and U.S. Government-sponsored agencies $ 11,436 $ (24 ) $ — $ — $ 11,436 $ (24 ) Municipal securities 39,298 (384 ) 26,509 (679 ) 65,807 (1,063 ) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 175,847 (1,296 ) 66,380 (1,639 ) 242,227 (2,935 ) Commercial 75,121 (700 ) 90,822 (2,361 ) 165,943 (3,061 ) Corporate obligations 3,472 (44 ) — — 3,472 (44 ) Total $ 305,174 $ (2,448 ) $ 183,711 $ (4,679 ) $ 488,885 $ (7,127 ) (1) Issued and guaranteed by U.S. Government-sponsored agencies. The Company has evaluated these investment securities available for sale as of June 30, 2018 and December 31, 2017 and has determined that the decline in their value is not other-than-temporary. The unrealized losses are primarily due to increases in market interest rates. The fair value of these securities is expected to recover as the securities approach their maturity date. None of the underlying issuers of the municipal securities and corporate obligations had credit ratings that were below investment grade levels at June 30, 2018 or December 31, 2017 . 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 six months ended June 30, 2018 and 2017 , there were no other-than-temporary charges recorded to net income. (c) Realized Gains and Losses The following table presents the gross realized gains and losses on the sale of securities available for sale for the three and six months ended June 30, 2018 and 2017 . Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) Gross realized gains $ 18 $ 117 $ 122 $ 117 Gross realized losses — — (69 ) — Net realized gains $ 18 $ 117 $ 53 $ 117 (d) 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 June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 Amortized Cost Fair Value Amortized Cost Fair Value (In thousands) Washington and Oregon state to secure public deposits $ 197,047 $ 193,946 $ 206,377 $ 206,425 Repurchase agreements 45,463 44,207 48,750 48,237 Other securities pledged 20,048 19,742 12,484 12,498 Total $ 262,558 $ 257,895 $ 267,611 $ 267,160 Equity Securities The Company holds an equity security with a readily determinable fair value of $162,000 and $146,000 as of June 30, 2018 and December 31, 2017 , respectively. As a result of the adoption of ASU 2016-01, this security is no longer classified as investment security available for sale and has been reclassified to prepaid expenses and other assets on the Company's Condensed Consolidated Statements of Financial Condition as of June 30, 2018 . As such, its presentation is not comparable to the presentation as of December 31, 2017 . The Company recorded the tax-effected unrealized gain on the equity security through an adjustment to accumulated other comprehensive loss, net and retained earnings in the Condensed Consolidated Statement of Stockholders' Equity during the six months ended June 30, 2018 . |
Loans Receivable
Loans Receivable | 6 Months Ended |
Jun. 30, 2018 | |
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 fees or 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 criticized 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 classes 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 June 30, 2018 and December 31, 2017 consisted of the following portfolio segments and classes: June 30, 2018 December 31, 2017 (In thousands) Commercial business: Commercial and industrial $ 800,043 $ 645,396 Owner-occupied commercial real estate 693,330 622,150 Non-owner occupied commercial real estate 1,187,548 986,594 Total commercial business 2,680,921 2,254,140 One-to-four family residential 92,518 86,997 Real estate construction and land development: One-to-four family residential 71,934 51,985 Five or more family residential and commercial properties 93,315 97,499 Total real estate construction and land development 165,249 149,484 Consumer 385,987 355,091 Gross loans receivable 3,324,675 2,845,712 Net deferred loan costs 3,613 3,359 Loans receivable, net 3,328,288 2,849,071 Allowance for loan losses (33,972 ) (32,086 ) Total loans receivable, net $ 3,294,316 $ 2,816,985 (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 June 30, 2018 ) non-owner occupied commercial real estate, commercial and industrial and owner-occupied commercial real estate. As of June 30, 2018 and December 31, 2017 , 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 June 30, 2018 and December 31, 2017 . June 30, 2018 Pass OAEM Substandard Doubtful/Loss Total (In thousands) Commercial business: Commercial and industrial $ 731,265 $ 23,559 $ 45,219 $ — $ 800,043 Owner-occupied commercial real estate 656,991 16,402 19,937 — 693,330 Non-owner occupied commercial real estate 1,161,596 10,972 14,980 — 1,187,548 Total commercial business 2,549,852 50,933 80,136 — 2,680,921 One-to-four family residential 91,264 — 1,254 — 92,518 Real estate construction and land development: One-to-four family residential 70,499 267 1,168 — 71,934 Five or more family residential and commercial properties 93,258 57 — — 93,315 Total real estate construction and land development 163,757 324 1,168 — 165,249 Consumer 381,341 — 4,121 525 385,987 Gross loans receivable $ 3,186,214 $ 51,257 $ 86,679 $ 525 $ 3,324,675 December 31, 2017 Pass OAEM Substandard Doubtful/Loss Total (In thousands) Commercial business: Commercial and industrial $ 597,697 $ 19,536 $ 28,163 $ — $ 645,396 Owner-occupied commercial real estate 595,455 12,668 14,027 — 622,150 Non-owner occupied commercial real estate 955,450 10,494 20,650 — 986,594 Total commercial business 2,148,602 42,698 62,840 — 2,254,140 One-to-four family residential 85,762 — 1,235 — 86,997 Real estate construction and land development: One-to-four family residential 49,925 537 1,523 — 51,985 Five or more family residential and commercial properties 96,404 707 388 — 97,499 Total real estate construction and land development 146,329 1,244 1,911 — 149,484 Consumer 349,590 — 4,976 525 355,091 Gross loans receivable $ 2,730,283 $ 43,942 $ 70,962 $ 525 $ 2,845,712 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 June 30, 2018 and December 31, 2017 were $101.5 million and $83.5 million , respectively. (d) Nonaccrual Loans Nonaccrual loans, segregated by segments and classes of loans, were as follows as of June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 (In thousands) Commercial business: Commercial and industrial $ 8,376 $ 3,110 Owner-occupied commercial real estate 4,690 4,090 Non-owner occupied commercial real estate 2,169 1,898 Total commercial business 15,235 9,098 One-to-four family residential 77 81 Real estate construction and land development: One-to-four family residential 1,084 1,247 Consumer 127 277 Nonaccrual loans $ 16,523 $ 10,703 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 June 30, 2018 and December 31, 2017 were as follows: June 30, 2018 30-89 Days 90 Days or Greater Total Past Due Current Total (In thousands) Commercial business: Commercial and industrial $ 3,719 $ 4,122 $ 7,841 $ 792,202 $ 800,043 Owner-occupied commercial real estate 129 868 997 692,333 693,330 Non-owner occupied commercial real estate 1,501 3,238 4,739 1,182,809 1,187,548 Total commercial business 5,349 8,228 13,577 2,667,344 2,680,921 One-to-four family residential — — — 92,518 92,518 Real estate construction and land development: One-to-four family residential — 309 309 71,625 71,934 Five or more family residential and commercial properties — — — 93,315 93,315 Total real estate construction and land development — 309 309 164,940 165,249 Consumer 1,634 53 1,687 384,300 385,987 Gross loans receivable $ 6,983 $ 8,590 $ 15,573 $ 3,309,102 $ 3,324,675 December 31, 2017 30-89 Days 90 Days or Greater Total Past Due Current Total (In thousands) Commercial business: Commercial and industrial $ 2,993 $ 1,172 $ 4,165 $ 641,231 $ 645,396 Owner-occupied commercial real estate 1,277 1,225 2,502 619,648 622,150 Non-owner occupied commercial real estate 870 3,314 4,184 982,410 986,594 Total commercial business 5,140 5,711 10,851 2,243,289 2,254,140 One-to-four family residential 513 — 513 86,484 86,997 Real estate construction and land development: One-to-four family residential 84 1,331 1,415 50,570 51,985 Five or more family residential and commercial properties 40 — 40 97,459 97,499 Total real estate construction and land development 124 1,331 1,455 148,029 149,484 Consumer 1,939 687 2,626 352,465 355,091 Gross loans receivable $ 7,716 $ 7,729 $ 15,445 $ 2,830,267 $ 2,845,712 There were no loans 90 days or more past due that were still accruing interest as of June 30, 2018 or December 31, 2017 , 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 June 30, 2018 and December 31, 2017 are set forth in the following tables. June 30, 2018 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 $ 5,716 $ 12,238 $ 17,954 $ 18,825 $ 1,706 Owner-occupied commercial real estate 930 11,254 12,184 12,493 1,724 Non-owner occupied commercial real estate 4,662 5,923 10,585 10,558 784 Total commercial business 11,308 29,415 40,723 41,876 4,214 One-to-four family residential — 291 291 301 90 Real estate construction and land development: One-to-four family residential 775 309 1,084 1,842 5 Total real estate construction and land development 775 309 1,084 1,842 5 Consumer 53 329 382 447 74 Total $ 12,136 $ 30,344 $ 42,480 $ 44,466 $ 4,383 December 31, 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 $ 2,127 $ 9,872 $ 11,999 $ 12,489 $ 1,326 Owner-occupied commercial real estate 2,452 4,356 6,808 7,054 621 Non-owner occupied commercial real estate 4,722 11,297 16,019 16,172 1,222 Total commercial business 9,301 25,525 34,826 35,715 3,169 One-to-four family residential — 299 299 308 93 Real estate construction and land development: One-to-four family residential 938 309 1,247 2,200 2 Five or more family residential and commercial properties — 645 645 645 37 Total real estate construction and land development 938 954 1,892 2,845 39 Consumer 160 282 442 466 54 Total $ 10,399 $ 27,060 $ 37,459 $ 39,334 $ 3,355 The average recorded investment of impaired loans for the three and six months ended June 30, 2018 and 2017 are set forth in the following table. Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) Commercial business: Commercial and industrial $ 17,299 $ 6,925 $ 15,534 $ 8,742 Owner-occupied commercial real estate 12,643 3,278 12,622 3,760 Non-owner occupied commercial real estate 10,426 11,252 10,366 11,274 Total commercial business 40,368 21,455 38,522 23,776 One-to-four family residential 293 312 295 315 Real estate construction and land development: One-to-four family residential 1,116 2,636 1,159 2,781 Five or more family residential and commercial properties — 1,067 215 1,070 Total real estate construction and land development 1,116 3,703 1,374 3,851 Consumer 381 235 401 260 Total $ 42,158 $ 25,705 $ 40,592 $ 28,202 For the three and six months ended June 30, 2018 and 2017 , no interest income was recognized subsequent to a loan’s classification as nonaccrual. For the three and six months ended June 30, 2018 , the Bank recorded $360,000 and $686,000 , respectively, of interest income related to performing TDR loans. For the three and six months ended June 30, 2017 , the Bank recorded $281,000 and $646,000 , 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. TDR loans 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 TDR loans 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 TDR loans 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 June 30, 2018 and December 31, 2017 were as follows: June 30, 2018 December 31, 2017 Performing TDRs Nonaccrual TDRs Performing TDRs Nonaccrual (In thousands) TDR loans $ 25,957 $ 6,761 $ 26,757 $ 5,193 Allowance for loan losses on TDR loans 2,492 726 2,635 379 The unfunded commitment to borrowers related to TDR loans was $1.0 million and $1.2 million at June 30, 2018 and December 31, 2017 , respectively. Loans that were modified as TDR loans during the three and six months ended June 30, 2018 and 2017 are set forth in the following table: Three Months Ended June 30, 2018 2017 Number of Contracts (1) Outstanding Number of Contracts (1) Outstanding Principal Balance (1)(2) (Dollars in thousands) Commercial business: Commercial and industrial 9 $ 2,981 5 $ 3,439 Owner-occupied commercial real estate 1 570 — — Non-owner occupied commercial real estate — — 1 947 Total commercial business 10 3,551 6 4,386 Real estate construction and land development: One-to-four family residential — — 2 745 Total real estate construction and land development — — 2 745 Consumer 3 33 1 10 Total loans modified as TDR loans 13 $ 3,584 9 $ 5,141 Six Months Ended June 30, 2018 2017 Number of Contracts (1) Outstanding Number of Contracts (1) Outstanding Principal Balance (1)(2) (Dollars in thousands) Commercial business: Commercial and industrial 17 $ 6,193 10 $ 4,913 Owner-occupied commercial real estate 1 570 1 54 Non-owner occupied commercial real estate 2 2,380 1 948 Total commercial business 20 9,143 12 5,915 Real estate construction and land development: One-to-four family residential — — 4 1,889 Total real estate construction and land development — — 4 1,889 Consumer 6 107 2 18 Total TDR loans 26 $ 9,250 18 $ 7,822 (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 six months ended June 30, 2018 and 2017 . (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), except when the modification was the initial advance on a one-to-four family residential real estate construction and land development loan under a master guidance line. There were no advances on these types of loans during the three and six months ended June 30, 2018 and 2017 . Certain loans included in the table above may have been previously reported as TDR loans. The Bank typically grants shorter extension periods to continually monitor these TDR loans despite the fact that the extended date might not be the date the Bank expects sufficient cash flow from these borrowers. The Bank 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 loan and are adjusted, as necessary, in the current period based on more recent information. The related specific valuation allowance at June 30, 2018 was $738,000 for loans that were modified as TDR loans during the three and six months ended June 30, 2018 . Loans that were modified during the previous twelve months that subsequently defaulted during the three and six months ended June 30, 2018 and 2017 are set forth in the following table: Three Months Ended June 30, 2018 2017 Number of Contracts Outstanding Principal Balance Number of Outstanding (Dollars in thousands) Commercial business: Commercial and industrial 4 $ 2,725 — $ — Total commercial business 4 2,725 — — Consumer — — 3 36 Total 4 $ 2,725 3 $ 36 Six Months Ended June 30, 2018 2017 Number of Contracts Outstanding Principal Balance Number of Outstanding (Dollars in thousands) Commercial business: Commercial and industrial 5 $ 3,006 1 $ 234 Non-owner occupied commercial real estate 1 73 — — Total commercial business 6 3,079 1 234 Real estate construction and land development: One-to-four family residential 2 775 — — Total real estate construction and land development 2 775 — — Consumer — — 3 36 Total 8 $ 3,854 4 $ 270 During the three and six months ended June 30, 2018 , two loans and six loans, respectively, defaulted because they were past their modified maturity dates, and the borrowers have not subsequently repaid the credits. The Bank has chosen not to extend the maturities on these loans. In addition, during the three and six months ended June 30, 2018 , two loans and two loans, respectively, defaulted because the borrowers were more than 90 days delinquent on their scheduled loan payments. The Bank had no specific valuation allowance at June 30, 2018 related to the credits which defaulted during the six months ended June 30, 2018. During the three and six months ended June 30, 2017 , three loans and four loans, respectively, defaulted because the borrowers were more than 90 days delinquent on their scheduled loan payments. (h) Purchased Credit Impaired Loans The Company acquired certain loans and designated them, as appropriate, as PCI loans, which are accounted for under FASB ASC 310-30. No loans acquired in the Puget Sound Merger effective January 16, 2018 were considered PCI. The following table reflects the outstanding principal balance and recorded investment of the PCI loans at June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 Outstanding Principal Recorded Investment Outstanding Principal Recorded Investment (In thousands) Commercial business: Commercial and industrial $ 7,307 $ 3,819 $ 8,818 $ 2,912 Owner-occupied commercial real estate 9,737 8,605 12,230 11,515 Non-owner occupied commercial real estate 12,545 11,033 14,295 13,342 Total commercial business 29,589 23,457 35,343 27,769 One-to-four family residential 3,701 3,833 4,120 5,255 Real estate construction and land development: One-to-four family residential 107 391 841 89 Five or more family residential and commercial properties 193 11 2,361 2,035 Total real estate construction and land development 300 402 3,202 2,124 Consumer 2,932 4,160 3,974 5,455 Gross PCI loans $ 36,522 $ 31,852 $ 46,639 $ 40,603 On the acquisition dates, the amount by which the undiscounted expected cash flows of the PCI loans exceeded the estimated fair value of the loan is the “accretable yield.” The accretable yield is |
Allowance for Loan Losses
Allowance for Loan Losses | 6 Months Ended |
Jun. 30, 2018 | |
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 six months ended June 30, 2018 : Balance at Beginning of Period Charge-offs Recoveries Provision for Loan Losses Balance at End of Period (In thousands) Three Months Ended June 30, 2018 Commercial business: Commercial and industrial $ 9,943 $ (541 ) $ 65 $ 721 $ 10,188 Owner-occupied commercial real estate 5,040 (1 ) 3 204 5,246 Non-owner occupied commercial real estate 7,589 — — 137 7,726 Total commercial business 22,572 (542 ) 68 1,062 23,160 One-to-four family residential 1,083 (15 ) — 53 1,121 Real estate construction and land development: One-to-four family residential 941 — 2 73 1,016 Five or more family residential and commercial properties 1,115 — — (71 ) 1,044 Total real estate construction and land development 2,056 — 2 2 2,060 Consumer 6,054 (694 ) 142 803 6,305 Unallocated 1,496 — — (170 ) 1,326 Total $ 33,261 $ (1,251 ) $ 212 $ 1,750 $ 33,972 Six Months Ended June 30, 2018 Commercial business: Commercial and industrial $ 9,910 $ (622 ) $ 564 $ 336 $ 10,188 Owner-occupied commercial real estate 3,992 (1 ) 5 1,250 5,246 Non-owner occupied commercial real estate 8,097 — — (371 ) 7,726 Total commercial business 21,999 (623 ) 569 1,215 23,160 One-to-four family residential 1,056 (15 ) — 80 1,121 Real estate construction and land development: One-to-four family residential 862 — 2 152 1,016 Five or more family residential and commercial properties 1,190 — — (146 ) 1,044 Total real estate construction and land development 2,052 — 2 6 2,060 Consumer 6,081 (1,179 ) 230 1,173 6,305 Unallocated 898 — — 428 1,326 Total $ 32,086 $ (1,817 ) $ 801 $ 2,902 $ 33,972 The following table details the allowance for loan losses disaggregated on the basis of the Company's impairment method as of June 30, 2018 . Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Allowance for Loan Losses (In thousands) Commercial business: Commercial and industrial $ 1,706 $ 7,564 $ 918 $ 10,188 Owner-occupied commercial real estate 1,724 2,736 786 5,246 Non-owner occupied commercial real estate 784 6,118 824 7,726 Total commercial business 4,214 16,418 2,528 23,160 One-to-four family residential 90 879 152 1,121 Real estate construction and land development: One-to-four family residential 5 787 224 1,016 Five or more family residential and commercial properties — 957 87 1,044 Total real estate construction and land development 5 1,744 311 2,060 Consumer 74 5,601 630 6,305 Unallocated — 1,326 — 1,326 Total $ 4,383 $ 25,968 $ 3,621 $ 33,972 The following table details the recorded investment balance of the loan receivables disaggregated on the basis of the Company’s impairment method as of June 30, 2018 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Gross Loans Receivable (In thousands) Commercial business: Commercial and industrial $ 17,954 $ 778,270 $ 3,819 $ 800,043 Owner-occupied commercial real estate 12,184 672,541 8,605 693,330 Non-owner occupied commercial real estate 10,585 1,165,930 11,033 1,187,548 Total commercial business 40,723 2,616,741 23,457 2,680,921 One-to-four family residential 291 88,394 3,833 92,518 Real estate construction and land development: One-to-four family residential 1,084 70,459 391 71,934 Five or more family residential and commercial properties — 93,304 11 93,315 Total real estate construction and land development 1,084 163,763 402 165,249 Consumer 382 381,445 4,160 385,987 Total $ 42,480 $ 3,250,343 $ 31,852 $ 3,324,675 The following tables detail activity in the allowance for loan losses disaggregated by segment and class for the three and six months ended June 30, 2017 . Balance at Beginning of Period Charge-offs Recoveries Provision for Loan Losses Balance at End of Period (In thousands) Three Months Ended June 30, 2017 Commercial business: Commercial and industrial $ 10,091 $ (63 ) $ 452 $ 171 $ 10,651 Owner-occupied commercial real estate 4,216 (78 ) 2 14 4,154 Non-owner occupied commercial real estate 7,601 — — 108 7,709 Total commercial business 21,908 (141 ) 454 293 22,514 One-to-four family residential 1,052 — 1 20 1,073 Real estate construction and land development: One-to-four family residential 791 — — 30 821 Five or more family residential and commercial properties 1,546 — — 120 1,666 Total real estate construction and land development 2,337 — — 150 2,487 Consumer 5,195 (398 ) 110 803 5,710 Unallocated 1,102 — — (135 ) 967 Total $ 31,594 $ (539 ) $ 565 $ 1,131 $ 32,751 Six Months Ended June 30, 2017 Commercial business: Commercial and industrial $ 10,968 $ (358 ) $ 675 $ (634 ) $ 10,651 Owner-occupied commercial real estate 3,661 (85 ) 151 427 4,154 Non-owner occupied commercial real estate 7,753 — — (44 ) 7,709 Total commercial business 22,382 (443 ) 826 (251 ) 22,514 One-to-four family residential 1,015 — 1 57 1,073 Real estate construction and land development: One-to-four family residential 797 — 10 14 821 Five or more family residential and commercial properties 1,359 — — 307 1,666 Total real estate construction and land development 2,156 — 10 321 2,487 Consumer 5,024 (941 ) 217 1,410 5,710 Unallocated 506 — — 461 967 Total $ 31,083 $ (1,384 ) $ 1,054 $ 1,998 $ 32,751 The following table details the allowance for loan losses disaggregated on the basis of the Company's impairment method as of December 31, 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 $ 1,326 $ 7,558 $ 1,026 $ 9,910 Owner-occupied commercial real estate 621 2,557 814 3,992 Non-owner occupied commercial real estate 1,222 5,919 956 8,097 Total commercial business 3,169 16,034 2,796 21,999 One-to-four family residential 93 798 165 1,056 Real estate construction and land development: One-to-four family residential 2 635 225 862 Five or more family residential and commercial properties 37 1,064 89 1,190 Total real estate construction and land development 39 1,699 314 2,052 Consumer 54 5,303 724 6,081 Unallocated — 898 — 898 Total $ 3,355 $ 24,732 $ 3,999 $ 32,086 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, 2017 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Gross Loans Receivable (In thousands) Commercial business: Commercial and industrial $ 11,999 $ 630,485 $ 2,912 $ 645,396 Owner-occupied commercial real estate 6,808 603,827 11,515 622,150 Non-owner occupied commercial real estate 16,019 957,233 13,342 986,594 Total commercial business 34,826 2,191,545 27,769 2,254,140 One-to-four family residential 299 81,443 5,255 86,997 Real estate construction and land development: One-to-four family residential 1,247 50,649 89 51,985 Five or more family residential and commercial properties 645 94,819 2,035 97,499 Total real estate construction and land development 1,892 145,468 2,124 149,484 Consumer 442 349,194 5,455 355,091 Total $ 37,459 $ 2,767,650 $ 40,603 $ 2,845,712 |
Other Real Estate Owned
Other Real Estate Owned | 6 Months Ended |
Jun. 30, 2018 | |
Real Estate [Abstract] | |
Other Real Estate Owned | Other Real Estate Owned Changes in other real estate owned during the three and six months ended June 30, 2017 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) Balance at the beginning of the period $ — $ 786 $ — $ 754 Additions 434 — 434 32 Balance at the end of the period $ 434 $ 786 $ 434 $ 786 At June 30, 2018 , the carrying amount of other real estate owned that was the result of foreclosure and obtaining physical possession of residential real estate properties was $434,000 . At June 30, 2018 , the recorded investment of consumer mortgage loans secured by residential real estate properties (included in the one-to-four family residential loans in Note (4) Loans Receivable) for which formal foreclosure proceedings were in process was $77,000 . |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 6 Months Ended |
Jun. 30, 2018 | |
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 recent Puget Sound Merger on January 16, 2018 and the historical acquisitions of Washington Banking Company on May 1, 2014; Valley Community Bancshares 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). The following table presents the change in goodwill for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) Balance at the beginning of the period $ 187,549 $ 119,029 $ 119,029 $ 119,029 Additions as a result of acquisitions (1) — — 68,520 — Balance at the end of the period $ 187,549 $ 119,029 $ 187,549 $ 119,029 (1) See Note (2) Business Combination The Company performed its annual goodwill impairment test during the fourth quarter of 2017 and determined based on its Step 1 analysis that the fair value of the reporting unit exceeded the carrying value, such that the Company's goodwill was not considered impaired. Changes in the economic environment, operations of the reporting unit or other adverse events could result in future impairment charges which could have a material impact on the Company’s operating results. (b) Other Intangible Assets The other intangible assets represent the core deposit intangible ("CDI") acquired in business combinations. The useful life of the CDI related to the acquisitions of Puget Sound Bancorp, Washington Banking Company, Valley Community Bancshares, and Northwest Commercial Bank were estimated to be ten , ten , ten , and five years, respectively. The following table presents the change in other intangible assets for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) Balance at the beginning of the period $ 16,563 $ 7,050 $ 6,088 $ 7,374 Additions as a result of acquisitions (1) — — 11,270 — Amortization (796 ) (323 ) (1,591 ) (647 ) Balance at the end of the period $ 15,767 $ 6,727 $ 15,767 $ 6,727 (1) See Note (2) Business Combination |
Junior Subordinated Debentures
Junior Subordinated Debentures | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Junior Subordinated Debentures | Junior Subordinated Debentures As part of the acquisition of Washington Banking Company on May 1, 2014, the Company assumed trust preferred securities and junior subordinated debentures with a total fair value of $18.9 million at the merger date. Washington Banking Master Trust, a Delaware statutory business trust, was a wholly-owned subsidiary of the Washington Banking Company created for the exclusive purposes of issuing and selling capital securities and utilizing sale proceeds to acquire junior subordinated debentures issued by the Washington Banking Company. During 2007, the Trust issued $25.0 million of trust preferred securities with a 30 -year maturity, callable after the fifth year by the 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 merger date, 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 June 30, 2018 was 3.90% . The weighted average rate of the junior subordinated debentures was as follows for the indicated periods: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Weighted average rate (1) 6.28 % 5.04 % 6.01 % 4.96 % (1) 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 June 30, 2018 and December 31, 2017 , the balance of the junior subordinated debentures, net of unaccreted discount, was $20.2 million and $20.0 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. For financial reporting purposes, the Company's investment in the Master Trust is accounted for under the equity method and is included in prepaid expenses and other assets on the Company's Condensed Consolidated Statements of Financial Condition. The junior subordinated debentures issued and guaranteed by the Company and held by the Master Trust are reflected as liabilities on the Company's Condensed Consolidated Statements of Financial Condition. |
Repurchase Agreements
Repurchase Agreements | 6 Months Ended |
Jun. 30, 2018 | |
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 (3) Investment Securities. The following table presents the Company's repurchase agreement obligations by class of collateral pledged: June 30, 2018 December 31, 2017 (In thousands) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential $ 10,444 $ 11,239 Commercial 11,724 20,582 Total repurchase agreements $ 22,168 $ 31,821 (1) Issued and guaranteed by U.S. Government-sponsored agencies. |
Other Borrowings
Other Borrowings | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Other Borrowings | Other Borrowings (a) FHLB 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 June 30, 2018 , the Bank maintained a credit facility with the FHLB of Des Moines with available borrowing capacity of $838.1 million and had short-term FHLB advances outstanding of $75.5 million with maturity dates within 30 days. At December 31, 2017 there were FHLB advances outstanding of $92.5 million . The following table sets forth the details of FHLB advances during the three and six months ended June 30, 2018 and 2017 : Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) FHLB Advances: Average balance during the period $ 79,115 $ 107,125 $ 57,544 $ 104,144 Maximum month-end balance during the period $ 154,500 $ 137,450 $ 154,500 $ 137,450 Weighted average rate during the period 2.04 % 0.89 % 1.93 % 0.86 % 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, 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 ("TIB") and Pacific Coast Bankers’ Bank to purchase federal funds of up to $90.0 million as of June 30, 2018 . The lines generally mature annually or are reviewed annually. As of June 30, 2018 and December 31, 2017 , there were no federal funds purchased. (c) Credit Facilities The Bank maintains a credit facility with the Federal Reserve Bank of San Francisco ("Federal Reserve Bank") with available borrowing capacity of $58.1 million as of June 30, 2018 , on which there were no borrowings outstanding as of June 30, 2018 or December 31, 2017 . Any advances on the credit facility would have to be first secured by the Bank's investment securities or loans receivable. |
Derivative Financial Instrument
Derivative Financial Instruments (Notes) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 are presented in the following table. June 30, 2018 December 31, 2017 Notional Amounts Estimated Fair Value Notional Amounts Estimated Fair Value (In thousands) Non-hedging interest rate derivatives Interest rate swaps with customer (1) $ 163,257 $ (5,454 ) $ 146,537 $ (882 ) Interest rate swap with third party (1) 163,257 5,454 146,537 882 (1) The estimated fair value of the derivative included in prepaid and other assets on the Condensed Consolidated Statements of Financial Condition was $6.6 million and $3.4 million as of June 30, 2018 and December 31, 2017 , respectively. The estimated fair value of the derivative included in accrued expenses and other liabilities on the Condensed Consolidated Statements of Financial Condition was $6.6 million and $3.4 million as of June 30, 2018 and December 31, 2017 , respectively. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
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 six months ended June 30, 2018 and 2017 : Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (Dollars in thousands) Net income: Net income $ 11,857 $ 11,828 $ 20,944 $ 21,144 Less: Dividends and undistributed earnings allocated to participating securities (57 ) (83 ) (110 ) (164 ) Net income allocated to common shareholders $ 11,800 $ 11,745 $ 20,834 $ 20,980 Basic: Weighted average common shares outstanding 34,023,566 29,939,280 33,680,014 29,945,641 Less: Restricted stock awards (88,905 ) (183,082 ) (107,897 ) (215,446 ) Total basic weighted average common shares outstanding 33,934,661 29,756,198 33,572,117 29,730,195 Diluted: Basic weighted average common shares outstanding 33,934,661 29,756,198 33,572,117 29,730,195 Effect of potentially dilutive common shares (1) 172,631 83,411 157,819 64,042 Total diluted weighted average common shares outstanding 34,107,292 29,839,609 33,729,936 29,794,237 (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 six months ended June 30, 2018 and 2017 , there were no anti-dilutive shares outstanding related to options to acquire common stock. Anti-dilution occurs when the exercise price of a stock option or the unrecognized compensation cost per share of a restricted stock award exceeds the market price of the Company’s stock. (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 six months ended June 30, 2018 and calendar year 2017 . Declared Cash Dividend per Share Record Date Paid Date 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 October 25, 2017 $0.13 November 8, 2017 November 22, 2017 October 25, 2017 $0.10 November 8, 2017 November 22, 2017 * January 24, 2018 $0.15 February 7, 2018 February 21, 2018 April 25, 2018 $0.15 May 10, 2018 May 24, 2018 * 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") 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 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. Since the inception of the eleventh plan, the Company has repurchased 579,996 shares at an average share prices of $16.67 . No shares were repurchased under this plan during the three and six months ended June 30, 2018 and 2017 . In addition to the stock repurchases under a plan, the Company repurchases shares to pay withholding taxes on the vesting of restricted stock awards and units. The following table provides total repurchased shares for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Repurchased shares to pay withholding taxes (1) 7,394 11,476 52,820 27,367 Stock repurchase to pay withholding taxes average share price $ 33.84 $ 25.50 $ 31.96 $ 24.60 (1) During the six months ended June 30, 2018 , the Company repurchased 26,741 of shares related to the withholding taxes due on the accelerated vesting of the restricted stock units of Puget Sound which were converted to Heritage common stock shares with an average share price of $31.80 under the terms of the merger. See Note (2) Business Combination. (d) Issuance of Common Stock The Puget Sound Merger was effective on January 16, 2018. In conjunction with the merger was the issuance of 4,112,258 shares of the Company's common stock at the merger date share price of $31.80 for a fair value of $130.8 million . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive (Loss) Income | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive (Loss) Income | Accumulated Other Comprehensive (Loss) Income The changes in accumulated other comprehensive (loss) income (“AOCI”), all of which are due to changes in the fair value of available for sale securities and are net of tax, during the three and six months ended June 30, 2018 and 2017 are as follows: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Balance of AOCI at the beginning of period $ (8,934 ) $ (1,133 ) $ (1,298 ) $ (2,606 ) Other comprehensive (loss) income before reclassification (2,358 ) 2,766 (9,874 ) 4,239 Amounts reclassified from AOCI for gain on sale of investment securities included in net income (14 ) (76 ) (41 ) (76 ) Net current period other comprehensive (loss) income (2,372 ) 2,690 (9,915 ) 4,163 ASU 2016-01 implementation — — (93 ) — Balance of AOCI at the end of period $ (11,306 ) $ 1,557 $ (11,306 ) $ 1,557 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
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 (less costs to sell) 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 and impairment and is 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 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 June 30, 2018 and December 31, 2017 . June 30, 2018 Total Level 1 Level 2 Level 3 (In thousands) Assets Investment securities available for sale: U.S. Treasury and U.S. Government-sponsored agencies $ 52,064 $ — $ 52,064 $ — Municipal securities 203,022 — 203,022 — Mortgage-backed securities and collateralized mortgage obligations: Residential 312,122 — 312,122 — Commercial 250,221 — 250,221 — Collateralized loan obligations 2,256 — 2,256 — Corporate obligations 25,690 — 25,690 — Other asset-backed securities 28,295 — 28,295 — Total investment securities available for sale 873,670 — 873,670 — Derivative assets - interest rate swaps 6,629 — 6,629 — Liabilities Derivative liabilities - interest rate swaps $ 6,629 $ — $ 6,629 $ — December 31, 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 $ 13,442 $ — $ 13,442 $ — Municipal securities 250,015 — 250,015 — Mortgage-backed securities and collateralized mortgage obligations: Residential 280,211 — 280,211 — Commercial 217,079 — 217,079 — Collateralized loan obligations 4,580 — 4,580 — Corporate obligations 16,770 — 16,770 — Other securities 28,433 146 28,287 — Total investment securities available for sale 810,530 146 810,384 — Derivative assets - interest rate swaps 3,418 — 3,418 — Liabilities Derivative liabilities - interest rate swaps $ 3,418 $ — $ 3,418 $ — There were no transfers between Level 1 and Level 2 during the three and six months ended June 30, 2018 and 2017 . 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 June 30, 2018 and December 31, 2017 and the net losses recorded in earnings during three and six months ended June 30, 2018 and 2017 . Basis (1) Fair Value at June 30, 2018 Total Level 1 Level 2 Level 3 Net Losses (Gains) Recorded in Earnings During the Three Months Ended June 30, 2018 Net Losses (Gains) Recorded in Earnings During the Six Months Ended June 30, 2018 (In thousands) Impaired loans: Real estate construction and land development: One-to-four family residential $ 976 $ 304 $ — $ — $ 304 $ 3 3 Total assets measured at fair value on a nonrecurring basis $ 976 $ 304 $ — $ — $ 304 $ 3 $ 3 (1) Basis represents the unpaid principal balance of impaired loans. Basis (1) Fair Value at December 31, 2017 Total Level 1 Level 2 Level 3 Net Losses Recorded in Earnings During the Three Months Ended June 30, 2017 Net Losses (Gains) Recorded in Earnings During the Six Months Ended June 30, 2017 (In thousands) Impaired loans: Real estate construction and land development: One-to-four family residential $ 976 $ 307 $ — $ — $ 307 $ — — Total assets measured at fair value on a nonrecurring basis $ 976 $ 307 $ — $ — $ 307 $ — $ — (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 June 30, 2018 and December 31, 2017 . June 30, 2018 Fair Value Valuation Technique(s) Unobservable Input(s) Range of Inputs; Weighted Average (Dollars in thousands) Impaired loans $ 304 Market approach Adjustment for differences between the comparable sales (91.2%) - (14.4)%; (44.0%) December 31, 2017 Fair Value Valuation Technique(s) Unobservable Input(s) Range of Inputs; Weighted Average (Dollars in thousands) Impaired loans $ 307 Market approach Adjustment for differences between the comparable sales (91.5%) - (14.4%); (44.0%) (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. June 30, 2018 Carrying Value Fair Value Fair Value Measurements Using: Level 1 Level 2 Level 3 (In thousands) Financial Assets: Cash and cash equivalents $ 129,943 $ 129,943 $ 129,943 $ — $ — Investment securities available for sale 873,670 873,670 — 873,670 — Federal Home Loan Bank stock 8,616 N/A N/A N/A N/A Loans held for sale 3,598 3,708 — 3,708 — Total loans receivable, net $ 3,294,316 $ 3,277,881 $ — $ — $ 3,277,881 Accrued interest receivable 13,482 13,482 28 3,826 9,628 Derivative assets - interest rate swaps 6,629 6,629 — 6,629 — Equity security 162 162 162 — — Financial Liabilities: Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts 3,508,300 3,508,300 3,508,300 — — Certificate of deposit accounts 460,635 463,971 — 463,971 — Federal Home Loan Bank advances 75,500 75,500 — 75,500 — Securities sold under agreement to repurchase 22,168 22,168 22,168 — — Junior subordinated debentures 20,156 20,000 — — 20,000 Accrued interest payable 198 198 46 107 45 Derivative liabilities - interest rate swaps 6,629 6,629 — 6,629 — December 31, 2017 Carrying Value Fair Value Fair Value Measurements Using: Level 1 Level 2 Level 3 (In thousands) Financial Assets: Cash and cash equivalents $ 103,015 $ 103,015 $ 103,015 $ — $ — Investment securities available for sale 810,530 810,530 146 810,384 — Federal Home Loan Bank stock 8,347 N/A N/A N/A N/A Loans held for sale 2,288 2,364 — 2,364 — Loans receivable, net of allowance for loan losses 2,816,985 2,810,401 — — 2,810,401 Accrued interest receivable 12,244 12,244 23 3,772 8,449 Derivative assets - interest rate swaps 3,418 3,418 — 3,418 — Financial Liabilities: Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts $ 2,994,662 $ 2,994,662 $ 2,994,662 $ — $ — Certificate of deposit accounts 398,398 397,039 — 397,039 — Federal Home Loan Bank advances 92,500 92,500 — 92,500 — Securities sold under agreement to repurchase 31,821 31,821 31,821 — — Junior subordinated debentures 20,009 18,500 — — 18,500 Accrued interest payable 162 162 45 79 38 Derivative liabilities - interest rate swaps 3,418 3,418 — 3,418 — |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 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. The Company issues new shares of common stock to satisfy share option exercises and restricted stock awards. As of June 30, 2018 , shares that remain available for future issuance under the Company's stock-based compensation plans was 964,832 . (a) Stock Option Awards 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. For the three and six months ended June 30, 2018 and 2017 , 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 six months ended June 30, 2018 was $82,000 and $47,000 , respectively. The intrinsic value and cash proceeds from options exercised during the six months ended June 30, 2017 was $98,000 and $109,000 , respectively. The following table summarizes the stock option activity for the six months ended June 30, 2018 and 2017 : Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding at December 31, 2016 37,495 $ 13.77 Exercised (8,372 ) 13.03 Forfeited or expired (1,308 ) 13.53 Outstanding, vested and expected to vest and exercisable at June 30, 2017 27,815 $ 14.00 2.63 $ 348 Outstanding at December 31, 2017 23,231 $ 14.21 Exercised (4,042 ) 11.55 Forfeited or expired (831 ) 14.77 Outstanding, vested and expected to vest and exercisable at June 30, 2018 18,358 $ 14.77 1.90 $ 369 (b) Restricted Stock Awards Restricted stock awards granted generally have a four -year cliff vesting or four -year ratable vesting schedule. For the three and six months ended June 30, 2018 , the Company recognized compensation expense related to restricted stock awards of $249,000 and $532,000 , respectively, and a related tax benefit of $52,000 and $112,000 , respectively. For the three and six months ended June 30, 2017 , the Company recognized compensation expense related to restricted stock awards of $359,000 and $804,000 , respectively, and a related tax benefit of $126,000 and $282,000 , respectively. As of June 30, 2018 , the total unrecognized compensation expense related to non-vested restricted stock awards was $949,000 and the related weighted average period over which the compensation expense is expected to be recognized is approximately 1.38 years. The vesting date fair value of the restricted stock awards that vested during the six months ended June 30, 2018 and 2017 was $2.1 million and $2.6 million , respectively. The following table summarizes the restricted stock award activity for the six months ended June 30, 2018 and 2017 : Shares Weighted-Average Grant Date Fair Value Nonvested at December 31, 2016 261,296 $ 16.80 Vested (105,972 ) 16.47 Forfeited (7,704 ) 16.78 Nonvested at June 30, 2017 147,620 $ 17.04 Nonvested at December 31, 2017 137,399 $ 17.00 Vested (66,193 ) 16.67 Forfeited (2,394 ) 16.86 Nonvested at June 30, 2018 68,812 $ 17.32 (c) Restricted Stock Units During 2017, the Company began issuing performance-based stock-settled restricted stock unit awards ("PRSU") and stock-settled restricted stock unit awards ("RSU"), collectively called "units". Restricted stock units granted vest ratably over three years. Performance restricted stock units granted 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 number of shares of actually delivered pursuant to the PRSUs depends on the performance of the Company's Total Shareholder Return and Return on Average Assets over the performance period in relation to the performance of the common stock of a predetermined peer group. The conditions of the grants allow for an actual payout ranging between no payout and 150% of target. The payout level is calculated based on actual performance achieved during the performance period compared to a defined peer group. The fair value of such PRSUs was determined using a Monte Carlo simulation and will be recognized over the subsequent three years . The Monte-Carlo simulation model uses the same input assumptions as the Black-Scholes model; however, it also further incorporates into the fair value determination the possibility that the market condition may not be satisfied. Compensation costs related to these awards are recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided. Expected volatilities in the model were estimated using a historical period consistent with the performance period of approximately three years . The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the expected life of the grant. The Company used the following assumptions to estimate the fair value of PRSUs granted during February 2018 and 2017: 2018 2017 Shares issued 5,550 6,089 Expected Term in Years 2.84 2.85 Weighted-Average Risk Free Interest Rate 2.39 % 1.40 % Expected Dividend Yield — % — % Weighted-Average Fair Value 27.69 24.39 Correlation coefficient ABA NASDAQ Community Bank Index ABA NASDAQ Community Bank Index Range of peer company volatilities 18.99% - 51.42% 17.8% - 63.1% Range of peer company correlation coefficients 28.16% - 94.29% 8.24% - 89.79% Heritage volatility 22.3 % 21.8 % Heritage correlation coefficient 76.44 % 75.93 % For the three and six months ended June 30, 2018 , the Company recognized compensation expense related to the units of $435,000 and $775,000 , respectively, and a related tax benefit of $91,000 and $163,000 , respectively. For the three and six months ended June 30, 2017 , the Company recognized compensation expense related the units of $171,000 and $236,000 , respectively, and a related tax benefit of $60,000 and $83,000 , respectively. As of June 30, 2018 , the total unrecognized compensation expense related to non-vested units was $4.1 million and the related weighted average period over which the compensation expense is expected to be recognized is approximately 2.65 years. The vesting date fair value of the units that vested during the six months ended June 30, 2018 was $1.0 million . There were no units that vested during the six months ended June 30, 2017 . The following table summarizes the unit activity for the six months ended June 30, 2018 and 2017 : Shares Weighted-Average Grant Date Fair Value Nonvested at December 31, 2016 — $ — Granted 92,019 25.29 Forfeited (909 ) 25.35 Nonvested at June 30, 2017 91,110 $ 25.29 Nonvested at December 31, 2017 90,544 $ 25.31 Granted 114,015 30.61 Vested (32,262 ) 25.42 Forfeited (3,644 ) 27.87 Nonvested at June 30, 2018 168,653 $ 28.51 |
Cash Requirement
Cash Requirement | 6 Months Ended |
Jun. 30, 2018 | |
Banking and Thrift [Abstract] | |
Cash Requirement | Cash Requirement The Company is required to maintain an average reserve balance with the Federal Reserve Bank or maintain such reserve balance in the form of cash. The required reserve balance at June 30, 2018 and December 31, 2017 was $10.9 million and $60,000 , respectively, and was met by holding cash and maintaining an average balance with the Federal Reserve Bank. |
Description of Business, Basi26
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
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 Federal Deposit Insurance Corporation ("FDIC"). The Bank is headquartered in Olympia, Washington and conducts business from its 59 branch offices as of June 30, 2018 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 January 16, 2018, the Company completed the acquisition of Puget Sound Bancorp, Inc. (“Puget Sound”), the holding company for Puget Sound Bank, both of Bellevue, Washington (“Puget Sound Merger”). See Note (2) Business Combination for additional information on the merger. On March 8, 2018, the Company entered into a definitive agreement to acquire Premier Commercial Bancorp, ("Premier Commercial") and its wholly-owned bank subsidiary, Premier Community Bank, both of Hillsboro, Oregon (the "Premier Merger"). The Premier Merger was completed on July 2, 2018. See Note (17) Subsequent Event for additional information on the merger. |
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, 2017 (“ 2017 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 six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 . 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. |
Revenue from Contracts with Customers | Revenue from Contracts with Customers Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, (“ASC 606”), as amended, was adopted by the Company on January 1, 2018. ASC 606 applies to all contracts with customers to provide goods or services in the ordinary course of business, except for contracts that are specifically excluded from its scope. The Company's revenues are primarily composed of interest income on financial instruments, such as loans and investment securities, which are excluded from the scope of ASC 606. Descriptions of our revenue-generating activities that are within the scope ASC 606, which are presented in Service Charges and Other Fees and Other Income on the Company’s Condensed Consolidated Statement of Income, are as follows: • Service Charges on Deposit Accounts: The Company earns fees from its deposit customers from a variety of deposit products and services. Non-transaction based fees such as account maintenance fees and monthly statement fees are considered to be provided to the customer under a day-to-day contract with ongoing renewals. Revenues for these non-transaction fees are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Transaction-based fees such as non-sufficient fund charges, stop payment charges and wire fees are recognized at the time the transaction is executed as the contract duration does not extend beyond the service performed. • Wealth Management and Trust Services: The Company earns fees from contracts with customers for fiduciary and brokerage activities. Revenues are generally recognized on a monthly basis and are generally based on a percentage of the customer’s assets under management or based on investment or insurance solutions that are implemented for the customer. • Merchant Processing Services and Debit and Credit Card Fees: The Company earns fees from cardholder transactions conducted through third party payment network providers which consist of (i) interchange fees earned from the payment network as a debit card issuer, (ii) referral fee income, and (iii) ongoing merchant fees earned for referring customers to the payment processing provider. These fees are recognized when the transaction occurs, but may settle on a daily or monthly basis. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements FASB ASU 2014-09 , Revenue from Contracts with Customers , (as amended by FASB ASU 2015-14; FASB ASU 2016-08; FASB ASU 2016-10 and FASB ASU 2016-12), was issued in May 2014. Under this Accounting Standard Update ("ASU" or "Update"), the Financial Accounting Standards Board ("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 Company adopted the revenue recognition guidance, as amended, on January 1, 2018 using the modified retrospective approach. A significant amount of the Company’s revenues are derived from interest income on financial assets, which are excluded from the scope of the amended guidance. With respect to noninterest income and related disclosures, the Company has identified and evaluated the revenue streams and underlying revenue contracts within the scope of the guidance. The Company did not identify any significant changes in the timing of revenue recognition when considering the amended accounting guidance. The adoption of the Update did not have a material impact on the Company's Condensed Consolidated Financial Statements, but the adoption did change certain disclosure requirements as described in Significant Accounting Policies above. 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 Company adopted this Update effective January 1, 2018 using the cumulative catch-up transition method. This change resulted in a cumulative adjustment of $93,000 from accumulated other comprehensive loss, net to retained earnings for the unrealized gain related to the Company's equity security. The Company's processes and procedures utilized to estimate the fair value of loans receivable and certificate of deposit accounts for disclosure requirements were additionally changed due to adoption of this Update. Previously, the Company valued these items using an entry price notion. This ASU emphasized that these instruments be measured using the exit price notion; accordingly, the Company refined its calculation as part of adopting this Update. Prior period information has not been updated to conform with the new guidance. See the Condensed Consolidated Statements of Stockholders' Equity and Note (14) Fair Value Measurements. 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 developed its methodology to estimate the right-of use assets and lease liabilities. The Company anticipates electing an exclusion accounting policy for lease assets and lease liabilities for leases with a term of twelve months or less. The Company was committed to $13.7 million of minimum lease payments under noncancelable operating lease agreements at June 30, 2018. The Company does not expect the adoption of this Update will have a significant impact to its Condensed Consolidated Financial Statements. 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 ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality , for 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 has begun 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 selected a vendor to assist the Company in the adoption and has completed the implementation discovery sessions. The CECL steering committee is in the process of selecting appropriate methodologies and refining key data points in an effort to complete a mock CECL model by fourth quarter 2018. 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 was effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and must be applied using a retrospective transitional method to each period presented. The Company adopted this Update on January 1, 2018. The adoption did not have a significant impact on its Condensed Consolidated Financial Statements as cash proceeds received from the settlement of bank-owned life insurance policies and cash payments for premiums on bank-owned life insurance policies were previously classified as cash inflows and outflows, respectively, from investing activities in the Condensed Consolidated Statements of Cash Flows. 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 Update is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company adopted this Update in January 2018. The adoption did not have a material impact on its Condensed Consolidated Financial Statements as the Company had been accounting for premiums as prescribed under this guidance. 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 was effective for reporting periods beginning after December 15, 2017. The Company adopted the Update on January 1, 2018. The adoption did not have a material impact on its Condensed Consolidated Financial Statements because no share-based payment award was modified during the six months ended June 30, 2018. The Company will apply this Update prospectively for any subsequent modifications of share-based payment awards. FASB ASU 2018-02 , Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income was issued to address the income tax accounting treatment of the stranded tax effects within other comprehensive income due to the prohibition of backward tracing due to an income tax rate change that was initially recorded in other comprehensive income. This issue came about from the enactment of the Tax Cuts and Jobs Act on December 22, 2017 ("Tax Cuts and Jobs Act") that changed the Company’s income tax rate from 35% to 21%. The Update changed current accounting whereby an entity may elect to reclassify the stranded tax effect from accumulated other comprehensive income to retained earnings. The Update is effective for periods beginning after December 15, 2018 although early adoption is permitted. The Company early adopted ASU 2018-02 effective December 31, 2017 and elected a portfolio policy to reclassify the stranded tax effects of the change in the federal corporate tax rate of the net unrealized gains on our available-for-sale investment securities from accumulated other comprehensive loss, net to retained earnings. FASB ASU 2018-05 , Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 was issued to provide guidance on the income tax accounting implications of the Tax Cuts and Jobs Act, and allows for entities to report provisional amounts for specific income tax effects of the Tax Cuts and Jobs Act for which the accounting under ASC Topic 740 was not yet complete but a reasonable estimate could be determined. A measurement period of one-year is allowed to complete the accounting effects under ASC Topic 740 and revise any previous estimates reported. Any provisional amounts or subsequent adjustments included in an entity’s financial statements during the measurement period should be included in income from continuing operations as an adjustment to tax expense in the reporting period the amounts are determined. The Company adopted this Update with the provisional adjustments as reported in the Consolidated Financial Statements on Form 10-K as of December 31, 2017. As of June 30, 2018, the Company did not incur any adjustments to the provisional recognition. |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Preliminary fair value estimates of assets acquired and liabilities assumed and adjustments | The preliminary fair value estimates of the assets acquired and liabilities assumed in the Puget Sound Merger were as follows: Puget Sound Merger (In thousands) Assets Cash and cash equivalents $ 25,889 Interest earning deposits 54,247 Investment securities available for sale 80,353 Loans receivable 388,462 Premises and equipment, net 732 Federal Home Loan Bank stock, at cost 623 Bank owned life insurance 6,264 Accrued interest receivable 1,448 Prepaid expenses and other assets 1,354 Other intangible assets 11,270 Total assets acquired $ 570,642 Liabilities Deposits $ 505,885 Accrued expenses and other liabilities 2,504 Total liabilities acquired $ 508,389 Fair value of net assets acquired $ 62,253 A summary of the net assets purchased and the preliminary estimated fair value adjustments and resulting goodwill recognized from the Puget Sound Merger are presented in the following tables. Goodwill represents the excess of the consideration transferred over the estimated fair value of the net assets acquired and liabilities assumed. Puget Sound Merger (In thousands) Cost basis of net assets on merger date $ 54,405 Consideration transferred (130,773 ) Fair value adjustments: Investment securities (348 ) Total loans receivable, net 1,400 Premises and equipment (121 ) Other intangible assets 9,207 Prepaid expenses and other assets (2,282 ) Deposits (62 ) Accrued expenses and other liabilities 54 Goodwill recognized from the Puget Sound Merger $ (68,520 ) |
Summary of results of operations of acquired business | The table below presents only the significant results for the acquired business since the January 16, 2018 merger date: Three Months Ended (1) Six Months Ended (1) June 30, 2018 (In thousands) Interest income: Interest and fees on loans (2) $ 6,130 $ 10,647 Interest income: Interest and fees on investments (3) — 59 Interest income: Other interest earning assets 25 113 Interest expense (180 ) (324 ) Provision for loan losses for loans (350 ) (550 ) Noninterest income 109 257 Noninterest expense (4) (2,092 ) (7,672 ) Net effect, pre-tax $ 3,642 $ 2,530 (1) The Puget Sound Merger was completed on January 16, 2018. (2) Includes the accretion of the discount on the purchased loans of $1.1 million and $1.5 million during the three and six months ended June 30, 2018 , respectively. (3) All securities were sold with trade date of January 16, 2018 and settlement dates on or before February 14, 2018. (4) Excludes certain compensation and employee benefits for management as it is impracticable to determine due to the integration of the operations for this merger. Also includes certain merger-related costs incurred by the Company. |
Investment Securities (Tables)
Investment Securities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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) June 30, 2018 U.S. Treasury and U.S. Government-sponsored agencies $ 52,256 $ 42 $ (234 ) $ 52,064 Municipal securities 202,918 1,366 (1,262 ) 203,022 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 319,492 352 (7,722 ) 312,122 Commercial 257,858 141 (7,778 ) 250,221 Collateralized loan obligations 2,253 3 — 2,256 Corporate obligations 25,617 153 (80 ) 25,690 Other asset-backed securities 27,603 692 — 28,295 Total $ 887,997 $ 2,749 $ (17,076 ) $ 873,670 December 31, 2017 U.S. Treasury and U.S. Government-sponsored agencies $ 13,460 $ 6 $ (24 ) $ 13,442 Municipal securities 247,358 3,720 (1,063 ) 250,015 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 282,724 422 (2,935 ) 280,211 Commercial 219,696 444 (3,061 ) 217,079 Collateralized loan obligations 4,561 19 — 4,580 Corporate obligations 16,594 220 (44 ) 16,770 Other securities (2) 27,781 652 — 28,433 Total $ 812,174 $ 5,483 $ (7,127 ) $ 810,530 (1) Issued and guaranteed by U.S. Government-sponsored agencies. (2) Primarily asset-backed securities. |
Schedule of maturities of investment securities | The amortized cost and fair value of investment securities available for sale at June 30, 2018 , 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 $ 24,656 $ 24,690 Due after one year through five years 149,590 148,197 Due after five years through ten years 254,873 248,759 Due after ten years 458,878 452,024 Total $ 887,997 $ 873,670 |
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 June 30, 2018 and December 31, 2017 : Less than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (In thousands) June 30, 2018 U.S. Treasury and U.S. Government-sponsored agencies $ 34,674 $ (223 ) $ 536 $ (11 ) $ 35,210 $ (234 ) Municipal securities 63,443 (552 ) 22,903 (710 ) 86,346 (1,262 ) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 178,865 (3,954 ) 78,330 (3,768 ) 257,195 (7,722 ) Commercial 128,298 (3,058 ) 94,847 (4,720 ) 223,145 (7,778 ) Corporate obligations 15,482 (80 ) — — 15,482 (80 ) Total $ 420,762 $ (7,867 ) $ 196,616 $ (9,209 ) $ 617,378 $ (17,076 ) December 31, 2017 U.S. Treasury and U.S. Government-sponsored agencies $ 11,436 $ (24 ) $ — $ — $ 11,436 $ (24 ) Municipal securities 39,298 (384 ) 26,509 (679 ) 65,807 (1,063 ) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 175,847 (1,296 ) 66,380 (1,639 ) 242,227 (2,935 ) Commercial 75,121 (700 ) 90,822 (2,361 ) 165,943 (3,061 ) Corporate obligations 3,472 (44 ) — — 3,472 (44 ) Total $ 305,174 $ (2,448 ) $ 183,711 $ (4,679 ) $ 488,885 $ (7,127 ) (1) Issued and guaranteed by U.S. Government-sponsored agencies. |
Schedule of realized gains and losses on sale of securities available for sale | The following table presents the gross realized gains and losses on the sale of securities available for sale for the three and six months ended June 30, 2018 and 2017 . Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) Gross realized gains $ 18 $ 117 $ 122 $ 117 Gross realized losses — — (69 ) — Net realized gains $ 18 $ 117 $ 53 $ 117 |
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 June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 Amortized Cost Fair Value Amortized Cost Fair Value (In thousands) Washington and Oregon state to secure public deposits $ 197,047 $ 193,946 $ 206,377 $ 206,425 Repurchase agreements 45,463 44,207 48,750 48,237 Other securities pledged 20,048 19,742 12,484 12,498 Total $ 262,558 $ 257,895 $ 267,611 $ 267,160 |
Loans Receivable (Tables)
Loans Receivable (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Loans and Leases Receivable Disclosure [Abstract] | |
Schedule of loans receivable | Loans receivable at June 30, 2018 and December 31, 2017 consisted of the following portfolio segments and classes: June 30, 2018 December 31, 2017 (In thousands) Commercial business: Commercial and industrial $ 800,043 $ 645,396 Owner-occupied commercial real estate 693,330 622,150 Non-owner occupied commercial real estate 1,187,548 986,594 Total commercial business 2,680,921 2,254,140 One-to-four family residential 92,518 86,997 Real estate construction and land development: One-to-four family residential 71,934 51,985 Five or more family residential and commercial properties 93,315 97,499 Total real estate construction and land development 165,249 149,484 Consumer 385,987 355,091 Gross loans receivable 3,324,675 2,845,712 Net deferred loan costs 3,613 3,359 Loans receivable, net 3,328,288 2,849,071 Allowance for loan losses (33,972 ) (32,086 ) Total loans receivable, net $ 3,294,316 $ 2,816,985 |
Loans receivable by credit quality indicator | The following tables present the balance of the loans receivable by credit quality indicator as of June 30, 2018 and December 31, 2017 . June 30, 2018 Pass OAEM Substandard Doubtful/Loss Total (In thousands) Commercial business: Commercial and industrial $ 731,265 $ 23,559 $ 45,219 $ — $ 800,043 Owner-occupied commercial real estate 656,991 16,402 19,937 — 693,330 Non-owner occupied commercial real estate 1,161,596 10,972 14,980 — 1,187,548 Total commercial business 2,549,852 50,933 80,136 — 2,680,921 One-to-four family residential 91,264 — 1,254 — 92,518 Real estate construction and land development: One-to-four family residential 70,499 267 1,168 — 71,934 Five or more family residential and commercial properties 93,258 57 — — 93,315 Total real estate construction and land development 163,757 324 1,168 — 165,249 Consumer 381,341 — 4,121 525 385,987 Gross loans receivable $ 3,186,214 $ 51,257 $ 86,679 $ 525 $ 3,324,675 December 31, 2017 Pass OAEM Substandard Doubtful/Loss Total (In thousands) Commercial business: Commercial and industrial $ 597,697 $ 19,536 $ 28,163 $ — $ 645,396 Owner-occupied commercial real estate 595,455 12,668 14,027 — 622,150 Non-owner occupied commercial real estate 955,450 10,494 20,650 — 986,594 Total commercial business 2,148,602 42,698 62,840 — 2,254,140 One-to-four family residential 85,762 — 1,235 — 86,997 Real estate construction and land development: One-to-four family residential 49,925 537 1,523 — 51,985 Five or more family residential and commercial properties 96,404 707 388 — 97,499 Total real estate construction and land development 146,329 1,244 1,911 — 149,484 Consumer 349,590 — 4,976 525 355,091 Gross loans receivable $ 2,730,283 $ 43,942 $ 70,962 $ 525 $ 2,845,712 |
Schedule of nonaccrual loans | Nonaccrual loans, segregated by segments and classes of loans, were as follows as of June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 (In thousands) Commercial business: Commercial and industrial $ 8,376 $ 3,110 Owner-occupied commercial real estate 4,690 4,090 Non-owner occupied commercial real estate 2,169 1,898 Total commercial business 15,235 9,098 One-to-four family residential 77 81 Real estate construction and land development: One-to-four family residential 1,084 1,247 Consumer 127 277 Nonaccrual loans $ 16,523 $ 10,703 |
Past due financing receivables | The balances of past due loans, segregated by segments and classes of loans, as of June 30, 2018 and December 31, 2017 were as follows: June 30, 2018 30-89 Days 90 Days or Greater Total Past Due Current Total (In thousands) Commercial business: Commercial and industrial $ 3,719 $ 4,122 $ 7,841 $ 792,202 $ 800,043 Owner-occupied commercial real estate 129 868 997 692,333 693,330 Non-owner occupied commercial real estate 1,501 3,238 4,739 1,182,809 1,187,548 Total commercial business 5,349 8,228 13,577 2,667,344 2,680,921 One-to-four family residential — — — 92,518 92,518 Real estate construction and land development: One-to-four family residential — 309 309 71,625 71,934 Five or more family residential and commercial properties — — — 93,315 93,315 Total real estate construction and land development — 309 309 164,940 165,249 Consumer 1,634 53 1,687 384,300 385,987 Gross loans receivable $ 6,983 $ 8,590 $ 15,573 $ 3,309,102 $ 3,324,675 December 31, 2017 30-89 Days 90 Days or Greater Total Past Due Current Total (In thousands) Commercial business: Commercial and industrial $ 2,993 $ 1,172 $ 4,165 $ 641,231 $ 645,396 Owner-occupied commercial real estate 1,277 1,225 2,502 619,648 622,150 Non-owner occupied commercial real estate 870 3,314 4,184 982,410 986,594 Total commercial business 5,140 5,711 10,851 2,243,289 2,254,140 One-to-four family residential 513 — 513 86,484 86,997 Real estate construction and land development: One-to-four family residential 84 1,331 1,415 50,570 51,985 Five or more family residential and commercial properties 40 — 40 97,459 97,499 Total real estate construction and land development 124 1,331 1,455 148,029 149,484 Consumer 1,939 687 2,626 352,465 355,091 Gross loans receivable $ 7,716 $ 7,729 $ 15,445 $ 2,830,267 $ 2,845,712 |
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 June 30, 2018 and December 31, 2017 are set forth in the following tables. June 30, 2018 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 $ 5,716 $ 12,238 $ 17,954 $ 18,825 $ 1,706 Owner-occupied commercial real estate 930 11,254 12,184 12,493 1,724 Non-owner occupied commercial real estate 4,662 5,923 10,585 10,558 784 Total commercial business 11,308 29,415 40,723 41,876 4,214 One-to-four family residential — 291 291 301 90 Real estate construction and land development: One-to-four family residential 775 309 1,084 1,842 5 Total real estate construction and land development 775 309 1,084 1,842 5 Consumer 53 329 382 447 74 Total $ 12,136 $ 30,344 $ 42,480 $ 44,466 $ 4,383 December 31, 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 $ 2,127 $ 9,872 $ 11,999 $ 12,489 $ 1,326 Owner-occupied commercial real estate 2,452 4,356 6,808 7,054 621 Non-owner occupied commercial real estate 4,722 11,297 16,019 16,172 1,222 Total commercial business 9,301 25,525 34,826 35,715 3,169 One-to-four family residential — 299 299 308 93 Real estate construction and land development: One-to-four family residential 938 309 1,247 2,200 2 Five or more family residential and commercial properties — 645 645 645 37 Total real estate construction and land development 938 954 1,892 2,845 39 Consumer 160 282 442 466 54 Total $ 10,399 $ 27,060 $ 37,459 $ 39,334 $ 3,355 |
Schedule of average recorded investment impaired loans including restructuring loans | The average recorded investment of impaired loans for the three and six months ended June 30, 2018 and 2017 are set forth in the following table. Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) Commercial business: Commercial and industrial $ 17,299 $ 6,925 $ 15,534 $ 8,742 Owner-occupied commercial real estate 12,643 3,278 12,622 3,760 Non-owner occupied commercial real estate 10,426 11,252 10,366 11,274 Total commercial business 40,368 21,455 38,522 23,776 One-to-four family residential 293 312 295 315 Real estate construction and land development: One-to-four family residential 1,116 2,636 1,159 2,781 Five or more family residential and commercial properties — 1,067 215 1,070 Total real estate construction and land development 1,116 3,703 1,374 3,851 Consumer 381 235 401 260 Total $ 42,158 $ 25,705 $ 40,592 $ 28,202 |
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 June 30, 2018 and December 31, 2017 were as follows: June 30, 2018 December 31, 2017 Performing TDRs Nonaccrual TDRs Performing TDRs Nonaccrual (In thousands) TDR loans $ 25,957 $ 6,761 $ 26,757 $ 5,193 Allowance for loan losses on TDR loans 2,492 726 2,635 379 |
Troubled debt restructurings on financing receivables | Loans that were modified as TDR loans during the three and six months ended June 30, 2018 and 2017 are set forth in the following table: Three Months Ended June 30, 2018 2017 Number of Contracts (1) Outstanding Number of Contracts (1) Outstanding Principal Balance (1)(2) (Dollars in thousands) Commercial business: Commercial and industrial 9 $ 2,981 5 $ 3,439 Owner-occupied commercial real estate 1 570 — — Non-owner occupied commercial real estate — — 1 947 Total commercial business 10 3,551 6 4,386 Real estate construction and land development: One-to-four family residential — — 2 745 Total real estate construction and land development — — 2 745 Consumer 3 33 1 10 Total loans modified as TDR loans 13 $ 3,584 9 $ 5,141 Six Months Ended June 30, 2018 2017 Number of Contracts (1) Outstanding Number of Contracts (1) Outstanding Principal Balance (1)(2) (Dollars in thousands) Commercial business: Commercial and industrial 17 $ 6,193 10 $ 4,913 Owner-occupied commercial real estate 1 570 1 54 Non-owner occupied commercial real estate 2 2,380 1 948 Total commercial business 20 9,143 12 5,915 Real estate construction and land development: One-to-four family residential — — 4 1,889 Total real estate construction and land development — — 4 1,889 Consumer 6 107 2 18 Total TDR loans 26 $ 9,250 18 $ 7,822 (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 six months ended June 30, 2018 and 2017 . (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), except when the modification was the initial advance on a one-to-four family residential real estate construction and land development loan under a master guidance line. There were no advances on these types of loans during the three and six months ended June 30, 2018 and 2017 . |
Troubled debt restructuring loans, subsequently defaulted | Loans that were modified during the previous twelve months that subsequently defaulted during the three and six months ended June 30, 2018 and 2017 are set forth in the following table: Three Months Ended June 30, 2018 2017 Number of Contracts Outstanding Principal Balance Number of Outstanding (Dollars in thousands) Commercial business: Commercial and industrial 4 $ 2,725 — $ — Total commercial business 4 2,725 — — Consumer — — 3 36 Total 4 $ 2,725 3 $ 36 Six Months Ended June 30, 2018 2017 Number of Contracts Outstanding Principal Balance Number of Outstanding (Dollars in thousands) Commercial business: Commercial and industrial 5 $ 3,006 1 $ 234 Non-owner occupied commercial real estate 1 73 — — Total commercial business 6 3,079 1 234 Real estate construction and land development: One-to-four family residential 2 775 — — Total real estate construction and land development 2 775 — — Consumer — — 3 36 Total 8 $ 3,854 4 $ 270 |
Purchased impaired loans | The following table reflects the outstanding principal balance and recorded investment of the PCI loans at June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 Outstanding Principal Recorded Investment Outstanding Principal Recorded Investment (In thousands) Commercial business: Commercial and industrial $ 7,307 $ 3,819 $ 8,818 $ 2,912 Owner-occupied commercial real estate 9,737 8,605 12,230 11,515 Non-owner occupied commercial real estate 12,545 11,033 14,295 13,342 Total commercial business 29,589 23,457 35,343 27,769 One-to-four family residential 3,701 3,833 4,120 5,255 Real estate construction and land development: One-to-four family residential 107 391 841 89 Five or more family residential and commercial properties 193 11 2,361 2,035 Total real estate construction and land development 300 402 3,202 2,124 Consumer 2,932 4,160 3,974 5,455 Gross PCI loans $ 36,522 $ 31,852 $ 46,639 $ 40,603 |
Schedule of impaired purchased loans accretable yield | The following table summarizes the accretable yield on the PCI loans for the three and six months ended June 30, 2018 and 2017 . Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) Balance at the beginning of the period $ 11,269 $ 13,132 $ 11,224 $ 13,860 Accretion (587 ) (935 ) (1,368 ) (1,929 ) Disposal and other (273 ) (653 ) (1,971 ) (1,143 ) Change in accretable yield (349 ) 752 2,175 1,508 Balance at the end of the period $ 10,060 $ 12,296 $ 10,060 $ 12,296 |
Allowance for Loan Losses (Tabl
Allowance for Loan Losses (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 six months ended June 30, 2017 . Balance at Beginning of Period Charge-offs Recoveries Provision for Loan Losses Balance at End of Period (In thousands) Three Months Ended June 30, 2017 Commercial business: Commercial and industrial $ 10,091 $ (63 ) $ 452 $ 171 $ 10,651 Owner-occupied commercial real estate 4,216 (78 ) 2 14 4,154 Non-owner occupied commercial real estate 7,601 — — 108 7,709 Total commercial business 21,908 (141 ) 454 293 22,514 One-to-four family residential 1,052 — 1 20 1,073 Real estate construction and land development: One-to-four family residential 791 — — 30 821 Five or more family residential and commercial properties 1,546 — — 120 1,666 Total real estate construction and land development 2,337 — — 150 2,487 Consumer 5,195 (398 ) 110 803 5,710 Unallocated 1,102 — — (135 ) 967 Total $ 31,594 $ (539 ) $ 565 $ 1,131 $ 32,751 Six Months Ended June 30, 2017 Commercial business: Commercial and industrial $ 10,968 $ (358 ) $ 675 $ (634 ) $ 10,651 Owner-occupied commercial real estate 3,661 (85 ) 151 427 4,154 Non-owner occupied commercial real estate 7,753 — — (44 ) 7,709 Total commercial business 22,382 (443 ) 826 (251 ) 22,514 One-to-four family residential 1,015 — 1 57 1,073 Real estate construction and land development: One-to-four family residential 797 — 10 14 821 Five or more family residential and commercial properties 1,359 — — 307 1,666 Total real estate construction and land development 2,156 — 10 321 2,487 Consumer 5,024 (941 ) 217 1,410 5,710 Unallocated 506 — — 461 967 Total $ 31,083 $ (1,384 ) $ 1,054 $ 1,998 $ 32,751 The following table details the allowance for loan losses disaggregated on the basis of the Company's impairment method as of December 31, 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 $ 1,326 $ 7,558 $ 1,026 $ 9,910 Owner-occupied commercial real estate 621 2,557 814 3,992 Non-owner occupied commercial real estate 1,222 5,919 956 8,097 Total commercial business 3,169 16,034 2,796 21,999 One-to-four family residential 93 798 165 1,056 Real estate construction and land development: One-to-four family residential 2 635 225 862 Five or more family residential and commercial properties 37 1,064 89 1,190 Total real estate construction and land development 39 1,699 314 2,052 Consumer 54 5,303 724 6,081 Unallocated — 898 — 898 Total $ 3,355 $ 24,732 $ 3,999 $ 32,086 The following tables detail the activity in the allowance for loan losses disaggregated by segment and class for the three and six months ended June 30, 2018 : Balance at Beginning of Period Charge-offs Recoveries Provision for Loan Losses Balance at End of Period (In thousands) Three Months Ended June 30, 2018 Commercial business: Commercial and industrial $ 9,943 $ (541 ) $ 65 $ 721 $ 10,188 Owner-occupied commercial real estate 5,040 (1 ) 3 204 5,246 Non-owner occupied commercial real estate 7,589 — — 137 7,726 Total commercial business 22,572 (542 ) 68 1,062 23,160 One-to-four family residential 1,083 (15 ) — 53 1,121 Real estate construction and land development: One-to-four family residential 941 — 2 73 1,016 Five or more family residential and commercial properties 1,115 — — (71 ) 1,044 Total real estate construction and land development 2,056 — 2 2 2,060 Consumer 6,054 (694 ) 142 803 6,305 Unallocated 1,496 — — (170 ) 1,326 Total $ 33,261 $ (1,251 ) $ 212 $ 1,750 $ 33,972 Six Months Ended June 30, 2018 Commercial business: Commercial and industrial $ 9,910 $ (622 ) $ 564 $ 336 $ 10,188 Owner-occupied commercial real estate 3,992 (1 ) 5 1,250 5,246 Non-owner occupied commercial real estate 8,097 — — (371 ) 7,726 Total commercial business 21,999 (623 ) 569 1,215 23,160 One-to-four family residential 1,056 (15 ) — 80 1,121 Real estate construction and land development: One-to-four family residential 862 — 2 152 1,016 Five or more family residential and commercial properties 1,190 — — (146 ) 1,044 Total real estate construction and land development 2,052 — 2 6 2,060 Consumer 6,081 (1,179 ) 230 1,173 6,305 Unallocated 898 — — 428 1,326 Total $ 32,086 $ (1,817 ) $ 801 $ 2,902 $ 33,972 The following table details the allowance for loan losses disaggregated on the basis of the Company's impairment method as of June 30, 2018 . Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Allowance for Loan Losses (In thousands) Commercial business: Commercial and industrial $ 1,706 $ 7,564 $ 918 $ 10,188 Owner-occupied commercial real estate 1,724 2,736 786 5,246 Non-owner occupied commercial real estate 784 6,118 824 7,726 Total commercial business 4,214 16,418 2,528 23,160 One-to-four family residential 90 879 152 1,121 Real estate construction and land development: One-to-four family residential 5 787 224 1,016 Five or more family residential and commercial properties — 957 87 1,044 Total real estate construction and land development 5 1,744 311 2,060 Consumer 74 5,601 630 6,305 Unallocated — 1,326 — 1,326 Total $ 4,383 $ 25,968 $ 3,621 $ 33,972 |
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, 2017 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Gross Loans Receivable (In thousands) Commercial business: Commercial and industrial $ 11,999 $ 630,485 $ 2,912 $ 645,396 Owner-occupied commercial real estate 6,808 603,827 11,515 622,150 Non-owner occupied commercial real estate 16,019 957,233 13,342 986,594 Total commercial business 34,826 2,191,545 27,769 2,254,140 One-to-four family residential 299 81,443 5,255 86,997 Real estate construction and land development: One-to-four family residential 1,247 50,649 89 51,985 Five or more family residential and commercial properties 645 94,819 2,035 97,499 Total real estate construction and land development 1,892 145,468 2,124 149,484 Consumer 442 349,194 5,455 355,091 Total $ 37,459 $ 2,767,650 $ 40,603 $ 2,845,712 The following table details the recorded investment balance of the loan receivables disaggregated on the basis of the Company’s impairment method as of June 30, 2018 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Gross Loans Receivable (In thousands) Commercial business: Commercial and industrial $ 17,954 $ 778,270 $ 3,819 $ 800,043 Owner-occupied commercial real estate 12,184 672,541 8,605 693,330 Non-owner occupied commercial real estate 10,585 1,165,930 11,033 1,187,548 Total commercial business 40,723 2,616,741 23,457 2,680,921 One-to-four family residential 291 88,394 3,833 92,518 Real estate construction and land development: One-to-four family residential 1,084 70,459 391 71,934 Five or more family residential and commercial properties — 93,304 11 93,315 Total real estate construction and land development 1,084 163,763 402 165,249 Consumer 382 381,445 4,160 385,987 Total $ 42,480 $ 3,250,343 $ 31,852 $ 3,324,675 |
Other Real Estate Owned (Tables
Other Real Estate Owned (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Real Estate [Abstract] | |
Changes in other real estate owned | Changes in other real estate owned during the three and six months ended June 30, 2017 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) Balance at the beginning of the period $ — $ 786 $ — $ 754 Additions 434 — 434 32 Balance at the end of the period $ 434 $ 786 $ 434 $ 786 |
Goodwill and Other Intangible32
Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Change in goodwill | The following table presents the change in goodwill for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) Balance at the beginning of the period $ 187,549 $ 119,029 $ 119,029 $ 119,029 Additions as a result of acquisitions (1) — — 68,520 — Balance at the end of the period $ 187,549 $ 119,029 $ 187,549 $ 119,029 (1) See Note (2) Business Combination |
Change in other intangible assets | The following table presents the change in other intangible assets for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) Balance at the beginning of the period $ 16,563 $ 7,050 $ 6,088 $ 7,374 Additions as a result of acquisitions (1) — — 11,270 — Amortization (796 ) (323 ) (1,591 ) (647 ) Balance at the end of the period $ 15,767 $ 6,727 $ 15,767 $ 6,727 (1) See Note (2) Business Combination |
Junior Subordinated Debentures
Junior Subordinated Debentures (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of weighted average rate of junior subordinated debentures | The weighted average rate of the junior subordinated debentures was as follows for the indicated periods: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Weighted average rate (1) 6.28 % 5.04 % 6.01 % 4.96 % (1) 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. |
Repurchase Agreements (Tables)
Repurchase Agreements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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: June 30, 2018 December 31, 2017 (In thousands) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential $ 10,444 $ 11,239 Commercial 11,724 20,582 Total repurchase agreements $ 22,168 $ 31,821 (1) Issued and guaranteed by U.S. Government-sponsored agencies. |
Other Borrowings (Tables)
Other Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of FHLB advances | The following table sets forth the details of FHLB advances during the three and six months ended June 30, 2018 and 2017 : Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (In thousands) FHLB Advances: Average balance during the period $ 79,115 $ 107,125 $ 57,544 $ 104,144 Maximum month-end balance during the period $ 154,500 $ 137,450 $ 154,500 $ 137,450 Weighted average rate during the period 2.04 % 0.89 % 1.93 % 0.86 % |
Derivative Financial Instrume36
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 are presented in the following table. June 30, 2018 December 31, 2017 Notional Amounts Estimated Fair Value Notional Amounts Estimated Fair Value (In thousands) Non-hedging interest rate derivatives Interest rate swaps with customer (1) $ 163,257 $ (5,454 ) $ 146,537 $ (882 ) Interest rate swap with third party (1) 163,257 5,454 146,537 882 (1) The estimated fair value of the derivative included in prepaid and other assets on the Condensed Consolidated Statements of Financial Condition was $6.6 million and $3.4 million as of June 30, 2018 and December 31, 2017 , respectively. The estimated fair value of the derivative included in accrued expenses and other liabilities on the Condensed Consolidated Statements of Financial Condition was $6.6 million and $3.4 million as of June 30, 2018 and December 31, 2017 , respectively. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 six months ended June 30, 2018 and 2017 : Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (Dollars in thousands) Net income: Net income $ 11,857 $ 11,828 $ 20,944 $ 21,144 Less: Dividends and undistributed earnings allocated to participating securities (57 ) (83 ) (110 ) (164 ) Net income allocated to common shareholders $ 11,800 $ 11,745 $ 20,834 $ 20,980 Basic: Weighted average common shares outstanding 34,023,566 29,939,280 33,680,014 29,945,641 Less: Restricted stock awards (88,905 ) (183,082 ) (107,897 ) (215,446 ) Total basic weighted average common shares outstanding 33,934,661 29,756,198 33,572,117 29,730,195 Diluted: Basic weighted average common shares outstanding 33,934,661 29,756,198 33,572,117 29,730,195 Effect of potentially dilutive common shares (1) 172,631 83,411 157,819 64,042 Total diluted weighted average common shares outstanding 34,107,292 29,839,609 33,729,936 29,794,237 (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 six months ended June 30, 2018 and calendar year 2017 . Declared Cash Dividend per Share Record Date Paid Date 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 October 25, 2017 $0.13 November 8, 2017 November 22, 2017 October 25, 2017 $0.10 November 8, 2017 November 22, 2017 * January 24, 2018 $0.15 February 7, 2018 February 21, 2018 April 25, 2018 $0.15 May 10, 2018 May 24, 2018 * Denotes a special dividend. |
Schedule of repurchased shares | The following table provides total repurchased shares for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Repurchased shares to pay withholding taxes (1) 7,394 11,476 52,820 27,367 Stock repurchase to pay withholding taxes average share price $ 33.84 $ 25.50 $ 31.96 $ 24.60 (1) During the six months ended June 30, 2018 , the Company repurchased 26,741 of shares related to the withholding taxes due on the accelerated vesting of the restricted stock units of Puget Sound which were converted to Heritage common stock shares with an average share price of $31.80 under the terms of the merger. See Note (2) Business Combination. |
Accumulated Other Comprehensi38
Accumulated Other Comprehensive (Loss) Income (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Changes in accumulated other comprehensive (loss) income (AOCI) by component | The changes in accumulated other comprehensive (loss) income (“AOCI”), all of which are due to changes in the fair value of available for sale securities and are net of tax, during the three and six months ended June 30, 2018 and 2017 are as follows: Three Months Ended Six Months Ended 2018 2017 2018 2017 (In thousands) Balance of AOCI at the beginning of period $ (8,934 ) $ (1,133 ) $ (1,298 ) $ (2,606 ) Other comprehensive (loss) income before reclassification (2,358 ) 2,766 (9,874 ) 4,239 Amounts reclassified from AOCI for gain on sale of investment securities included in net income (14 ) (76 ) (41 ) (76 ) Net current period other comprehensive (loss) income (2,372 ) 2,690 (9,915 ) 4,163 ASU 2016-01 implementation — — (93 ) — Balance of AOCI at the end of period $ (11,306 ) $ 1,557 $ (11,306 ) $ 1,557 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017 . June 30, 2018 Total Level 1 Level 2 Level 3 (In thousands) Assets Investment securities available for sale: U.S. Treasury and U.S. Government-sponsored agencies $ 52,064 $ — $ 52,064 $ — Municipal securities 203,022 — 203,022 — Mortgage-backed securities and collateralized mortgage obligations: Residential 312,122 — 312,122 — Commercial 250,221 — 250,221 — Collateralized loan obligations 2,256 — 2,256 — Corporate obligations 25,690 — 25,690 — Other asset-backed securities 28,295 — 28,295 — Total investment securities available for sale 873,670 — 873,670 — Derivative assets - interest rate swaps 6,629 — 6,629 — Liabilities Derivative liabilities - interest rate swaps $ 6,629 $ — $ 6,629 $ — December 31, 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 $ 13,442 $ — $ 13,442 $ — Municipal securities 250,015 — 250,015 — Mortgage-backed securities and collateralized mortgage obligations: Residential 280,211 — 280,211 — Commercial 217,079 — 217,079 — Collateralized loan obligations 4,580 — 4,580 — Corporate obligations 16,770 — 16,770 — Other securities 28,433 146 28,287 — Total investment securities available for sale 810,530 146 810,384 — Derivative assets - interest rate swaps 3,418 — 3,418 — Liabilities Derivative liabilities - interest rate swaps $ 3,418 $ — $ 3,418 $ — |
Fair value measurements of assets on a nonrecurring basis | The tables below represent assets measured at fair value on a nonrecurring basis at June 30, 2018 and December 31, 2017 and the net losses recorded in earnings during three and six months ended June 30, 2018 and 2017 . Basis (1) Fair Value at June 30, 2018 Total Level 1 Level 2 Level 3 Net Losses (Gains) Recorded in Earnings During the Three Months Ended June 30, 2018 Net Losses (Gains) Recorded in Earnings During the Six Months Ended June 30, 2018 (In thousands) Impaired loans: Real estate construction and land development: One-to-four family residential $ 976 $ 304 $ — $ — $ 304 $ 3 3 Total assets measured at fair value on a nonrecurring basis $ 976 $ 304 $ — $ — $ 304 $ 3 $ 3 (1) Basis represents the unpaid principal balance of impaired loans. Basis (1) Fair Value at December 31, 2017 Total Level 1 Level 2 Level 3 Net Losses Recorded in Earnings During the Three Months Ended June 30, 2017 Net Losses (Gains) Recorded in Earnings During the Six Months Ended June 30, 2017 (In thousands) Impaired loans: Real estate construction and land development: One-to-four family residential $ 976 $ 307 $ — $ — $ 307 $ — — Total assets measured at fair value on a nonrecurring basis $ 976 $ 307 $ — $ — $ 307 $ — $ — (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 June 30, 2018 and December 31, 2017 . June 30, 2018 Fair Value Valuation Technique(s) Unobservable Input(s) Range of Inputs; Weighted Average (Dollars in thousands) Impaired loans $ 304 Market approach Adjustment for differences between the comparable sales (91.2%) - (14.4)%; (44.0%) December 31, 2017 Fair Value Valuation Technique(s) Unobservable Input(s) Range of Inputs; Weighted Average (Dollars in thousands) Impaired loans $ 307 Market approach Adjustment for differences between the comparable sales (91.5%) - (14.4%); (44.0%) |
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. June 30, 2018 Carrying Value Fair Value Fair Value Measurements Using: Level 1 Level 2 Level 3 (In thousands) Financial Assets: Cash and cash equivalents $ 129,943 $ 129,943 $ 129,943 $ — $ — Investment securities available for sale 873,670 873,670 — 873,670 — Federal Home Loan Bank stock 8,616 N/A N/A N/A N/A Loans held for sale 3,598 3,708 — 3,708 — Total loans receivable, net $ 3,294,316 $ 3,277,881 $ — $ — $ 3,277,881 Accrued interest receivable 13,482 13,482 28 3,826 9,628 Derivative assets - interest rate swaps 6,629 6,629 — 6,629 — Equity security 162 162 162 — — Financial Liabilities: Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts 3,508,300 3,508,300 3,508,300 — — Certificate of deposit accounts 460,635 463,971 — 463,971 — Federal Home Loan Bank advances 75,500 75,500 — 75,500 — Securities sold under agreement to repurchase 22,168 22,168 22,168 — — Junior subordinated debentures 20,156 20,000 — — 20,000 Accrued interest payable 198 198 46 107 45 Derivative liabilities - interest rate swaps 6,629 6,629 — 6,629 — December 31, 2017 Carrying Value Fair Value Fair Value Measurements Using: Level 1 Level 2 Level 3 (In thousands) Financial Assets: Cash and cash equivalents $ 103,015 $ 103,015 $ 103,015 $ — $ — Investment securities available for sale 810,530 810,530 146 810,384 — Federal Home Loan Bank stock 8,347 N/A N/A N/A N/A Loans held for sale 2,288 2,364 — 2,364 — Loans receivable, net of allowance for loan losses 2,816,985 2,810,401 — — 2,810,401 Accrued interest receivable 12,244 12,244 23 3,772 8,449 Derivative assets - interest rate swaps 3,418 3,418 — 3,418 — Financial Liabilities: Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts $ 2,994,662 $ 2,994,662 $ 2,994,662 $ — $ — Certificate of deposit accounts 398,398 397,039 — 397,039 — Federal Home Loan Bank advances 92,500 92,500 — 92,500 — Securities sold under agreement to repurchase 31,821 31,821 31,821 — — Junior subordinated debentures 20,009 18,500 — — 18,500 Accrued interest payable 162 162 45 79 38 Derivative liabilities - interest rate swaps 3,418 3,418 — 3,418 — |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | The following table summarizes the stock option activity for the six months ended June 30, 2018 and 2017 : Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding at December 31, 2016 37,495 $ 13.77 Exercised (8,372 ) 13.03 Forfeited or expired (1,308 ) 13.53 Outstanding, vested and expected to vest and exercisable at June 30, 2017 27,815 $ 14.00 2.63 $ 348 Outstanding at December 31, 2017 23,231 $ 14.21 Exercised (4,042 ) 11.55 Forfeited or expired (831 ) 14.77 Outstanding, vested and expected to vest and exercisable at June 30, 2018 18,358 $ 14.77 1.90 $ 369 |
Schedule of restricted stock award activity | The following table summarizes the restricted stock award activity for the six months ended June 30, 2018 and 2017 : Shares Weighted-Average Grant Date Fair Value Nonvested at December 31, 2016 261,296 $ 16.80 Vested (105,972 ) 16.47 Forfeited (7,704 ) 16.78 Nonvested at June 30, 2017 147,620 $ 17.04 Nonvested at December 31, 2017 137,399 $ 17.00 Vested (66,193 ) 16.67 Forfeited (2,394 ) 16.86 Nonvested at June 30, 2018 68,812 $ 17.32 |
Summary of assumptions used for restricted stock unit grants | The Company used the following assumptions to estimate the fair value of PRSUs granted during February 2018 and 2017: 2018 2017 Shares issued 5,550 6,089 Expected Term in Years 2.84 2.85 Weighted-Average Risk Free Interest Rate 2.39 % 1.40 % Expected Dividend Yield — % — % Weighted-Average Fair Value 27.69 24.39 Correlation coefficient ABA NASDAQ Community Bank Index ABA NASDAQ Community Bank Index Range of peer company volatilities 18.99% - 51.42% 17.8% - 63.1% Range of peer company correlation coefficients 28.16% - 94.29% 8.24% - 89.79% Heritage volatility 22.3 % 21.8 % Heritage correlation coefficient 76.44 % 75.93 % |
Schedule of restricted stock unit activity | The following table summarizes the unit activity for the six months ended June 30, 2018 and 2017 : Shares Weighted-Average Grant Date Fair Value Nonvested at December 31, 2016 — $ — Granted 92,019 25.29 Forfeited (909 ) 25.35 Nonvested at June 30, 2017 91,110 $ 25.29 Nonvested at December 31, 2017 90,544 $ 25.31 Granted 114,015 30.61 Vested (32,262 ) 25.42 Forfeited (3,644 ) 27.87 Nonvested at June 30, 2018 168,653 $ 28.51 |
Description of Business, Basi41
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements - Description of Business (Details) | Jun. 30, 2018branch |
Heritage Bank | |
Business Description and Basis of Presentation [Line Items] | |
Number of branches operating | 59 |
Description of Business, Basi42
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements - Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative adjustment | $ 0 | ||||
Minimum lease payments | $ 13,700 | ||||
Retained earnings | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative adjustment | 93 | ||||
Accumulated other comprehensive loss, net | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative adjustment | $ 0 | $ (93) | $ 0 | $ 0 |
Business Combination - Textual
Business Combination - Textual (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 16, 2018 | Jan. 12, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Business Acquisition [Line Items] | ||||||
Share price (in usd per share) | $ 31.80 | $ 31.80 | $ 31.80 | |||
Number of shares forfeited to pay applicable taxes (in shares) | 26,741 | 26,741 | ||||
Goodwill | $ 0 | $ 0 | $ 68,520 | $ 0 | ||
Puget Sound Bank | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued (in shares) | 1.1688 | |||||
Number of shares issued | 4,112,258 | |||||
Share price (in usd per share) | $ 31.80 | |||||
Fair value of shares issued | $ 130,800 | |||||
Share price paid in cash (in usd per share) | $ 3,000 | |||||
Total consideration paid | $ 130,773 | |||||
Total fair value of shares forfeited to pay applicable taxes | $ 851 | |||||
Number of shares forfeited to pay applicable taxes (in shares) | 26,741 | |||||
Goodwill | $ 68,520 | 68,500 | ||||
Acquisition-related costs | $ 551 | $ 5,000 |
Business Combination - Fair Val
Business Combination - Fair Value Estimates of Assets Acquired and Liabilities Assumed (Details) - Puget Sound Bank $ in Thousands | Jan. 16, 2018USD ($) |
Assets | |
Cash and cash equivalents | $ 25,889 |
Interest earning deposits | 54,247 |
Investment securities available for sale | 80,353 |
Loans receivable | 388,462 |
Premises and equipment, net | 732 |
Federal Home Loan Bank stock, at cost | 623 |
Bank owned life insurance | 6,264 |
Accrued interest receivable | 1,448 |
Prepaid expenses and other assets | 1,354 |
Other intangible assets | 11,270 |
Total assets acquired | 570,642 |
Liabilities | |
Deposits | 505,885 |
Total liabilities acquired | 2,504 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | 508,389 |
Fair value of net assets acquired | $ 62,253 |
Business Combination - Summary
Business Combination - Summary of Fair Value Adjustments and Goodwill (Details) - USD ($) $ in Thousands | Jan. 16, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Fair value adjustments: | |||||
Goodwill recognized from the Puget Sound Merger | $ 0 | $ 0 | $ (68,520) | $ 0 | |
Puget Sound Bank | |||||
Business Acquisition [Line Items] | |||||
Cost basis of net assets on merger date | $ 54,405 | ||||
Consideration transferred | (130,773) | ||||
Fair value adjustments: | |||||
Investment securities | (348) | ||||
Total loans receivable, net | 1,400 | ||||
Premises and equipment | (121) | ||||
Other intangible assets | 9,207 | ||||
Prepaid expenses and other assets | (2,282) | ||||
Deposits | (62) | ||||
Accrued expenses and other liabilities | 54 | ||||
Goodwill recognized from the Puget Sound Merger | $ (68,520) | $ (68,500) |
Business Combination - Results
Business Combination - Results of Operations of Acquired Business (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Business Acquisition [Line Items] | ||||
Interest income: Interest and fees on loans | $ 41,141 | $ 31,500 | $ 79,300 | $ 61,985 |
Interest income: Interest and fees on investments | 4,068 | 3,141 | 7,597 | 6,190 |
Interest income: Other interest earning assets | 242 | 96 | 460 | 143 |
Interest expense | (2,928) | (1,907) | (5,338) | (3,624) |
Provision for loan losses for loans | (1,750) | (1,131) | (2,902) | (1,998) |
Noninterest income | 7,573 | 10,709 | 15,121 | 18,072 |
Noninterest expense | (35,706) | (27,809) | (72,453) | (55,032) |
Income before income taxes | 13,860 | $ 15,903 | 24,346 | $ 28,308 |
Puget Sound Bank | ||||
Business Acquisition [Line Items] | ||||
Interest income: Interest and fees on loans | 6,130 | 10,647 | ||
Interest income: Interest and fees on investments | 0 | 59 | ||
Interest income: Other interest earning assets | 25 | 113 | ||
Interest expense | (180) | (324) | ||
Provision for loan losses for loans | (350) | (550) | ||
Noninterest income | 109 | 257 | ||
Noninterest expense | (2,092) | (7,672) | ||
Income before income taxes | 3,642 | 2,530 | ||
Accretion of discount on purchased loans | $ 1,100 | $ 1,500 |
Investment Securities - Amortiz
Investment Securities - Amortized Cost, Gross Unrealized Gains and Losses and Fair Values (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Investment Holdings [Line Items] | ||
Amortized Cost | $ 887,997 | $ 812,174 |
Gross Unrealized Gains | 2,749 | 5,483 |
Gross Unrealized Losses | (17,076) | (7,127) |
Fair Value | 873,670 | 810,530 |
U.S. Treasury and U.S. Government-sponsored agencies | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 52,256 | 13,460 |
Gross Unrealized Gains | 42 | 6 |
Gross Unrealized Losses | (234) | (24) |
Fair Value | 52,064 | 13,442 |
Municipal securities | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 202,918 | 247,358 |
Gross Unrealized Gains | 1,366 | 3,720 |
Gross Unrealized Losses | (1,262) | (1,063) |
Fair Value | 203,022 | 250,015 |
Residential | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 319,492 | 282,724 |
Gross Unrealized Gains | 352 | 422 |
Gross Unrealized Losses | (7,722) | (2,935) |
Fair Value | 312,122 | 280,211 |
Commercial | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 257,858 | 219,696 |
Gross Unrealized Gains | 141 | 444 |
Gross Unrealized Losses | (7,778) | (3,061) |
Fair Value | 250,221 | 217,079 |
Collateralized loan obligations | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 2,253 | 4,561 |
Gross Unrealized Gains | 3 | 19 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 2,256 | 4,580 |
Corporate obligations | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 25,617 | 16,594 |
Gross Unrealized Gains | 153 | 220 |
Gross Unrealized Losses | (80) | (44) |
Fair Value | 25,690 | 16,770 |
Other asset-backed securities | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 27,603 | 27,781 |
Gross Unrealized Gains | 692 | 652 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 28,295 | $ 28,433 |
Investment Securities - Textual
Investment Securities - Textual (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)loan | Jun. 30, 2017loan | Jun. 30, 2018USD ($)loan | Jun. 30, 2017loan | Dec. 31, 2017USD ($) | |
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) $ in Thousands | Jun. 30, 2018USD ($) |
Amortized Cost | |
Due in one year or less | $ 24,656 |
Due after one year through five years | 149,590 |
Due after five years through ten years | 254,873 |
Due after ten years | 458,878 |
Amortized Cost | 887,997 |
Fair Value | |
Due in one year or less | 24,690 |
Due after one year through five years | 148,197 |
Due after five years through ten years | 248,759 |
Due after ten years | 452,024 |
Fair Value | $ 873,670 |
Investment Securities - Unreali
Investment Securities - Unrealized Losses (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value | ||
Less than 12 Months | $ 420,762 | $ 305,174 |
12 Months or Longer | 196,616 | 183,711 |
Total | 617,378 | 488,885 |
Unrealized Losses | ||
Less than 12 Months | (7,867) | (2,448) |
12 Months or Longer | (9,209) | (4,679) |
Total | (17,076) | (7,127) |
U.S. Treasury and U.S. Government-sponsored agencies | ||
Fair Value | ||
Less than 12 Months | 34,674 | 11,436 |
12 Months or Longer | 536 | 0 |
Total | 35,210 | 11,436 |
Unrealized Losses | ||
Less than 12 Months | (223) | (24) |
12 Months or Longer | (11) | 0 |
Total | (234) | (24) |
Municipal securities | ||
Fair Value | ||
Less than 12 Months | 63,443 | 39,298 |
12 Months or Longer | 22,903 | 26,509 |
Total | 86,346 | 65,807 |
Unrealized Losses | ||
Less than 12 Months | (552) | (384) |
12 Months or Longer | (710) | (679) |
Total | (1,262) | (1,063) |
Residential | ||
Fair Value | ||
Less than 12 Months | 178,865 | 175,847 |
12 Months or Longer | 78,330 | 66,380 |
Total | 257,195 | 242,227 |
Unrealized Losses | ||
Less than 12 Months | (3,954) | (1,296) |
12 Months or Longer | (3,768) | (1,639) |
Total | (7,722) | (2,935) |
Commercial | ||
Fair Value | ||
Less than 12 Months | 128,298 | 75,121 |
12 Months or Longer | 94,847 | 90,822 |
Total | 223,145 | 165,943 |
Unrealized Losses | ||
Less than 12 Months | (3,058) | (700) |
12 Months or Longer | (4,720) | (2,361) |
Total | (7,778) | (3,061) |
Corporate obligations | ||
Fair Value | ||
Less than 12 Months | 15,482 | 3,472 |
12 Months or Longer | 0 | 0 |
Total | 15,482 | 3,472 |
Unrealized Losses | ||
Less than 12 Months | (80) | (44) |
12 Months or Longer | 0 | 0 |
Total | $ (80) | $ (44) |
Investment Securities - Realize
Investment Securities - Realized Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Gross realized gains | $ 18 | $ 117 | $ 122 | $ 117 |
Gross realized losses | 0 | 0 | (69) | 0 |
Net realized gains | $ 18 | $ 117 | $ 53 | $ 117 |
Investment Securities - Amort52
Investment Securities - Amortized Cost and Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Scheduled of amortized cost and fair value of securities pledged as collateral | ||
Amortized Cost | $ 262,558 | $ 267,611 |
Fair Value | 257,895 | 267,160 |
Washington and Oregon state to secure public deposits | ||
Scheduled of amortized cost and fair value of securities pledged as collateral | ||
Amortized Cost | 197,047 | 206,377 |
Fair Value | 193,946 | 206,425 |
Repurchase agreements | ||
Scheduled of amortized cost and fair value of securities pledged as collateral | ||
Amortized Cost | 45,463 | 48,750 |
Fair Value | 44,207 | 48,237 |
Other securities pledged | ||
Scheduled of amortized cost and fair value of securities pledged as collateral | ||
Amortized Cost | 20,048 | 12,484 |
Fair Value | $ 19,742 | $ 12,498 |
Investment Securities - Equity
Investment Securities - Equity Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Investments, Debt and Equity Securities [Abstract] | ||
Equity security | $ 162 | $ 146 |
Loans Receivable - Loan Origina
Loans Receivable - Loan Origination/Risk Management (Details) $ in Thousands | 6 Months Ended | |||||
Jun. 30, 2018USD ($)segment | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Number of loan segments | segment | 4 | |||||
Maximum percentage consumer loans | 80.00% | |||||
Gross loans receivable | $ 3,324,675 | $ 2,845,712 | ||||
Net deferred loan costs | 3,613 | 3,359 | ||||
Loans receivable, net | 3,328,288 | 2,849,071 | ||||
Allowance for loan losses | (33,972) | $ (33,261) | (32,086) | $ (32,751) | $ (31,594) | $ (31,083) |
Total loans receivable, net | 3,294,316 | 2,816,985 | ||||
Commercial Business | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 2,680,921 | 2,254,140 | ||||
Allowance for loan losses | (23,160) | (22,572) | (21,999) | (22,514) | (21,908) | (22,382) |
Commercial Business | Commercial and Industrial | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 800,043 | 645,396 | ||||
Allowance for loan losses | (10,188) | (9,943) | (9,910) | (10,651) | (10,091) | (10,968) |
Commercial Business | Owner-occupied Commercial Real Estate | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 693,330 | 622,150 | ||||
Allowance for loan losses | (5,246) | (5,040) | (3,992) | (4,154) | (4,216) | (3,661) |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 1,187,548 | 986,594 | ||||
Allowance for loan losses | $ (7,726) | (7,589) | (8,097) | (7,709) | (7,601) | (7,753) |
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 | 80.00% | |||||
Gross loans receivable | $ 92,518 | 86,997 | ||||
Allowance for loan losses | (1,121) | (1,083) | (1,056) | (1,073) | (1,052) | (1,015) |
Real Estate Construction and Land Development | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 165,249 | 149,484 | ||||
Allowance for loan losses | (2,060) | (2,056) | (2,052) | (2,487) | (2,337) | (2,156) |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 71,934 | 51,985 | ||||
Allowance for loan losses | (1,016) | (941) | (862) | (821) | (791) | (797) |
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 | 93,315 | 97,499 | ||||
Allowance for loan losses | (1,044) | (1,115) | (1,190) | (1,666) | (1,546) | (1,359) |
Consumer | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Gross loans receivable | 385,987 | 355,091 | ||||
Allowance for loan losses | $ (6,305) | $ (6,054) | $ (6,081) | $ (5,710) | $ (5,195) | $ (5,024) |
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) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017Loan | |
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 | Jun. 30, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | $ 3,186,214 | $ 2,730,283 |
OAEM | 51,257 | 43,942 |
Substandard | 86,679 | 70,962 |
Doubtful/Loss | 525 | 525 |
Total | 3,324,675 | 2,845,712 |
Potential problem loans receivable | 101,500 | 83,500 |
Commercial Business | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 2,549,852 | 2,148,602 |
OAEM | 50,933 | 42,698 |
Substandard | 80,136 | 62,840 |
Doubtful/Loss | 0 | 0 |
Total | 2,680,921 | 2,254,140 |
Commercial Business | Commercial and Industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 731,265 | 597,697 |
OAEM | 23,559 | 19,536 |
Substandard | 45,219 | 28,163 |
Doubtful/Loss | 0 | 0 |
Total | 800,043 | 645,396 |
Commercial Business | Owner-occupied Commercial Real Estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 656,991 | 595,455 |
OAEM | 16,402 | 12,668 |
Substandard | 19,937 | 14,027 |
Doubtful/Loss | 0 | 0 |
Total | 693,330 | 622,150 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 1,161,596 | 955,450 |
OAEM | 10,972 | 10,494 |
Substandard | 14,980 | 20,650 |
Doubtful/Loss | 0 | 0 |
Total | 1,187,548 | 986,594 |
One-to-four Family Residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 91,264 | 85,762 |
OAEM | 0 | 0 |
Substandard | 1,254 | 1,235 |
Doubtful/Loss | 0 | 0 |
Total | 92,518 | 86,997 |
Real Estate Construction and Land Development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 163,757 | 146,329 |
OAEM | 324 | 1,244 |
Substandard | 1,168 | 1,911 |
Doubtful/Loss | 0 | 0 |
Total | 165,249 | 149,484 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 70,499 | 49,925 |
OAEM | 267 | 537 |
Substandard | 1,168 | 1,523 |
Doubtful/Loss | 0 | 0 |
Total | 71,934 | 51,985 |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 93,258 | 96,404 |
OAEM | 57 | 707 |
Substandard | 0 | 388 |
Doubtful/Loss | 0 | 0 |
Total | 93,315 | 97,499 |
Consumer | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 381,341 | 349,590 |
OAEM | 0 | 0 |
Substandard | 4,121 | 4,976 |
Doubtful/Loss | 525 | 525 |
Total | $ 385,987 | $ 355,091 |
Loans Receivable - Nonaccrual L
Loans Receivable - Nonaccrual Loans (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | $ 16,523 | $ 10,703 |
Commercial Business | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 15,235 | 9,098 |
Commercial Business | Commercial and Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 8,376 | 3,110 |
Commercial Business | Owner-occupied Commercial Real Estate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 4,690 | 4,090 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 2,169 | 1,898 |
One-to-four Family Residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 77 | 81 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 1,084 | 1,247 |
Consumer | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | $ 127 | $ 277 |
Loans Receivable - Past Due Loa
Loans Receivable - Past Due Loans (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | $ 15,573,000 | $ 15,445,000 |
Current | 3,309,102,000 | 2,830,267,000 |
Total | 3,324,675,000 | 2,845,712,000 |
90 days or more and still accruing | 0 | 0 |
30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 6,983,000 | 7,716,000 |
90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 8,590,000 | 7,729,000 |
Commercial Business | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 13,577,000 | 10,851,000 |
Current | 2,667,344,000 | 2,243,289,000 |
Total | 2,680,921,000 | 2,254,140,000 |
Commercial Business | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 5,349,000 | 5,140,000 |
Commercial Business | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 8,228,000 | 5,711,000 |
Commercial Business | Commercial and Industrial | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 7,841,000 | 4,165,000 |
Current | 792,202,000 | 641,231,000 |
Total | 800,043,000 | 645,396,000 |
Commercial Business | Commercial and Industrial | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 3,719,000 | 2,993,000 |
Commercial Business | Commercial and Industrial | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 4,122,000 | 1,172,000 |
Commercial Business | Owner-occupied Commercial Real Estate | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 997,000 | 2,502,000 |
Current | 692,333,000 | 619,648,000 |
Total | 693,330,000 | 622,150,000 |
Commercial Business | Owner-occupied Commercial Real Estate | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 129,000 | 1,277,000 |
Commercial Business | Owner-occupied Commercial Real Estate | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 868,000 | 1,225,000 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 4,739,000 | 4,184,000 |
Current | 1,182,809,000 | 982,410,000 |
Total | 1,187,548,000 | 986,594,000 |
Commercial Business | Non-owner Occupied Commercial Real Estate | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,501,000 | 870,000 |
Commercial Business | Non-owner Occupied Commercial Real Estate | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 3,238,000 | 3,314,000 |
One-to-four Family Residential | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 0 | 513,000 |
Current | 92,518,000 | 86,484,000 |
Total | 92,518,000 | 86,997,000 |
One-to-four Family Residential | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 0 | 513,000 |
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 | 309,000 | 1,455,000 |
Current | 164,940,000 | 148,029,000 |
Total | 165,249,000 | 149,484,000 |
Real Estate Construction and Land Development | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 0 | 124,000 |
Real Estate Construction and Land Development | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 309,000 | 1,331,000 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 309,000 | 1,415,000 |
Current | 71,625,000 | 50,570,000 |
Total | 71,934,000 | 51,985,000 |
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 | 0 | 84,000 |
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 | 1,331,000 |
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 | 0 | 40,000 |
Current | 93,315,000 | 97,459,000 |
Total | 93,315,000 | 97,499,000 |
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 | 0 | 40,000 |
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 | 0 |
Consumer | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,687,000 | 2,626,000 |
Current | 384,300,000 | 352,465,000 |
Total | 385,987,000 | 355,091,000 |
Consumer | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,634,000 | 1,939,000 |
Consumer | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | $ 53,000 | $ 687,000 |
Loans Receivable - Impaired Loa
Loans Receivable - Impaired Loans (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | $ 12,136,000 | $ 12,136,000 | $ 10,399,000 | ||
Recorded Investment With Specific Valuation Allowance | 30,344,000 | 30,344,000 | 27,060,000 | ||
Total Recorded Investment | 42,480,000 | 42,480,000 | 37,459,000 | ||
Unpaid Contractual Principal Balance | 44,466,000 | 44,466,000 | 39,334,000 | ||
Related Specific Valuation Allowance | 4,383,000 | 4,383,000 | 3,355,000 | ||
Average recorded investment on impaired loans | 42,158,000 | $ 25,705,000 | 40,592,000 | $ 28,202,000 | |
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 | 360,000 | 281,000 | 686,000 | 646,000 | |
Commercial Business | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 11,308,000 | 11,308,000 | 9,301,000 | ||
Recorded Investment With Specific Valuation Allowance | 29,415,000 | 29,415,000 | 25,525,000 | ||
Total Recorded Investment | 40,723,000 | 40,723,000 | 34,826,000 | ||
Unpaid Contractual Principal Balance | 41,876,000 | 41,876,000 | 35,715,000 | ||
Related Specific Valuation Allowance | 4,214,000 | 4,214,000 | 3,169,000 | ||
Average recorded investment on impaired loans | 40,368,000 | 21,455,000 | 38,522,000 | 23,776,000 | |
Commercial Business | Commercial and Industrial | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 5,716,000 | 5,716,000 | 2,127,000 | ||
Recorded Investment With Specific Valuation Allowance | 12,238,000 | 12,238,000 | 9,872,000 | ||
Total Recorded Investment | 17,954,000 | 17,954,000 | 11,999,000 | ||
Unpaid Contractual Principal Balance | 18,825,000 | 18,825,000 | 12,489,000 | ||
Related Specific Valuation Allowance | 1,706,000 | 1,706,000 | 1,326,000 | ||
Average recorded investment on impaired loans | 17,299,000 | 6,925,000 | 15,534,000 | 8,742,000 | |
Commercial Business | Owner-occupied Commercial Real Estate | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 930,000 | 930,000 | 2,452,000 | ||
Recorded Investment With Specific Valuation Allowance | 11,254,000 | 11,254,000 | 4,356,000 | ||
Total Recorded Investment | 12,184,000 | 12,184,000 | 6,808,000 | ||
Unpaid Contractual Principal Balance | 12,493,000 | 12,493,000 | 7,054,000 | ||
Related Specific Valuation Allowance | 1,724,000 | 1,724,000 | 621,000 | ||
Average recorded investment on impaired loans | 12,643,000 | 3,278,000 | 12,622,000 | 3,760,000 | |
Commercial Business | Non-owner Occupied Commercial Real Estate | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 4,662,000 | 4,662,000 | 4,722,000 | ||
Recorded Investment With Specific Valuation Allowance | 5,923,000 | 5,923,000 | 11,297,000 | ||
Total Recorded Investment | 10,585,000 | 10,585,000 | 16,019,000 | ||
Unpaid Contractual Principal Balance | 10,558,000 | 10,558,000 | 16,172,000 | ||
Related Specific Valuation Allowance | 784,000 | 784,000 | 1,222,000 | ||
Average recorded investment on impaired loans | 10,426,000 | 11,252,000 | 10,366,000 | 11,274,000 | |
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 | 291,000 | 291,000 | 299,000 | ||
Total Recorded Investment | 291,000 | 291,000 | 299,000 | ||
Unpaid Contractual Principal Balance | 301,000 | 301,000 | 308,000 | ||
Related Specific Valuation Allowance | 90,000 | 90,000 | 93,000 | ||
Average recorded investment on impaired loans | 293,000 | 312,000 | 295,000 | 315,000 | |
Real Estate Construction and Land Development | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 775,000 | 775,000 | 938,000 | ||
Recorded Investment With Specific Valuation Allowance | 309,000 | 309,000 | 954,000 | ||
Total Recorded Investment | 1,084,000 | 1,084,000 | 1,892,000 | ||
Unpaid Contractual Principal Balance | 1,842,000 | 1,842,000 | 2,845,000 | ||
Related Specific Valuation Allowance | 5,000 | 5,000 | 39,000 | ||
Average recorded investment on impaired loans | 1,116,000 | 3,703,000 | 1,374,000 | 3,851,000 | |
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 | 775,000 | 775,000 | 938,000 | ||
Recorded Investment With Specific Valuation Allowance | 309,000 | 309,000 | 309,000 | ||
Total Recorded Investment | 1,084,000 | 1,084,000 | 1,247,000 | ||
Unpaid Contractual Principal Balance | 1,842,000 | 1,842,000 | 2,200,000 | ||
Related Specific Valuation Allowance | 5,000 | 5,000 | 2,000 | ||
Average recorded investment on impaired loans | 1,116,000 | 2,636,000 | 1,159,000 | 2,781,000 | |
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 | ||||
Recorded Investment With Specific Valuation Allowance | 645,000 | ||||
Total Recorded Investment | 645,000 | ||||
Unpaid Contractual Principal Balance | 645,000 | ||||
Related Specific Valuation Allowance | 37,000 | ||||
Average recorded investment on impaired loans | 0 | 1,067,000 | 215,000 | 1,070,000 | |
Consumer | |||||
Financing Receivable, Impaired [Line Items] | |||||
Recorded Investment With No Specific Valuation Allowance | 53,000 | 53,000 | 160,000 | ||
Recorded Investment With Specific Valuation Allowance | 329,000 | 329,000 | 282,000 | ||
Total Recorded Investment | 382,000 | 382,000 | 442,000 | ||
Unpaid Contractual Principal Balance | 447,000 | 447,000 | 466,000 | ||
Related Specific Valuation Allowance | 74,000 | 74,000 | $ 54,000 | ||
Average recorded investment on impaired loans | $ 381,000 | $ 235,000 | $ 401,000 | $ 260,000 |
Loans Receivable - TDR Loans, R
Loans Receivable - TDR Loans, Recorded Investment and Allowance (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Performing TDRs, TDR loans | $ 25,957 | $ 26,757 |
Nonaccrual TDRs, TDR loans | 6,761 | 5,193 |
Performing TDRs, Allowance for loan losses on TDR loans | 2,492 | 2,635 |
Nonaccrual TDRs, Allowance for loan losses on TDR loans | 726 | 379 |
Unfunded commitments related to credits classified as TDRs | $ 1,000 | $ 1,200 |
Loans Receivable - Modified TDR
Loans Receivable - Modified TDRs (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)contract | Jun. 30, 2017USD ($)contract | Jun. 30, 2018USD ($)contract | Jun. 30, 2017USD ($)contract | Dec. 31, 2017USD ($) | |
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ | $ 4,383 | $ 4,383 | $ 3,355 | ||
Troubled Debt Restructured Loans | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 13 | 9 | 26 | 18 | |
Outstanding Principal Balance | $ | $ 3,584 | $ 5,141 | $ 9,250 | $ 7,822 | |
Number of contracts modified | contract | 4 | 3 | 8 | 4 | |
Troubled Debt Restructured Loans | Past Modified Maturity Date | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of contracts modified | contract | 2 | 3 | 6 | 4 | |
Troubled Debt Restructured Loans | 90 Days or Greater Past Due | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of contracts modified | contract | 2 | 2 | |||
Troubled Debt Restructured Loans | Modified During the Quarter | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ | $ 738 | $ 738 | |||
Commercial Business | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ | $ 4,214 | $ 4,214 | 3,169 | ||
Commercial Business | Troubled Debt Restructured Loans | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 10 | 6 | 20 | 12 | |
Outstanding Principal Balance | $ | $ 3,551 | $ 4,386 | $ 9,143 | $ 5,915 | |
Number of contracts modified | contract | 4 | 0 | 6 | 1 | |
Commercial Business | Commercial and Industrial | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ | $ 1,706 | $ 1,706 | 1,326 | ||
Commercial Business | Commercial and Industrial | Troubled Debt Restructured Loans | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 9 | 5 | 17 | 10 | |
Outstanding Principal Balance | $ | $ 2,981 | $ 3,439 | $ 6,193 | $ 4,913 | |
Number of contracts modified | contract | 4 | 0 | 5 | 1 | |
Commercial Business | Owner-occupied Commercial Real Estate | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ | $ 1,724 | $ 1,724 | 621 | ||
Commercial Business | Owner-occupied Commercial Real Estate | Troubled Debt Restructured Loans | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 1 | 0 | 1 | 1 | |
Outstanding Principal Balance | $ | $ 570 | $ 0 | $ 570 | $ 54 | |
Number of contracts modified | contract | 1 | 0 | |||
Commercial Business | Non-owner Occupied Commercial Real Estate | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ | $ 784 | $ 784 | 1,222 | ||
Commercial Business | Non-owner Occupied Commercial Real Estate | Troubled Debt Restructured Loans | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 0 | 1 | 2 | 1 | |
Outstanding Principal Balance | $ | $ 0 | $ 947 | $ 2,380 | $ 948 | |
Real Estate Construction and Land Development | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ | $ 5 | $ 5 | 39 | ||
Number of contracts modified | contract | 2 | 0 | |||
Real Estate Construction and Land Development | Troubled Debt Restructured Loans | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 0 | 2 | 0 | 4 | |
Outstanding Principal Balance | $ | $ 0 | $ 745 | $ 0 | $ 1,889 | |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ | $ 5 | $ 5 | 2 | ||
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | Troubled Debt Restructured Loans | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 0 | 2 | 0 | 4 | |
Outstanding Principal Balance | $ | $ 0 | $ 745 | $ 0 | $ 1,889 | |
Number of contracts modified | contract | 2 | 0 | |||
Consumer | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Related specific valuation allowance | $ | $ 74 | $ 74 | $ 54 | ||
Consumer | Troubled Debt Restructured Loans | |||||
Loans Modified as Troubled Debt Restructurings [Abstract] | |||||
Number of Contracts | contract | 3 | 1 | 6 | 2 | |
Outstanding Principal Balance | $ | $ 33 | $ 10 | $ 107 | $ 18 | |
Number of contracts modified | contract | 0 | 3 | 0 | 3 |
Loans Receivable - TDRs Subsequ
Loans Receivable - TDRs Subsequently Defaulted (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($)contract | Jun. 30, 2017USD ($)contract | Jun. 30, 2018USD ($)contract | Jun. 30, 2017USD ($)contract | |
Real Estate Construction and Land Development | ||||
Financing Receivable, Modifications [Line Items] | ||||
Number of Contracts | contract | 2 | 0 | ||
Outstanding Principal Balance | $ | $ 775 | $ 0 | ||
Troubled Debt Restructured Loans | ||||
Financing Receivable, Modifications [Line Items] | ||||
Number of Contracts | contract | 4 | 3 | 8 | 4 |
Outstanding Principal Balance | $ | $ 2,725 | $ 36 | $ 3,854 | $ 270 |
Troubled Debt Restructured Loans | Commercial Business | ||||
Financing Receivable, Modifications [Line Items] | ||||
Number of Contracts | contract | 4 | 0 | 6 | 1 |
Outstanding Principal Balance | $ | $ 2,725 | $ 0 | $ 3,079 | $ 234 |
Troubled Debt Restructured Loans | Commercial Business | Commercial and Industrial | ||||
Financing Receivable, Modifications [Line Items] | ||||
Number of Contracts | contract | 4 | 0 | 5 | 1 |
Outstanding Principal Balance | $ | $ 2,725 | $ 0 | $ 3,006 | $ 234 |
Troubled Debt Restructured Loans | Commercial Business | Owner-occupied Commercial Real Estate | ||||
Financing Receivable, Modifications [Line Items] | ||||
Number of Contracts | contract | 1 | 0 | ||
Outstanding Principal Balance | $ | $ 73 | $ 0 | ||
Troubled Debt Restructured Loans | Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||||
Financing Receivable, Modifications [Line Items] | ||||
Number of Contracts | contract | 2 | 0 | ||
Outstanding Principal Balance | $ | $ 775 | $ 0 | ||
Troubled Debt Restructured Loans | Consumer | ||||
Financing Receivable, Modifications [Line Items] | ||||
Number of Contracts | contract | 0 | 3 | 0 | 3 |
Outstanding Principal Balance | $ | $ 0 | $ 36 | $ 0 | $ 36 |
Loans Receivable - Purchased Cr
Loans Receivable - Purchased Credit Impaired Loans (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | $ 36,522 | $ 46,639 |
Recorded Investment | 31,852 | 40,603 |
Commercial Business | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 29,589 | 35,343 |
Recorded Investment | 23,457 | 27,769 |
Commercial Business | Commercial and Industrial | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 7,307 | 8,818 |
Recorded Investment | 3,819 | 2,912 |
Commercial Business | Owner-occupied Commercial Real Estate | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 9,737 | 12,230 |
Recorded Investment | 8,605 | 11,515 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 12,545 | 14,295 |
Recorded Investment | 11,033 | 13,342 |
One-to-four Family Residential | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 3,701 | 4,120 |
Recorded Investment | 3,833 | 5,255 |
Real Estate Construction and Land Development | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 300 | 3,202 |
Recorded Investment | 402 | 2,124 |
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 107 | 841 |
Recorded Investment | 391 | 89 |
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 193 | 2,361 |
Recorded Investment | 11 | 2,035 |
Consumer | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 2,932 | 3,974 |
Recorded Investment | $ 4,160 | $ 5,455 |
Loans Receivable - Change in Ac
Loans Receivable - Change in Accretable Yield (Details) - PCI Loans - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||||
Balance at the beginning of the period | $ 11,269 | $ 13,132 | $ 11,224 | $ 13,860 |
Accretion | (587) | (935) | (1,368) | (1,929) |
Disposal and other | (273) | (653) | (1,971) | (1,143) |
Change in accretable yield | (349) | 752 | 2,175 | 1,508 |
Balance at the end of the period | $ 10,060 | $ 12,296 | $ 10,060 | $ 12,296 |
Allowance for Loan Losses - Sum
Allowance for Loan Losses - Summary of Changes in Loan Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | $ 33,261 | $ 31,594 | $ 32,086 | $ 31,083 |
Charge-offs | (1,251) | (539) | (1,817) | (1,384) |
Recoveries | 212 | 565 | 801 | 1,054 |
Provision for Loan Losses | 1,750 | 1,131 | 2,902 | 1,998 |
Balance at End of Period | 33,972 | 32,751 | 33,972 | 32,751 |
Commercial Business | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 22,572 | 21,908 | 21,999 | 22,382 |
Charge-offs | (542) | (141) | (623) | (443) |
Recoveries | 68 | 454 | 569 | 826 |
Provision for Loan Losses | 1,062 | 293 | 1,215 | (251) |
Balance at End of Period | 23,160 | 22,514 | 23,160 | 22,514 |
Commercial Business | Commercial and Industrial | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 9,943 | 10,091 | 9,910 | 10,968 |
Charge-offs | (541) | (63) | (622) | (358) |
Recoveries | 65 | 452 | 564 | 675 |
Provision for Loan Losses | 721 | 171 | 336 | (634) |
Balance at End of Period | 10,188 | 10,651 | 10,188 | 10,651 |
Commercial Business | Owner-occupied Commercial Real Estate | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 5,040 | 4,216 | 3,992 | 3,661 |
Charge-offs | (1) | (78) | (1) | (85) |
Recoveries | 3 | 2 | 5 | 151 |
Provision for Loan Losses | 204 | 14 | 1,250 | 427 |
Balance at End of Period | 5,246 | 4,154 | 5,246 | 4,154 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 7,589 | 7,601 | 8,097 | 7,753 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Provision for Loan Losses | 137 | 108 | (371) | (44) |
Balance at End of Period | 7,726 | 7,709 | 7,726 | 7,709 |
One-to-four Family Residential | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 1,083 | 1,052 | 1,056 | 1,015 |
Charge-offs | (15) | 0 | (15) | 0 |
Recoveries | 0 | 1 | 0 | 1 |
Provision for Loan Losses | 53 | 20 | 80 | 57 |
Balance at End of Period | 1,121 | 1,073 | 1,121 | 1,073 |
Real Estate Construction and Land Development | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 2,056 | 2,337 | 2,052 | 2,156 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 2 | 0 | 2 | 10 |
Provision for Loan Losses | 2 | 150 | 6 | 321 |
Balance at End of Period | 2,060 | 2,487 | 2,060 | 2,487 |
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 | 941 | 791 | 862 | 797 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 2 | 0 | 2 | 10 |
Provision for Loan Losses | 73 | 30 | 152 | 14 |
Balance at End of Period | 1,016 | 821 | 1,016 | 821 |
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 | 1,115 | 1,546 | 1,190 | 1,359 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Provision for Loan Losses | (71) | 120 | (146) | 307 |
Balance at End of Period | 1,044 | 1,666 | 1,044 | 1,666 |
Consumer | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 6,054 | 5,195 | 6,081 | 5,024 |
Charge-offs | (694) | (398) | (1,179) | (941) |
Recoveries | 142 | 110 | 230 | 217 |
Provision for Loan Losses | 803 | 803 | 1,173 | 1,410 |
Balance at End of Period | 6,305 | 5,710 | 6,305 | 5,710 |
Unallocated | ||||
Schedule of changes in allowance for loan losses | ||||
Balance at Beginning of Period | 1,496 | 1,102 | 898 | 506 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Provision for Loan Losses | (170) | (135) | 428 | 461 |
Balance at End of Period | $ 1,326 | $ 967 | $ 1,326 | $ 967 |
Allowance for Loan Losses - Act
Allowance for Loan Losses - Activity in Allowance for Losses Disaggregated on Basis of Impairment (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | $ 4,383 | $ 3,355 | ||||
Loans Collectively Evaluated for Impairment | 25,968 | 24,732 | ||||
PCI Loans | 3,621 | 3,999 | ||||
Total Allowance for Loan Losses | 33,972 | $ 33,261 | 32,086 | $ 32,751 | $ 31,594 | $ 31,083 |
Commercial Business | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 4,214 | 3,169 | ||||
Loans Collectively Evaluated for Impairment | 16,418 | 16,034 | ||||
PCI Loans | 2,528 | 2,796 | ||||
Total Allowance for Loan Losses | 23,160 | 22,572 | 21,999 | 22,514 | 21,908 | 22,382 |
Commercial Business | Commercial and Industrial | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 1,706 | 1,326 | ||||
Loans Collectively Evaluated for Impairment | 7,564 | 7,558 | ||||
PCI Loans | 918 | 1,026 | ||||
Total Allowance for Loan Losses | 10,188 | 9,943 | 9,910 | 10,651 | 10,091 | 10,968 |
Commercial Business | Owner-occupied Commercial Real Estate | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 1,724 | 621 | ||||
Loans Collectively Evaluated for Impairment | 2,736 | 2,557 | ||||
PCI Loans | 786 | 814 | ||||
Total Allowance for Loan Losses | 5,246 | 5,040 | 3,992 | 4,154 | 4,216 | 3,661 |
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 | 784 | 1,222 | ||||
Loans Collectively Evaluated for Impairment | 6,118 | 5,919 | ||||
PCI Loans | 824 | 956 | ||||
Total Allowance for Loan Losses | 7,726 | 7,589 | 8,097 | 7,709 | 7,601 | 7,753 |
One-to-four Family Residential | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 90 | 93 | ||||
Loans Collectively Evaluated for Impairment | 879 | 798 | ||||
PCI Loans | 152 | 165 | ||||
Total Allowance for Loan Losses | 1,121 | 1,083 | 1,056 | 1,073 | 1,052 | 1,015 |
Real Estate Construction and Land Development | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 5 | 39 | ||||
Loans Collectively Evaluated for Impairment | 1,744 | 1,699 | ||||
PCI Loans | 311 | 314 | ||||
Total Allowance for Loan Losses | 2,060 | 2,056 | 2,052 | 2,487 | 2,337 | 2,156 |
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 | 5 | 2 | ||||
Loans Collectively Evaluated for Impairment | 787 | 635 | ||||
PCI Loans | 224 | 225 | ||||
Total Allowance for Loan Losses | 1,016 | 941 | 862 | 821 | 791 | 797 |
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 | 0 | 37 | ||||
Loans Collectively Evaluated for Impairment | 957 | 1,064 | ||||
PCI Loans | 87 | 89 | ||||
Total Allowance for Loan Losses | 1,044 | 1,115 | 1,190 | 1,666 | 1,546 | 1,359 |
Consumer | ||||||
Schedule of allowance for loan losses on the basis of impairment method | ||||||
Loans Individually Evaluated for Impairment | 74 | 54 | ||||
Loans Collectively Evaluated for Impairment | 5,601 | 5,303 | ||||
PCI Loans | 630 | 724 | ||||
Total Allowance for Loan Losses | 6,305 | 6,054 | 6,081 | 5,710 | 5,195 | 5,024 |
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 | 1,326 | 898 | ||||
PCI Loans | 0 | 0 | ||||
Total Allowance for Loan Losses | $ 1,326 | $ 1,496 | $ 898 | $ 967 | $ 1,102 | $ 506 |
Allowance for Loan Losses - Rec
Allowance for Loan Losses - Recorded Investment Disaggregated on Basis of Impairment (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | $ 42,480 | $ 37,459 |
Loans Collectively Evaluated for Impairment | 3,250,343 | 2,767,650 |
PCI Loans | 31,852 | 40,603 |
Total Gross Loans Receivable | 3,324,675 | 2,845,712 |
Commercial Business | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 40,723 | 34,826 |
Loans Collectively Evaluated for Impairment | 2,616,741 | 2,191,545 |
PCI Loans | 23,457 | 27,769 |
Total Gross Loans Receivable | 2,680,921 | 2,254,140 |
Commercial Business | Commercial and Industrial | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 17,954 | 11,999 |
Loans Collectively Evaluated for Impairment | 778,270 | 630,485 |
PCI Loans | 3,819 | 2,912 |
Total Gross Loans Receivable | 800,043 | 645,396 |
Commercial Business | Owner-occupied Commercial Real Estate | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 12,184 | 6,808 |
Loans Collectively Evaluated for Impairment | 672,541 | 603,827 |
PCI Loans | 8,605 | 11,515 |
Total Gross Loans Receivable | 693,330 | 622,150 |
Commercial Business | Non-owner Occupied Commercial Real Estate | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 10,585 | 16,019 |
Loans Collectively Evaluated for Impairment | 1,165,930 | 957,233 |
PCI Loans | 11,033 | 13,342 |
Total Gross Loans Receivable | 1,187,548 | 986,594 |
One-to-four Family Residential | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 291 | 299 |
Loans Collectively Evaluated for Impairment | 88,394 | 81,443 |
PCI Loans | 3,833 | 5,255 |
Total Gross Loans Receivable | 92,518 | 86,997 |
Real Estate Construction and Land Development | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 1,084 | 1,892 |
Loans Collectively Evaluated for Impairment | 163,763 | 145,468 |
PCI Loans | 402 | 2,124 |
Total Gross Loans Receivable | 165,249 | 149,484 |
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 | 1,084 | 1,247 |
Loans Collectively Evaluated for Impairment | 70,459 | 50,649 |
PCI Loans | 391 | 89 |
Total Gross Loans Receivable | 71,934 | 51,985 |
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 | 0 | 645 |
Loans Collectively Evaluated for Impairment | 93,304 | 94,819 |
PCI Loans | 11 | 2,035 |
Total Gross Loans Receivable | 93,315 | 97,499 |
Consumer | ||
Schedule of loan receivables on the basis of impairment method | ||
Loans Individually Evaluated for Impairment | 382 | 442 |
Loans Collectively Evaluated for Impairment | 381,445 | 349,194 |
PCI Loans | 4,160 | 5,455 |
Total Gross Loans Receivable | $ 385,987 | $ 355,091 |
Other Real Estate Owned (Detail
Other Real Estate Owned (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Real Estate [Abstract] | ||||
Mortgage loans in process of foreclosure | $ 77 | $ 77 | ||
Changes in other real estate owned | ||||
Balance at the beginning of the period | 0 | $ 786 | 0 | $ 754 |
Additions | 434 | 0 | 434 | 32 |
Balance at the end of the period | $ 434 | $ 786 | $ 434 | $ 786 |
Goodwill and Other Intangible69
Goodwill and Other Intangible Assets - Change in Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Goodwill [Roll Forward] | ||||
Balance at the beginning of the period | $ 187,549 | $ 119,029 | $ 119,029 | $ 119,029 |
Additions as a result of acquisitions | 0 | 0 | 68,520 | 0 |
Balance at the end of the period | $ 187,549 | $ 119,029 | $ 187,549 | $ 119,029 |
Goodwill and Other Intangible70
Goodwill and Other Intangible Assets - Other Intangible Assets, Textual (Details) - Core Deposits | 6 Months Ended |
Jun. 30, 2018 | |
Puget Sound Bancorp | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 10 years |
Washington Banking Company | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 10 years |
Valley Community Bancshares | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 10 years |
Northwest Commercial Bank | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 5 years |
Goodwill and Other Intangible71
Goodwill and Other Intangible Assets - Change in Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Finite-lived Intangible Assets [Roll Forward] | ||||
Balance at the beginning of the period | $ 16,563 | $ 7,050 | $ 6,088 | $ 7,374 |
Additions as a result of acquisitions | 0 | 0 | 11,270 | 0 |
Amortization | (796) | (323) | (1,591) | (647) |
Balance at the end of the period | $ 15,767 | $ 6,727 | $ 15,767 | $ 6,727 |
Junior Subordinated Debenture72
Junior Subordinated Debentures (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2007 | Dec. 31, 2017 | May 01, 2014 | |
Debt Instrument [Line Items] | |||||||
Issued amount | $ 25,000,000 | ||||||
Debt term | 30 years | ||||||
Adjustable rate of trust preferred securities | 3.90% | 3.90% | |||||
Junior subordinated debentures | $ 20,156,000 | $ 20,156,000 | $ 20,009,000 | ||||
Junior Subordinated Debentures | |||||||
Debt Instrument [Line Items] | |||||||
Weighted average rate | 6.28% | 5.04% | 6.01% | 4.96% | |||
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 | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Disclosure of Repurchase Agreements [Abstract] | ||
Repurchase agreements, maturity period | 1 day | |
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Repurchase agreement obligations | $ 22,168 | $ 31,821 |
Residential | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Repurchase agreement obligations | 10,444 | 11,239 |
Commercial | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Repurchase agreement obligations | $ 11,724 | $ 20,582 |
Other Borrowings - Textual (Det
Other Borrowings - Textual (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Federal Home Loan Bank, Advances [Line Items] | ||
Credit facility with the FHLB | $ 838,100,000 | |
FHLB advances outstanding | 75,500,000 | $ 92,500,000 |
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 | 58,100,000 | |
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 | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Debt Disclosure [Abstract] | ||||
Average balance during the period | $ 79,115 | $ 107,125 | $ 57,544 | $ 104,144 |
Maximum month-end balance during the period | $ 154,500 | $ 137,450 | $ 154,500 | $ 137,450 |
Weighted average rate during the period | 2.04% | 0.89% | 1.93% | 0.86% |
Derivative Financial Instrume76
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Prepaid and other assets | ||
Derivative Asset | ||
Estimated Fair Value | $ 6,600 | $ 3,400 |
Accrued expenses and other liabilities | ||
Derivative Liability | ||
Estimated Fair Value | 6,600 | 3,400 |
Interest rate swaps | Non-hedging interest rate derivatives | ||
Derivative Asset | ||
Notional Amounts | 163,257 | 146,537 |
Estimated Fair Value | (5,454) | (882) |
Derivative Liability | ||
Notional Amounts | 163,257 | 146,537 |
Estimated Fair Value | $ 5,454 | $ 882 |
Stockholders' Equity - Reconcil
Stockholders' Equity - Reconciliation of Weighted Average Shares (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net income: | ||||
Net income | $ 11,857 | $ 11,828 | $ 20,944 | $ 21,144 |
Less: Dividends and undistributed earnings allocated to participating securities | (57) | (83) | (110) | (164) |
Net income allocated to common shareholders | $ 11,800 | $ 11,745 | $ 20,834 | $ 20,980 |
Basic: | ||||
Weighted average common shares outstanding (in shares) | 34,023,566 | 29,939,280 | 33,680,014 | 29,945,641 |
Less: Restricted stock awards (in shares) | (88,905) | (183,082) | (107,897) | (215,446) |
Total basic weighted average common shares outstanding (in shares) | 33,934,661 | 29,756,198 | 33,572,117 | 29,730,195 |
Diluted: | ||||
Basic weighted average common shares outstanding (in shares) | 33,934,661 | 29,756,198 | 33,572,117 | 29,730,195 |
Effect of potentially dilutive common shares (in shares) | 172,631 | 83,411 | 157,819 | 64,042 |
Total diluted weighted average common shares outstanding (in shares) | 34,107,292 | 29,839,609 | 33,729,936 | 29,794,237 |
Stockholders' Equity - Earnings
Stockholders' Equity - Earnings Per Common Share, Textual (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Equity [Abstract] | ||||
Anti-dilutive securities excluded from computation (in shares) | 0 | 0 | 0 | 0 |
Stockholders' Equity - Dividend
Stockholders' Equity - Dividends (Details) - $ / shares | Apr. 25, 2018 | Jan. 24, 2018 | Oct. 25, 2017 | Jul. 25, 2017 | Apr. 25, 2017 | Jan. 25, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Dividends Payable [Line Items] | ||||||||||
Declared | Apr. 25, 2018 | Jan. 24, 2018 | Oct. 25, 2017 | Jul. 25, 2017 | Apr. 25, 2017 | Jan. 25, 2017 | ||||
Cash Dividend per Share (in usd per share) | $ 0.15 | $ 0.15 | $ 0.13 | $ 0.13 | $ 0.13 | $ 0.12 | $ 0.15 | $ 0.13 | $ 0.3 | $ 0.25 |
Record Date | May 10, 2018 | Feb. 7, 2018 | Nov. 8, 2017 | Aug. 10, 2017 | May 10, 2017 | Feb. 9, 2017 | ||||
Paid Date | May 24, 2018 | Feb. 21, 2018 | Nov. 22, 2017 | Aug. 24, 2017 | May 24, 2017 | Feb. 23, 2017 | ||||
Special Dividend | ||||||||||
Dividends Payable [Line Items] | ||||||||||
Declared | Oct. 25, 2017 | |||||||||
Cash Dividend per Share (in usd per share) | $ 0.10 | |||||||||
Record Date | Nov. 8, 2017 | |||||||||
Paid Date | Nov. 22, 2017 |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Repurchase Program (Details) - Eleventh Plan - $ / shares | Oct. 23, 2014 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2018 |
Stockholders Equity (Textual) [Abstract] | ||||||
Outstanding share percent | 5.00% | |||||
Outstanding common shares in the plan (in shares) | 1,513,000 | |||||
Number of shares repurchased (in shares) | 0 | 0 | 0 | 0 | 579,996 | |
Withholding taxes average price per share (in usd per share) | $ 16.67 |
Stockholders' Equity - Shares R
Stockholders' Equity - Shares Repurchased (Details) - $ / shares | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 16, 2018 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Number of shares repurchased related to withholding taxes due on accelerated vesting of RSUs (in shares) | 26,741 | 26,741 | |||
Average share price (in usd per share) | $ 31.80 | $ 31.80 | $ 31.80 | ||
Shares Related to Withholding Taxes on the Vesting of Restricted Stock | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Repurchased shares to pay withholding taxes (in shares) | 7,394 | 11,476 | 52,820 | 27,367 | |
Stock repurchase to pay withholding taxes average share price (in usd per share) | $ 33.84 | $ 25.50 | $ 31.96 | $ 24.60 |
Stockholders' Equity - Issuance
Stockholders' Equity - Issuance of Common Stock (Details) - $ / shares | Jun. 30, 2018 | Jan. 16, 2018 |
Business Acquisition [Line Items] | ||
Share price (in usd per share) | $ 31.80 | $ 31.80 |
Puget Sound | ||
Business Acquisition [Line Items] | ||
Number of shares issued (in shares) | 4,112,258 |
Accumulated Other Comprehensi83
Accumulated Other Comprehensive (Loss) Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | |
Increase (Decrease) in Accumulated Other Comprehensive (Loss) Income [Roll Forward] | ||||||||
Beginning balance | $ 508,305 | $ 481,763 | ||||||
Other comprehensive (loss) income | $ (2,372) | $ 2,690 | (9,915) | 4,163 | ||||
ASU 2016-01 implementation | $ 0 | |||||||
Ending balance | 639,523 | 500,048 | 639,523 | 500,048 | ||||
Accumulated other comprehensive income (loss), net | ||||||||
Increase (Decrease) in Accumulated Other Comprehensive (Loss) Income [Roll Forward] | ||||||||
Beginning balance | (8,934) | (1,133) | (1,298) | (2,606) | ||||
Other comprehensive (loss) income before reclassification | (2,358) | 2,766 | (9,874) | 4,239 | ||||
Amounts reclassified from AOCI for gain on sale of investment securities available for sale included in net income | (14) | (76) | (41) | (76) | ||||
Other comprehensive (loss) income | (2,372) | 2,690 | (9,915) | 4,163 | ||||
ASU 2016-01 implementation | $ 0 | $ (93) | $ 0 | $ 0 | ||||
Ending balance | $ (11,306) | $ 1,557 | $ (11,306) | $ 1,557 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Measurement on Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | $ 873,670 | $ 810,530 |
U.S. Treasury and U.S. Government-sponsored agencies | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 52,064 | 13,442 |
Municipal securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 203,022 | 250,015 |
Residential | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 312,122 | 280,211 |
Commercial | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 250,221 | 217,079 |
Collateralized loan obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 2,256 | 4,580 |
Corporate obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 25,690 | 16,770 |
Other asset-backed securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 28,295 | 28,433 |
Recurring | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 873,670 | 810,530 |
Derivative assets - interest rate swaps | 6,629 | 3,418 |
Derivative liabilities - interest rate swaps | 6,629 | 3,418 |
Recurring | U.S. Treasury and U.S. Government-sponsored agencies | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 52,064 | 13,442 |
Recurring | Municipal securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 203,022 | 250,015 |
Recurring | Residential | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 312,122 | 280,211 |
Recurring | Commercial | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 250,221 | 217,079 |
Recurring | Collateralized loan obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 2,256 | 4,580 |
Recurring | Corporate obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 25,690 | 16,770 |
Recurring | Other asset-backed securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 28,295 | 28,433 |
Recurring | Level 1 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 146 |
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, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Municipal securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Residential | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Commercial | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Collateralized loan obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Corporate obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Other asset-backed securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 146 |
Recurring | Level 2 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 873,670 | 810,384 |
Derivative assets - interest rate swaps | 6,629 | 3,418 |
Derivative liabilities - interest rate swaps | 6,629 | 3,418 |
Recurring | Level 2 | U.S. Treasury and U.S. Government-sponsored agencies | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 52,064 | 13,442 |
Recurring | Level 2 | Municipal securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 203,022 | 250,015 |
Recurring | Level 2 | Residential | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 312,122 | 280,211 |
Recurring | Level 2 | Commercial | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 250,221 | 217,079 |
Recurring | Level 2 | Collateralized loan obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 2,256 | 4,580 |
Recurring | Level 2 | Corporate obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 25,690 | 16,770 |
Recurring | Level 2 | Other asset-backed securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 28,295 | 28,287 |
Recurring | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
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, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Municipal securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Residential | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Commercial | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Collateralized loan obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Corporate obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Other asset-backed securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total investment securities available for sale | $ 0 | $ 0 |
Fair Value Measurements - Textu
Fair Value Measurements - Textual (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | ||||
Fair value assets transfers between level 1 and level 2 transfer amount | $ 0 | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Fai86
Fair Value Measurements - Fair Value Measurement on Nonrecurring Basis (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
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 | 3,277,881 | 3,277,881 | 2,810,401 | ||
Nonrecurring | Impaired Loans | |||||
Fair value measurements of assets on a nonrecurring basis | |||||
Basis | 976 | 976 | 976 | ||
Fair Value | 304 | 304 | 307 | ||
Net Losses (Gains) Recorded in Earnings | 3 | $ 0 | 3 | $ 0 | |
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 | 304 | 304 | 307 | ||
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 | 976 | 976 | 976 | ||
Fair Value | 304 | 304 | 307 | ||
Net Losses (Gains) Recorded in Earnings | 3 | $ 0 | 3 | $ 0 | |
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 | 0 | 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 | 0 | 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 | $ 304 | $ 304 | $ 307 |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information, Level 3 (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Nonrecurring | Impaired Loans | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans | $ 304 | $ 307 |
Level 3 | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans | 3,277,881 | 2,810,401 |
Level 3 | Nonrecurring | Impaired Loans | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans | $ 304 | $ 307 |
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 | (91.20%) | (91.50%) |
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 | (14.40%) | (14.40%) |
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 | (44.00%) | (44.00%) |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Value and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Financial Assets: | ||
Equity security | $ 162 | $ 146 |
Level 1 | ||
Financial Assets: | ||
Cash and cash equivalents | 129,943 | 103,015 |
Investment securities available for sale | 0 | 146 |
Loans held for sale | 0 | 0 |
Total loans receivable, net | 0 | 0 |
Accrued interest receivable | 28 | 23 |
Derivative assets - interest rate swaps | 0 | 0 |
Equity security | 162 | |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 3,508,300 | 2,994,662 |
Certificate of deposit accounts | 0 | 0 |
Federal Home Loan Bank advances | 0 | 0 |
Securities sold under agreement to repurchase | 22,168 | 31,821 |
Junior subordinated debentures | 0 | 0 |
Accrued interest payable | 46 | 45 |
Derivative liabilities - interest rate swaps | 0 | 0 |
Level 2 | ||
Financial Assets: | ||
Cash and cash equivalents | 0 | 0 |
Investment securities available for sale | 873,670 | 810,384 |
Loans held for sale | 3,708 | 2,364 |
Total loans receivable, net | 0 | 0 |
Accrued interest receivable | 3,826 | 3,772 |
Derivative assets - interest rate swaps | 6,629 | 3,418 |
Equity security | 0 | |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 0 | 0 |
Certificate of deposit accounts | 463,971 | 397,039 |
Federal Home Loan Bank advances | 75,500 | 92,500 |
Securities sold under agreement to repurchase | 0 | 0 |
Junior subordinated debentures | 0 | 0 |
Accrued interest payable | 107 | 79 |
Derivative liabilities - interest rate swaps | 6,629 | 3,418 |
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 | 3,277,881 | 2,810,401 |
Accrued interest receivable | 9,628 | 8,449 |
Derivative assets - interest rate swaps | 0 | 0 |
Equity security | 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 | 20,000 | 18,500 |
Accrued interest payable | 45 | 38 |
Derivative liabilities - interest rate swaps | 0 | 0 |
Carrying Value | ||
Financial Assets: | ||
Cash and cash equivalents | 129,943 | 103,015 |
Investment securities available for sale | 873,670 | 810,530 |
Federal Home Loan Bank stock | 8,616 | 8,347 |
Loans held for sale | 3,598 | 2,288 |
Total loans receivable, net | 3,294,316 | 2,816,985 |
Accrued interest receivable | 13,482 | 12,244 |
Derivative assets - interest rate swaps | 6,629 | 3,418 |
Equity security | 162 | |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 3,508,300 | 2,994,662 |
Certificate of deposit accounts | 460,635 | 398,398 |
Federal Home Loan Bank advances | 75,500 | 92,500 |
Securities sold under agreement to repurchase | 22,168 | 31,821 |
Junior subordinated debentures | 20,156 | 20,009 |
Accrued interest payable | 198 | 162 |
Derivative liabilities - interest rate swaps | 6,629 | 3,418 |
Fair Value | ||
Financial Assets: | ||
Cash and cash equivalents | 129,943 | 103,015 |
Investment securities available for sale | 873,670 | 810,530 |
Loans held for sale | 3,708 | 2,364 |
Total loans receivable, net | 3,277,881 | 2,810,401 |
Accrued interest receivable | 13,482 | 12,244 |
Derivative assets - interest rate swaps | 6,629 | 3,418 |
Equity security | 162 | |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 3,508,300 | 2,994,662 |
Certificate of deposit accounts | 463,971 | 397,039 |
Federal Home Loan Bank advances | 75,500 | 92,500 |
Securities sold under agreement to repurchase | 22,168 | 31,821 |
Junior subordinated debentures | 20,000 | 18,500 |
Accrued interest payable | 198 | 162 |
Derivative liabilities - interest rate swaps | $ 6,629 | $ 3,418 |
Stock-Based Compensation - Text
Stock-Based Compensation - Textual (Details) - shares | Jul. 24, 2014 | Jun. 30, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares remain available for future issuances under stock-based compensation plans | 964,832 | |
the Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized for issuance | 1,500,000 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Awards, Textual (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Proceeds from exercise of stock options | $ 47,000 | $ 109,000 | ||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | $ 0 | $ 0 | 0 | 0 |
Intrinsic value of options exercised | 82,000 | 98,000 | ||
Proceeds from exercise of stock options | $ 47,000 | $ 109,000 | ||
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 |
Stock-Based Compensation - St91
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Shares | ||
Outstanding at beginning of period (in shares) | 23,231 | 37,495 |
Exercised (in shares) | (4,042) | (8,372) |
Forfeited or expired (in shares) | (831) | (1,308) |
Outstanding at end of period (in shares) | 18,358 | 27,815 |
Shares, Vested and expected to vest (in shares) | 18,358 | 27,815 |
Shares, Exercisable (in shares) | 18,358 | 27,815 |
Weighted-Average Exercise Price | ||
Outstanding at beginning of period (in usd per share) | $ 14.21 | $ 13.77 |
Exercised (in usd per share) | 11.55 | 13.03 |
Forfeited or expired (in usd per share) | 14.77 | 13.53 |
Outstanding at end of period (in usd per share) | 14.77 | 14 |
Weighted-Average Exercise Price, Vested and expected to vest (in usd per share) | 14.77 | 14 |
Weighted-Average Exercise Price, Exercisable (in usd per share) | $ 14.77 | $ 14 |
Weighted-Average Remaining Contractual Term, Outstanding | 1 year 10 months 25 days | 2 years 7 months 17 days |
Weighted-Average Remaining Contractual Term, Vested and expected to vest | 1 year 10 months 25 days | 2 years 7 months 17 days |
Weighted-Average Remaining Contractual Term, Exercisable | 1 year 10 months 25 days | 2 years 7 months 17 days |
Aggregate Intrinsic Value, Outstanding | $ 369 | $ 348 |
Aggregate Intrinsic Value, Vested and expected to vest | 369 | 348 |
Aggregate Intrinsic Value, Exercisable | $ 369 | $ 348 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock, Textual (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting date fair value | $ 2,100,000 | $ 2,600,000 | ||
Restricted Stock Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | 249,000 | $ 359,000 | $ 532,000 | 804,000 |
Tax benefit from compensation expense | 52,000 | 126,000 | 112,000 | 282,000 |
Unrecognized compensation expense | $ 949,000 | $ 949,000 | ||
Compensation expense expected to be recognized, weighted average period | 1 year 4 months 17 days | |||
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 | |||
Compensation expense | $ 435,000 | 171,000 | $ 775,000 | 236,000 |
Tax benefit from compensation expense | 91,000 | $ 60,000 | 163,000 | 83,000 |
Unrecognized compensation expense | $ 4,100,000 | $ 4,100,000 | ||
Compensation expense expected to be recognized, weighted average period | 2 years 7 months 24 days | |||
Vesting date fair value | $ 1,000,000 | $ 0 | ||
Performance-Based Restricted Stock Units (PRSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Performance-Based Restricted Stock Units (PRSUs) | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Actual payout percentage | 0.00% | |||
Performance-Based Restricted Stock Units (PRSUs) | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Actual payout percentage | 150.00% |
Stock-Based Compensation - Re93
Stock-Based Compensation - Restricted Stock Activity (Details) - $ / shares | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Restricted Stock Awards | |||
Shares | |||
Nonvested at beginning of period (in shares) | 137,399 | 261,296 | |
Vested (in shares) | (66,193) | (105,972) | |
Forfeited (in shares) | (2,394) | (7,704) | |
Nonvested at end of period (in shares) | 147,620 | 68,812 | 147,620 |
Weighted-Average Grant Date Fair Value | |||
Nonvested at beginning of period (in usd per share) | $ 17 | $ 16.80 | |
Vested (in usd per share) | 16.67 | 16.47 | |
Forfeited (in usd per share) | 16.86 | 16.78 | |
Nonvested at end of period (in usd per share) | $ 17.04 | $ 17.32 | $ 17.04 |
Restricted Stock Units | |||
Shares | |||
Nonvested at beginning of period (in shares) | 90,544 | 0 | |
Granted (in shares) | 114,015 | 92,019 | |
Vested (in shares) | (32,262) | ||
Forfeited (in shares) | (909) | (3,644) | |
Nonvested at end of period (in shares) | 91,110 | 168,653 | 91,110 |
Weighted-Average Grant Date Fair Value | |||
Nonvested at beginning of period (in usd per share) | $ 25.31 | $ 0 | |
Granted (in usd per share) | 30.61 | 25.29 | |
Vested (in usd per share) | 25.42 | ||
Forfeited (in usd per share) | $ 25.35 | 27.87 | |
Nonvested at end of period (in usd per share) | $ 25.29 | $ 28.51 | $ 25.29 |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair Value Assumptions (Details) - Performance-Based Restricted Stock Units (PRSUs) - $ / shares | 1 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares issued | 5,550 | 6,089 |
Expected Term in Years | 2 years 10 months 2 days | 2 years 10 months 6 days |
Expected Dividend Yield (as a percent) | 0.00% | 0.00% |
Weighted-Average Fair Value (in usd per share) | $ 27.69 | $ 24.39 |
Correlation coefficient (as a percent) | 76.44% | 75.93% |
Heritage volatility (as a percent) | 22.30% | 21.80% |
Peer Company | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Range of peer company volatilities, Minimum (as a percent) | 18.99% | 17.80% |
Range of peer company volatilities, Maximum (as a percent) | 51.42% | 63.10% |
Minimum | Peer Company | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Correlation coefficient (as a percent) | 28.16% | 8.24% |
Maximum | Peer Company | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Correlation coefficient (as a percent) | 94.29% | 89.79% |
Weighted Average | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted-Average Risk Free Interest Rate | 2.39% | 1.40% |
Cash Requirement (Details)
Cash Requirement (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Banking and Thrift [Abstract] | ||
Required reserve balance | $ 10,900 | $ 60 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 29, 2018 | Jun. 30, 2018 | Jun. 30, 2018 | Jul. 02, 2018 | Jan. 16, 2018 | Dec. 31, 2017 |
Subsequent Event [Line Items] | ||||||
Share price (in usd per share) | $ 31.80 | $ 31.80 | $ 31.80 | |||
Assets | $ 4,789,488 | $ 4,789,488 | $ 4,113,270 | |||
Loans | 3,294,316 | 3,294,316 | 2,816,985 | |||
Deposits | 3,968,935 | 3,968,935 | $ 3,393,060 | |||
Premier Commercial | ||||||
Subsequent Event [Line Items] | ||||||
Share price (in usd per share) | $ 34.85 | |||||
Number of shares issued | 2,848,579 | |||||
Share price paid in cash (in usd per share) | $ 2,000 | |||||
Total consideration paid | $ 99,300 | |||||
Assets | 381,700 | 381,700 | ||||
Loans | 335,300 | 335,300 | ||||
Deposits | 319,300 | 319,300 | ||||
Acquisition-related costs | $ 329 | $ 653 | ||||
Premier Commercial | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Number of shares issued (in shares) | 0.4863 |