Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 20, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | HERITAGE FINANCIAL CORP /WA/ | ||
Entity Central Index Key | 1,046,025 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 34,013,263 | ||
Entity Public Float | $ 777,392,632 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
ASSETS | ||
Cash on hand and in banks | $ 78,293 | $ 77,117 |
Interest earning deposits | 24,722 | 26,628 |
Cash and cash equivalents | 103,015 | 103,745 |
Investment securities available for sale, at fair value | 810,530 | 794,645 |
Loans held for sale | 2,288 | 11,662 |
Loans receivable, net | 2,849,071 | 2,640,749 |
Allowance for loan losses | (32,086) | (31,083) |
Total loans receivable, net | 2,816,985 | 2,609,666 |
Other real estate owned | 0 | 754 |
Premises and equipment, net | 60,325 | 63,911 |
Federal Home Loan Bank stock, at cost | 8,347 | 7,564 |
Bank owned life insurance | 75,091 | 70,355 |
Accrued interest receivable | 12,244 | 10,925 |
Prepaid expenses and other assets | 99,328 | 79,351 |
Other intangible assets, net | 6,088 | 7,374 |
Goodwill | 119,029 | 119,029 |
Total assets | 4,113,270 | 3,878,981 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Deposits | 3,393,060 | 3,229,648 |
Federal Home Loan Bank advances | 92,500 | 79,600 |
Junior subordinated debentures | 20,009 | 19,717 |
Securities sold under agreement to repurchase | 31,821 | 22,104 |
Accrued expenses and other liabilities | 67,575 | 46,149 |
Total liabilities | 3,604,965 | 3,397,218 |
Stockholders’ equity: | ||
Preferred stock, no par value, 2,500,000 shares authorized; no shares issued and outstanding at December 31, 2017 and 2016 | 0 | 0 |
Common stock, no par value, 50,000,000 shares authorized; 29,927,746 and 29,954,931 shares issued and outstanding at December 31, 2017 and 2016, respectively | 360,590 | 359,060 |
Retained earnings | 149,013 | 125,309 |
Accumulated other comprehensive loss, net | (1,298) | (2,606) |
Total stockholders’ equity | 508,305 | 481,763 |
Total liabilities and stockholders’ equity | $ 4,113,270 | $ 3,878,981 |
Consolidated Statements of Fin3
Consolidated Statements of Financial Condition (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in usd per share) | ||
Preferred stock, shares authorized | 2,500,000 | 2,500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in usd per share) | ||
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 29,927,746 | 29,954,931 |
Common stock, shares outstanding | 29,927,746 | 29,954,931 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
INTEREST INCOME: | |||
Interest and fees on loans | $ 129,213 | $ 122,147 | $ 121,687 |
Taxable interest on investment securities | 12,688 | 11,215 | 9,578 |
Nontaxable interest on investment securities | 5,269 | 4,870 | 4,196 |
Interest and dividends on other interest earning assets | 710 | 280 | 278 |
Total interest income | 147,880 | 138,512 | 135,739 |
INTEREST EXPENSE: | |||
Deposits | 6,049 | 5,010 | 5,229 |
Junior subordinated debentures | 1,014 | 880 | 827 |
Other borrowings | 1,283 | 116 | 64 |
Total interest expense | 8,346 | 6,006 | 6,120 |
Net interest income | 139,534 | 132,506 | 129,619 |
Provision for loan losses | 4,220 | 4,931 | 4,372 |
Net interest income after provision for loan losses | 135,314 | 127,575 | 125,247 |
NONINTEREST INCOME: | |||
Service charges and other fees | 18,004 | 14,354 | 14,179 |
Gain on sale of investment securities, net | 6 | 1,315 | 1,516 |
Gain on sale of loans, net | 7,696 | 6,994 | 4,683 |
Gain on termination of FDIC shared-loss agreements | 0 | 0 | 1,747 |
Gain on sale of Merchant Visa portfolio | 0 | 0 | 2,198 |
Interest rate swap fees | 1,045 | 1,854 | 452 |
Other income | 8,657 | 7,102 | 7,493 |
Total noninterest income | 35,408 | 31,619 | 32,268 |
NONINTEREST EXPENSE: | |||
Compensation and employee benefits | 64,268 | 61,405 | 58,134 |
Occupancy and equipment | 15,396 | 15,763 | 15,846 |
Data processing | 8,176 | 7,312 | 7,700 |
Marketing | 2,943 | 2,835 | 3,066 |
Professional services | 4,777 | 3,606 | 3,536 |
State and local taxes | 2,461 | 2,616 | 2,378 |
Federal deposit insurance premium | 1,435 | 1,620 | 2,046 |
Other real estate owned, net | (70) | 334 | 1,007 |
Amortization of intangible assets | 1,286 | 1,415 | 2,100 |
Other expense | 9,903 | 9,567 | 10,395 |
Total noninterest expense | 110,575 | 106,473 | 106,208 |
Income before income taxes | 60,147 | 52,721 | 51,307 |
Income tax expense | 18,356 | 13,803 | 13,818 |
Net income | $ 41,791 | $ 38,918 | $ 37,489 |
Basic earnings per common share (in usd per share) | $ 1.39 | $ 1.30 | $ 1.25 |
Diluted earnings per common share (in usd per share) | 1.39 | 1.30 | 1.25 |
Dividends declared per common share (in usd per share) | $ 0.61 | $ 0.72 | $ 0.53 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 41,791 | $ 38,918 | $ 37,489 |
Change in fair value of investment securities available for sale, net of tax of $826, $(2,316) and $(306), respectively | 1,530 | (4,311) | (559) |
Reclassification adjustment of net gain from sale of investment securities available for sale included in income, net of tax of $(2), $(461) and $(574), respectively | (4) | (854) | (1,067) |
Accretion of other-than-temporary impairment on investment securities, net of tax of $0, $0 and $4, respectively | 0 | 0 | 108 |
Reclassification of remaining unaccreted other-than-temporary impairment upon sale of investment securities held to maturity included in income, net of tax of $0, $0 and $44, respectively | 0 | 0 | 81 |
Transfer of investment securities from held to maturity to available for sale, net of tax of $0, $0 and $334, respectively | 0 | 0 | 618 |
Other comprehensive income (loss) | 1,526 | (5,165) | (819) |
Comprehensive income | $ 43,317 | $ 33,753 | $ 36,670 |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Change in fair value of securities available for sale, tax | $ 826 | $ (2,316) | $ (306) |
Reclassification adjustment of net gain from sale of investment securities available for sale included in income, tax | (2) | (461) | (574) |
Accretion of other-than-temporary impairment on investment securities, tax | 0 | 0 | 4 |
Reclassification of remaining unaccreted other-than-temporary impairment upon sale of investment securities held to maturity included in income, tax | 0 | 0 | 44 |
Transfer of investment securities from held to maturity to available for sale, tax | $ 0 | $ 0 | $ 334 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Total | Common stock | Retained earnings | Accumulated other comprehensive income (loss), net |
Beginning balance, shares at Dec. 31, 2014 | 30,260,000 | |||
Balance of AOCI at the beginning of the year at Dec. 31, 2014 | $ 454,506 | $ 364,741 | $ 86,387 | $ 3,378 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Restricted and unrestricted stock awards issued, net of forfeitures, shares | 118,000 | |||
Restricted and unrestricted stock awards granted, net of forfeitures | $ 0 | |||
Exercise of stock options (including net excess tax benefits/deficiencies from nonqualified options), shares | 61,529 | 61,000 | ||
Exercise of stock options (including excess tax benefits from nonqualified stock options) | $ 765 | $ 765 | ||
Restricted stock compensation expense | 1,555 | 1,555 | ||
Net excess tax benefits from vesting of restricted stock | 126 | $ 126 | ||
Common stock repurchased, shares | (464,000) | |||
Common stock repurchased | (7,736) | $ (7,736) | ||
Net income | 37,489 | 37,489 | ||
Other comprehensive income (loss), net of tax | (819) | (819) | ||
Cash dividends declared on common stock | (15,916) | (15,916) | ||
Ending balance, shares at Dec. 31, 2015 | 29,975,000 | |||
Balance of AOCI at the end of the year at Dec. 31, 2015 | 469,970 | $ 359,451 | 107,960 | 2,559 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Restricted and unrestricted stock awards issued, net of forfeitures, shares | 110,000 | |||
Restricted and unrestricted stock awards granted, net of forfeitures | $ 0 | |||
Exercise of stock options (including net excess tax benefits/deficiencies from nonqualified options), shares | 37,713 | 38,000 | ||
Exercise of stock options (including excess tax benefits from nonqualified stock options) | $ 560 | $ 560 | ||
Restricted stock compensation expense | 1,840 | 1,840 | ||
Net excess tax benefits from vesting of restricted stock | 103 | $ 103 | ||
Common stock repurchased, shares | (168,000) | |||
Common stock repurchased | (2,894) | $ (2,894) | ||
Net income | 38,918 | 38,918 | ||
Other comprehensive income (loss), net of tax | (5,165) | (5,165) | ||
Cash dividends declared on common stock | (21,569) | (21,569) | ||
ASU 2018-02 Implementation | 0 | |||
Ending balance, shares at Dec. 31, 2016 | 29,955,000 | |||
Balance of AOCI at the end of the year at Dec. 31, 2016 | 481,763 | $ 359,060 | 125,309 | (2,606) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Restricted and unrestricted stock awards issued, net of forfeitures, shares | (10,000) | |||
Restricted and unrestricted stock awards granted, net of forfeitures | $ 0 | |||
Exercise of stock options (including net excess tax benefits/deficiencies from nonqualified options), shares | 12,662 | 13,000 | ||
Exercise of stock options (including excess tax benefits from nonqualified stock options) | $ 164 | $ 164 | ||
Restricted stock compensation expense | 2,103 | $ 2,103 | ||
Common stock repurchased, shares | (30,000) | |||
Common stock repurchased | (737) | $ (737) | ||
Net income | 41,791 | 41,791 | ||
Other comprehensive income (loss), net of tax | 1,526 | 1,526 | ||
Cash dividends declared on common stock | (18,305) | (18,305) | ||
ASU 2018-02 Implementation | 0 | 218 | (218) | |
Ending balance, shares at Dec. 31, 2017 | 29,928,000 | |||
Balance of AOCI at the end of the year at Dec. 31, 2017 | $ 508,305 | $ 360,590 | $ 149,013 | $ (1,298) |
Consolidated Statement of Stoc8
Consolidated Statement of Stockholders' Equity (Parenthetical) - $ / shares | Oct. 25, 2017 | Jul. 25, 2017 | Apr. 25, 2017 | Jan. 25, 2017 | Oct. 26, 2016 | Jul. 20, 2016 | Apr. 20, 2016 | Jan. 27, 2016 | Oct. 21, 2015 | Jul. 22, 2015 | Apr. 22, 2015 | Jan. 28, 2015 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Stockholders' Equity [Abstract] | |||||||||||||||||||||||
Dividends declared per common share (in usd per share) | $ 0.13 | $ 0.13 | $ 0.13 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.10 | $ 0.23 | $ 0.13 | $ 0.13 | $ 0.12 | $ 0.37 | $ 0.12 | $ 0.12 | $ 0.11 | $ 0.61 | $ 0.72 | $ 0.53 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 41,791 | $ 38,918 | $ 37,489 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 10,704 | 12,709 | 13,967 |
Changes in net deferred loan costs, net of amortization | (1,007) | (1,422) | (1,866) |
Provision for loan losses | 4,220 | 4,931 | 4,372 |
Net change in accrued interest receivable, FDIC indemnification asset, prepaid expenses and other assets, and accrued expenses and other liabilities | 11,634 | 2,147 | (78) |
Stock-based compensation expense | 2,103 | 1,840 | 1,555 |
Net excess tax benefit from exercise of stock-based compensation | 0 | (123) | (140) |
Amortization of intangible assets | 1,286 | 1,415 | 2,100 |
Origination of loans held for sale | (108,696) | (145,107) | (132,932) |
Proceeds from sale of loans | 121,482 | 148,121 | 135,515 |
Earnings on bank owned life insurance | (1,424) | (1,460) | (1,354) |
Valuation adjustment on other real estate owned | 0 | 383 | 529 |
Gain on sale of loans, net | (7,696) | (6,994) | (4,683) |
Gain on sale of investment securities, net | (6) | (1,315) | (1,516) |
Gain on sale of assets held for sale | (747) | 0 | 0 |
(Gain) loss on sale of other real estate owned, net | (144) | (173) | 97 |
Gain on termination of FDIC shared-loss agreements | 0 | 0 | (1,747) |
Loss on sale or write-off of furniture, equipment and leasehold improvements | 13 | 110 | 89 |
Net cash provided by operating activities | 73,513 | 53,980 | 51,397 |
Cash flows from investing activities: | |||
Loans originated, net of principal payments | (235,154) | (263,387) | (184,862) |
Maturities of other interest earning deposits | 0 | 6,709 | 3,346 |
Maturities, calls and payments of investment securities available for sale | 98,894 | 129,408 | 124,592 |
Maturities, calls and payments of investment securities held to maturity | 0 | 0 | 5,221 |
Purchase of investment securities available for sale | (149,914) | (267,657) | (290,499) |
Purchase of premises and equipment | (3,063) | (6,722) | (1,821) |
Purchase of other real estate owned | 0 | 0 | (188) |
Proceeds from sales of other loans | 28,874 | 21,077 | 30,751 |
Proceeds from sales of other real estate owned | 930 | 2,486 | 3,555 |
Proceeds from sales of investment securities available for sale | 31,028 | 140,373 | 116,332 |
Proceeds from sales of investment securities held to maturity | 0 | 0 | 972 |
Proceeds from sales of assets held for sale | 1,849 | 0 | 0 |
Proceeds from redemption of FHLB stock | 30,018 | 23,732 | 8,040 |
Purchases of FHLB stock | (30,801) | (27,148) | 0 |
Proceeds from sales of premises and equipment | 0 | 659 | 815 |
Purchase of bank owned life insurance | (4,394) | (8,000) | (25,019) |
Proceeds from BOLI death benefit | 1,101 | 0 | 0 |
Capital contributions to low-income housing tax credit partnerships and new market tax credit partnerships, net | (10,762) | (4,456) | (746) |
Net cash used for termination of FDIC shared-loss agreements | 0 | 0 | (7,110) |
Net cash used in investing activities | (241,394) | (252,926) | (216,621) |
Cash flows from financing activities: | |||
Net increase in deposits | 163,412 | 121,361 | 201,956 |
FHLB advances | 763,350 | 660,900 | 0 |
Repayments of FHLB advances | (750,450) | (581,300) | 0 |
Common stock cash dividends paid | (18,305) | (21,569) | (15,916) |
Net increase (decrease) in securities sold under agreement to repurchase | 9,717 | (1,110) | (8,967) |
Proceeds from exercise of stock options | 164 | 540 | 751 |
Net excess tax benefit from exercise of stock-based compensation | 0 | 123 | 140 |
Repurchase of common stock | (737) | (2,894) | (7,736) |
Net cash provided by financing activities | 167,151 | 176,051 | 170,228 |
Net (decrease) increase in cash and cash equivalents | (730) | (22,895) | 5,004 |
Cash and cash equivalents at beginning of year | 103,745 | 126,640 | 121,636 |
Cash and cash equivalents at end of year | 103,015 | 103,745 | 126,640 |
Supplemental disclosures of cash flow information: | |||
Cash paid for interest | 8,399 | 5,998 | 6,324 |
Cash paid for income taxes | 2,045 | 11,500 | 15,286 |
Supplemental non-cash disclosures of cash flow information: | |||
Transfers of loans receivable to other real estate owned | 32 | 1,431 | 2,657 |
Transfers of premises and equipment, net to prepaid expenses and other assets for properties held for sale | 2,687 | 0 | 0 |
Investment in low income housing tax credit partnership and related funding commitment | 33,171 | 19,663 | 0 |
Settlement of investment securities available for sale not settled at year end | 0 | 0 | (1,288) |
Transfer from investment securities held to maturity to available for sale | 0 | 0 | 29,370 |
Receivable due from bank owned life insurance contract | $ 0 | $ 0 | $ 445 |
Description of Business, Basis
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements and Recently Issued Accounting Pronouncements | Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements (a) Description of Business Heritage Financial Corporation ("Heritage" or the “Company”) is a bank holding company that was incorporated in the State of Washington in August 1997. The Company is primarily engaged in the business of planning, directing and coordinating the business activities of its wholly-owned subsidiary, Heritage Bank (the “Bank”). The Bank is a Washington-chartered commercial bank and its deposits are insured by the FDIC. The Bank is headquartered in Olympia, Washington and conducts business from its 60 branch offices located throughout Washington State and the greater Portland, Oregon area, including one branch acquired in the Puget Sound Merger in January 2018. 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”). As of December 31, 2017, Puget Sound had $556.0 million in total assets, $388.3 million in total loans and $491.9 million in total deposits. Costs incurred by Heritage for the Puget Sound Merger totaled $810,000 during the year ended December 31, 2017. See Note (24) Subsequent Events for additional information. (b) Basis of Presentation The accounting and reporting policies of the Company and its subsidiaries conform to U.S. Generally Accepted Accounting Principles (“GAAP”). In preparing the Consolidated Financial Statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. Actual results could differ from these estimates. The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiary, the Bank. All significant intercompany balances and transactions among the Company and the Bank have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year’s presentation. Reclassifications had no effect on the prior years' net income or stockholders’ equity. (c) Significant Accounting Policies Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents includes cash on hand and in banks, interest earning deposits with original maturities of 90 days or less, and federal funds sold. Net cash flows are reported for customer loan and deposit transactions, other interest bearing deposits, federal funds sold and repurchase agreements. Investment Securities The Company identifies investments as held to maturity or available for sale at the time of acquisition. Securities are classified as held to maturity when the Company has the ability and positive intent to hold them to maturity. Securities classified as available for sale are available for future liquidity requirements and may be sold prior to maturity. As of December 31, 2017 and December 31, 2016 the Bank does not hold any securities classified as held to maturity. See Note (2) Investment Securities for additional information. Securities available for sale are carried at fair value. Interest income includes amortization of purchase premiums or accretion of purchase discounts using the interest method. Unrealized gains and losses on securities available for sale are generally excluded from earnings and are reported in other comprehensive income (loss), net of related income taxes. Realized gains and losses on sale of investment securities are computed on the specific identification method. Transfers of securities between the available for sale and held to maturity categories are accounted for at fair value. Management evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. Although these evaluations involve significant judgment, an unrealized loss in the fair value of a debt security is generally deemed to be temporary when the fair value of the security is below the carrying value primarily due to changes in interest rates, there has not been significant deterioration in the financial condition of the issuer, and it is not more likely than not that the Company will be required to, nor does it have the intent to sell the security before the anticipated recovery of its remaining carrying value. If any of these criteria is not met, the impairment is split into two components as follows: 1) other-than-temporary impairment related to credit loss, which must be recognized in the income statement and 2) other-than-temporary impairment related to other factors, which is recognized in other comprehensive income (loss). The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For debt securities with other-than-temporary impairment, the previous amortized cost basis less the other-than-temporary impairment recognized in earnings shall be the new amortized cost basis of the security. In subsequent periods, the Company accretes into interest income the difference between the new amortized cost basis and cash flows expected to be collected prospectively over the life of the debt security . Continued deterioration of market conditions could result in additional impairment losses recognized within the investment portfolio. Other factors that may be considered in determining whether a decline in the value of either a debt or an equity security is “other-than-temporary” include ratings by recognized rating agencies; actions of commercial banks or other lenders relative to the continued extension of credit facilities to the issuer of the security; the financial condition, capital strength and near-term prospects of the issuer and recommendations of investment advisors or market analysts. Loans Held for Sale Mortgage loans held for sale are carried at the lower of amortized cost or fair value. Any loan that management does not have the intent and ability to hold for the foreseeable future or until maturity or payoff is classified as held for sale at the time of origination, purchase or securitization, or when such decision is made. Unrealized losses on such loans are recorded as a valuation allowance and included in income. Loans Receivable and Loan Commitments Loans receivable include loans originated by the Bank as well as loans acquired in business combinations. Loans acquired in a business combination are designated as “purchased” loans. These loans are recorded at their fair value at acquisition date, factoring in credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for loan losses is not carried over or recorded as of the acquisition date. Loans purchased with evidence of credit deterioration since origination for which it is probable that all contractually required payments will not be collected are accounted for under FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality . These loans are identified as purchased credit impaired ("PCI") loans. In situations where such loans have similar risk characteristics, loans may be aggregated into pools to estimate cash flows. A pool is accounted for as a single asset with a single interest rate, cumulative loss rate and cash flow expectation. Expected cash flows at the acquisition date in excess of the fair value of loans are considered to be accretable yield, which is recognized as interest income over the life of the loan or pool using a level yield method if the timing and amount of the future cash flows of the loan or pool is reasonably estimable. The cash flows expected over the life of the PCI loan or pool are estimated quarterly using an external cash flow model that projects cash flows and calculates the carrying values of the loans or pools, book yields, effective interest income and impairment, if any, based on loan or pool level events. Assumptions as to default rates, loss severity and prepayment speeds are utilized to calculate the expected cash flows. To the extent actual or projected cash flows are less than previously estimated, additional provisions for loan losses on the purchased loan portfolios will be recognized immediately into earnings. To the extent actual or projected cash flows are more than previously estimated, the increase in cash flows is recognized immediately as a recapture of provision for loan losses up to the amount of any provision previously recognized for that loan or pool, if any, then prospectively recognized in interest income as a yield adjustment. Any disposals of a loan in a pool, including sale of a loan, payment in full or foreclosure results in the removal of the loan from the loan pool at the carrying amount. Loans accounted for under FASB ASC 310-30 are generally considered accruing and performing loans as the loans accrete interest income over the estimated life of the loan when cash flows are reasonably estimable. Accordingly, PCI loans that are contractually past due are still considered to be accruing and performing loans. If the timing and amount of cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans and interest income may be recognized on a cash basis or all cash payments may be accounted for a as a reduction of the principal amount outstanding. 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 . These loans are identified as non-PCI loans, and are initially recorded at their fair value, which is estimated using an external cash flow model and assumptions similar to the FASB ASC 310-30 loans. The difference between the estimated fair value and the unpaid principal balance at acquisition date is recognized as interest income over the life of the loan using an effective interest method for non-revolving credits or a straight-line method, which approximates the effective interest method, for revolving credits. Any unrecognized discount for a loan that is subsequently repaid in full will be recognized immediately into income. Loans are generally recorded at the unpaid principal balance, net of premiums, unearned discounts and net deferred loan origination fees and costs. The premiums and unearned discounts may include values determined in purchase accounting. Interest on loans is calculated using the simple interest method based on the daily balance of the principal amount outstanding and is credited to income as earned. Loans are considered past due or delinquent when principal or interest payments are past due 30 days or more. Covered Loans : Purchased loans subject to FDIC shared-loss agreements were historically identified as “covered” on the Consolidated Financial Statements. The FDIC shared-loss agreements were terminated during the year ended December 31, 2015 and as such the covered designation was removed. For further information see Note (5) FDIC Indemnification Asset. The covered loans included the majority of loans from the Company's acquisition of Cowlitz Bank and certain loans from the Washington Banking Merger, which included loans from Washington Banking Company's acquisitions of City Bank and North County Bank. The same accounting principles that apply to loans receivable applied to covered loans receivable, with the added benefit of shared-loss agreements. Delinquent Loans : Delinquencies in the commercial business loan portfolio are handled by the assigned loan officer. Loan officers are responsible for collecting loans they originate or which are assigned to them. The Bank sends a borrower a delinquency notice 15 days after the due date when the borrower fails to make a required payment on a loan. If the delinquency is not brought current, additional delinquency notices are mailed at 30 and 45 days for commercial loans. Additional written and oral contacts are made with the borrower between 60 and 90 days after the due date. If a real estate loan payment is past due for 45 days or more, the collection manager may perform a review of the condition of the property. Depending on the nature of the loan and the type of collateral securing the loan, the Bank may negotiate and accept a modified payment program with the borrower, accept a voluntary deed in lieu of foreclosure or, when considered necessary, begin foreclosure proceedings. If foreclosed on, real property is generally sold at a public sale and the Bank may bid on the property to protect its interest. A decision as to whether and when to begin foreclosure proceedings is based on such factors as the amount of the outstanding loan relative to the value of the property securing the original indebtedness, the extent of the delinquency, and the borrower’s ability and willingness to cooperate in resolving the delinquency. Nonaccrual Loans : The Company's policies for placing loans on nonaccrual status, recording payments received on nonaccrual loans, resuming accrual of interest, determining past due or delinquency status and charging off uncollectible loans generally do not differ by loan segments or classes. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Delinquent loans may remain on accrual status between 30 days and 89 days past due. The accrual of interest is generally discontinued at the time the loan is 90 days delinquent unless the credit is well secured and in the process of collection. Loans are placed on nonaccrual at an earlier date if collection of the contractual principal or interest is doubtful. All interest accrued but not collected on loans deemed nonaccrual during the period is reversed against interest income in that period. The interest payments received on nonaccrual loans are generally accounted for on the cost-recovery method whereby the interest payment is applied to the principal balances. Loans may be returned to accrual status when improvements in credit quality eliminate the doubt as to the full collectability of both interest and principal and a period of sustained performance has occurred. Substantially all loans that are nonaccrual are also considered impaired. Income recognition on impaired loans conforms to that used on nonaccrual loans. Loans are generally charged-off if collection of the contractual principal or interest as scheduled in the loan agreement is doubtful. Credit card loans and other consumer loans are typically charged-off no later than 180 days past due. Impaired Loans : The Bank routinely tests its problem loans for potential impairment. Problem loans that may be impaired are identified using the Bank's normal loan review procedures, which include post-approval reviews, quarterly reviews by credit administration of criticized loan reports, scheduled internal reviews, underwriting during extensions and renewals and the analysis of information routinely received on a borrower’s financial performance. A loan is considered impaired when, based on current information and events, it is probable the Bank will be unable to collect the scheduled payments of principal or interest when due according to the original contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrowers, including length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amounts of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient the loan’s observable market price or the fair value of the collateral (less cost to sell) if the loan is collateral dependent. Income recognition on impaired loans conforms to that used on nonaccrual loans. Subsequent to an initial measure of impairment, if there is a significant change in the amount or timing of a loan’s expected future cash flows or a change in the value of collateral or market price of a loan, based on new information received, the impairment is recalculated. However, the net carrying value of a loan never exceeds the recorded investment in the loan. Troubled Debt Restructures : A troubled debt restructured loan (“TDR”) is a restructuring in which the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that it would not otherwise consider. These concessions may include changes of the interest rate, forbearance of the outstanding principal or accrued interest, extension of the maturity date, delay in the timing of the regular payment, or any other actions intended to minimize potential losses. The Bank does not forgive principal for a majority of its TDRs, but in those situations where principal is forgiven, the entire amount of such principal forgiveness is immediately charged off to the extent not done so prior to the modification. The Bank also considers insignificant delays in payments when determining if a loan should be classified as a TDR. The Company has implemented more stringent definitions of concessions and impairment measures for PCI loans which are not in pools as these loans have known credit deteriorations 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. Modifications of PCI loans which are not in pools are considered TDRs if they result in a decrease in expected cash flows when compared to the pre-modification expected cash flows, without any other changes to the agreement to consider. A loan that has been placed on nonaccrual status that is subsequently restructured will usually remain on nonaccrual status until the borrower is able to demonstrate repayment performance in compliance with the restructured terms for a sustained period, typically for six months. A restructured loan may return to accrual status sooner based on other significant events or mitigating circumstances. A loan that has not been placed on nonaccrual status may be restructured and such loan may remain on accrual status after such restructuring. In these circumstances, the borrower has made payments before the restructuring and is expected to continue to perform after the restructuring. Generally, this type of restructuring involves a reduction in the loan interest rate and/or a change to interest-only payments for a period of time. The restructured loan is considered impaired despite the accrual status and a specific valuation allowance, if any, is calculated in the manner previously described. A TDR is considered defaulted if, during the 12-month period after the restructure, the loan has not performed in accordance to the restructured terms. Defaults include loans whose payments are 90 days or more past due and loans whose revised maturity date passed and no further modifications will be granted for that borrower. A loan may subsequently be excluded from the TDR disclosures if: (i) the restructured interest rate was greater than or equal to the interest rate of a new loan with comparable risk at the time of the restructure, and (ii) the loan is no longer impaired based on the terms of the restructured agreement. The Bank's policy is that the borrower must demonstrate a sustained period, typically six consecutive months, of payments in accordance with the modified loan before it can be reviewed for removal from the TDR disclosure under the second criteria. However, the loan must be reported as a TDR in at least one annual report on Form 10-K. Once a loan has been classified as a TDR, it will continue to be disclosed as an impaired loan until paid off or charged-off, even if the loan subsequently is no longer disclosed as a TDR. Unfunded Loan Commitments : Unfunded loan commitments are generally related to the unused portion of the total commitment of a loan or providing credit facilities to clients of the Bank and are not actively traded financial instruments. These unfunded commitments are disclosed as financial instruments with off-balance sheet risk in Note (14) Commitments and Contingencies and Note (18) Fair Value in the Notes to Consolidated Financial Statements. Loan Fees and Costs Loan origination fees and certain direct origination costs are deferred and amortized as an adjustment of the yields of the loans over their contractual lives, adjusted for prepayment of the loans, using the effective interest method or the straight-line method, when the straight-line method approximates the effective interest method. In the event loans are sold, the unamortized net deferred loan origination fees or costs are recognized as a component of the gains or losses on the sales of loans. Allowance for Loan Losses Allowance for Loan Losses : The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses on loans designated as non-PCI loans is similar to the methodology described below except that for non-PCI loans, the remaining unaccreted discounts resulting from the fair value adjustments recorded at the time the loans were purchased are additionally factored into the allowance methodology. The allowance for loan losses on PCI loans is described in the “Allowance for Loan Losses on Purchased Credit Impaired Loans” section below. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses from risks inherent in the loan portfolio. The Company’s allowance for loan losses methodology includes allowance allocations calculated in accordance with FASB ASC 310, Receivables and allowance allocations calculated in accordance with FASB ASC 450, Contingencies . Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company’s process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for loan losses reflects loan quality trends, including the levels of and trends related to nonaccrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors. The provision for loan losses also reflects all actions taken on all loans for a particular period. Therefore, the amount of the provision reflects not only the necessary increases in the allowance for loan losses related to newly identified criticized loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in specific valuation allowances for impaired loans or loan pools. The level of the allowance reflects management’s continuing evaluation of known and inherent risks in the loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, could be charged off. Loans which management determines are impaired are individually evaluated for impairment, and specific valuation allowances are recorded, if any, on these loans based on the methodology previously described. Loans that are determined not to meet management's definition of impaired are collectively evaluated for impairment based on (i) historical loss factors determined in accordance with FASB ASC 450 based on historical loan loss experience for similar loans with similar characteristics and trends; and (ii) environmental loss factors that reflect the impact of current conditions, as determined in accordance with FASB ASC 450 based on general economic conditions and other qualitative risk factors both internal and external to the Company. The historical loss factors and environmental loss factors are combined and multiplied against the outstanding principal balances of loans in pools of similar loans with similar characteristics. The Company evaluates specific loans for credit quality indicators and performs regular analysis and evaluation of problem loans. Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligor’s ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the loan officer level for all loans. When a loan is performing but has an assigned risk grade other than pass, the loan officer analyzes the loan to determine an appropriate monitoring and collection strategy. When a loan is nonperforming or has been classified as a nonaccrual loan, a member from the special assets department will analyze the loan to determine if it is impaired. If the loan is considered impaired, the special assets department will evaluate the need for a specific valuation allowance on the loan. Specific valuation allowances are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies and economic conditions affecting the borrower’s industry, among other things. Historical loss factors are calculated based on the historical loss experience and recovery experience of specific classes of loans. The Company calculates historical loss ratios for the classes of loans based on the proportion of actual charge-offs and recoveries experienced to the total loans in the pool for a rolling twelve-quarter average. Environmental loss factors are based on general economic conditions and other qualitative risk factors both internal and external to the Company. In general, such valuation allowances are determined by evaluating, among other things: (i) levels of and trends in delinquencies, classified and impaired loans; (ii) levels of and trends in charge-offs and recoveries; (iii) trends in volume and terms of loans (iv) effects of changes in risk selection and underwriting standards, and other changes in lending policies, procedures, and practices; (v) experience, ability, and depth of lending management and other relevant staff; (vi) national and local economic trends and conditions; (vii) other external factors such as competition, legal, and regulatory; (viii) effects of changes in credit concentrations, and (ix) other factors. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Each component is determined to be on a scale of risk. The results are then utilized in a matrix to determine an appropriate environmental loss factor for each class of loan. The allowance for loan losses evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. While management utilizes its best judgment and information available to recognize losses on loans, future additions to the allowance may be necessary based on declines in local and national economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require the Bank to make adjustments to the allowance based on their judgments about information available to them at the time of their examinations. The Company believes the allowance for loan losses is appropriate given all of the above considerations. Allowance for Loan Losses on Purchased Credit Impaired Loans: The PCI loans acquired in the Company's mergers and acquisitions are subject to the Company’s internal and external credit review. Under the accounting guidance of FASB ASC 310-30, the allowance for loan losses on PCI loans is measured at each financial reporting period, or measurement date, based on expected cash flows. If and when credit deterioration, or decreases in expected cash flows previously estimated, occurs subsequent to the acquisition date, a provision for loan losses will be charged to earnings as of the measurement date. Prior to the termination of the FDIC shared-loss agreements, a provision for loan losses on PCI loans was charged to earnings for the full amount without regard to the FDIC shared-loss agreements, and the portion of the loss reimbursable from the FDIC was recorded in noninterest income and increased the FDIC indemnification asset. Allowance for Losses on Unfunded Commitments: The Bank is also party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the disbursed amounts recognized in the Consolidated Statements of Financial Condition. The Company has a policy in which it evaluates the risk on a quarterly basis, and provides for an allowance for credit losses, as necessary. The methodology is similar to the allowance for loan losses, and includes an estimate of the probability of drawdown of the loan commitment. Based on its analysis, the Company has recorded an allowance for off-balance sheet financial instruments of $170,000 as of both December 31, 2017 and 2016 . This allowance is reported within accrued expenses and other liabilities on the Company's Consolidated Statements of Financial Condition. Mortgage Banking Operations The Company sells one-to-four family residential loans on a servicing-released basis and recognizes a cash gain or loss. A cash gain or loss is recognized to the extent that the sale proceeds of the loan sold differs from the net book value at the time of sale. Income from one-to-four family residential loans brokered to other lenders is recognized into income on date of loan closing. Commitments to sell one-to-four family residential loans are made primarily during the period between the taking of the loan application and the closing of the loan. The timing of making these sale commitments is dependent upon the timing of the borrower’s election to lock-in the mortgage interest rate and fees prior to loan closing. Most of these sale commitments are made on a best-efforts basis whereby the Bank is only obligated to sell the loan if the loan is approved and closed by the Bank. Commitments to fund one-to-four family residential loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these loans are accounted for as free standing derivatives. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates between the date the interest on the loan was locked and the balance sheet date. The Company enters into forward commitments for the future delivery of one-to-four family residential loans when interest rate locks are entered into, in order to hedge the interest rate risk resulting from its commitments to fund the loans. Changes in the fair values of these derivatives are included in other income. The fair value of these derivative instruments was no t significant at December 31, 2017 and 2016 . FDIC Indemnification Asset The FDIC indemnification asset represented the present value of the est |
Investment Securities
Investment Securities | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment Securities | Investment Securities The Company’s investment policy is designed primarily to provide and maintain liquidity, generate a favorable return on assets without incurring undue interest rate and credit risk, and complement the Bank’s lending activities. (a) Securities by Type and Maturity The amortized cost, gross unrealized gains, gross unrealized losses and fair values of investment securities available for sale at the dates indicated were as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (In thousands) 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 December 31, 2016 U.S. Treasury and U.S. Government-sponsored agencies $ 1,563 $ 6 $ — $ 1,569 Municipal securities 237,305 2,427 (2,476 ) 237,256 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 310,391 985 (2,200 ) 309,176 Commercial 211,259 599 (3,540 ) 208,318 Collateralized loan obligations 10,505 4 (31 ) 10,478 Corporate obligations 16,611 104 (9 ) 16,706 Other securities (2) 11,005 156 (19 ) 11,142 Total $ 798,639 $ 4,281 $ (8,275 ) $ 794,645 (1) Issued and guaranteed by U.S. Government-sponsored agencies. (2) Primarily asset-backed securities issued and guaranteed by U.S. Government-sponsored agencies. There were no securities classified as trading or held to maturity at December 31, 2017 or December 31, 2016 . The amortized cost and fair value of investment securities available for sale at December 31, 2017 , by contractual maturity, are set forth below. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Cost Fair Value (In thousands) Due in one year or less $ 8,922 $ 8,982 Due after one year through five years 132,271 132,497 Due after five years through ten years 240,089 238,613 Due after ten years 430,847 430,292 Investment securities with no stated maturities 45 146 Total $ 812,174 $ 810,530 (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 December 31, 2017 and December 31, 2016 : Less than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (In thousands) 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 ) December 31, 2016 Municipal securities $ 90,188 $ (2,476 ) $ — $ — $ 90,188 $ (2,476 ) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 181,562 (2,148 ) 10,854 (52 ) 192,416 (2,200 ) Commercial 157,055 (3,446 ) 12,597 (94 ) 169,652 (3,540 ) Collateralized loan obligations 2,976 (1 ) 2,969 (30 ) 5,945 (31 ) Corporate obligations 4,032 (9 ) — — 4,032 (9 ) Other securities (2) 6,998 (19 ) — — 6,998 (19 ) Total $ 442,811 $ (8,099 ) $ 26,420 $ (176 ) $ 469,231 $ (8,275 ) (1) Issued and guaranteed by U.S. Government-sponsored agencies. (2) Primarily asset-backed securities issued and guaranteed by U.S. Government-sponsored agencies. The Company has evaluated these investment securities available for sale as of December 31, 2017 and December 31, 2016 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 had credit ratings that were below investment grade levels at December 31, 2017 or December 31, 2016 . The Company has the ability and intent to hold the investments until recovery of the securities' amortized cost which may be the maturity date of the securities. For the years ended December 31, 2017 , 2016 and 2015 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 years ended December 31, 2017 , 2016 and 2015 : Year ended December 31, 2017 2016 2015 (In thousands) Gross realized gains $ 193 $ 1,518 $ 2,109 Gross realized losses (187 ) (203 ) (593 ) Net realized gains $ 6 $ 1,315 $ 1,516 (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 December 31, 2017 and December 31, 2016 : December 31, 2017 December 31, 2016 Amortized Cost Fair Value Amortized Cost Fair Value (In thousands) Washington and Oregon state to secure public deposits $ 206,377 $ 206,425 $ 214,834 $ 215,247 Repurchase agreements 48,750 48,237 29,481 29,294 Other securities pledged 12,484 12,498 3,557 3,546 Total $ 267,611 $ 267,160 $ 247,872 $ 248,087 |
Loans Receivable
Loans Receivable | 12 Months Ended |
Dec. 31, 2017 | |
Loans and Leases Receivable Disclosure [Abstract] | |
Loan 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. (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 December 31, 2017 and December 31, 2016 consisted of the following portfolio segments and classes: December 31, 2017 December 31, 2016 (In thousands) Commercial business: Commercial and industrial $ 645,396 $ 637,773 Owner-occupied commercial real estate 622,150 558,035 Non-owner occupied commercial real estate 986,594 880,880 Total commercial business 2,254,140 2,076,688 One-to-four family residential 86,997 77,391 Real estate construction and land development: One-to-four family residential 51,985 50,414 Five or more family residential and commercial properties 97,499 108,764 Total real estate construction and land development 149,484 159,178 Consumer 355,091 325,140 Gross loans receivable 2,845,712 2,638,397 Net deferred loan costs 3,359 2,352 Loans receivable, net 2,849,071 2,640,749 Allowance for loan losses (32,086 ) (31,083 ) Total loans receivable, net $ 2,816,985 $ 2,609,666 (b) Concentrations of Credit Most of the Company’s lending activity occurs within its primary market areas which are concentrated along the I-5 corridor from Whatcom County to Clark County in Washington State and Multnomah County in Oregon, as well as other contiguous markets. The majority of the Company’s loan portfolio consists of (in order of balances at December 31, 2017 ) non-owner occupied commercial real estate, commercial and industrial and owner-occupied commercial real estate. As of December 31, 2017 and December 31, 2016 , there were no concentrations of loans related to any single industry in excess of 10% of the Company’s total loans. (c) Credit Quality Indicators As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk grade of the loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) nonperforming loans and (v) the general economic conditions of the United States of America, and specifically the states of Washington and Oregon. The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 10. A description of the general characteristics of the risk grades is as follows: • Grades 1 to 5: These grades are considered “pass grade” and include loans with negligible to above average but acceptable risk. These borrowers generally have strong to acceptable capital levels and consistent earnings and debt service capacity. Loans with the higher grades within the “pass” category may include borrowers who are experiencing unusual operating difficulties, but have acceptable payment performance to date. Increased monitoring of financial information and/or collateral may be appropriate. Loans with this grade show no immediate loss exposure. • Grade 6: This grade includes "Watch" loans and is considered a “pass grade”. The grade is intended to be utilized on a temporary basis for pass grade borrowers where a potentially significant risk-modifying action is anticipated in the near term. • Grade 7: This grade includes “Other Assets Especially Mentioned” (“OAEM”) loans in accordance with regulatory guidelines, and is intended to highlight loans with elevated risks. Loans with this grade show signs of deteriorating profits and capital, and the borrower might not be strong enough to sustain a major setback. The borrower is typically higher than normally leveraged, and outside support might be modest and likely illiquid. The loan is at risk of further decline unless active measures are taken to correct the situation. • Grade 8: This grade includes “Substandard” loans in accordance with regulatory guidelines, which the Company has determined have a high credit risk. These loans also have well-defined weaknesses which make payment default or principal exposure likely, but not yet certain. The borrower may have shown serious negative trends in financial ratios and performance. Such loans may be dependent upon collateral liquidation, a secondary source of repayment or an event outside of the normal course of business. Loans with this grade can be placed on accrual or nonaccrual status based on the Company’s accrual policy. • Grade 9: This grade includes “Doubtful” loans in accordance with regulatory guidelines, and the Company has determined these loans to have excessive credit risk. Such loans are placed on nonaccrual status and may be dependent upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty. Additionally, these loans generally have a specific valuation allowance or have been partially charged-off for the amount considered uncollectible. • Grade 10: This grade includes “Loss” loans in accordance with regulatory guidelines, and the Company has determined these loans have the highest risk of loss. Such loans are charged-off or charged-down when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. “Loss” is not intended to imply that the loan or some portion of it will never be paid, nor does it in any way imply that there has been a forgiveness of debt. Numerical loan grades for loans are established at the origination of the loan. Loan grades are reviewed on a quarterly basis, or more frequently if necessary, by the credit department. The Bank follows the FDIC’s Uniform Retail Credit Classification and Account Management Policy for subsequent classification in the event of payment delinquencies or default. Typically, an individual loan grade will not be changed from the prior period unless there is a specific indication of credit deterioration or improvement. Credit deterioration is evidenced by delinquency, direct communications with the borrower, or other borrower information that becomes known to management. Credit improvements are evidenced by known facts regarding the borrower or the collateral property. The loan grades relate to the likelihood of losses in that the higher the grade, the greater the loss potential. Loans with a pass grade may have some estimated inherent losses, but to a lesser extent than the other loan grades. The OAEM loan grade is transitory in that the Company is waiting on additional information to determine the likelihood and extent of the potential loss. The likelihood of loss for OAEM graded loans, however, is greater than Watch graded loans because there has been measurable credit deterioration. Loans with a Substandard grade are generally loans for which the Company has individually analyzed for potential impairment. For Doubtful and Loss graded loans, the Company is almost certain of the losses, and the outstanding principal balances are generally charged-off to the realizable value. The following tables present the balance of the loans receivable by credit quality indicator as of December 31, 2017 and December 31, 2016 . 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 December 31, 2016 Pass OAEM Substandard Doubtful/Loss Total (In thousands) Commercial business: Commercial and industrial $ 601,273 $ 5,048 $ 31,452 $ — $ 637,773 Owner-occupied commercial real estate 532,585 4,437 21,013 — 558,035 Non-owner occupied commercial real estate 841,383 14,573 24,924 — 880,880 Total commercial business 1,975,241 24,058 77,389 — 2,076,688 One-to-four family residential 76,020 — 1,371 — 77,391 Real estate construction and land development: One-to-four family residential 44,752 500 5,162 — 50,414 Five or more family residential and commercial properties 105,723 1,150 1,891 — 108,764 Total real estate construction and land development 150,475 1,650 7,053 — 159,178 Consumer 320,140 — 5,000 — 325,140 Gross loans receivable $ 2,521,876 $ 25,708 $ 90,813 $ — $ 2,638,397 Potential problem loans are loans classified as OAEM or worse that are currently accruing interest and are not considered impaired, but which management is monitoring because the financial information of the borrower causes concern as to their ability to meet their loan repayment terms. Potential problem loans may include PCI loans as these loans continue to accrete loan discounts established at acquisition based on the guidance of FASB ASC 310-30. Potential problem loans as of December 31, 2017 and December 31, 2016 were $83.5 million and $87.8 million , respectively. The balance of potential problem loans guaranteed by a governmental agency, which guarantee reduces the Company's credit exposure, was $3.1 million and $1.1 million as of December 31, 2017 and December 31, 2016 , respectively. (d) Nonaccrual Loans Nonaccrual loans, segregated by segments and classes of loans, were as follows as of December 31, 2017 and December 31, 2016 : December 31, 2017 December 31, 2016 (In thousands) Commercial business: Commercial and industrial $ 3,110 $ 3,531 Owner-occupied commercial real estate 4,090 3,728 Non-owner occupied commercial real estate 1,898 1,321 Total commercial business 9,098 8,580 One-to-four family residential 81 94 Real estate construction and land development: One-to-four family residential 1,247 2,008 Total real estate construction and land development 1,247 2,008 Consumer 277 227 Nonaccrual loans $ 10,703 $ 10,909 The Company had $1.9 million and $2.8 million of nonaccrual loans guaranteed by governmental agencies at December 31, 2017 and December 31, 2016 , respectively. PCI loans are not included in the nonaccrual loan table above because these loans are accounted for under FASB ASC 310-30, which provides that accretable yield is calculated based on a loan's expected cash flow even if the loan is not performing under its contractual terms. (e) Past due loans The Company performs an aging analysis of past due loans using the categories of 30-89 days past due and 90 or more days past due. This policy is consistent with regulatory reporting requirements. The balances of past due loans, segregated by segments and classes of loans, as of December 31, 2017 and December 31, 2016 were as follows: 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 December 31, 2016 30-89 Days 90 Days or Greater Total Past Due Current Total (In thousands) Commercial business: Commercial and industrial $ 2,687 $ 1,733 $ 4,420 $ 633,353 $ 637,773 Owner-occupied commercial real estate 1,807 2,915 4,722 553,313 558,035 Non-owner occupied commercial real estate 733 — 733 880,147 880,880 Total commercial business 5,227 4,648 9,875 2,066,813 2,076,688 One-to-four family residential 523 — 523 76,868 77,391 Real estate construction and land development: One-to-four family residential 90 2,008 2,098 48,316 50,414 Five or more family residential and commercial properties — 377 377 108,387 108,764 Total real estate construction and land development 90 2,385 2,475 156,703 159,178 Consumer 2,292 105 2,397 322,743 325,140 Gross loans receivable $ 8,132 $ 7,138 $ 15,270 $ 2,623,127 $ 2,638,397 There were no loans 90 days or more past due that were still accruing interest as of December 31, 2017 or 2016 , excluding PCI loans. (f) Impaired loans Impaired loans include nonaccrual loans and performing TDR loans. The balances of impaired loans as of December 31, 2017 and December 31, 2016 are set forth in the following tables. 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 December 31, 2016 Recorded Investment With No Specific Valuation Allowance Recorded Investment With Specific Valuation Allowance Total Recorded Investment Unpaid Contractual Principal Balance Related Specific Valuation Allowance (In thousands) Commercial business: Commercial and industrial $ 1,739 $ 10,636 $ 12,375 $ 13,249 $ 1,199 Owner-occupied commercial real estate 1,150 3,574 4,724 5,107 511 Non-owner occupied commercial real estate 4,905 6,413 11,318 11,386 797 Total commercial business 7,794 20,623 28,417 29,742 2,507 One-to-four family residential — 321 321 325 97 Real estate construction and land development: One-to-four family residential 2,243 828 3,071 3,755 6 Five or more family residential and commercial properties — 1,079 1,079 1,079 60 Total real estate construction and land development 2,243 1,907 4,150 4,834 66 Consumer 48 262 310 325 64 Total $ 10,085 $ 23,113 $ 33,198 $ 35,226 $ 2,734 The Company had governmental guarantees of $3.2 million and $3.5 million related to the impaired loan balances at December 31, 2017 and December 31, 2016 , respectively. The average recorded investment of impaired loans for the years ended December 31, 2017 , 2016 and 2015 are set forth in the following table. Year Ended December 31, 2017 2016 2015 (In thousands) Commercial business: Commercial and industrial $ 11,310 $ 10,207 $ 9,781 Owner-occupied commercial real estate 5,401 4,540 4,346 Non-owner occupied commercial real estate 12,162 11,709 9,257 Total commercial business 28,873 26,456 23,384 One-to-four family residential 309 279 257 Real estate construction and land development: One-to-four family residential 2,315 3,305 3,841 Five or more family residential and commercial properties 903 1,656 2,008 Total real estate construction and land development 3,218 4,961 5,849 Consumer 351 645 171 Total $ 32,751 $ 32,341 $ 29,661 For the years ended December 31, 2017 , 2016 and 2015 no interest income was recognized subsequent to a loan’s classification as nonaccrual. For the years ended December 31, 2017 , 2016 and 2015 , the Bank recorded $1.2 million , $651,000 and $780,000 , 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 December 31, 2017 and December 31, 2016 were as follows: December 31, 2017 December 31, 2016 Performing TDR Loans Nonaccrual TDR Loans Performing TDR Loans Nonaccrual (In thousands) TDR loans $ 26,757 $ 5,193 $ 22,288 $ 6,900 Allowance for loan losses on TDR loans 2,635 379 1,965 437 The unfunded commitment to borrowers related to TDR loans was $1.2 million and $249,000 at December 31, 2017 and December 31, 2016 , respectively. Loans that were modified as TDR loans during the years ended December 31, 2017 , 2016 and 2015 are set forth in the following table: Year Ended December 31, 2017 2016 2015 Number of Contracts (1) Outstanding (1)(2) Number of Contracts (1) Outstanding (1)(2) Number of Contracts (1) Outstanding (1)(2) (Dollars in thousands) Commercial business: Commercial and industrial 19 $ 7,212 19 $ 7,398 25 $ 6,312 Owner-occupied commercial real estate 3 1,366 2 569 4 1,311 Non-owner occupied commercial real estate 4 9,574 2 2,121 4 7,496 Total commercial business 26 18,152 23 10,088 33 15,119 Real estate construction and land development: One-to-four family residential 2 938 5 2,206 4 2,291 Five or more family residential and commercial properties — — 1 1,078 — — Total real estate construction and land development 2 938 6 3,284 4 2,291 Consumer 8 110 6 66 1 37 Total TDR loans 36 $ 19,200 35 $ 13,438 38 $ 17,447 (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 years ended December 31, 2017 , 2016 and 2015 . (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 years ended December 31, 2017 , 2016 and 2015 . Of the 36 loans modified during the year ended December 31, 2017 , 21 loans with a total outstanding principal balance of $12.1 million had no prior modifications. The remaining loans included in the table above for the year ended December 31, 2017 were previously reported as TDR loans. The Bank typically grants shorter extension periods to continually monitor the 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 December 31, 2017 was $1.8 million for loans that were modified as TDR loans during the year ended December 31, 2017 . Of the 35 loans modified during the year ended December 31, 2016 , 17 loans with a total outstanding principal balance of $7.2 million had no prior modifications. Of the 38 loans modified during the year ended December 31, 2015 , 18 loans with a total outstanding principal balance of $7.0 million had no prior modifications. Similar to the year ended December 31, 2017 discussion above, the majority of the modifications in prior periods was the result of the Bank granting shorter extension periods to continually monitor the troubled credits, which resulted in TDR classification. The related specific valuation allowance for loans that were modified as TDR loans during the years ended December 31, 2016 and 2015 was $1.0 million and $1.7 million , respectively. The loans modified during the previous twelve months that subsequently defaulted during the years ended December 31, 2017 , 2016 and 2015 are included in the following table: Year Ended December 31, 2017 2016 2015 Number of Contracts Outstanding Principal Balance Number of Outstanding Number of Outstanding (Dollars in thousands) Commercial business: Commercial and industrial 1 $ 283 — $ — 2 $ 1,755 Owner-occupied commercial real estate 1 80 1 488 — — Total commercial business 2 363 1 488 2 1755 Real estate construction and land development: One-to-four family residential 2 938 2 1,143 — — Total real estate construction and land development 2 938 2 1,143 — — Consumer 1 7 — — — — Total 5 $ 1,308 3 $ 1,631 2 $ 1,755 During the year ended December 31, 2017 , there were four loans that 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. The one consumer loan defaulted during the year ended December 31, 2017 as it was greater than 90 days past due its modified terms, but the loan became current as of December 31, 2017 . The Bank had a specific valuation allowance of $1,000 at December 31, 2017 related to the credits which defaulted during the year ended December 31, 2017 . During the year ended December 31, 2016 , all three loans defaulted because they were past their modified maturity dates, and the borrowers had not repaid the credits. At December 31, 2016, the Bank was in the process of granting addition extensions on these loans. At December 31, 2015 , there was one commercial and industrial loan totaling $1.7 million that was modified during the previous twelve months and subsequently defaulted because the borrower did not make specific curtailment, or additional, payments on the loan during the year. The borrower was 30-89 days past due as of December 31, 2015 . The other commercial and industrial loan included in the above table that defaulted during the year ended December 31, 2015 defaulted because the borrower was past its modified maturity date, and had not repaid the credits. The Bank had a specific valuation allowance of $111,000 and $191,000 at December 31, 2016 and 2015 , respectively, related to the credits which defaulted during the related year ends. (h) Purchased Credit Impaired Loans The Company acquired loans and designated them as PCI loans, which are accounted for under FASB ASC 310-30. The following table reflects the outstanding principal balance and recorded investment of the PCI loans at December 31, 2017 and December 31, 2016 : December 31, 2017 December 31, 2016 Outstanding Principal R |
Allowance for Loan Losses
Allowance for Loan Losses | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses is maintained at a level deemed appropriate by management to provide for probable incurred credit losses in the loan portfolio. The FDIC shared-loss agreements terminated on August 4, 2015. Prior to their termination, when a credit deterioration occurred subsequent to the acquisition to a loan that was covered by the FDIC shared-loss agreements, a provision for loan losses was charged to earnings for the full amount of the impairment, without regard to the coverage of the FDIC shared-loss agreements. A summary of the changes in the allowance for loan losses during the years ended December 31, 2017 , 2016 and 2015 is as follows: Year Ended December 31, 2017 2016 2015 (In thousands) Balance at the beginning of the year $ 31,083 $ 29,746 $ 27,729 Charge-offs (4,838 ) (6,085 ) (3,482 ) Recoveries of loans previously charged-off 1,621 2,491 1,127 Provision for loan losses 4,220 4,931 4,372 Balance at the end of the year $ 32,086 $ 31,083 $ 29,746 The following table details the activity in the allowance for loan losses disaggregated by segment and class for the year ended December 31, 2017 : Balance at Beginning of Year Charge-offs Recoveries Provision for Loan Losses Balance at End of Year (In thousands) Commercial business: Commercial and industrial $ 10,968 $ (859 ) $ 792 $ (991 ) $ 9,910 Owner-occupied commercial real estate 3,661 (1,579 ) 155 1,755 3,992 Non-owner occupied commercial real estate 7,753 — — 344 8,097 Total commercial business 22,382 (2,438 ) 947 1,108 21,999 One-to-four family residential 1,015 (30 ) 2 69 1,056 Real estate construction and land development: One-to-four family residential 797 (556 ) 202 419 862 Five or more family residential and commercial properties 1,359 — — (169 ) 1,190 Total real estate construction and land development 2,156 (556 ) 202 250 2,052 Consumer 5,024 (1,814 ) 470 2,401 6,081 Unallocated 506 — — 392 898 Total $ 31,083 $ (4,838 ) $ 1,621 $ 4,220 $ 32,086 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 The following table details the activity in the allowance for loan losses disaggregated by segment and class for the year ended December 31, 2016 : Balance at Beginning of Year Charge-offs Recoveries Provision for Loan Losses Balance at End of Year (In thousands) Commercial business: Commercial and industrial $ 9,972 $ (3,265 ) $ 1,844 $ 2,417 $ 10,968 Owner-occupied commercial real estate 4,370 (538 ) — (171 ) 3,661 Non-owner occupied commercial real estate 7,722 (350 ) — 381 7,753 Total commercial business 22,064 (4,153 ) 1,844 2,627 22,382 One-to-four family residential 1,157 — 2 (144 ) 1,015 Real estate construction and land development: One-to-four family residential 1,058 (100 ) 83 (244 ) 797 Five or more family residential and commercial properties 813 (54 ) — 600 1,359 Total real estate construction and land development 1,871 (154 ) 83 356 2,156 Consumer 4,309 (1,778 ) 562 1,931 5,024 Unallocated 345 — — 161 506 Total $ 29,746 $ (6,085 ) $ 2,491 $ 4,931 $ 31,083 The following table details the allowance for loan losses disaggregated on the basis of the Company's impairment method as of December 31, 2016 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Allowance for Loan Losses (In thousands) Commercial business: Commercial and industrial $ 1,199 $ 8,048 $ 1,721 $ 10,968 Owner-occupied commercial real estate 511 1,834 1,316 3,661 Non-owner occupied commercial real estate 797 5,142 1,814 7,753 Total commercial business 2,507 15,024 4,851 22,382 One-to-four family residential 97 643 275 1,015 Real estate construction and land development: One-to-four family residential 6 538 253 797 Five or more family residential and commercial properties 60 1,168 131 1,359 Total real estate construction and land development 66 1,706 384 2,156 Consumer 64 3,912 1,048 5,024 Unallocated — 506 — 506 Total $ 2,734 $ 21,791 $ 6,558 $ 31,083 The following table details the recorded investment balance of the loan receivables disaggregated on the basis of the Company’s impairment method as of December 31, 2016 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Gross Loans Receivable (In thousands) Commercial business: Commercial and industrial $ 12,375 $ 616,081 $ 9,317 $ 637,773 Owner-occupied commercial real estate 4,724 537,338 15,973 558,035 Non-owner occupied commercial real estate 11,318 846,202 23,360 880,880 Total commercial business 28,417 1,999,621 48,650 2,076,688 One-to-four family residential 321 72,165 4,905 77,391 Real estate construction and land development: One-to-four family residential 3,071 45,220 2,123 50,414 Five or more family residential and commercial properties 1,079 105,197 2,488 108,764 Total real estate construction and land development 4,150 150,417 4,611 159,178 Consumer 310 318,548 6,282 325,140 Total $ 33,198 $ 2,540,751 $ 64,448 $ 2,638,397 The following table details the activity in the allowance for loan losses disaggregated by segment and class for the year ended December 31, 2015 : Balance at Beginning of Year Charge-offs Recoveries Provision for Loan Losses Balance at End of Year (In thousands) Commercial business: Commercial and industrial $ 10,553 $ (1,488 ) $ 476 $ 431 $ 9,972 Owner-occupied commercial real estate 4,032 — — 338 4,370 Non-owner occupied commercial real estate 5,601 (188 ) — 2,309 7,722 Total commercial business 20,186 (1,676 ) 476 3,078 22,064 One-to-four family residential 1,200 — 13 (56 ) 1,157 Real estate construction and land development: One-to-four family residential 1,786 (106 ) 100 (722 ) 1,058 Five or more family residential and commercial properties 972 — — (159 ) 813 Total real estate construction and land development 2,758 (106 ) 100 (881 ) 1,871 Consumer 2,769 (1,700 ) 538 2,702 4,309 Unallocated 816 — — (471 ) 345 Total $ 27,729 $ (3,482 ) $ 1,127 $ 4,372 $ 29,746 |
FDIC Indemnification Asset
FDIC Indemnification Asset | 12 Months Ended |
Dec. 31, 2017 | |
Banking and Thrift [Abstract] | |
FDIC Indemnification Asset | FDIC Indemnification Asset On August 4, 2015, the Bank and the FDIC entered into an agreement terminating the FDIC shared-loss agreements for all three of the FDIC-assisted acquisitions (Cowlitz Bank and Washington Banking Company's acquisitions of City Bank and North County Bank). The Bank paid consideration of $7.1 million to the FDIC for the termination of the shared-loss agreements related to these acquisitions. The termination of the shared-loss agreements resulted in a pre-tax gain of $1.7 million and the elimination of the FDIC indemnification asset and the FDIC clawback liability (included in “accrued expenses and other liabilities” in the Consolidated Statements of Financial Condition) which was recorded as of the termination date. The FDIC indemnification asset and FDIC clawback liability amounts were $388,000 and $9.3 million , respectively, as of June 30, 2015. All rights and obligations of the parties under the FDIC shared-loss agreements, including the clawback provisions, were eliminated under the termination agreement. It is not anticipated that the termination of the FDIC shared-loss agreements will have any impact on the yields for the loans that were previously covered under these agreements. All future charge-offs, recoveries, gains, losses and expenses related to previously covered assets will now be recognized entirely by the Bank since the FDIC will no longer be sharing in such charge-offs, recoveries, gains, losses and expenses. The following table provides changes in the FDIC indemnification asset during the year ended December 31, 2015 . The years ended December 31, 2017 and 2016 are not included because of the above-mentioned termination. Year Ended December 31, 2015 (In thousands) Balance at the beginning of the year $ 1,116 Cash payments received or receivable from the FDIC (231 ) FDIC share of additional estimated gains (352 ) Net amortization (145 ) Change due to termination of FDIC shared-loss agreements (388 ) Balance at the end of the year $ — |
Other Real Estate Owned
Other Real Estate Owned | 12 Months Ended |
Dec. 31, 2017 | |
Banking and Thrift [Abstract] | |
Other Real Estate Owned | Other Real Estate Owned Changes in other real estate owned during the years ended December 31, 2017 , 2016 and 2015 were as follows: Year Ended December 31, 2017 2016 2015 (In thousands Balance at the beginning of the year $ 754 $ 2,019 $ 3,355 Additions 32 1,431 2,845 Proceeds from dispositions (930 ) (2,486 ) (3,555 ) Gain (loss) on sales, net 144 173 (97 ) Valuation adjustment — (383 ) (529 ) Balance at the end of the year $ — $ 754 $ 2,019 At December 31, 2017 , there was no other real estate owned that was the result of foreclosure and obtaining physical possession of residential real estate properties . At December 31, 2017 , the recorded investment of consumer mortgage loans secured by residential real estate properties (included in the one-to-four family residential loan class in Note (3) Loans Receivable) for which formal foreclosure proceedings were in process was $660,000 . |
Premises and Equipment
Premises and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Premises and Equipment | Premises and Equipment A summary of premises and equipment is as follows: December 31, 2017 December 31, 2016 (In thousands) Land $ 21,483 $ 22,677 Buildings and building improvements 50,984 52,432 Furniture, fixtures and equipment 20,894 18,723 Total premises and equipment 93,361 93,832 Accumulated depreciation 33,036 29,921 Premises and equipment, net $ 60,325 $ 63,911 Total depreciation expense on premises and equipment was $3.9 million , $3.9 million and $4.0 million for the years ended December 31, 2017 , 2016 and 2015 , respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets (a) Goodwill The Company’s goodwill represents the excess of the purchase price over the fair value of net assets acquired in the Washington Banking Merger on May 1, 2014, and the acquisitions of Valley 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). There were no additions to goodwill during the years ended December 31, 2017 , 2016 and 2015 . At December 31, 2017 , the Company’s step-one analysis concluded that the reporting unit’s fair value was greater than its carrying value and therefore no goodwill impairment charges were required, or recorded, for the year ended December 31, 2017 . Similarly, no goodwill impairment charges were required, or recorded, for the years ended December 31, 2016 and 2015 . Even though there was no goodwill impairment at December 31, 2017 , adverse events may impact the recoverability of goodwill and could result in a future impairment charge which could have a material impact on the Company’s operating results. (b) Other Intangible Assets The other intangible assets represent the core deposit intangible ("CDI") acquired in business combinations. The useful life of the CDI related to the Washington Banking Merger and the acquisitions of Valley Community Bancshares, Northwest Commercial Bank, and Cowlitz Bank were estimated to be ten , ten , five and nine years, respectively. The following table presents the change in the other intangible assets for the periods indicated: Year Ended December 31, 2017 2016 2015 (In thousands) Balance at the beginning of the year $ 7,374 $ 8,789 $ 10,889 Less: Amortization 1,286 1,415 2,100 Balance at the end of the year $ 6,088 $ 7,374 $ 8,789 The estimated aggregate amortization expense related to these intangible assets for future years is as follows: Year Ending December 31, (In thousands) 2018 $ 1,122 2019 1,043 2020 989 2021 938 2022 887 Thereafter 1,109 $ 6,088 |
Deposits
Deposits | 12 Months Ended |
Dec. 31, 2017 | |
Deposits [Abstract] | |
Deposits | Deposits Deposits consisted of the following: December 31, 2017 December 31, 2016 Amount Percent Amount Percent (Dollars in thousands) Noninterest demand deposits $ 944,791 27.8 % $ 882,091 27.3 % Interest bearing demand deposits 1,051,752 31.1 963,821 29.8 Money market accounts 499,618 14.7 523,875 16.2 Savings accounts 498,501 14.7 502,460 15.6 Total non-maturity deposits 2,994,662 88.3 2,872,247 88.9 Certificate of deposit accounts 398,398 11.7 357,401 11.1 Total deposits $ 3,393,060 100.0 % $ 3,229,648 100.0 % Accrued interest payable on deposits was $124,000 and $186,000 as of December 31, 2017 and 2016 , respectively and is included in accrued expenses and other liabilities in the Consolidated Statements of Financial Condition. Interest expense, by category, was as follows: Year Ended December 31, 2017 2016 2015 (In thousands) Interest bearing demand deposits $ 1,812 $ 1,569 $ 1,476 Money market accounts 682 749 922 Savings accounts 1,311 756 445 Certificate of deposit accounts 2,244 1,936 2,386 $ 6,049 $ 5,010 $ 5,229 Scheduled maturities of certificates of deposit for future years are as follows: Year Ending December 31, (In thousands) 2018 $ 258,657 2019 81,407 2020 22,401 2021 10,708 2022 25,169 Thereafter 56 $ 398,398 Certificates of deposit issued in denominations equal to or in excess of $250,000 totaled $113.7 million and $54.8 million as of December 31, 2017 and 2016 , respectively. |
Junior Subordinated Debentures
Junior Subordinated Debentures | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Junior Subordinated Debentures | Junior Subordinated Debentures As part of the Washington Banking Merger, the Company assumed trust preferred securities and junior subordinated debentures with a total fair value of $18.9 million at the May 1, 2014 merger date. Washington Banking Master Trust, a Delaware statutory business trust, was a wholly-owned subsidiary of 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 Company. The trust preferred securities have a quarterly adjustable rate based upon the three-month London Interbank Offered Rate ("LIBOR") plus 1.56% . On the Washington Banking Merger date of May 1, 2014, the Company acquired the Trust, which retained the Washington Banking Master Trust name, and assumed the performance and observance of the covenants under the indenture related to the trust preferred securities. The adjustable rate of the trust preferred securities at December 31, 2017 was 3.25% . The weighted average rate of the junior subordinated debentures was 5.11% and 4.50% for the years ended December 31, 2017 and 2016 , respectively. The weighted average rate includes the accretion of the discount established at the merger date which is amortized over the life of the trust preferred securities. The junior subordinated debentures are the sole assets of the Trust, and payments under the junior subordinated debentures are the sole revenues of the Trust. At December 31, 2017 and 2016 , the balance of the junior subordinated debentures, net of unaccreted discount, was $20.0 million and $19.7 million , respectively. All of the common securities of the Trust are owned by the Company. Heritage has fully and unconditionally guaranteed the capital securities along with all obligations of the Trust under the trust agreements. 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 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 Consolidated Statements of Financial Condition. |
Repurchase Agreements
Repurchase Agreements | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Repurchase Agreements [Abstract] | |
Repurchase Agreements | Repurchase Agreements The Company utilizes repurchase agreements with one -day maturities as a supplement to funding sources. Repurchase agreements are secured by pledged investment securities available for sale. Under the repurchase agreements, the Company is required to maintain an aggregate market value of securities pledged greater than the balance of the repurchase agreements. The Company is required to pledge additional securities to cover any declines below the balance of the repurchase agreements. For additional information on the total value of investment securities pledged for repurchase agreements see Note (2) Investment Securities. The following table presents the Company's repurchase agreement obligations by class of collateral pledged: December 31, 2017 December 31, 2016 (In thousands) U.S. Treasury and U.S. Government-sponsored agencies $ — $ 2,944 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 11,239 5,191 Commercial 20,582 13,969 Total repurchase agreements $ 31,821 $ 22,104 (1) Issued and guaranteed by U.S. Government-sponsored agencies. |
Other Borrowings
Other Borrowings | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Other Borrowings | Other Borrowings (a) FHLB Advances The Federal Home Loan Bank ("FHLB") of Des Moines functions as a member-owned cooperative providing credit for member financial institutions. Advances are made pursuant to several different programs. Each credit program has its own interest rate and range of maturities. Limitations on the amount of advances are based on a percentage of the Bank's assets or on the FHLB’s assessment of the institution’s creditworthiness. At December 31, 2017 , the Bank maintained a credit facility with the FHLB of Des Moines for $881.1 million and had short-term FHLB advances outstanding of $92.5 million with maturity dates within 30 days. At December 31, 2016 there were FHLB advances outstanding of $79.6 million . The following table sets forth the details of FHLB advances during and as of the years ended December 31, 2017 and 2016 : December 31, 2017 December 31, 2016 (In thousands) FHLB Advances: Average balance during the year $ 105,646 $ 13,349 Maximum month-end balance during the year $ 137,450 $ 79,600 Weighted average rate during the year 1.16 % 0.55 % Weighted average rate at end of year 1.56 % 0.81 % 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 and Pacific Coast Bankers’ Bank to purchase federal funds of up to $90.0 million as of December 31, 2017 . The lines generally mature annually or are reviewed annually. As of December 31, 2017 and 2016 , there were no federal funds purchased. (c) Credit Facilities The Bank maintains a credit facility with the Federal Reserve Bank of San Francisco for $82.5 million as of December 31, 2017 , of which there were no borrowings outstanding as of December 31, 2017 or 2016 . Any advances on the credit facility would have to be first secured by the Bank's investment securities or loans receivable. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans (a) 401(k) Plan The Company provides its eligible employees with a 401(k) plan called "Heritage Financial Corporation 401(k) Profit Sharing Plan and Trust" (the “Plan”). The Company funds certain Plan costs as accrued. The Plan includes the Company’s salary savings 401(k) plan for its employees. All employees hired may participate in the Plan the first of the month following thirty days of service. Participants may contribute a portion of their salary, which is matched by the Company at 50% , not to be greater than 3% of eligible compensation, up to certain Internal Revenue Service limits. A Roth feature was added to the plan in 2016. All participants are 100% vested in all accounts at all times. Employer matching contributions for the years ended December 31, 2017 , 2016 and 2015 were $1.1 million , $1.0 million and $954,000 , respectively. The profit sharing portion of the Plan is a defined contribution retirement plan. All profit sharing and discretionary contributions are completely discretionary. Participants are eligible for profit sharing contributions upon credit of 1,000 hours of service during the plan year, the attainment of 18 years of age, and employment on the last day of the year. Employees are vested in profit sharing contributions in the same manner as employer matching contributions discussed above. For the years ended December 31, 2017 , 2016 and 2015 , the Company made no employer profit sharing contributions. (b) Employment Agreements The Company has entered into contracts with certain senior officers that provide benefits under certain conditions following termination without cause, and/or following a change in control of the Company. (c) Deferred Compensation Plan During 2012, the Company adopted a Deferred Compensation Plan, which provides its directors and select executive officers with the opportunity to defer current compensation. Under the Plan, participants are permitted to elect to defer compensation and the Company has the discretion to make additional contributions to the Plan on behalf of any participant based on a number of factors. Compensation expense under the Deferred Compensation Plan totaled $652,000 , $540,000 and $570,000 for the years ended December 31, 2017 , 2016 and 2015 , respectively. The Company’s contributions totaled $453,000 , $521,000 and $296,000 for the years ended December 31, 2017 , 2016 and 2015 , respectively. As of December 31, 2017 and 2016 , the carrying value of the obligation related to the deferred compensation plans was $2.8 million and $2.2 million , respectively. (d) Split-Dollar Life Insurance Benefit Plan In conjunction with the Washington Banking Merger, the Company assumed the split-dollar life insurance benefit plan previously maintained by Washington Banking. Life insurance policies are maintained for current or former officers of the Bank or former Washington Banking officers that are subject to split-dollar life insurance agreements, which continue after the participant's employment and retirement. All participants are fully vested in their split-dollar life insurance benefits. The accrued benefit liability for the split-dollar life insurance agreements represents the present value of the future death benefits payable to the participants' beneficiaries. The split-dollar life insurance projected benefit obligation is included in accrued expenses and other liabilities on the Company's Consolidated Statements of Financial Condition. As of December 31, 2017 and 2016 , the carrying value of the obligation was $250,000 and $1.1 million , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies (a) Lease Commitments The Bank leases certain premises and equipment under operating leases. Rental expense of leased premises and equipment was $3.8 million , $4.4 million and $4.6 million for the years ended December 31, 2017 , 2016 and 2015 , respectively, which is included in occupancy and equipment expense on the Company's Consolidated Statements of Income. The estimated future minimum annual rental commitments under noncancelable leases having an original or remaining term of more than one year are as follows: Year Ending December 31, (In thousands) 2018 $ 3,074 2019 2,681 2020 2,385 2021 1,640 2022 929 Thereafter 2,241 $ 12,950 The leases contain various provisions for increases in rental rates, based either on changes in the published Consumer Price Index or a predetermined escalation schedule. Substantially all of the leases provide the Company with the option to extend the lease term one or more times following expiration of the initial term. (b) Commitments to Extend Credit In the ordinary course of business, the Company may enter into various types of transactions that include commitments to extend credit that are not included in the Consolidated Financial Statements. The Company applies the same credit standards to these commitments as it uses in all its lending activities and has included these commitments in its lending risk evaluations. The majority of the commitments presented below are variable rate. The Company’s exposure to credit and market risk under commitments to extend credit is represented by the amount of these commitments. The following table presents outstanding commitments to extend credit, including letters of credit, at the dates indicated: December 31, 2017 December 31, 2016 (In thousands) Commercial business: Commercial and industrial $ 363,272 $ 368,308 Owner-occupied commercial real estate 6,815 3,443 Non-owner occupied commercial real estate 13,543 8,732 Total commercial business 383,630 380,483 One-to-four family residential — — Real estate construction and land development: One-to-four family residential 38,160 23,004 Five or more family residential and commercial properties 86,787 78,121 Total real estate construction and land development 124,947 101,125 Consumer 204,625 144,405 Total outstanding commitments $ 713,202 $ 626,013 (c) Variable Interests The Company has two equity investments in Low-Income Housing Tax Credit partnerships ("LIHTCs") which are indirect federal subsidies that finance low-income housing projects. The Company reported the investments in the unconsolidated LIHTCs as prepaid expenses and other assets on the Company’s Statements of Financial Condition with carrying values of $54.0 million and $23.3 million as of December 31, 2017 and 2016 , respectively. As a limited liability investor in these partnerships, the Company receives tax benefits in the form of tax deductions from partnership operating losses and federal income tax credits. The federal income tax credits are earned over a 10-year period as a result of the investment properties meeting certain criteria and are subject to recapture for noncompliance with such criteria over a 15-year period. The Company accounts for the LIHTCs under the proportional amortization method and amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance on the Company's Consolidated Statements of Income as a component of income tax expense. During the years ended December 31, 2017 , 2016 , and 2015 the Company recognized tax benefits of $2.9 million , $640,000 and $273,000 , respectively. See Note (20) Income Taxes for further information on tax benefits. The maximum exposure to loss in the LIHTCs is the amount of equity invested and credit extended by the Company. Loans to these entities are underwritten in substantially the same manner as are other loans and are generally secured. The Company has evaluated the variable interests held by the Company in each LIHTC investment and determined that the Company does not have controlling financial interests in such investments, and is not the primary beneficiary. Total unfunded contingent commitments related to the Company’s LIHTC investments totaled $39.8 million and $18.3 million at December 31, 2017 and 2016 , respectively, and is reported as accrued expenses and other liabilities on the Company's Statements of Financial Condition. The Company expects to fund LIHTC commitments of $8.6 million during the year ended December 31, 2018 and $26.0 million during the year ended December 31, 2019, with the remaining commitments of $5.2 million paid by December 31, 2034. There were no impairment losses on the Company’s LIHTC investments during the years ended December 31, 2017 , 2016 or 2015 . The Company also made a total of $25.0 million of Qualified Equity Investments ("QEIs") into three Certified Development Entities (“CDEs”) in May 2014 and is eligible to receive New Markets Tax Credits (“NMTC”) on the QEIs. The NMTC program provides federal tax incentives to investors to make investments in distressed communities and promotes economic improvements through the development of successful businesses in these communities. The NMTC is available to investors over a seven-year period and is subject to recapture if certain events occur during such period. Gross tax credits related to the Company's CDEs totaling $9.8 million are available through 2020 . The Company is required to fund 85 percent of a tranche to claim the entire tax credit, and it had until May 15, 2015 to complete the funding. The tranche was funded in 2015 before the deadline. The Company accounts for its NMTC on the equity method and reported the investment balance as prepaid expenses and other assets on the Company’s Statements of Financial Condition with carrying value of $25.8 million and $26.8 million at December 31, 2017 and December 31, 2016 , respectively. The Company recorded investment income of $735,000 , $740,000 and $562,000 during the years ended December 31, 2017 , 2016 and 2015 , respectively, in other income on the Company's Statements of Income. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company has entered into certain interest rate swap contracts that are not designated as hedging instruments. The purpose of these derivative contracts is primarily to provide commercial business loan customers the ability to convert their loans from variable to fixed interest rates. Upon the origination of a derivative contract with a customer, the Company simultaneously enters into an offsetting derivative contract with a third party in order to offset its exposure on the variable and fixed rate components of the customer agreement. The Company recognizes immediate income based upon the difference in the bid/ask spread of the underlying transactions with its customers and the third party, which is recorded in interest rate swap fees on the 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 December 31, 2017 and December 31, 2016 are presented in the following table. December 31, 2017 December 31, 2016 Notional Amounts Estimated Fair Value Notional Amounts Estimated Fair Value (In thousands) Non-hedging interest rate derivatives Interest rate swaps with customer (1) $ 146,537 $ (882 ) $ 102,709 $ (1,099 ) Interest rate swap with third party (1) 146,537 882 102,709 1,099 (1) The estimated fair value of the derivative included in prepaid and other assets on the Consolidated Statements of Financial Condition was $3.4 million and $2.8 million as of December 31, 2017 and 2016 , respectively. The estimated fair value of the derivative included in accrued expenses and other liabilities on the Consolidated Statements of Financial Condition was $3.4 million and $2.8 million as of December 31, 2017 and 2016 , respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity (a) Earnings Per Common Share The following table illustrates the reconciliation of weighted average shares used for earnings per common share computations for the years ended December 31, 2017 , 2016 and 2015 : Year Ended December 31, 2017 2016 2015 (Dollars in thousands) Net income: Net income $ 41,791 $ 38,918 $ 37,489 Less: Dividends and undistributed earnings allocated to participating securities (293 ) (358 ) (328 ) Net income allocated to common shareholders $ 41,498 $ 38,560 $ 37,161 Basic: Weighted average common shares outstanding 29,937,400 29,963,365 30,057,558 Less: Restricted stock awards (179,581 ) (285,063 ) (267,943 ) Total basic weighted average common shares outstanding 29,757,819 29,678,302 29,789,615 Diluted: Basic weighted average common shares outstanding 29,757,819 29,678,302 29,789,615 Effect of potentially dilutive common shares (1) 91,512 13,851 22,725 Total diluted weighted average common shares outstanding 29,849,331 29,692,153 29,812,340 (1) Represents the effect of the assumed exercise of stock options and vesting of restricted stock awards and units. Potential dilutive shares are excluded from the computation of earnings per share if their effect is anti-dilutive. For the year ended December 31, 2017 , there were no anti-dilutive shares outstanding related to options to acquire common stock. For the years ended December 31, 2016 and 2015 , anti-dilutive shares outstanding related to options to acquire common stock totaled 436 and 4,320 , respectively. 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 years ended December 31, 2017 , 2016 and 2015 . Declared Cash Dividend per Share Record Date Paid Date January 28, 2015 $0.10 February 10, 2015 February 24, 2015 April 22, 2015 $0.11 May 7, 2015 May 21, 2015 July 22, 2015 $0.11 August 6, 2015 August 20, 2015 October 21, 2015 $0.11 November 4, 2015 November 18, 2015 October 21, 2015 $0.10 November 4, 2015 November 18, 2015 * January 27, 2016 $0.11 February 10, 2016 February 24, 2016 April 20, 2016 $0.12 May 5, 2016 May 19, 2016 July 20, 2016 $0.12 August 4, 2016 August 18, 2016 October 26, 2016 $0.12 November 8, 2016 November 22, 2016 October 26, 2016 $0.25 November 8, 2016 November 22, 2016 * January 25, 2017 $0.12 February 9, 2017 February 23, 2017 April 25, 2017 $0.13 May 10, 2017 May 24, 2017 July 25, 2017 $0.13 August 10, 2017 August 24, 2017 October 25, 2017 $0.13 November 8, 2017 November 22, 2017 October 25, 2017 $0.10 November 8, 2017 November 22, 2017 * * Denotes a special dividend. The FDIC and the Washington State Department of Financial Institutions, Division of Banks have the authority under their supervisory powers to prohibit the payment of dividends by the Bank to the Company. Additionally, current guidance from the Board of Governors of the Federal Reserve System ("Federal Reserve") 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. The following table provides total repurchased shares and average share prices under the plan for the periods indicated: Year Ended December 31, 2017 2016 2015 Plan Total (1) Eleventh Plan Repurchased shares — 138,000 441,966 579,966 Stock repurchase average share price $ — $ 17.16 $ 16.64 $ 16.76 (1) Represents shares repurchased and average price per share paid during the duration of the plan. In addition to the stock repurchases disclosed in the table above, the Company repurchased shares to pay withholding taxes on the vesting of restricted stock. During the years ended December 31, 2017 , 2016 and 2015 , the Company repurchased 29,429 , 29,512 and 22,300 shares at an average price of $25.01 , $17.82 and $17.09 respectively, to pay withholding taxes on the vesting of restricted stock that vested during the respective periods. (d) Issuance of Common Stock No common stock was issued during the years ended December 31, 2017 , 2016 and 2015 other than common stock related to the exercise of stock options and issuance of restricted stock awards as further described in Note (19) Stock-Based Compensation. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The changes in accumulated other comprehensive income (loss) (“AOCI”) by component, during the years ended December 31, 2017 , 2016 and 2015 are as follows: December 31, 2017 December 31, 2016 (In thousands) Balance of AOCI at the beginning of the year $ (2,606 ) $ 2,559 Other comprehensive income (loss) before reclassification (1) 1,530 (4,311 ) Amounts reclassified from AOCI for gain on sale of investment securities included in net income (1) (4 ) (854 ) Net current period other comprehensive income (loss) 1,526 (5,165 ) ASU 2018-02 Implementation (218 ) — Balance of AOCI at the end of the year $ (1,298 ) $ (2,606 ) (1) All amounts are due to the changes in fair value of available for sale securities and are net of tax. December 31, 2015 Changes in (1) Accretion of other-than- (1) Total (In thousands) Balance of AOCI at the beginning of the year $ 3,567 $ (189 ) $ 3,378 Other comprehensive (loss) income before reclassification (559 ) 108 (451 ) Amounts reclassified from AOCI for gain on sale of investment securities available for sale included in net income (1,067 ) 81 (986 ) Held to maturity transfer to available for sale 618 — 618 Net current period other comprehensive (loss) income (1,008 ) 189 (819 ) Balance of AOCI at the end of the year $ 2,559 $ — $ 2,559 (1) All amounts are net of tax. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 : Valuations for assets and liabilities traded in active exchange markets, or interest in open-end mutual funds that allow the Company to sell its ownership interest back to the fund at net asset value on a daily basis. Valuations are obtained from readily available pricing sources for market transactions involving identical assets, liabilities, or funds. Level 2 : Valuations for assets and liabilities traded in less active dealer or broker markets, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or valuations using methodologies with observable inputs. Level 3 : Valuations for assets and liabilities that are derived from other valuation methodologies, such as option pricing models, discounted cash flow models and similar techniques using unobservable inputs, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. (a) Recurring and Nonrecurring Basis The Company used the following methods and significant assumptions to measure the fair value of certain assets on a recurring and nonrecurring basis: Investment Securities Available for Sale : The fair values of all investment securities are based upon the assumptions that market participants would use in pricing the security. If available, fair values of investment securities are determined by quoted market prices (Level 1). For investment securities where quoted market prices are not available, fair values are calculated based on market prices on similar securities (Level 2). For investment securities where quoted prices or market prices of similar securities are not available, fair values are calculated by using observable and unobservable inputs such as discounted cash flows or other market indicators (Level 3). Security valuations are obtained from third party pricing services for comparable assets or liabilities. Impaired Loans : At the time a loan is considered impaired, its impairment is measured based on either the present value of expected future cash flows discounted at the loan’s effective interest rate, the observable market price, or the fair market value of the collateral (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 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 December 31, 2017 and December 31, 2016 . 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 $ — December 31, 2016 Total Level 1 Level 2 Level 3 (In thousands) Assets Investment securities available for sale: U.S. Treasury and U.S. Government-sponsored agencies $ 1,569 $ — $ 1,569 $ — Municipal securities 237,256 — 237,256 — Mortgage backed securities and collateralized mortgage obligations: Residential 309,176 — 309,176 — Commercial 208,318 — 208,318 — Collateralized loan obligations 10,478 — 10,478 — Corporate obligations 16,706 — 16,706 — Other securities 11,142 123 11,019 — Total investment securities available for sale 794,645 123 794,522 — Derivative assets - interest rate swaps 2,804 — 2,804 — Liabilities Derivative liabilities - interest rate swaps $ 2,804 $ — $ 2,804 $ — There were no transfers between Level 1 and Level 2 during the years ended December 31, 2017 and 2016 . The Company may be required to measure certain financial assets and liabilities at fair value on a nonrecurring basis. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. The tables below represent assets measured at fair value on a nonrecurring basis at December 31, 2017 and December 31, 2016 and the net losses (gains) recorded in earnings during years ended December 31, 2017 and 2016 . Basis (1) Fair Value at December 31, 2017 Total Level 1 Level 2 Level 3 Net Losses (Gains) Recorded in Earnings During the Year Ended December 31, 2017 (In thousands) Impaired loans: Real estate construction and land development: One-to-four family residential $ 976 $ 307 $ — $ — $ 307 $ (558 ) Total assets measured at fair value on a nonrecurring basis $ 976 $ 307 $ — $ — $ 307 $ (558 ) (1) Basis represents the unpaid principal balance of impaired loans. Basis (1) Fair Value at December 31, 2016 Total Level 1 Level 2 Level 3 Net Losses (Gains) Recorded in Earnings During the Year Ended December 31, 2016 (In thousands) Impaired loans: Commercial business: Commercial and industrial $ 205 $ 200 $ — $ — $ 200 $ 5 Owner-occupied commercial real estate 780 603 — — 603 (145 ) Total commercial business 985 803 — — 803 (140 ) Real estate construction and land development: One-to-four family residential 828 822 — — 822 (23 ) Total real estate construction and land development 828 822 — — 822 (23 ) Consumer 16 9 — — 9 6 Total assets measured at fair value on a nonrecurring basis $ 1,829 $ 1,634 $ — $ — $ 1,634 $ (157 ) (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 December 31, 2017 and December 31, 2016 . 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.%) December 31, 2016 Fair Value Valuation Technique(s) Unobservable Input(s) Range of Inputs; Weighted Average (Dollars in thousands) Impaired loans $ 1,634 Market approach Adjustment for differences between the comparable sales (23.8%) - 63.9%; 20.4% (b) Fair Value of Financial Instruments Because broadly traded markets do not exist for most of the Company’s financial instruments, the fair value calculations attempt to incorporate the effect of current market conditions at a specific time. These determinations are subjective in nature, involve uncertainties and matters of significant judgment and do not include tax ramifications; therefore, the results cannot be determined with precision, substantiated by comparison to independent markets and may not be realized in an actual sale or immediate settlement of the instruments. There may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results. For all of these reasons, the aggregation of the fair value calculations presented herein do not represent, and should not be construed to represent, the underlying value of the Company. The tables below present the carrying value amount of the Company’s financial instruments and their corresponding estimated fair values at the dates indicated. 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 — Total loans receivable, net 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 — December 31, 2016 Carrying Value Fair Value Fair Value Measurements Using: Level 1 Level 2 Level 3 (In thousands) Financial Assets: Cash and cash equivalents $ 103,745 $ 103,745 $ 103,745 $ — $ — Investment securities available for sale 794,645 794,645 123 794,522 — Federal Home Loan Bank stock 7,564 N/A N/A N/A N/A Loans held for sale 11,662 11,988 — 11,988 — Loans receivable, net of allowance for loan losses 2,609,666 2,675,811 — — 2,675,811 Accrued interest receivable 10,925 10,925 3 3,472 7,450 Derivative assets - interest rate swaps 2,804 2,804 — 2,804 — Financial Liabilities: Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts $ 2,872,247 $ 2,872,247 $ 2,872,247 $ — $ — Certificate of deposit accounts 357,401 357,536 — 357,536 — Federal Home Loan Bank advances 79,600 79,600 — 79,600 — Securities sold under agreement to repurchase 22,104 22,104 22,104 — — Junior subordinated debentures 19,717 15,000 — — 15,000 Accrued interest payable 215 215 44 142 29 Derivative liabilities - interest rate swaps 2,804 2,804 — 2,804 — The methods and assumptions, not previously presented, used to estimate fair value are described as follows: Cash and Cash Equivalents: The fair value of financial instruments that are short-term or reprice frequently and that have little or no risk are considered to have a fair value equal to carrying value (Level 1). Federal Home Loan Bank Stock : FHLB stock is not publicly traded; thus, it is not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. Loans Held for Sale : The fair value of loans held for sale is estimated based upon binding contracts or quotes from third party investors for similar loans. (Level 2). Loans Receivable : Except for certain impaired loans discussed previously, fair value is based on discounted cash flows using current market rates applied to the estimated life (Level 3). While these methodologies are permitted under U.S. GAAP, they are not based on the exit price concept of the fair value required under FASB ASC 820-10, Fair Value Measurements and Disclosures , and generally produce a higher value. Accrued Interest Receivable/Payable : The fair value of accrued interest receivable/payable balances approximates the carrying value. The fair value measurements are commensurate with the asset or liability from which the accrued interest is generated (Level 1, Level 2 and Level 3). Deposits : For deposits with no contractual maturity, the fair value is assumed to equal the carrying value (Level 1). The fair value of certificate of deposit accounts is based on discounted cash flows using the difference between the deposit rate and the rates offered by the Company for deposits of similar remaining maturities (Level 2). Federal Home Loan Bank advances : The fair value of FHLB advances is estimated based on discounting the future cash flows using the market rate currently offered (Level 2). Securities Sold Under Agreement to Repurchase : Securities sold under agreement to repurchase are short-term in nature and they reprice on a daily basis. Fair value financial instruments that are short-term or reprice frequently and that have little or no risk are considered to have a fair value equal to carrying value (Level 1). Junior Subordinated Debentures: The fair value is estimated using discounted cash flow analysis based on current rates for similar types of debt, which many be unobservable, and considering recent trading activity of similar instruments in markets which can be inactive (Level 3). Off-Balance Sheet Financial Instruments : The majority of our commitments to extend credit, standby letters of credit and commitments to sell mortgage loans carry current market interest rates if converted to loans. As such, no premium or discount was ascribed to these commitments (Level 1). They are excluded from the preceding tables. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock options generally vest ratably over three years and expire five years after they become exercisable or vest ratably over four years and expire ten years from date of grant. Restricted stock awards granted generally have a four -year cliff vesting or four -year ratable vesting schedule. Restricted stock units granted generally 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 Company issues new shares of common stock to satisfy share option exercises and restricted stock awards. On July 24, 2014, the Company's shareholders approved the Heritage Financial Corporation 2014 Omnibus Equity Plan that provides for the issuance of 1,500,000 shares of the Company's common stock in the form of stock options, stock appreciation rights, stock awards (which includes restricted stock units, restricted stock, performance units, performance shares or bonus shares) and cash incentive awards. Under the Company's stock-based compensation plan, 1,072,809 shares remain available for future issuance as of December 31, 2017 . (a) Stock Option Awards For the years ended December 31, 2017 , 2016 and 2015 , the Company did not 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 from options exercised during the years ended December 31, 2017 , 2016 and 2015 was $161,000 , $177,000 and $299,000 , respectively. The cash proceeds from options exercised during the years ended December 31, 2017 , 2016 and 2015 were $164,000 , $540,000 and $751,000 , respectively. The following table summarizes the stock option activity for the years ended December 31, 2017 , 2016 and 2015 : Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding at December 31, 2014 156,407 $ 13.59 Exercised (61,529 ) 12.15 Forfeited or expired (15,470 ) 16.27 Outstanding at December 31, 2015 79,408 14.19 Exercised (37,713 ) 14.31 Forfeited or expired (4,200 ) 16.80 Outstanding at December 31, 2016 37,495 13.77 Exercised (12,662 ) 12.97 Forfeited or expired (1,602 ) 13.76 Outstanding, vested and expected to vest and exercisable at December 31, 2017 23,231 $ 14.21 2.14 $ 385 (b) Restricted Stock Awards For the years ended December 31, 2017 , 2016 and 2015 the Company recognized compensation expense related to restricted stock awards of $1.4 million , $1.8 million and $1.6 million , respectively, and a related tax benefit of $488,000 , $644,000 and $546,000 , respectively. As of December 31, 2017 , the total unrecognized compensation expense related to non-vested restricted stock awards was $1.5 million and the related weighted average period over which the compensation expense is expected to be recognized is approximately 1.6 years. The vesting date fair value of the restricted stock awards that vested during the years ended December 31, 2017 , 2016 and 2015 was $2.9 million , $2.0 million and $1.6 million , respectively. The following table summarizes the restricted stock award activity for the years ended December 31, 2017 , 2016 and 2015 : Shares Weighted-Average Grant Date Fair Value Nonvested at December 31, 2014 238,669 $ 15.20 Granted 121,320 16.72 Vested (92,486 ) 15.12 Forfeited (2,982 ) 15.73 Nonvested at December 31, 2015 264,521 15.92 Granted 121,039 17.60 Vested (112,516 ) 15.62 Forfeited (11,748 ) 16.62 Nonvested at December 31, 2016 261,296 16.80 Granted — — Vested (113,479 ) 16.55 Forfeited (10,418 ) 16.80 Nonvested at December 31, 2017 137,399 $ 17.00 (c) Restricted Stock Units During 2017, performance-based stock-settled restricted stock unit awards ("PRSU") and stock-settled restricted stock unit awards ("RSU") were granted with a performance period of three years . 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 next 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 2017: 2017 Shares issued 6,089 Expected Term in Years 2.85 Weighted-Average Risk Free Interest Rate 1.40 % Expected Dividend Yield — % Weighted-Average Fair Value 24.39 Correlation coefficient ABA NASDAQ Community Bank Index Range of peer company volatilities 17.8% - 63.1% Range of peer company correlation coefficients 8.24% - 89.79% Heritage volatility 21.8 % Heritage correlation coefficient 75.93 % For the year ended December 31, 2017 , the Company recognized compensation expense related to RSUs of $712,000 , and a related tax benefit of $249,000 . As of December 31, 2017 , the total unrecognized compensation expense related to non-vested restricted stock units was $1.6 million and the related weighted average period over which the compensation expense is expected to be recognized is approximately 2.02 years. The following table summarizes the RSU activity for the year ended December 31, 2017 : Units Weighted-Average Grant Date Fair Value Nonvested at December 31, 2016 — $ — Granted 92,356 25.31 Vested — — Forfeited (1,812 ) 25.35 Nonvested at December 31, 2017 90,544 $ 25.31 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense is substantially due to Federal income taxes as the provision for the state of Oregon income taxes is insignificant. Income tax expense for the years ended December 31, 2017 , 2016 and 2015 consisted of the following: Year Ended December 31, 2017 2016 2015 (In thousands) Current tax expense $ 12,171 $ 6,885 $ 9,760 Deferred tax expense 6,185 6,918 4,058 Income tax expense $ 18,356 $ 13,803 $ 13,818 A reconciliation of the Company's effective income tax rate with the Federal statutory income tax rate of 35% is as follows: Year Ended December 31, 2017 2016 2015 (In thousands) Income tax expense at Federal statutory rate $ 21,051 $ 18,452 $ 17,957 Tax-exempt instruments (3,212 ) (3,198 ) (2,482 ) Non-deductible acquisition costs 210 — — Federal tax credits and other benefits (1) (1,510 ) (931 ) (880 ) Effects of BOLI (531 ) (511 ) (474 ) Revaluation of net deferred tax assets 2,568 — — Tax resolutions (2) — — (300 ) Other, net (220 ) (9 ) (3 ) Income tax expense $ 18,356 $ 13,803 $ 13,818 (1) Federal tax credits are provided for under the NMTC program and LIHTC programs as described in Note (14) Commitments and Contingencies. Tax benefits related to these credits were recognized for financial reporting purposes in the same period that the credits were recognized in the Company's income tax returns. Other benefits include the proportional amortization of the LIHTC of $2.2 million , $523,000 and $209,000 , for the years ended December 31, 2017 , 2016 and 2015 , respectively. (2) Washington Banking Company had recorded tax-related liabilities prior to the merger effective date, which the Company assumed as part of the Washington Banking Merger. These tax-related liabilities were resolved during the year ended December 31, 2015, resulting in a decrease of the Company's income tax expense for the year ended December 31, 2015. On December 22, 2017, the U.S. Government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"). The Tax Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. For businesses, the Tax Act reduces the corporate federal tax rate from a maximum of 35% to a flat 21% rate. The corporate tax rate reduction was effective January 1, 2018. The Tax Act required a revaluation the Company’s deferred tax assets and liabilities to account for the future impact of lower corporate tax rates and other provisions of the legislation. As a result of the Company's revaluation, the net deferred tax asset was reduced through an increase to the provision for income tax. The following table presents major components of the deferred income tax asset (liability) resulting from differences between financial reporting and tax basis: December 31, 2017 December 31, 2016 (In thousands) Deferred tax assets: Allowance for loan losses $ 3,330 $ 4,739 Accrued compensation 1,779 2,685 Stock compensation 660 910 Net unrealized losses charged to other comprehensive income on securities 347 1,388 Market discount on purchased loans 3,908 10,506 Foregone interest on nonaccrual loans 471 1,536 Net operating loss carryforward acquired from NCB 270 483 Other deferred tax assets 763 1,483 Total deferred tax assets 11,528 23,730 Deferred tax liabilities: Deferred loan fees, net (2,518 ) (3,736 ) Premises and equipment (1,091 ) (1,660 ) FHLB stock (557 ) (926 ) Goodwill and other intangible assets (304 ) (740 ) Federal tax credits (1,107 ) (1,314 ) Junior subordinated debentures (1,215 ) (2,122 ) Other deferred tax liabilities (847 ) (1,223 ) Total deferred tax liabilities (7,639 ) (11,721 ) Deferred tax asset, net $ 3,889 $ 12,009 In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. A valuation allowance is required to be recognized for the portion of the deferred tax asset that will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2017 , based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management expects to realize the benefits of these deductible differences. The Company had a net operating loss carryforward of $1.3 million and $1.4 million at December 31, 2017 and 2016 , respectively, that will expire in 2033 . The Company is limited to the amount of the net operating loss carryforward that it can deduct each year. A tax planning strategy has been developed that management believes will enable the Company to deduct all of the net operating loss carryforwards prior to the expiration date. Based on these estimates, management has no t recorded a valuation allowance as of December 31, 2017 and 2016 . As of December 31, 2017 and 2016 , the Company had an insignificant amount of unrecognized tax benefits, none of which would materially affect its effective tax rate if recognized. The Company does not anticipate that the amount of unrecognized tax benefits will significantly increase or decrease in the next 12 months. The amount of interest and penalties accrued as of December 31, 2017 and 2016 and for the years ended December 31, 2017 , 2016 and 2015 were immaterial. The Company has qualified under provisions of the Internal Revenue Code to compute income taxes after deductions of additions to the bad debt reserves when it was registered as a Savings Bank. At December 31, 2017 , the Company had a taxable temporary difference of approximately $2.8 million that arose before 1988 (base-year amount). In accordance with FASB ASC 740, a deferred tax liability of an estimated $980,000 has not been recognized for the temporary difference. Management does not expect this temporary difference to reverse in the foreseeable future. The Company and its subsidiary file a United States consolidated federal income tax return and an Oregon State income tax return, and the tax years subject to examination by the Internal Revenue Service are the years ended December 31, 2017 , 2016 , 2015 and 2014 . |
Regulatory Capital Requirements
Regulatory Capital Requirements | 12 Months Ended |
Dec. 31, 2017 | |
Regulatory Capital Requirements [Abstract] | |
Regulatory Capital Requirements | Regulatory Capital Requirements The Company is a bank holding company under the supervision of the Federal Reserve Bank of San Francisco. Bank holding companies are subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended, and the regulations of the Federal Reserve. Heritage Bank is a federally insured institution and thereby is subject to the capital requirements established by the FDIC. The Federal Reserve capital requirements generally parallel the FDIC requirements. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements and operations. Management believes as of December 31, 2017 , the Company and the Bank meet all capital adequacy requirements to which they are subject. As of December 31, 2017 and December 31, 2016 , the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's categories. Minimum Well- Actual $ % $ % $ % (Dollars in thousands) As of December 31, 2017: The Company consolidated Common equity Tier 1 capital to risk-weighted assets $ 154,522 4.5 % N/A N/A $ 386,689 11.3 % Tier 1 leverage capital to average assets 159,494 4.0 N/A N/A 406,687 10.2 Tier 1 capital to risk-weighted assets 206,029 6.0 N/A N/A 406,687 11.8 Total capital to risk-weighted assets 274,706 8.0 N/A N/A 439,044 12.8 Heritage Bank Common equity Tier 1 capital to risk-weighted assets 154,400 4.5 223,023 6.5 391,092 11.4 Tier 1 leverage capital to average assets 159,300 4.0 199,125 5.0 391,092 9.8 Tier 1 capital to risk-weighted assets 205,867 6.0 274,490 8.0 391,092 11.4 Total capital to risk-weighted assets 274,490 8.0 343,112 10.0 423,348 12.3 As of December 31, 2016: The Company consolidated Common equity Tier 1 capital to risk-weighted assets 142,688 4.5 N/A N/A 362,350 11.4 Tier 1 leverage capital to average assets 148,144 4.0 N/A N/A 381,989 10.3 Tier 1 capital to risk-weighted assets 190,250 6.0 N/A N/A 381,989 12.0 Total capital to risk-weighted assets 253,667 8.0 N/A N/A 413,320 13.0 Heritage Bank Common equity Tier 1 capital to risk-weighted assets 142,573 4.5 205,938 6.5 369,915 11.7 Tier 1 leverage capital to average assets 148,024 4.0 185,030 5.0 369,915 10.0 Tier 1 capital to risk-weighted assets 190,097 6.0 253,462 8.0 369,915 11.7 Total capital to risk-weighted assets 253,462 8.0 316,828 10.0 401,168 12.7 Effective January 1, 2015 (with some changes transitioned into full effectiveness over two to four years), the Company became subject to new capital adequacy requirements approved by the Federal Reserve and the FDIC that implement the revised standards of the Basel Committee on Banking Supervision, commonly called Basel III, and address relevant provisions of the Dodd-Frank Act. Under the new capital requirements both the Company and the Bank are required to have a common equity Tier 1 capital ratio of 4.5%. In addition, both the Company and the Bank are required to have a Tier 1 leverage ratio of 4.0%, a Tier 1 risk-based ratio of 6.0% and a total risk-based ratio of 8.0%. Both the Company and the Bank are required to establish a “conservation buffer”, consisting of common equity Tier 1 capital of more than 2.5% above the minimum risk-based capital ratios. The capital conservation buffer is designed to ensure that banks build up capital buffers outside periods of stress which can be drawn down as losses are incurred. An institution that does not meet the conservation buffer will be subject to restrictions on certain activities including payment of dividends, stock repurchases and discretionary bonuses to executive officers. The conservation buffer is being phased in beginning in 2016 and will take full effect on January 1, 2019. Certain calculations under the rules will also have phase-in periods. The capital conservation buffer requirement began to be phased-in on January 1, 2016 when more than 0.625% of risk-weighted assets was required, and increases by 0.625% on each subsequent January 1, until it is fully phased-in on January 1, 2019. At December 31, 2017 , the capital conservation buffer was 4.71% and 4.26% for the Company and the Bank, respectively. |
Heritage Financial Corporation
Heritage Financial Corporation (Parent Company Only) | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Heritage Financial Corporation (Parent Company Only) | Heritage Financial Corporation (Parent Company Only) Following is the condensed financial statements of the Parent Company. HERITAGE FINANCIAL CORPORATION (PARENT COMPANY ONLY) Condensed Statements of Financial Condition December 31, 2017 December 31, 2016 (In thousands) ASSETS Cash and interest earning deposits $ 11,904 $ 10,568 Investment in subsidiary bank 512,655 489,388 Other assets 4,696 2,601 Total assets $ 529,255 $ 502,557 LIABILITIES AND STOCKHOLDERS’ EQUITY Junior subordinated debentures $ 20,009 $ 19,717 Other liabilities 941 1,077 Total stockholders’ equity 508,305 481,763 Total liabilities and stockholders’ equity $ 529,255 $ 502,557 HERITAGE FINANCIAL CORPORATION (PARENT COMPANY ONLY) Condensed Statements of Income Year Ended December 31, 2017 2016 2015 (In thousands) INTEREST INCOME: Interest and dividends on interest earning deposits and other assets $ 44 $ 34 $ 28 Total interest income 44 34 28 INTEREST EXPENSE: Junior subordinated debentures 1,014 880 827 Total interest expense 1,014 880 827 Net interest expense (970 ) (846 ) (799 ) NONINTEREST INCOME: Dividends from subsidiary bank 23,000 30,000 22,000 Equity in undistributed income of subsidiary bank 21,755 11,848 18,131 Total noninterest income 44,755 41,848 40,131 NONONTEREST EXPENSE: Professional services 768 385 263 Other expense 3,726 3,437 3,120 Total noninterest expense 4,494 3,822 3,383 Income before income taxes 39,291 37,180 35,949 Income tax benefit (2,500 ) (1,738 ) (1,540 ) Net income $ 41,791 $ 38,918 $ 37,489 HERITAGE FINANCIAL CORPORATION (PARENT COMPANY ONLY) Condensed Statements of Cash Flows Year Ended December 31, 2017 2016 2015 (In thousands) Cash flows from operating activities: Net income $ 41,791 $ 38,918 $ 37,489 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed income of subsidiary bank (21,755 ) (11,848 ) (18,131 ) Net excess tax benefit from exercise of stock options and vesting of restricted stock — (123 ) (140 ) Stock-based compensation expense 2,103 1,840 1,555 Net change in other assets and liabilities (1,925 ) (1,141 ) (125 ) Net cash provided by operating activities 20,214 27,646 20,648 Cash flows from financing activities: Common stock cash dividends paid (18,305 ) (21,569 ) (15,916 ) Proceeds from exercise of stock options 164 540 751 Net excess tax benefit from exercise of stock options and vesting of restricted stock — 123 140 Repurchase of common stock (737 ) (2,894 ) (7,736 ) Net cash used in financing activities (18,878 ) (23,800 ) (22,761 ) Net increase (decrease) in cash and cash equivalents 1,336 3,846 (2,113 ) Cash and cash equivalents at beginning of year 10,568 6,722 8,835 Cash and cash equivalents at end of year $ 11,904 $ 10,568 $ 6,722 |
Selected Quarterly Financial Da
Selected Quarterly Financial Data | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Financial Data (Unaudited) | Selected Quarterly Financial Data (Unaudited) Results of operations on a quarterly basis were as follows: Year Ended December 31, 2017 First Quarter Second Quarter Third Quarter Fourth Quarter (Dollars in thousands, except per share amounts) Interest income $ 34,863 $ 36,087 $ 37,324 $ 39,606 Interest expense 1,717 1,907 2,333 2,389 Net interest income 33,146 34,180 34,991 37,217 Provision for loan losses 867 1,131 884 1,338 Net interest income after provision for loan losses 32,279 33,049 34,107 35,879 Noninterest income 7,349 10,663 8,394 9,002 Noninterest expense 27,223 27,809 27,955 27,588 Income before provision for income taxes 12,405 15,903 14,546 17,293 Income tax expense 3,089 4,075 3,922 7,270 Net income $ 9,316 $ 11,828 $ 10,624 $ 10,023 Basic earnings per common share $ 0.31 $ 0.40 $ 0.35 $ 0.33 Diluted earnings per common share 0.31 0.40 0.35 0.33 Cash dividends declared on common stock 0.12 0.13 0.13 0.23 Year Ended December 31, 2016 First Quarter Second Quarter Third Quarter Fourth Quarter (Dollars in thousands, except per share amounts) Interest income $ 34,235 $ 34,592 $ 35,114 $ 34,571 Interest expense 1,475 1,507 1,508 1,516 Net interest income 32,760 33,085 33,606 33,055 Provision for loan losses 1,139 1,120 1,495 1,177 Net interest income after provision for loan losses 31,621 31,965 32,111 31,878 Noninterest income 6,990 6,576 9,867 8,186 Noninterest expense 26,369 26,477 26,818 26,809 Income before provision for income taxes 12,242 12,064 15,160 13,255 Income tax expense 3,151 3,169 4,121 3,362 Net income $ 9,091 $ 8,895 $ 11,039 $ 9,893 Basic earnings per common share $ 0.30 $ 0.30 $ 0.37 $ 0.33 Diluted earnings per common share 0.30 0.30 0.37 0.33 Cash dividends declared on common stock 0.11 0.12 0.12 0.37 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events (a) Puget Sound Merger On January 16, 2018, the Company completed the Puget Sound Merger. Pursuant to the terms of the merger agreement, Puget Sound shareholders received 1.1688 shares of Heritage common stock per share of Puget Sound stock at the per share, closing date price on January 12, 2018 of $31.80 . Heritage issued an aggregate of 4,112,347 shares of its common stock in the transaction for total consideration paid of $130.8 million . As of the acquisition date, Puget Sound merged into Heritage and Puget Sound Bank merged into Heritage Bank. The acquisition of the net assets constitutes a business acquisition as defined by FASB ASC 805, Business Combinations . The Business Combinations topic 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. Accordingly, the estimated fair values of the acquired assets, including the identifiable intangible assets, and the assumed liabilities in the acquisition will be measured and recorded as of the acquisition date. The operating results of the Company for the year ended December 31, 2017 do not include the operating results produced by the acquired assets and assumed liabilities from Puget Sound as the Puget Sound Merger did not close until January 16, 2018. It is not practical to present financial information related to the assets acquired and liabilities assumed from Puget Sound at this time because the initial fair value information is not available. (b) DOR Preliminary Findings In June 2016, the Company received preliminary findings from the Washington State Department of Revenue ("DOR") regarding its business and occupation ("B&O") tax audit on the B&O tax returns of Whidbey Island Bank for the years 2010-2014. A substantial portion of the preliminary findings related to the receipt of FDIC shared-loss payments from the FDIC to Washington Banking Company in connection with its acquisitions of City Bank in April 2010 and North County Bank in September 2010. The total amount of the preliminary finding, along with calculated back interest, was approximately $1.6 million . In January 2018, the Company received notification from the DOR that the B&O tax audit was considered resolved with no payment due. This matter is now considered closed. |
Description of Business, Basi34
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Heritage Financial Corporation ("Heritage" or the “Company”) is a bank holding company that was incorporated in the State of Washington in August 1997. The Company is primarily engaged in the business of planning, directing and coordinating the business activities of its wholly-owned subsidiary, Heritage Bank (the “Bank”). The Bank is a Washington-chartered commercial bank and its deposits are insured by the FDIC. The Bank is headquartered in Olympia, Washington and conducts business from its 60 branch offices located throughout Washington State and the greater Portland, Oregon area, including one branch acquired in the Puget Sound Merger in January 2018. 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. |
Basis of Presentation | Basis of Presentation The accounting and reporting policies of the Company and its subsidiaries conform to U.S. Generally Accepted Accounting Principles (“GAAP”). In preparing the Consolidated Financial Statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. Actual results could differ from these estimates. The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiary, the Bank. All significant intercompany balances and transactions among the Company and the Bank have been eliminated in consolidation. |
Reclassifications | Certain prior year amounts have been reclassified to conform to the current year’s presentation. Reclassifications had no effect on the prior years' net income or stockholders’ equity. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents includes cash on hand and in banks, interest earning deposits with original maturities of 90 days or less, and federal funds sold. Net cash flows are reported for customer loan and deposit transactions, other interest bearing deposits, federal funds sold and repurchase agreements. |
Investment Securities | Investment Securities The Company identifies investments as held to maturity or available for sale at the time of acquisition. Securities are classified as held to maturity when the Company has the ability and positive intent to hold them to maturity. Securities classified as available for sale are available for future liquidity requirements and may be sold prior to maturity. As of December 31, 2017 and December 31, 2016 the Bank does not hold any securities classified as held to maturity. See Note (2) Investment Securities for additional information. Securities available for sale are carried at fair value. Interest income includes amortization of purchase premiums or accretion of purchase discounts using the interest method. Unrealized gains and losses on securities available for sale are generally excluded from earnings and are reported in other comprehensive income (loss), net of related income taxes. Realized gains and losses on sale of investment securities are computed on the specific identification method. Transfers of securities between the available for sale and held to maturity categories are accounted for at fair value. Management evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. Although these evaluations involve significant judgment, an unrealized loss in the fair value of a debt security is generally deemed to be temporary when the fair value of the security is below the carrying value primarily due to changes in interest rates, there has not been significant deterioration in the financial condition of the issuer, and it is not more likely than not that the Company will be required to, nor does it have the intent to sell the security before the anticipated recovery of its remaining carrying value. If any of these criteria is not met, the impairment is split into two components as follows: 1) other-than-temporary impairment related to credit loss, which must be recognized in the income statement and 2) other-than-temporary impairment related to other factors, which is recognized in other comprehensive income (loss). The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For debt securities with other-than-temporary impairment, the previous amortized cost basis less the other-than-temporary impairment recognized in earnings shall be the new amortized cost basis of the security. In subsequent periods, the Company accretes into interest income the difference between the new amortized cost basis and cash flows expected to be collected prospectively over the life of the debt security . Continued deterioration of market conditions could result in additional impairment losses recognized within the investment portfolio. Other factors that may be considered in determining whether a decline in the value of either a debt or an equity security is “other-than-temporary” include ratings by recognized rating agencies; actions of commercial banks or other lenders relative to the continued extension of credit facilities to the issuer of the security; the financial condition, capital strength and near-term prospects of the issuer and recommendations of investment advisors or market analysts. |
Loans Held for Sale | Loans Held for Sale Mortgage loans held for sale are carried at the lower of amortized cost or fair value. Any loan that management does not have the intent and ability to hold for the foreseeable future or until maturity or payoff is classified as held for sale at the time of origination, purchase or securitization, or when such decision is made. Unrealized losses on such loans are recorded as a valuation allowance and included in income. |
Loans Receivable and Loan Commitments | Loans Receivable and Loan Commitments Loans receivable include loans originated by the Bank as well as loans acquired in business combinations. Loans acquired in a business combination are designated as “purchased” loans. These loans are recorded at their fair value at acquisition date, factoring in credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for loan losses is not carried over or recorded as of the acquisition date. Loans purchased with evidence of credit deterioration since origination for which it is probable that all contractually required payments will not be collected are accounted for under FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality . These loans are identified as purchased credit impaired ("PCI") loans. In situations where such loans have similar risk characteristics, loans may be aggregated into pools to estimate cash flows. A pool is accounted for as a single asset with a single interest rate, cumulative loss rate and cash flow expectation. Expected cash flows at the acquisition date in excess of the fair value of loans are considered to be accretable yield, which is recognized as interest income over the life of the loan or pool using a level yield method if the timing and amount of the future cash flows of the loan or pool is reasonably estimable. The cash flows expected over the life of the PCI loan or pool are estimated quarterly using an external cash flow model that projects cash flows and calculates the carrying values of the loans or pools, book yields, effective interest income and impairment, if any, based on loan or pool level events. Assumptions as to default rates, loss severity and prepayment speeds are utilized to calculate the expected cash flows. To the extent actual or projected cash flows are less than previously estimated, additional provisions for loan losses on the purchased loan portfolios will be recognized immediately into earnings. To the extent actual or projected cash flows are more than previously estimated, the increase in cash flows is recognized immediately as a recapture of provision for loan losses up to the amount of any provision previously recognized for that loan or pool, if any, then prospectively recognized in interest income as a yield adjustment. Any disposals of a loan in a pool, including sale of a loan, payment in full or foreclosure results in the removal of the loan from the loan pool at the carrying amount. Loans accounted for under FASB ASC 310-30 are generally considered accruing and performing loans as the loans accrete interest income over the estimated life of the loan when cash flows are reasonably estimable. Accordingly, PCI loans that are contractually past due are still considered to be accruing and performing loans. If the timing and amount of cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans and interest income may be recognized on a cash basis or all cash payments may be accounted for a as a reduction of the principal amount outstanding. 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 . These loans are identified as non-PCI loans, and are initially recorded at their fair value, which is estimated using an external cash flow model and assumptions similar to the FASB ASC 310-30 loans. The difference between the estimated fair value and the unpaid principal balance at acquisition date is recognized as interest income over the life of the loan using an effective interest method for non-revolving credits or a straight-line method, which approximates the effective interest method, for revolving credits. Any unrecognized discount for a loan that is subsequently repaid in full will be recognized immediately into income. Loans are generally recorded at the unpaid principal balance, net of premiums, unearned discounts and net deferred loan origination fees and costs. The premiums and unearned discounts may include values determined in purchase accounting. Interest on loans is calculated using the simple interest method based on the daily balance of the principal amount outstanding and is credited to income as earned. Loans are considered past due or delinquent when principal or interest payments are past due 30 days or more. Covered Loans : Purchased loans subject to FDIC shared-loss agreements were historically identified as “covered” on the Consolidated Financial Statements. The FDIC shared-loss agreements were terminated during the year ended December 31, 2015 and as such the covered designation was removed. For further information see Note (5) FDIC Indemnification Asset. The covered loans included the majority of loans from the Company's acquisition of Cowlitz Bank and certain loans from the Washington Banking Merger, which included loans from Washington Banking Company's acquisitions of City Bank and North County Bank. The same accounting principles that apply to loans receivable applied to covered loans receivable, with the added benefit of shared-loss agreements. Delinquent Loans : Delinquencies in the commercial business loan portfolio are handled by the assigned loan officer. Loan officers are responsible for collecting loans they originate or which are assigned to them. The Bank sends a borrower a delinquency notice 15 days after the due date when the borrower fails to make a required payment on a loan. If the delinquency is not brought current, additional delinquency notices are mailed at 30 and 45 days for commercial loans. Additional written and oral contacts are made with the borrower between 60 and 90 days after the due date. If a real estate loan payment is past due for 45 days or more, the collection manager may perform a review of the condition of the property. Depending on the nature of the loan and the type of collateral securing the loan, the Bank may negotiate and accept a modified payment program with the borrower, accept a voluntary deed in lieu of foreclosure or, when considered necessary, begin foreclosure proceedings. If foreclosed on, real property is generally sold at a public sale and the Bank may bid on the property to protect its interest. A decision as to whether and when to begin foreclosure proceedings is based on such factors as the amount of the outstanding loan relative to the value of the property securing the original indebtedness, the extent of the delinquency, and the borrower’s ability and willingness to cooperate in resolving the delinquency. Nonaccrual Loans : The Company's policies for placing loans on nonaccrual status, recording payments received on nonaccrual loans, resuming accrual of interest, determining past due or delinquency status and charging off uncollectible loans generally do not differ by loan segments or classes. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Delinquent loans may remain on accrual status between 30 days and 89 days past due. The accrual of interest is generally discontinued at the time the loan is 90 days delinquent unless the credit is well secured and in the process of collection. Loans are placed on nonaccrual at an earlier date if collection of the contractual principal or interest is doubtful. All interest accrued but not collected on loans deemed nonaccrual during the period is reversed against interest income in that period. The interest payments received on nonaccrual loans are generally accounted for on the cost-recovery method whereby the interest payment is applied to the principal balances. Loans may be returned to accrual status when improvements in credit quality eliminate the doubt as to the full collectability of both interest and principal and a period of sustained performance has occurred. Substantially all loans that are nonaccrual are also considered impaired. Income recognition on impaired loans conforms to that used on nonaccrual loans. Loans are generally charged-off if collection of the contractual principal or interest as scheduled in the loan agreement is doubtful. Credit card loans and other consumer loans are typically charged-off no later than 180 days past due. Impaired Loans : The Bank routinely tests its problem loans for potential impairment. Problem loans that may be impaired are identified using the Bank's normal loan review procedures, which include post-approval reviews, quarterly reviews by credit administration of criticized loan reports, scheduled internal reviews, underwriting during extensions and renewals and the analysis of information routinely received on a borrower’s financial performance. A loan is considered impaired when, based on current information and events, it is probable the Bank will be unable to collect the scheduled payments of principal or interest when due according to the original contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrowers, including length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amounts of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient the loan’s observable market price or the fair value of the collateral (less cost to sell) if the loan is collateral dependent. Income recognition on impaired loans conforms to that used on nonaccrual loans. Subsequent to an initial measure of impairment, if there is a significant change in the amount or timing of a loan’s expected future cash flows or a change in the value of collateral or market price of a loan, based on new information received, the impairment is recalculated. However, the net carrying value of a loan never exceeds the recorded investment in the loan. Troubled Debt Restructures : A troubled debt restructured loan (“TDR”) is a restructuring in which the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that it would not otherwise consider. These concessions may include changes of the interest rate, forbearance of the outstanding principal or accrued interest, extension of the maturity date, delay in the timing of the regular payment, or any other actions intended to minimize potential losses. The Bank does not forgive principal for a majority of its TDRs, but in those situations where principal is forgiven, the entire amount of such principal forgiveness is immediately charged off to the extent not done so prior to the modification. The Bank also considers insignificant delays in payments when determining if a loan should be classified as a TDR. The Company has implemented more stringent definitions of concessions and impairment measures for PCI loans which are not in pools as these loans have known credit deteriorations 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. Modifications of PCI loans which are not in pools are considered TDRs if they result in a decrease in expected cash flows when compared to the pre-modification expected cash flows, without any other changes to the agreement to consider. A loan that has been placed on nonaccrual status that is subsequently restructured will usually remain on nonaccrual status until the borrower is able to demonstrate repayment performance in compliance with the restructured terms for a sustained period, typically for six months. A restructured loan may return to accrual status sooner based on other significant events or mitigating circumstances. A loan that has not been placed on nonaccrual status may be restructured and such loan may remain on accrual status after such restructuring. In these circumstances, the borrower has made payments before the restructuring and is expected to continue to perform after the restructuring. Generally, this type of restructuring involves a reduction in the loan interest rate and/or a change to interest-only payments for a period of time. The restructured loan is considered impaired despite the accrual status and a specific valuation allowance, if any, is calculated in the manner previously described. A TDR is considered defaulted if, during the 12-month period after the restructure, the loan has not performed in accordance to the restructured terms. Defaults include loans whose payments are 90 days or more past due and loans whose revised maturity date passed and no further modifications will be granted for that borrower. A loan may subsequently be excluded from the TDR disclosures if: (i) the restructured interest rate was greater than or equal to the interest rate of a new loan with comparable risk at the time of the restructure, and (ii) the loan is no longer impaired based on the terms of the restructured agreement. The Bank's policy is that the borrower must demonstrate a sustained period, typically six consecutive months, of payments in accordance with the modified loan before it can be reviewed for removal from the TDR disclosure under the second criteria. However, the loan must be reported as a TDR in at least one annual report on Form 10-K. Once a loan has been classified as a TDR, it will continue to be disclosed as an impaired loan until paid off or charged-off, even if the loan subsequently is no longer disclosed as a TDR. Unfunded Loan Commitments : Unfunded loan commitments are generally related to the unused portion of the total commitment of a loan or providing credit facilities to clients of the Bank and are not actively traded financial instruments. These unfunded commitments are disclosed as financial instruments with off-balance sheet risk in Note (14) Commitments and Contingencies and Note (18) Fair Value in the Notes to Consolidated Financial Statements. |
Loan Fees and Costs | Loan Fees and Costs Loan origination fees and certain direct origination costs are deferred and amortized as an adjustment of the yields of the loans over their contractual lives, adjusted for prepayment of the loans, using the effective interest method or the straight-line method, when the straight-line method approximates the effective interest method. In the event loans are sold, the unamortized net deferred loan origination fees or costs are recognized as a component of the gains or losses on the sales of loans. |
Allowance for Loan Losses | Allowance for Loan Losses Allowance for Loan Losses : The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses on loans designated as non-PCI loans is similar to the methodology described below except that for non-PCI loans, the remaining unaccreted discounts resulting from the fair value adjustments recorded at the time the loans were purchased are additionally factored into the allowance methodology. The allowance for loan losses on PCI loans is described in the “Allowance for Loan Losses on Purchased Credit Impaired Loans” section below. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses from risks inherent in the loan portfolio. The Company’s allowance for loan losses methodology includes allowance allocations calculated in accordance with FASB ASC 310, Receivables and allowance allocations calculated in accordance with FASB ASC 450, Contingencies . Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company’s process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for loan losses reflects loan quality trends, including the levels of and trends related to nonaccrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors. The provision for loan losses also reflects all actions taken on all loans for a particular period. Therefore, the amount of the provision reflects not only the necessary increases in the allowance for loan losses related to newly identified criticized loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in specific valuation allowances for impaired loans or loan pools. The level of the allowance reflects management’s continuing evaluation of known and inherent risks in the loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, could be charged off. Loans which management determines are impaired are individually evaluated for impairment, and specific valuation allowances are recorded, if any, on these loans based on the methodology previously described. Loans that are determined not to meet management's definition of impaired are collectively evaluated for impairment based on (i) historical loss factors determined in accordance with FASB ASC 450 based on historical loan loss experience for similar loans with similar characteristics and trends; and (ii) environmental loss factors that reflect the impact of current conditions, as determined in accordance with FASB ASC 450 based on general economic conditions and other qualitative risk factors both internal and external to the Company. The historical loss factors and environmental loss factors are combined and multiplied against the outstanding principal balances of loans in pools of similar loans with similar characteristics. The Company evaluates specific loans for credit quality indicators and performs regular analysis and evaluation of problem loans. Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligor’s ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the loan officer level for all loans. When a loan is performing but has an assigned risk grade other than pass, the loan officer analyzes the loan to determine an appropriate monitoring and collection strategy. When a loan is nonperforming or has been classified as a nonaccrual loan, a member from the special assets department will analyze the loan to determine if it is impaired. If the loan is considered impaired, the special assets department will evaluate the need for a specific valuation allowance on the loan. Specific valuation allowances are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies and economic conditions affecting the borrower’s industry, among other things. Historical loss factors are calculated based on the historical loss experience and recovery experience of specific classes of loans. The Company calculates historical loss ratios for the classes of loans based on the proportion of actual charge-offs and recoveries experienced to the total loans in the pool for a rolling twelve-quarter average. Environmental loss factors are based on general economic conditions and other qualitative risk factors both internal and external to the Company. In general, such valuation allowances are determined by evaluating, among other things: (i) levels of and trends in delinquencies, classified and impaired loans; (ii) levels of and trends in charge-offs and recoveries; (iii) trends in volume and terms of loans (iv) effects of changes in risk selection and underwriting standards, and other changes in lending policies, procedures, and practices; (v) experience, ability, and depth of lending management and other relevant staff; (vi) national and local economic trends and conditions; (vii) other external factors such as competition, legal, and regulatory; (viii) effects of changes in credit concentrations, and (ix) other factors. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Each component is determined to be on a scale of risk. The results are then utilized in a matrix to determine an appropriate environmental loss factor for each class of loan. The allowance for loan losses evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. While management utilizes its best judgment and information available to recognize losses on loans, future additions to the allowance may be necessary based on declines in local and national economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require the Bank to make adjustments to the allowance based on their judgments about information available to them at the time of their examinations. The Company believes the allowance for loan losses is appropriate given all of the above considerations. Allowance for Loan Losses on Purchased Credit Impaired Loans: The PCI loans acquired in the Company's mergers and acquisitions are subject to the Company’s internal and external credit review. Under the accounting guidance of FASB ASC 310-30, the allowance for loan losses on PCI loans is measured at each financial reporting period, or measurement date, based on expected cash flows. If and when credit deterioration, or decreases in expected cash flows previously estimated, occurs subsequent to the acquisition date, a provision for loan losses will be charged to earnings as of the measurement date. Prior to the termination of the FDIC shared-loss agreements, a provision for loan losses on PCI loans was charged to earnings for the full amount without regard to the FDIC shared-loss agreements, and the portion of the loss reimbursable from the FDIC was recorded in noninterest income and increased the FDIC indemnification asset. Allowance for Losses on Unfunded Commitments: The Bank is also party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the disbursed amounts recognized in the Consolidated Statements of Financial Condition. The Company has a policy in which it evaluates the risk on a quarterly basis, and provides for an allowance for credit losses, as necessary. The methodology is similar to the allowance for loan losses, and includes an estimate of the probability of drawdown of the loan commitment. Based on its analysis, the Company has recorded an allowance for off-balance sheet financial instruments of $170,000 as of both December 31, 2017 and 2016 . This allowance is reported within accrued expenses and other liabilities on the Company's Consolidated Statements of Financial Condition. |
Mortgage Banking Operations | Mortgage Banking Operations The Company sells one-to-four family residential loans on a servicing-released basis and recognizes a cash gain or loss. A cash gain or loss is recognized to the extent that the sale proceeds of the loan sold differs from the net book value at the time of sale. Income from one-to-four family residential loans brokered to other lenders is recognized into income on date of loan closing. Commitments to sell one-to-four family residential loans are made primarily during the period between the taking of the loan application and the closing of the loan. The timing of making these sale commitments is dependent upon the timing of the borrower’s election to lock-in the mortgage interest rate and fees prior to loan closing. Most of these sale commitments are made on a best-efforts basis whereby the Bank is only obligated to sell the loan if the loan is approved and closed by the Bank. Commitments to fund one-to-four family residential loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these loans are accounted for as free standing derivatives. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates between the date the interest on the loan was locked and the balance sheet date. The Company enters into forward commitments for the future delivery of one-to-four family residential loans when interest rate locks are entered into, in order to hedge the interest rate risk resulting from its commitments to fund the loans. Changes in the fair values of these derivatives are included in other income. |
FDIC Indemnification Asset | FDIC Indemnification Asset The FDIC indemnification asset represented the present value of the estimated loan losses to be reimbursed by the FDIC. The termination of the FDIC shared-loss agreements during the year ended December 31, 2015 eliminated this asset. See Note (5) FDIC Indemnification Asset for further information on the termination agreement. The FDIC indemnification asset was measured at estimated fair value at acquisition dates on the same basis as the loans. The present value was calculated using the shorter of the shared-loss agreement terms or the life of the loan. Under the terms of the FDIC shared-loss agreements, the FDIC absorbed 80% of losses and received 80% of loss recoveries for the loans during the terms of the agreements. Certain shared-loss agreements had loss minimums or tranches which reduced the shared-loss percentages during the coverage period. The FDIC indemnification asset was reduced as losses were recognized on loans and shared-loss payments were received from the FDIC. Since the FDIC indemnification asset was initially recorded at estimated fair value using a discount rate, a portion of the discount was accreted into noninterest income during each reporting period. The FDIC indemnification asset was evaluated quarterly. Realized losses in excess of prior estimates immediately increased the FDIC indemnification asset by a credit to noninterest income. Conversely, if realized losses were less than prior estimates, the FDIC indemnification asset was reduced by a charge to noninterest income on a prospective basis, and any change in value was limited to the contractual terms of the shared-loss agreements. |
Other Real Estate Owned | Other Real Estate Owned Other real estate acquired by the Company in partial or full satisfaction of a loan obligation is classified as held for sale. When acquired, the property is recorded at the estimated fair value (less the costs to sell) at the date of acquisition, not to exceed net realizable value, and any resulting write-down is charged to the allowance for loan losses. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the properly to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to the development and improvement of the property, however, are capitalized to the extent of the property’s net realizable value. If the estimated realizable value of the other real estate owned property declines after the acquisition date, the adjustment to the value is charged to other real estate owned expense, net. |
Premises and Equipment | Premises and Equipment Premises and equipment, including leasehold improvements, are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or the lease period, whichever is shorter. The estimated useful lives used to compute depreciation and amortization for buildings and building improvements is 15 to 39 years; and for furniture, fixtures and equipment is three to seven years. The Company reviews buildings, leasehold improvements and equipment for impairment whenever events or changes in the circumstances indicate that the undiscounted cash flows for the property are less than its carrying value. If identified, an impairment loss is recognized through a charge to earnings based on the fair value of the property. |
Bank Owned Life Insurance | Bank Owned Life Insurance The Company has bank owned life insurance (“BOLI”) of $75.1 million at December 31, 2017 . These policies insure the lives of certain current or former Bank officers, and name the Bank as beneficiary. Noninterest income is generated tax-free (subject to certain limitations) from the increase in the policies' underlying investments made by the insurance company. The Bank utilizes BOLI to partially offset costs associated with employee compensation and benefit programs with the earnings on the BOLI. The Company records BOLI at the amount that can be realized under the insurance contract at the statement of financial condition date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. |
Other Intangible Assets | Other Intangible Assets The other intangible assets represents the Core Deposit Intangible (“CDI”) acquired in business combinations. The fair value of the CDI stemming from any given business combination is based on the present value of the expected cost savings attributable to the core deposit funding, relative to an alternative source of funding. The CDI is amortized over an estimated useful life which approximates the existing deposit relationships acquired on an accelerated method. The Company evaluates such identifiable intangibles for impairment when an indication of impairment exists. |
Goodwill | Goodwill The Company’s goodwill represents the excess of the purchase price over the fair value of net assets acquired in acquisitions. In accordance with Accounting Standards Update ("ASU") 2011-08 Intangibles – Goodwill and Other (Topic 350), an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. In other words, before the first step of the existing guidance, the entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that the fair value of goodwill is less than carrying value. The qualitative assessment includes adverse events or circumstances identified that could negatively affect the reporting units’ fair value as well as positive and mitigating events. Such indicators may include, among others: a significant change in legal factors or in the general business climate; significant change in the Company’s stock price and market capitalization; unanticipated competition; and an action or assessment by a regulator. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step process is unnecessary. The entity has the option to bypass the qualitative assessment step for any reporting unit in any period and proceed directly to the first step of the two-step process. The entity can resume performing the qualitative assessment in any subsequent period. The first step of the goodwill impairment test is performed, when considered necessary, by comparing the reporting unit’s aggregate fair value to its carrying value. Absent other indicators of impairment, if the aggregate fair value exceeds the carrying value, goodwill is not considered impaired and no additional analysis is necessary. If the carrying value of the reporting unit were to exceed the aggregate fair value, a second step would be performed to measure the amount of impairment loss, if any. To measure any impairment loss the implied fair value would be determined in the same manner as if the reporting unit were being acquired in a business combination. If the implied fair value of goodwill is less than the recorded goodwill, an impairment charge would be recorded for the difference. |
Income Taxes | Income Taxes The Company and the Bank file a United States consolidated federal income tax return and an Oregon State income tax return. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. A valuation allowance, if needed, reduces deferred tax assets to the amounts expected to be realized. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in “income taxes” in the Consolidated Statements of Income as the amounts are generally insignificant each year. |
Stock-Based Compensation and Deferred Compensation Plan | Stock-Based Compensation The Company maintains a number of stock-based incentive programs, which are discussed in more detail in Note (19) Stock-Based Compensation. Compensation cost is recognized for stock options, restricted stock awards and restricted stock units issued to employees and directors, based on the fair value of these awards at the date of grant. Compensation cost is recognized over the requisite service period, generally defined as the vesting period, on a straight-line basis. Compensation cost for restricted stock units with market-based vesting is recognized over the service period to the extent the restricted stock units are expected to vest. With the adoption of FASB ASU 2016-09 on January 1, 2017, forfeitures are recognized as they occur. The market price of the Company’s common stock at the date of grant is used to determine the fair value of the restricted stock awards and restricted stock units. The fair value of stock options granted is estimated based on the date of grant using the Black-Scholes-Merton option pricing model. Certain restricted stock unit grants are subject to performance-based vesting as well as other approved vesting conditions and cliff vest based on those conditions, and the fair value is estimated using a Monte Carlo simulation pricing model. The assumptions used in the Black-Scholes-Merton option pricing model and the Monte Carlo simulation pricing model include the expected term based on the valuation date and the remaining contractual term of the award; the risk-free interest rate based on the U.S. Treasury curve at the valuation date of the award; the expected dividend yield based on expected dividends being payable to the holders; and the expected stock price volatility over the expected term based on the historical volatility over the equivalent historical term. Deferred Compensation Plan The Company has adopted a Deferred Compensation Plan and has entered into arrangements with certain executive officers. Under the Plan, participants are permitted to elect to defer compensation and the Company has the discretion to make additional contributions to the Plan on behalf of any participant based on a number of factors. Such discretionary contributions are generally approved by the Compensation Committee of the Company's Board of Directors. The notional account balances of participants under the Plan earn interest on an annual basis. The applicable interest rate is the Moody’s Seasoned Aaa Corporate Bond Yield as of January 1 of each year. Generally, a participant’s account is payable upon the earliest of the participant’s separation from service with the Company, the participant’s death or disability, or a specified date that is elected by the participant in accordance with applicable rules of the Internal Revenue Code. The Company’s obligation to make payments under the Plan is a general obligation of the Company and is to be paid from the Company’s general assets. As such, participants are general unsecured creditors of the Company with respect to their participation under the Plan. The Company records a liability within accrued expenses and other liabilities on the Consolidated Statements of Financial Condition and records compensation expense in a systematic and rational manner. Since the amounts earned are generally based on the Company’s annual performance, the Company records deferred compensation expense each year for an amount calculated based on that year’s financial performance. |
Earnings per Share | Earnings per Share The two-class method is used in the calculation of basic and diluted earnings per common share. Basic earnings per common share is net income allocated to common shareholders divided by the weighted average number of common shares outstanding during the period. All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for this calculation. Dividends and undistributed earnings allocated to participating securities are excluded from net income allocated to common shareholders and participating securities are excluded from weighted average common shares outstanding. Diluted earnings per common share is calculated using the treasury stock method and includes the dilutive effect of additional potential common shares issuable under stock options. Earnings and dividends per share are restated for all stock splits and stock dividends through the date of issuance of the financial statements. |
Derivative Financial Instruments | Derivative Financial Instruments The Company utilizes interest rate swap derivative contracts to facilitate the needs of its customers. Under these transactions, the Company enters into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each swap transaction, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, the Company agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the Company’s customer to effectively convert a variable rate loan to a fixed rate. Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts for the most part offset each other and do not significantly impact the Company’s results of operations. These interest rate swaps are not designated as hedging instruments. The fair value of derivative positions outstanding is included in prepaid expenses and other assets and accrued expenses and other liabilities in the Company's Consolidated Statements of Financial Condition and the net change in each of these financial statement line items is included in the Consolidated Statements of Cash Flows. For non-hedging derivative instruments, gains and losses due to changes in fair value and all cash flows are included in other noninterest income in the Company's Consolidated Statements of Income, but net to zero for the years ended December 31, 2017 and 2016 based on the identical back-to-back interest rate swaps. |
Operating Segments | Operating Segments While the Company’s chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements FASB ASU 2014-09 , Revenue from Contracts with Customers , was issued in May 2014. Under this Update, FASB created a new Topic 606 which is in response to a joint initiative of FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and international financial reporting standards that would: • Remove inconsistencies and weaknesses in revenue requirements. • Provide a more robust framework for addressing revenue issues. • Improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. • Provide more useful information to users of financial statements through improved disclosure requirements. • Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. The original effective date for this Update was deferred in FASB ASU 2015-14 below. FASB ASU 2015-14 , Revenue from Contracts with Customers (Topic 606) , was issued in August 2015 and defers the effective date of the above-mentioned FASB ASU 2014-09 for certain entities. Public business entities, certain not-for-profit entities and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted, but only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company adopted the revenue recognition guidance 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 has not identified any significant changes in the timing of revenue recognition when considering the amended accounting guidance and it is implementing processes and procedures to ensure it is fully compliant with the disclosure requirements that are required beginning with the quarterly reporting period as of March 31, 2018. The Company has elected to adopt the new guidance under the modified retrospective approach and, except for certain disclosure requirements, does not expect the new guidance to have a material impact on its Consolidated Financial Statements. FASB ASU 2016-01 , Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10) , was issued in January 2016, to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. This Update contains several provisions, including but not limited to 1) requiring equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income; 2) simplifying the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) eliminating the requirement to disclose the method(s) and significant assumptions used to estimate fair value; and 4) requiring separate presentation of financial assets and liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. The Update also changes certain financial statement disclosure requirements, including requiring disclosures of the fair value of financial instruments be made on the basis of exit price. The Update is effective for public entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This Update will not have a significant impact on the Company’s statements of financial condition or income and the Company is implementing processes and procedures to ensure it is fully compliant with the disclosures requirements of this Update related to fair value of its financial instruments beginning with the quarterly reporting period as of March 31, 2018. 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 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 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 $13.0 million of minimum lease payments under noncancelable operating lease agreements at December 31, 2017 . The Company does not expect the adoption of this amendment will have a significant impact to its Consolidated Financial Statements. FASB ASU 2016-08 , Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations , was issued in March 2016 and it clarifies the implementation guidance of the above-mentioned FASB ASU 2014-09 as it relates to principal versus agent considerations. The Update addresses identifying the unit of account and nature of the goods or services as well as applying the control principle and interactions with the control principle. The amendments to the Update do not change the core principle of the guidance. The effective date, transition requirements and impact on the Company's Consolidated Financial Statements for this Update are the same as those described in FASB ASU 2015-14 above. FASB ASU 2016-09 , Stock Compensation (Topic 718) , issued in March 2016, is intended to simplify several aspects of the accounting for share-based payment award transactions. For public business entities, the guidance is effective for annual periods after December 15, 2016, including interim periods within those annual periods with early adoption permitted. Certain amendments are required to be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Other amendments are applied retroactively (such as presentation of employee taxes paid on the statement of cash flows) or prospectively (such as recognition of excess tax benefits on the income statement). The Company adopted this standard effective January 1, 2017. The Company made an accounting policy election upon adoption to account for forfeitures as they occur, and this change resulted in a cumulative adjustment that was immaterial to all periods presented. Changes to the statement of cash flows have been applied prospectively and the Company recorded excess tax benefits in its income tax expense. Adoption of all other changes under this Update did not have a material impact on the Consolidated Financial Statements. FASB ASU 2016-10 , Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , was issued in April 2016 which clarifies the implementation guidance of the above-mentioned FASB ASU 2014-09 as it relates to identifying performance obligations and licensing. The effective date, transition requirements and impact on the Company's Consolidated Financial Statements for this Update are the same as those described in FASB ASU 2015-14 above. FASB ASU 2016-12 , Revenue from Contracts with Customers (Topic 606): Narrow-scope Improvements and Practical Expedients , was issued in May 2016. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update affect only the narrow aspects of Topic 606. The effective date, transition requirements and impact on the Company's Consolidated Financial Statements for this Update are the same as those described in FASB ASU 2015-14 above. FASB ASU 2016-13 , Financial Instruments: Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , was issued in June 2016. Commonly referred to as the current expected credit loss model ("CECL"), this Update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses is based on relevant information about past events including historical experience, current conditions and reasonable and supportable forecasts that affect the collectibility of the reported amount. The amendment affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables and any other financial asset not excluded from the scope that have the contractual right to receive cash. The Update replaces the incurred loss impairment methodology, which generally only considered past events and current conditions, with a methodology that reflects the expected credit losses and required consideration of a broader range of reasonable and supportable information to estimate all expected credit losses. The Update additionally addresses purchased assets and introduces the purchased financial asset with a more-than-insignificant amount of credit deterioration since origination ("PCD"). The accounting for these PCD assets is similar to the existing accounting guidance of FASB 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 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 begun the implementation discovery sessions. FASB ASU 2016-15 , Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , was issued in August 2016. The Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted and must be applied using a retrospective transitional method to each period presented. The Company has evaluated the new guidance and does not anticipate that its adoption of this Update on January 1, 2018 will have a significant impact on its Consolidated Financial Statements. FASB ASU 2017-03 , Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update) , was issued in January 2017. The SEC staff view is that a registrant should evaluate FASB ASC Updates that have not yet been adopted to determine the appropriate financial disclosures about the potential material effects of the updates on the financial statements when adopted. If a registrant does not know or cannot reasonably estimate the impact of an update, then in addition to making a statement to that effect, the registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact. The staff expects the additional qualitative disclosures to include a description of the effect of the accounting policies expected to be applied compared to current accounting policies. Also, the registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. The amendments specifically addressed recent FASB ASC amendments to Topic 326, Financial Instruments - Credit Losses; Topic 842, Leases; and Topic 606, Revenue from Contracts with Customers; although, the amendments apply to any subsequent amendments to guidance in the FASB ASC. The Company adopted the amendments in this Update during the fourth quarter of 2016 and appropriate disclosures have been included in this Note for each recently issued accounting standard. FASB ASU 2017-04 , Goodwill (Topic 350) , was issued in January 2017 and eliminates Step 2 from the goodwill impairment test. Under the amendments, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized, however, should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Update is effective for annual periods or any interim goodwill impairment tests beginning after December 15, 2019 using a prospective transition method and early adoption is permitted. The Company does not expect the Update will have a material impact on its 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 does not expect the Update will have a material impact on its Consolidated Financial Statements as the Company had been accounting for premiums as prescribed under this guidance. The Company adopted this Update in January 2018. FASB ASU 2017-09 , Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting was issued in May 2017 to provide clarity as to when to apply modification accounting when there is a change in the terms or conditions of a share-based payment award. According to this Update, an entity should account for the effects of a modification unless the fair value, vesting conditions and balance sheet classification of the award is the same after the modification as compared to the original award prior to the modification. The Update is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not expect the Update will have a material impact on its Consolidated Financial Statements. 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 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. Application of US GAAP in Accounting for the Tax Cuts and Jobs Act On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118) to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. SAB 118 provides guidance to registrants under three scenarios: (1) Measurement of certain income tax effects is complete, (2) Measurement of certain income tax effects can be reasonable estimated and (3) Measurement of certain income tax effects cannot be reasonably estimated. SAB 118 provides a one year measurement period for the registrant to complete its accounting for certain income tax effects that are considered provisional or for which reasonable estimates cannot be made. The Company recognized the income tax effects of the 2017 Tax Act in its 2017 financial statements in accordance with SAB 118. |
Investment Securities (Tables)
Investment Securities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Reconciliation of available for sale securities | 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) 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 December 31, 2016 U.S. Treasury and U.S. Government-sponsored agencies $ 1,563 $ 6 $ — $ 1,569 Municipal securities 237,305 2,427 (2,476 ) 237,256 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 310,391 985 (2,200 ) 309,176 Commercial 211,259 599 (3,540 ) 208,318 Collateralized loan obligations 10,505 4 (31 ) 10,478 Corporate obligations 16,611 104 (9 ) 16,706 Other securities (2) 11,005 156 (19 ) 11,142 Total $ 798,639 $ 4,281 $ (8,275 ) $ 794,645 (1) Issued and guaranteed by U.S. Government-sponsored agencies. (2) Primarily asset-backed securities issued and guaranteed by U.S. Government-sponsored agencies. |
Schedule of securities available for sale | The amortized cost and fair value of investment securities available for sale at December 31, 2017 , by contractual maturity, are set forth below. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Cost Fair Value (In thousands) Due in one year or less $ 8,922 $ 8,982 Due after one year through five years 132,271 132,497 Due after five years through ten years 240,089 238,613 Due after ten years 430,847 430,292 Investment securities with no stated maturities 45 146 Total $ 812,174 $ 810,530 |
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 December 31, 2017 and December 31, 2016 : Less than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (In thousands) 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 ) December 31, 2016 Municipal securities $ 90,188 $ (2,476 ) $ — $ — $ 90,188 $ (2,476 ) Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 181,562 (2,148 ) 10,854 (52 ) 192,416 (2,200 ) Commercial 157,055 (3,446 ) 12,597 (94 ) 169,652 (3,540 ) Collateralized loan obligations 2,976 (1 ) 2,969 (30 ) 5,945 (31 ) Corporate obligations 4,032 (9 ) — — 4,032 (9 ) Other securities (2) 6,998 (19 ) — — 6,998 (19 ) Total $ 442,811 $ (8,099 ) $ 26,420 $ (176 ) $ 469,231 $ (8,275 ) (1) Issued and guaranteed by U.S. Government-sponsored agencies. (2) Primarily asset-backed securities issued and guaranteed by U.S. Government-sponsored agencies. |
Gross 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 years ended December 31, 2017 , 2016 and 2015 : Year ended December 31, 2017 2016 2015 (In thousands) Gross realized gains $ 193 $ 1,518 $ 2,109 Gross realized losses (187 ) (203 ) (593 ) Net realized gains $ 6 $ 1,315 $ 1,516 |
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 December 31, 2017 and December 31, 2016 : December 31, 2017 December 31, 2016 Amortized Cost Fair Value Amortized Cost Fair Value (In thousands) Washington and Oregon state to secure public deposits $ 206,377 $ 206,425 $ 214,834 $ 215,247 Repurchase agreements 48,750 48,237 29,481 29,294 Other securities pledged 12,484 12,498 3,557 3,546 Total $ 267,611 $ 267,160 $ 247,872 $ 248,087 |
Loans Receivable (Tables)
Loans Receivable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Loans and Leases Receivable Disclosure [Abstract] | |
Schedule of loans receivable | Loans receivable at December 31, 2017 and December 31, 2016 consisted of the following portfolio segments and classes: December 31, 2017 December 31, 2016 (In thousands) Commercial business: Commercial and industrial $ 645,396 $ 637,773 Owner-occupied commercial real estate 622,150 558,035 Non-owner occupied commercial real estate 986,594 880,880 Total commercial business 2,254,140 2,076,688 One-to-four family residential 86,997 77,391 Real estate construction and land development: One-to-four family residential 51,985 50,414 Five or more family residential and commercial properties 97,499 108,764 Total real estate construction and land development 149,484 159,178 Consumer 355,091 325,140 Gross loans receivable 2,845,712 2,638,397 Net deferred loan costs 3,359 2,352 Loans receivable, net 2,849,071 2,640,749 Allowance for loan losses (32,086 ) (31,083 ) Total loans receivable, net $ 2,816,985 $ 2,609,666 |
Loans receivable by credit quality indicator | The following tables present the balance of the loans receivable by credit quality indicator as of December 31, 2017 and December 31, 2016 . 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 December 31, 2016 Pass OAEM Substandard Doubtful/Loss Total (In thousands) Commercial business: Commercial and industrial $ 601,273 $ 5,048 $ 31,452 $ — $ 637,773 Owner-occupied commercial real estate 532,585 4,437 21,013 — 558,035 Non-owner occupied commercial real estate 841,383 14,573 24,924 — 880,880 Total commercial business 1,975,241 24,058 77,389 — 2,076,688 One-to-four family residential 76,020 — 1,371 — 77,391 Real estate construction and land development: One-to-four family residential 44,752 500 5,162 — 50,414 Five or more family residential and commercial properties 105,723 1,150 1,891 — 108,764 Total real estate construction and land development 150,475 1,650 7,053 — 159,178 Consumer 320,140 — 5,000 — 325,140 Gross loans receivable $ 2,521,876 $ 25,708 $ 90,813 $ — $ 2,638,397 |
Schedule of nonaccrual loans | Nonaccrual loans, segregated by segments and classes of loans, were as follows as of December 31, 2017 and December 31, 2016 : December 31, 2017 December 31, 2016 (In thousands) Commercial business: Commercial and industrial $ 3,110 $ 3,531 Owner-occupied commercial real estate 4,090 3,728 Non-owner occupied commercial real estate 1,898 1,321 Total commercial business 9,098 8,580 One-to-four family residential 81 94 Real estate construction and land development: One-to-four family residential 1,247 2,008 Total real estate construction and land development 1,247 2,008 Consumer 277 227 Nonaccrual loans $ 10,703 $ 10,909 |
Past due financing receivables | The balances of past due loans, segregated by segments and classes of loans, as of December 31, 2017 and December 31, 2016 were as follows: 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 December 31, 2016 30-89 Days 90 Days or Greater Total Past Due Current Total (In thousands) Commercial business: Commercial and industrial $ 2,687 $ 1,733 $ 4,420 $ 633,353 $ 637,773 Owner-occupied commercial real estate 1,807 2,915 4,722 553,313 558,035 Non-owner occupied commercial real estate 733 — 733 880,147 880,880 Total commercial business 5,227 4,648 9,875 2,066,813 2,076,688 One-to-four family residential 523 — 523 76,868 77,391 Real estate construction and land development: One-to-four family residential 90 2,008 2,098 48,316 50,414 Five or more family residential and commercial properties — 377 377 108,387 108,764 Total real estate construction and land development 90 2,385 2,475 156,703 159,178 Consumer 2,292 105 2,397 322,743 325,140 Gross loans receivable $ 8,132 $ 7,138 $ 15,270 $ 2,623,127 $ 2,638,397 |
Schedule of impaired loans, including restructured | Impaired loans include nonaccrual loans and performing TDR loans. The balances of impaired loans as of December 31, 2017 and December 31, 2016 are set forth in the following tables. 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 December 31, 2016 Recorded Investment With No Specific Valuation Allowance Recorded Investment With Specific Valuation Allowance Total Recorded Investment Unpaid Contractual Principal Balance Related Specific Valuation Allowance (In thousands) Commercial business: Commercial and industrial $ 1,739 $ 10,636 $ 12,375 $ 13,249 $ 1,199 Owner-occupied commercial real estate 1,150 3,574 4,724 5,107 511 Non-owner occupied commercial real estate 4,905 6,413 11,318 11,386 797 Total commercial business 7,794 20,623 28,417 29,742 2,507 One-to-four family residential — 321 321 325 97 Real estate construction and land development: One-to-four family residential 2,243 828 3,071 3,755 6 Five or more family residential and commercial properties — 1,079 1,079 1,079 60 Total real estate construction and land development 2,243 1,907 4,150 4,834 66 Consumer 48 262 310 325 64 Total $ 10,085 $ 23,113 $ 33,198 $ 35,226 $ 2,734 |
Schedule of average recorded investment impaired loans including restructuring loans | The average recorded investment of impaired loans for the years ended December 31, 2017 , 2016 and 2015 are set forth in the following table. Year Ended December 31, 2017 2016 2015 (In thousands) Commercial business: Commercial and industrial $ 11,310 $ 10,207 $ 9,781 Owner-occupied commercial real estate 5,401 4,540 4,346 Non-owner occupied commercial real estate 12,162 11,709 9,257 Total commercial business 28,873 26,456 23,384 One-to-four family residential 309 279 257 Real estate construction and land development: One-to-four family residential 2,315 3,305 3,841 Five or more family residential and commercial properties 903 1,656 2,008 Total real estate construction and land development 3,218 4,961 5,849 Consumer 351 645 171 Total $ 32,751 $ 32,341 $ 29,661 |
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 December 31, 2017 and December 31, 2016 were as follows: December 31, 2017 December 31, 2016 Performing TDR Loans Nonaccrual TDR Loans Performing TDR Loans Nonaccrual (In thousands) TDR loans $ 26,757 $ 5,193 $ 22,288 $ 6,900 Allowance for loan losses on TDR loans 2,635 379 1,965 437 |
Troubled debt restructurings on financing receivables | Loans that were modified as TDR loans during the years ended December 31, 2017 , 2016 and 2015 are set forth in the following table: Year Ended December 31, 2017 2016 2015 Number of Contracts (1) Outstanding (1)(2) Number of Contracts (1) Outstanding (1)(2) Number of Contracts (1) Outstanding (1)(2) (Dollars in thousands) Commercial business: Commercial and industrial 19 $ 7,212 19 $ 7,398 25 $ 6,312 Owner-occupied commercial real estate 3 1,366 2 569 4 1,311 Non-owner occupied commercial real estate 4 9,574 2 2,121 4 7,496 Total commercial business 26 18,152 23 10,088 33 15,119 Real estate construction and land development: One-to-four family residential 2 938 5 2,206 4 2,291 Five or more family residential and commercial properties — — 1 1,078 — — Total real estate construction and land development 2 938 6 3,284 4 2,291 Consumer 8 110 6 66 1 37 Total TDR loans 36 $ 19,200 35 $ 13,438 38 $ 17,447 (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 years ended December 31, 2017 , 2016 and 2015 . (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 years ended December 31, 2017 , 2016 and 2015 . |
Troubled debt restructuring loans, subsequently defaulted | The loans modified during the previous twelve months that subsequently defaulted during the years ended December 31, 2017 , 2016 and 2015 are included in the following table: Year Ended December 31, 2017 2016 2015 Number of Contracts Outstanding Principal Balance Number of Outstanding Number of Outstanding (Dollars in thousands) Commercial business: Commercial and industrial 1 $ 283 — $ — 2 $ 1,755 Owner-occupied commercial real estate 1 80 1 488 — — Total commercial business 2 363 1 488 2 1755 Real estate construction and land development: One-to-four family residential 2 938 2 1,143 — — Total real estate construction and land development 2 938 2 1,143 — — Consumer 1 7 — — — — Total 5 $ 1,308 3 $ 1,631 2 $ 1,755 |
Purchased impaired loans | The following table reflects the outstanding principal balance and recorded investment of the PCI loans at December 31, 2017 and December 31, 2016 : December 31, 2017 December 31, 2016 Outstanding Principal Recorded Investment Outstanding Principal Recorded Investment (In thousands) Commercial business: Commercial and industrial $ 8,818 $ 2,912 $ 13,067 $ 9,317 Owner-occupied commercial real estate 12,230 11,515 17,639 15,973 Non-owner occupied commercial real estate 14,295 13,342 25,037 23,360 Total commercial business 35,343 27,769 55,743 48,650 One-to-four family residential 4,120 5,255 5,120 4,905 Real estate construction and land development: One-to-four family residential 841 89 2,958 2,123 Five or more family residential and commercial properties 2,361 2,035 2,614 2,488 Total real estate construction and land development 3,202 2,124 5,572 4,611 Consumer 3,974 5,455 5,296 6,282 Gross PCI loans $ 46,639 $ 40,603 $ 71,731 $ 64,448 |
Schedule of impaired purchased loans accretable yield | The following table summarizes the accretable yield on the PCI loans for the years ended December 31, 2017 , 2016 and 2015 . Year Ended December 31, 2017 2016 2015 (In thousands) Balance at the beginning of the year $ 13,860 $ 17,592 $ 21,092 Accretion (3,471 ) (4,962 ) (6,993 ) Disposal and other (2,758 ) (3,329 ) (3,111 ) Change in accretable yield 3,593 4,559 6,604 Balance at the end of the year $ 11,224 $ 13,860 $ 17,592 |
Activity in related party loans | Activity in related party loans for the years ended December 31, 2017 , 2016 and 2015 was as follows: Year Ended or As of December 31, (in thousands) Balance outstanding at December 31, 2014 $ 9,164 Principal additions 12,189 Principal reductions (578 ) Balance outstanding at December 31, 2015 20,775 Principal additions 738 Principal reductions (1,596 ) Balance outstanding at December 31, 2016 19,917 Elimination of outstanding loan balance due to change in related party status (10,930 ) Principal additions — Principal reductions (527 ) Balance outstanding at December 31, 2017 $ 8,460 |
Mortgage banking activities | The following table presents information concerning the origination and sale of the Bank's one-to-four family residential loans and the gains from the sale of loans as a result of the Bank's mortgage banking activities. Year Ended December 31, 2017 2016 2015 (In thousands) One-to-four family residential loans: Originated (1) $ 144,066 $ 178,169 $ 164,974 Sold 113,786 141,127 132,365 Gains on sales of loans, net (2) 3,412 3,723 3,150 (1) Includes loans originated for sale in the secondary market or for the Bank's loan portfolio. (2) Excludes net gains on sales of SBA and other loans. |
Contractual amounts of commitments to sell and fund with off-balance sheet risk | The contractual amounts of commitments to sell and fund with off-balance sheet risk at December 31, 2017 and 2016 were as follows: December 31, 2017 December 31, 2016 (In thousands) Commitments to sell mortgage loans $ 10,140 $ 18,166 Commitments to fund mortgage loans (at interest rates approximating market rates) for portfolio or for sale: Fixed rate $ 10,894 $ 19,301 Variable or adjustable rate 56 4,189 Total commitments to fund mortgage loans $ 10,950 $ 23,490 |
Details of SBNA loans serviced | Details of certain SBA loans serviced are as follows: December 31, 2017 December 31, 2016 (In thousands) SBA loans serviced for others with participating interest, gross loan balance $ 53,809 $ 48,359 SBA loans serviced for others with participating interest, participation balance owned by Bank (1) 12,394 11,218 (1) Included in the balances of total loans receivable, net on the Company's Consolidated Statements of Financial Condition. |
Allowance for Loan Losses (Tabl
Allowance for Loan Losses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Schedule of changes in allowance for loan losses | A summary of the changes in the allowance for loan losses during the years ended December 31, 2017 , 2016 and 2015 is as follows: Year Ended December 31, 2017 2016 2015 (In thousands) Balance at the beginning of the year $ 31,083 $ 29,746 $ 27,729 Charge-offs (4,838 ) (6,085 ) (3,482 ) Recoveries of loans previously charged-off 1,621 2,491 1,127 Provision for loan losses 4,220 4,931 4,372 Balance at the end of the year $ 32,086 $ 31,083 $ 29,746 The following table details the activity in the allowance for loan losses disaggregated by segment and class for the year ended December 31, 2017 : Balance at Beginning of Year Charge-offs Recoveries Provision for Loan Losses Balance at End of Year (In thousands) Commercial business: Commercial and industrial $ 10,968 $ (859 ) $ 792 $ (991 ) $ 9,910 Owner-occupied commercial real estate 3,661 (1,579 ) 155 1,755 3,992 Non-owner occupied commercial real estate 7,753 — — 344 8,097 Total commercial business 22,382 (2,438 ) 947 1,108 21,999 One-to-four family residential 1,015 (30 ) 2 69 1,056 Real estate construction and land development: One-to-four family residential 797 (556 ) 202 419 862 Five or more family residential and commercial properties 1,359 — — (169 ) 1,190 Total real estate construction and land development 2,156 (556 ) 202 250 2,052 Consumer 5,024 (1,814 ) 470 2,401 6,081 Unallocated 506 — — 392 898 Total $ 31,083 $ (4,838 ) $ 1,621 $ 4,220 $ 32,086 The following table details the activity in the allowance for loan losses disaggregated by segment and class for the year ended December 31, 2015 : Balance at Beginning of Year Charge-offs Recoveries Provision for Loan Losses Balance at End of Year (In thousands) Commercial business: Commercial and industrial $ 10,553 $ (1,488 ) $ 476 $ 431 $ 9,972 Owner-occupied commercial real estate 4,032 — — 338 4,370 Non-owner occupied commercial real estate 5,601 (188 ) — 2,309 7,722 Total commercial business 20,186 (1,676 ) 476 3,078 22,064 One-to-four family residential 1,200 — 13 (56 ) 1,157 Real estate construction and land development: One-to-four family residential 1,786 (106 ) 100 (722 ) 1,058 Five or more family residential and commercial properties 972 — — (159 ) 813 Total real estate construction and land development 2,758 (106 ) 100 (881 ) 1,871 Consumer 2,769 (1,700 ) 538 2,702 4,309 Unallocated 816 — — (471 ) 345 Total $ 27,729 $ (3,482 ) $ 1,127 $ 4,372 $ 29,746 The following table details the activity in the allowance for loan losses disaggregated by segment and class for the year ended December 31, 2016 : Balance at Beginning of Year Charge-offs Recoveries Provision for Loan Losses Balance at End of Year (In thousands) Commercial business: Commercial and industrial $ 9,972 $ (3,265 ) $ 1,844 $ 2,417 $ 10,968 Owner-occupied commercial real estate 4,370 (538 ) — (171 ) 3,661 Non-owner occupied commercial real estate 7,722 (350 ) — 381 7,753 Total commercial business 22,064 (4,153 ) 1,844 2,627 22,382 One-to-four family residential 1,157 — 2 (144 ) 1,015 Real estate construction and land development: One-to-four family residential 1,058 (100 ) 83 (244 ) 797 Five or more family residential and commercial properties 813 (54 ) — 600 1,359 Total real estate construction and land development 1,871 (154 ) 83 356 2,156 Consumer 4,309 (1,778 ) 562 1,931 5,024 Unallocated 345 — — 161 506 Total $ 29,746 $ (6,085 ) $ 2,491 $ 4,931 $ 31,083 |
Schedule of loan receivables on the basis of impairment method | The following table details the allowance for loan losses disaggregated on the basis of the Company's impairment method as of December 31, 2016 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Allowance for Loan Losses (In thousands) Commercial business: Commercial and industrial $ 1,199 $ 8,048 $ 1,721 $ 10,968 Owner-occupied commercial real estate 511 1,834 1,316 3,661 Non-owner occupied commercial real estate 797 5,142 1,814 7,753 Total commercial business 2,507 15,024 4,851 22,382 One-to-four family residential 97 643 275 1,015 Real estate construction and land development: One-to-four family residential 6 538 253 797 Five or more family residential and commercial properties 60 1,168 131 1,359 Total real estate construction and land development 66 1,706 384 2,156 Consumer 64 3,912 1,048 5,024 Unallocated — 506 — 506 Total $ 2,734 $ 21,791 $ 6,558 $ 31,083 The following table details the recorded investment balance of the loan receivables disaggregated on the basis of the Company’s impairment method as of December 31, 2016 : Loans Individually Evaluated for Impairment Loans Collectively Evaluated for Impairment PCI Loans Total Gross Loans Receivable (In thousands) Commercial business: Commercial and industrial $ 12,375 $ 616,081 $ 9,317 $ 637,773 Owner-occupied commercial real estate 4,724 537,338 15,973 558,035 Non-owner occupied commercial real estate 11,318 846,202 23,360 880,880 Total commercial business 28,417 1,999,621 48,650 2,076,688 One-to-four family residential 321 72,165 4,905 77,391 Real estate construction and land development: One-to-four family residential 3,071 45,220 2,123 50,414 Five or more family residential and commercial properties 1,079 105,197 2,488 108,764 Total real estate construction and land development 4,150 150,417 4,611 159,178 Consumer 310 318,548 6,282 325,140 Total $ 33,198 $ 2,540,751 $ 64,448 $ 2,638,397 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 |
FDIC Indemnification Asset (Tab
FDIC Indemnification Asset (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Banking and Thrift [Abstract] | |
Schedule of FDIC indemnification asset | The following table provides changes in the FDIC indemnification asset during the year ended December 31, 2015 . The years ended December 31, 2017 and 2016 are not included because of the above-mentioned termination. Year Ended December 31, 2015 (In thousands) Balance at the beginning of the year $ 1,116 Cash payments received or receivable from the FDIC (231 ) FDIC share of additional estimated gains (352 ) Net amortization (145 ) Change due to termination of FDIC shared-loss agreements (388 ) Balance at the end of the year $ — |
Other Real Estate Owned (Tables
Other Real Estate Owned (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Banking and Thrift [Abstract] | |
Changes in other real estate owned | Changes in other real estate owned during the years ended December 31, 2017 , 2016 and 2015 were as follows: Year Ended December 31, 2017 2016 2015 (In thousands Balance at the beginning of the year $ 754 $ 2,019 $ 3,355 Additions 32 1,431 2,845 Proceeds from dispositions (930 ) (2,486 ) (3,555 ) Gain (loss) on sales, net 144 173 (97 ) Valuation adjustment — (383 ) (529 ) Balance at the end of the year $ — $ 754 $ 2,019 |
Premises and Equipment (Tables)
Premises and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of premises and equipment | A summary of premises and equipment is as follows: December 31, 2017 December 31, 2016 (In thousands) Land $ 21,483 $ 22,677 Buildings and building improvements 50,984 52,432 Furniture, fixtures and equipment 20,894 18,723 Total premises and equipment 93,361 93,832 Accumulated depreciation 33,036 29,921 Premises and equipment, net $ 60,325 $ 63,911 |
Goodwill and Other Intangible41
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Change in other intangible assets | The following table presents the change in the other intangible assets for the periods indicated: Year Ended December 31, 2017 2016 2015 (In thousands) Balance at the beginning of the year $ 7,374 $ 8,789 $ 10,889 Less: Amortization 1,286 1,415 2,100 Balance at the end of the year $ 6,088 $ 7,374 $ 8,789 |
Estimated aggregate amortization expense for future years | The estimated aggregate amortization expense related to these intangible assets for future years is as follows: Year Ending December 31, (In thousands) 2018 $ 1,122 2019 1,043 2020 989 2021 938 2022 887 Thereafter 1,109 $ 6,088 |
Deposits (Tables)
Deposits (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Deposits [Abstract] | |
Schedule of deposits | Deposits consisted of the following: December 31, 2017 December 31, 2016 Amount Percent Amount Percent (Dollars in thousands) Noninterest demand deposits $ 944,791 27.8 % $ 882,091 27.3 % Interest bearing demand deposits 1,051,752 31.1 963,821 29.8 Money market accounts 499,618 14.7 523,875 16.2 Savings accounts 498,501 14.7 502,460 15.6 Total non-maturity deposits 2,994,662 88.3 2,872,247 88.9 Certificate of deposit accounts 398,398 11.7 357,401 11.1 Total deposits $ 3,393,060 100.0 % $ 3,229,648 100.0 % |
Schedule of interest expense, by category | Interest expense, by category, was as follows: Year Ended December 31, 2017 2016 2015 (In thousands) Interest bearing demand deposits $ 1,812 $ 1,569 $ 1,476 Money market accounts 682 749 922 Savings accounts 1,311 756 445 Certificate of deposit accounts 2,244 1,936 2,386 $ 6,049 $ 5,010 $ 5,229 |
Schedule of maturities of certificates of deposit | Scheduled maturities of certificates of deposit for future years are as follows: Year Ending December 31, (In thousands) 2018 $ 258,657 2019 81,407 2020 22,401 2021 10,708 2022 25,169 Thereafter 56 $ 398,398 |
Repurchase Agreements (Tables)
Repurchase Agreements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Repurchase Agreements [Abstract] | |
Repurchase agreement obligation by class of collateral pledged | The following table presents the Company's repurchase agreement obligations by class of collateral pledged: December 31, 2017 December 31, 2016 (In thousands) U.S. Treasury and U.S. Government-sponsored agencies $ — $ 2,944 Mortgage-backed securities and collateralized mortgage obligations (1) : Residential 11,239 5,191 Commercial 20,582 13,969 Total repurchase agreements $ 31,821 $ 22,104 (1) Issued and guaranteed by U.S. Government-sponsored agencies. |
Other Borrowings (Tables)
Other Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of FHLB advances | The following table sets forth the details of FHLB advances during and as of the years ended December 31, 2017 and 2016 : December 31, 2017 December 31, 2016 (In thousands) FHLB Advances: Average balance during the year $ 105,646 $ 13,349 Maximum month-end balance during the year $ 137,450 $ 79,600 Weighted average rate during the year 1.16 % 0.55 % Weighted average rate at end of year 1.56 % 0.81 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of estimated future minimum annual rental commitments under noncancelable leases | The estimated future minimum annual rental commitments under noncancelable leases having an original or remaining term of more than one year are as follows: Year Ending December 31, (In thousands) 2018 $ 3,074 2019 2,681 2020 2,385 2021 1,640 2022 929 Thereafter 2,241 $ 12,950 |
Summary of outstanding commitments to extend credit, including letters of credit | The following table presents outstanding commitments to extend credit, including letters of credit, at the dates indicated: December 31, 2017 December 31, 2016 (In thousands) Commercial business: Commercial and industrial $ 363,272 $ 368,308 Owner-occupied commercial real estate 6,815 3,443 Non-owner occupied commercial real estate 13,543 8,732 Total commercial business 383,630 380,483 One-to-four family residential — — Real estate construction and land development: One-to-four family residential 38,160 23,004 Five or more family residential and commercial properties 86,787 78,121 Total real estate construction and land development 124,947 101,125 Consumer 204,625 144,405 Total outstanding commitments $ 713,202 $ 626,013 |
Derivative Financial Instrume46
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of notional amounts and estimated fair values of interest rate derivative contracts | The notional amounts and estimated fair values of interest rate derivative contracts outstanding at December 31, 2017 and December 31, 2016 are presented in the following table. December 31, 2017 December 31, 2016 Notional Amounts Estimated Fair Value Notional Amounts Estimated Fair Value (In thousands) Non-hedging interest rate derivatives Interest rate swaps with customer (1) $ 146,537 $ (882 ) $ 102,709 $ (1,099 ) Interest rate swap with third party (1) 146,537 882 102,709 1,099 (1) The estimated fair value of the derivative included in prepaid and other assets on the Consolidated Statements of Financial Condition was $3.4 million and $2.8 million as of December 31, 2017 and 2016 , respectively. The estimated fair value of the derivative included in accrued expenses and other liabilities on the Consolidated Statements of Financial Condition was $3.4 million and $2.8 million as of December 31, 2017 and 2016 , respectively. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Schedule of earnings per share reconciliation | The following table illustrates the reconciliation of weighted average shares used for earnings per common share computations for the years ended December 31, 2017 , 2016 and 2015 : Year Ended December 31, 2017 2016 2015 (Dollars in thousands) Net income: Net income $ 41,791 $ 38,918 $ 37,489 Less: Dividends and undistributed earnings allocated to participating securities (293 ) (358 ) (328 ) Net income allocated to common shareholders $ 41,498 $ 38,560 $ 37,161 Basic: Weighted average common shares outstanding 29,937,400 29,963,365 30,057,558 Less: Restricted stock awards (179,581 ) (285,063 ) (267,943 ) Total basic weighted average common shares outstanding 29,757,819 29,678,302 29,789,615 Diluted: Basic weighted average common shares outstanding 29,757,819 29,678,302 29,789,615 Effect of potentially dilutive common shares (1) 91,512 13,851 22,725 Total diluted weighted average common shares outstanding 29,849,331 29,692,153 29,812,340 (1) Represents the effect of the assumed exercise of stock options and vesting of restricted stock awards and units. |
Schedule of dividends activity | The following table summarizes the dividend activity for the years ended December 31, 2017 , 2016 and 2015 . Declared Cash Dividend per Share Record Date Paid Date January 28, 2015 $0.10 February 10, 2015 February 24, 2015 April 22, 2015 $0.11 May 7, 2015 May 21, 2015 July 22, 2015 $0.11 August 6, 2015 August 20, 2015 October 21, 2015 $0.11 November 4, 2015 November 18, 2015 October 21, 2015 $0.10 November 4, 2015 November 18, 2015 * January 27, 2016 $0.11 February 10, 2016 February 24, 2016 April 20, 2016 $0.12 May 5, 2016 May 19, 2016 July 20, 2016 $0.12 August 4, 2016 August 18, 2016 October 26, 2016 $0.12 November 8, 2016 November 22, 2016 October 26, 2016 $0.25 November 8, 2016 November 22, 2016 * January 25, 2017 $0.12 February 9, 2017 February 23, 2017 April 25, 2017 $0.13 May 10, 2017 May 24, 2017 July 25, 2017 $0.13 August 10, 2017 August 24, 2017 October 25, 2017 $0.13 November 8, 2017 November 22, 2017 October 25, 2017 $0.10 November 8, 2017 November 22, 2017 * * Denotes a special dividend. |
Schedule of repurchased shares | The following table provides total repurchased shares and average share prices under the plan for the periods indicated: Year Ended December 31, 2017 2016 2015 Plan Total (1) Eleventh Plan Repurchased shares — 138,000 441,966 579,966 Stock repurchase average share price $ — $ 17.16 $ 16.64 $ 16.76 (1) Represents shares repurchased and average price per share paid during the duration of the plan. |
Accumulated Other Comprehensi48
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Changes in accumulated other comprehensive income (loss) | The changes in accumulated other comprehensive income (loss) (“AOCI”) by component, during the years ended December 31, 2017 , 2016 and 2015 are as follows: December 31, 2017 December 31, 2016 (In thousands) Balance of AOCI at the beginning of the year $ (2,606 ) $ 2,559 Other comprehensive income (loss) before reclassification (1) 1,530 (4,311 ) Amounts reclassified from AOCI for gain on sale of investment securities included in net income (1) (4 ) (854 ) Net current period other comprehensive income (loss) 1,526 (5,165 ) ASU 2018-02 Implementation (218 ) — Balance of AOCI at the end of the year $ (1,298 ) $ (2,606 ) (1) All amounts are due to the changes in fair value of available for sale securities and are net of tax. December 31, 2015 Changes in (1) Accretion of other-than- (1) Total (In thousands) Balance of AOCI at the beginning of the year $ 3,567 $ (189 ) $ 3,378 Other comprehensive (loss) income before reclassification (559 ) 108 (451 ) Amounts reclassified from AOCI for gain on sale of investment securities available for sale included in net income (1,067 ) 81 (986 ) Held to maturity transfer to available for sale 618 — 618 Net current period other comprehensive (loss) income (1,008 ) 189 (819 ) Balance of AOCI at the end of the year $ 2,559 $ — $ 2,559 (1) All amounts are net of tax. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements of assets on a recurring basis | The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 and December 31, 2016 . 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 $ — December 31, 2016 Total Level 1 Level 2 Level 3 (In thousands) Assets Investment securities available for sale: U.S. Treasury and U.S. Government-sponsored agencies $ 1,569 $ — $ 1,569 $ — Municipal securities 237,256 — 237,256 — Mortgage backed securities and collateralized mortgage obligations: Residential 309,176 — 309,176 — Commercial 208,318 — 208,318 — Collateralized loan obligations 10,478 — 10,478 — Corporate obligations 16,706 — 16,706 — Other securities 11,142 123 11,019 — Total investment securities available for sale 794,645 123 794,522 — Derivative assets - interest rate swaps 2,804 — 2,804 — Liabilities Derivative liabilities - interest rate swaps $ 2,804 $ — $ 2,804 $ — |
Fair value measurements of assets on a nonrecurring basis | The tables below represent assets measured at fair value on a nonrecurring basis at December 31, 2017 and December 31, 2016 and the net losses (gains) recorded in earnings during years ended December 31, 2017 and 2016 . Basis (1) Fair Value at December 31, 2017 Total Level 1 Level 2 Level 3 Net Losses (Gains) Recorded in Earnings During the Year Ended December 31, 2017 (In thousands) Impaired loans: Real estate construction and land development: One-to-four family residential $ 976 $ 307 $ — $ — $ 307 $ (558 ) Total assets measured at fair value on a nonrecurring basis $ 976 $ 307 $ — $ — $ 307 $ (558 ) (1) Basis represents the unpaid principal balance of impaired loans. Basis (1) Fair Value at December 31, 2016 Total Level 1 Level 2 Level 3 Net Losses (Gains) Recorded in Earnings During the Year Ended December 31, 2016 (In thousands) Impaired loans: Commercial business: Commercial and industrial $ 205 $ 200 $ — $ — $ 200 $ 5 Owner-occupied commercial real estate 780 603 — — 603 (145 ) Total commercial business 985 803 — — 803 (140 ) Real estate construction and land development: One-to-four family residential 828 822 — — 822 (23 ) Total real estate construction and land development 828 822 — — 822 (23 ) Consumer 16 9 — — 9 6 Total assets measured at fair value on a nonrecurring basis $ 1,829 $ 1,634 $ — $ — $ 1,634 $ (157 ) (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 December 31, 2017 and December 31, 2016 . 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.%) December 31, 2016 Fair Value Valuation Technique(s) Unobservable Input(s) Range of Inputs; Weighted Average (Dollars in thousands) Impaired loans $ 1,634 Market approach Adjustment for differences between the comparable sales (23.8%) - 63.9%; 20.4% |
Schedule of carrying value and fair value of financial instruments | The tables below present the carrying value amount of the Company’s financial instruments and their corresponding estimated fair values at the dates indicated. 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 — Total loans receivable, net 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 — December 31, 2016 Carrying Value Fair Value Fair Value Measurements Using: Level 1 Level 2 Level 3 (In thousands) Financial Assets: Cash and cash equivalents $ 103,745 $ 103,745 $ 103,745 $ — $ — Investment securities available for sale 794,645 794,645 123 794,522 — Federal Home Loan Bank stock 7,564 N/A N/A N/A N/A Loans held for sale 11,662 11,988 — 11,988 — Loans receivable, net of allowance for loan losses 2,609,666 2,675,811 — — 2,675,811 Accrued interest receivable 10,925 10,925 3 3,472 7,450 Derivative assets - interest rate swaps 2,804 2,804 — 2,804 — Financial Liabilities: Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts $ 2,872,247 $ 2,872,247 $ 2,872,247 $ — $ — Certificate of deposit accounts 357,401 357,536 — 357,536 — Federal Home Loan Bank advances 79,600 79,600 — 79,600 — Securities sold under agreement to repurchase 22,104 22,104 22,104 — — Junior subordinated debentures 19,717 15,000 — — 15,000 Accrued interest payable 215 215 44 142 29 Derivative liabilities - interest rate swaps 2,804 2,804 — 2,804 — |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | The following table summarizes the stock option activity for the years ended December 31, 2017 , 2016 and 2015 : Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding at December 31, 2014 156,407 $ 13.59 Exercised (61,529 ) 12.15 Forfeited or expired (15,470 ) 16.27 Outstanding at December 31, 2015 79,408 14.19 Exercised (37,713 ) 14.31 Forfeited or expired (4,200 ) 16.80 Outstanding at December 31, 2016 37,495 13.77 Exercised (12,662 ) 12.97 Forfeited or expired (1,602 ) 13.76 Outstanding, vested and expected to vest and exercisable at December 31, 2017 23,231 $ 14.21 2.14 $ 385 |
Schedule of restricted stock award activity | The following table summarizes the restricted stock award activity for the years ended December 31, 2017 , 2016 and 2015 : Shares Weighted-Average Grant Date Fair Value Nonvested at December 31, 2014 238,669 $ 15.20 Granted 121,320 16.72 Vested (92,486 ) 15.12 Forfeited (2,982 ) 15.73 Nonvested at December 31, 2015 264,521 15.92 Granted 121,039 17.60 Vested (112,516 ) 15.62 Forfeited (11,748 ) 16.62 Nonvested at December 31, 2016 261,296 16.80 Granted — — Vested (113,479 ) 16.55 Forfeited (10,418 ) 16.80 Nonvested at December 31, 2017 137,399 $ 17.00 |
Schedule of assumptions of PRSUs granted | The Company used the following assumptions to estimate the fair value of PRSUs granted during February 2017: 2017 Shares issued 6,089 Expected Term in Years 2.85 Weighted-Average Risk Free Interest Rate 1.40 % Expected Dividend Yield — % Weighted-Average Fair Value 24.39 Correlation coefficient ABA NASDAQ Community Bank Index Range of peer company volatilities 17.8% - 63.1% Range of peer company correlation coefficients 8.24% - 89.79% Heritage volatility 21.8 % Heritage correlation coefficient 75.93 % |
Summary of RSU activity | The following table summarizes the RSU activity for the year ended December 31, 2017 : Units Weighted-Average Grant Date Fair Value Nonvested at December 31, 2016 — $ — Granted 92,356 25.31 Vested — — Forfeited (1,812 ) 25.35 Nonvested at December 31, 2017 90,544 $ 25.31 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense | Income tax expense for the years ended December 31, 2017 , 2016 and 2015 consisted of the following: Year Ended December 31, 2017 2016 2015 (In thousands) Current tax expense $ 12,171 $ 6,885 $ 9,760 Deferred tax expense 6,185 6,918 4,058 Income tax expense $ 18,356 $ 13,803 $ 13,818 |
Reconciliation of effective income tax rate | A reconciliation of the Company's effective income tax rate with the Federal statutory income tax rate of 35% is as follows: Year Ended December 31, 2017 2016 2015 (In thousands) Income tax expense at Federal statutory rate $ 21,051 $ 18,452 $ 17,957 Tax-exempt instruments (3,212 ) (3,198 ) (2,482 ) Non-deductible acquisition costs 210 — — Federal tax credits and other benefits (1) (1,510 ) (931 ) (880 ) Effects of BOLI (531 ) (511 ) (474 ) Revaluation of net deferred tax assets 2,568 — — Tax resolutions (2) — — (300 ) Other, net (220 ) (9 ) (3 ) Income tax expense $ 18,356 $ 13,803 $ 13,818 (1) Federal tax credits are provided for under the NMTC program and LIHTC programs as described in Note (14) Commitments and Contingencies. Tax benefits related to these credits were recognized for financial reporting purposes in the same period that the credits were recognized in the Company's income tax returns. Other benefits include the proportional amortization of the LIHTC of $2.2 million , $523,000 and $209,000 , for the years ended December 31, 2017 , 2016 and 2015 , respectively. (2) Washington Banking Company had recorded tax-related liabilities prior to the merger effective date, which the Company assumed as part of the Washington Banking Merger. These tax-related liabilities were resolved during the year ended December 31, 2015, resulting in a decrease of the Company's income tax expense for the year ended December 31, 2015. |
Components of deferred income tax asset (liability) | The following table presents major components of the deferred income tax asset (liability) resulting from differences between financial reporting and tax basis: December 31, 2017 December 31, 2016 (In thousands) Deferred tax assets: Allowance for loan losses $ 3,330 $ 4,739 Accrued compensation 1,779 2,685 Stock compensation 660 910 Net unrealized losses charged to other comprehensive income on securities 347 1,388 Market discount on purchased loans 3,908 10,506 Foregone interest on nonaccrual loans 471 1,536 Net operating loss carryforward acquired from NCB 270 483 Other deferred tax assets 763 1,483 Total deferred tax assets 11,528 23,730 Deferred tax liabilities: Deferred loan fees, net (2,518 ) (3,736 ) Premises and equipment (1,091 ) (1,660 ) FHLB stock (557 ) (926 ) Goodwill and other intangible assets (304 ) (740 ) Federal tax credits (1,107 ) (1,314 ) Junior subordinated debentures (1,215 ) (2,122 ) Other deferred tax liabilities (847 ) (1,223 ) Total deferred tax liabilities (7,639 ) (11,721 ) Deferred tax asset, net $ 3,889 $ 12,009 |
Regulatory Capital Requiremen52
Regulatory Capital Requirements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Regulatory Capital Requirements [Abstract] | |
Minimum capital requirements to maintain leverage ratio | Minimum Well- Actual $ % $ % $ % (Dollars in thousands) As of December 31, 2017: The Company consolidated Common equity Tier 1 capital to risk-weighted assets $ 154,522 4.5 % N/A N/A $ 386,689 11.3 % Tier 1 leverage capital to average assets 159,494 4.0 N/A N/A 406,687 10.2 Tier 1 capital to risk-weighted assets 206,029 6.0 N/A N/A 406,687 11.8 Total capital to risk-weighted assets 274,706 8.0 N/A N/A 439,044 12.8 Heritage Bank Common equity Tier 1 capital to risk-weighted assets 154,400 4.5 223,023 6.5 391,092 11.4 Tier 1 leverage capital to average assets 159,300 4.0 199,125 5.0 391,092 9.8 Tier 1 capital to risk-weighted assets 205,867 6.0 274,490 8.0 391,092 11.4 Total capital to risk-weighted assets 274,490 8.0 343,112 10.0 423,348 12.3 As of December 31, 2016: The Company consolidated Common equity Tier 1 capital to risk-weighted assets 142,688 4.5 N/A N/A 362,350 11.4 Tier 1 leverage capital to average assets 148,144 4.0 N/A N/A 381,989 10.3 Tier 1 capital to risk-weighted assets 190,250 6.0 N/A N/A 381,989 12.0 Total capital to risk-weighted assets 253,667 8.0 N/A N/A 413,320 13.0 Heritage Bank Common equity Tier 1 capital to risk-weighted assets 142,573 4.5 205,938 6.5 369,915 11.7 Tier 1 leverage capital to average assets 148,024 4.0 185,030 5.0 369,915 10.0 Tier 1 capital to risk-weighted assets 190,097 6.0 253,462 8.0 369,915 11.7 Total capital to risk-weighted assets 253,462 8.0 316,828 10.0 401,168 12.7 |
Heritage Financial Corporatio53
Heritage Financial Corporation (Parent Company Only) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed statements of financial condition | HERITAGE FINANCIAL CORPORATION (PARENT COMPANY ONLY) Condensed Statements of Financial Condition December 31, 2017 December 31, 2016 (In thousands) ASSETS Cash and interest earning deposits $ 11,904 $ 10,568 Investment in subsidiary bank 512,655 489,388 Other assets 4,696 2,601 Total assets $ 529,255 $ 502,557 LIABILITIES AND STOCKHOLDERS’ EQUITY Junior subordinated debentures $ 20,009 $ 19,717 Other liabilities 941 1,077 Total stockholders’ equity 508,305 481,763 Total liabilities and stockholders’ equity $ 529,255 $ 502,557 |
Condensed statements of income | HERITAGE FINANCIAL CORPORATION (PARENT COMPANY ONLY) Condensed Statements of Income Year Ended December 31, 2017 2016 2015 (In thousands) INTEREST INCOME: Interest and dividends on interest earning deposits and other assets $ 44 $ 34 $ 28 Total interest income 44 34 28 INTEREST EXPENSE: Junior subordinated debentures 1,014 880 827 Total interest expense 1,014 880 827 Net interest expense (970 ) (846 ) (799 ) NONINTEREST INCOME: Dividends from subsidiary bank 23,000 30,000 22,000 Equity in undistributed income of subsidiary bank 21,755 11,848 18,131 Total noninterest income 44,755 41,848 40,131 NONONTEREST EXPENSE: Professional services 768 385 263 Other expense 3,726 3,437 3,120 Total noninterest expense 4,494 3,822 3,383 Income before income taxes 39,291 37,180 35,949 Income tax benefit (2,500 ) (1,738 ) (1,540 ) Net income $ 41,791 $ 38,918 $ 37,489 |
Condensed statements of cash flows | HERITAGE FINANCIAL CORPORATION (PARENT COMPANY ONLY) Condensed Statements of Cash Flows Year Ended December 31, 2017 2016 2015 (In thousands) Cash flows from operating activities: Net income $ 41,791 $ 38,918 $ 37,489 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed income of subsidiary bank (21,755 ) (11,848 ) (18,131 ) Net excess tax benefit from exercise of stock options and vesting of restricted stock — (123 ) (140 ) Stock-based compensation expense 2,103 1,840 1,555 Net change in other assets and liabilities (1,925 ) (1,141 ) (125 ) Net cash provided by operating activities 20,214 27,646 20,648 Cash flows from financing activities: Common stock cash dividends paid (18,305 ) (21,569 ) (15,916 ) Proceeds from exercise of stock options 164 540 751 Net excess tax benefit from exercise of stock options and vesting of restricted stock — 123 140 Repurchase of common stock (737 ) (2,894 ) (7,736 ) Net cash used in financing activities (18,878 ) (23,800 ) (22,761 ) Net increase (decrease) in cash and cash equivalents 1,336 3,846 (2,113 ) Cash and cash equivalents at beginning of year 10,568 6,722 8,835 Cash and cash equivalents at end of year $ 11,904 $ 10,568 $ 6,722 |
Selected Quarterly Financial 54
Selected Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Results of operations on a quarterly basis | Results of operations on a quarterly basis were as follows: Year Ended December 31, 2017 First Quarter Second Quarter Third Quarter Fourth Quarter (Dollars in thousands, except per share amounts) Interest income $ 34,863 $ 36,087 $ 37,324 $ 39,606 Interest expense 1,717 1,907 2,333 2,389 Net interest income 33,146 34,180 34,991 37,217 Provision for loan losses 867 1,131 884 1,338 Net interest income after provision for loan losses 32,279 33,049 34,107 35,879 Noninterest income 7,349 10,663 8,394 9,002 Noninterest expense 27,223 27,809 27,955 27,588 Income before provision for income taxes 12,405 15,903 14,546 17,293 Income tax expense 3,089 4,075 3,922 7,270 Net income $ 9,316 $ 11,828 $ 10,624 $ 10,023 Basic earnings per common share $ 0.31 $ 0.40 $ 0.35 $ 0.33 Diluted earnings per common share 0.31 0.40 0.35 0.33 Cash dividends declared on common stock 0.12 0.13 0.13 0.23 Year Ended December 31, 2016 First Quarter Second Quarter Third Quarter Fourth Quarter (Dollars in thousands, except per share amounts) Interest income $ 34,235 $ 34,592 $ 35,114 $ 34,571 Interest expense 1,475 1,507 1,508 1,516 Net interest income 32,760 33,085 33,606 33,055 Provision for loan losses 1,139 1,120 1,495 1,177 Net interest income after provision for loan losses 31,621 31,965 32,111 31,878 Noninterest income 6,990 6,576 9,867 8,186 Noninterest expense 26,369 26,477 26,818 26,809 Income before provision for income taxes 12,242 12,064 15,160 13,255 Income tax expense 3,151 3,169 4,121 3,362 Net income $ 9,091 $ 8,895 $ 11,039 $ 9,893 Basic earnings per common share $ 0.30 $ 0.30 $ 0.37 $ 0.33 Diluted earnings per common share 0.30 0.30 0.37 0.33 Cash dividends declared on common stock 0.11 0.12 0.12 0.37 |
Description of Business, Basi55
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements - Description of Business (Details) $ in Thousands | Jan. 16, 2018branch | Dec. 31, 2017USD ($)branch | Dec. 31, 2016USD ($) |
Business Description and Basis of Presentation [Line Items] | |||
Total assets | $ 4,113,270 | $ 3,878,981 | |
Total loans | 2,845,712 | 2,638,397 | |
Total deposits | $ 3,393,060 | $ 3,229,648 | |
Heritage Bank | |||
Business Description and Basis of Presentation [Line Items] | |||
Number of branches operating | branch | 60 | ||
Puget Sound | |||
Business Description and Basis of Presentation [Line Items] | |||
Total assets | $ 556,000 | ||
Total loans | 388,300 | ||
Total deposits | 491,900 | ||
Puget Sound | |||
Business Description and Basis of Presentation [Line Items] | |||
Acquisition costs incurred | $ 810 | ||
Subsequent event | Puget Sound | |||
Business Description and Basis of Presentation [Line Items] | |||
Number of branches acquired | branch | 1 |
Description of Business, Basi56
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements - Allowance for Loan Losses (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Allowance for off-balance sheet financial instruments | $ 170 | $ 170 |
Description of Business, Basi57
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements - Mortgage Banking Operations (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Fair value of derivative instruments | $ 0 | $ 0 |
Description of Business, Basi58
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements - FDIC Indemnification Asset (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Percentage of losses absorbed by FDIC | 80.00% |
Percentage of loss recoveries received by FDIC | 80.00% |
Description of Business, Basi59
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements - Premises and Equipment (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Minimum | Buildings and building improvements | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 15 years |
Minimum | Furniture, fixtures and equipment | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 3 years |
Maximum | Buildings and building improvements | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 39 years |
Maximum | Furniture, fixtures and equipment | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 7 years |
Description of Business, Basi60
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements - Bank Owned Life Insurance (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Bank owned life insurance | $ 75,091 | $ 70,355 |
Description of Business, Basi61
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements - Operating Segments (Details) | 12 Months Ended |
Dec. 31, 2017segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 1 |
Description of Business, Basi62
Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements - Recently Issued Accounting Pronouncements (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Future minimum lease payments | $ 12,950 |
Investment Securities - Reconci
Investment Securities - Reconciliation (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 812,174 | $ 798,639 |
Gross Unrealized Gains | 5,483 | 4,281 |
Gross Unrealized Losses | (7,127) | (8,275) |
Fair Value | 810,530 | 794,645 |
U.S. Treasury and U.S. Government-sponsored agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 13,460 | 1,563 |
Gross Unrealized Gains | 6 | 6 |
Gross Unrealized Losses | (24) | 0 |
Fair Value | 13,442 | 1,569 |
Municipal securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 247,358 | 237,305 |
Gross Unrealized Gains | 3,720 | 2,427 |
Gross Unrealized Losses | (1,063) | (2,476) |
Fair Value | 250,015 | 237,256 |
Residential mortgage-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 282,724 | 310,391 |
Gross Unrealized Gains | 422 | 985 |
Gross Unrealized Losses | (2,935) | (2,200) |
Fair Value | 280,211 | 309,176 |
Commercial mortgage-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 219,696 | 211,259 |
Gross Unrealized Gains | 444 | 599 |
Gross Unrealized Losses | (3,061) | (3,540) |
Fair Value | 217,079 | 208,318 |
Collateralized loan obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 4,561 | 10,505 |
Gross Unrealized Gains | 19 | 4 |
Gross Unrealized Losses | 0 | (31) |
Fair Value | 4,580 | 10,478 |
Corporate obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 16,594 | 16,611 |
Gross Unrealized Gains | 220 | 104 |
Gross Unrealized Losses | (44) | (9) |
Fair Value | 16,770 | 16,706 |
Other securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 27,781 | 11,005 |
Gross Unrealized Gains | 652 | 156 |
Gross Unrealized Losses | 0 | (19) |
Fair Value | $ 28,433 | $ 11,142 |
Investment Securities - Textual
Investment Securities - Textual (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | ||
Securities classified as trading | $ 0 | $ 0 |
Securities classified as held to maturity | 0 | 0 |
OTTI, unrealized losses | $ 0 | $ 0 |
Investment Securities - Contrac
Investment Securities - Contractual Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Amortized Cost | ||
Due in one year or less | $ 8,922 | |
Due after one year through five years | 132,271 | |
Due after five years through ten years | 240,089 | |
Due after ten years | 430,847 | |
Investment securities with no stated maturities | 45 | |
Amortized Cost | 812,174 | $ 798,639 |
Fair Value | ||
Due in one year or less | 8,982 | |
Due after one year through five years | 132,497 | |
Due after five years through ten years | 238,613 | |
Due after ten years | 430,292 | |
Investment securities with no stated maturities | 146 | |
Fair Value | $ 810,530 | $ 794,645 |
Investment Securities - Unreali
Investment Securities - Unrealized Losses (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value | ||
Less than 12 Months | $ 305,174 | $ 442,811 |
12 Months or Longer | 183,711 | 26,420 |
Total | 488,885 | 469,231 |
Unrealized Losses | ||
Less than 12 Months | (2,448) | (8,099) |
12 Months or Longer | (4,679) | (176) |
Total | (7,127) | (8,275) |
U.S. Treasury and U.S. Government-sponsored agencies | ||
Fair Value | ||
Less than 12 Months | 11,436 | |
12 Months or Longer | 0 | |
Total | 11,436 | |
Unrealized Losses | ||
Less than 12 Months | (24) | |
12 Months or Longer | 0 | |
Total | (24) | |
Municipal securities | ||
Fair Value | ||
Less than 12 Months | 39,298 | 90,188 |
12 Months or Longer | 26,509 | 0 |
Total | 65,807 | 90,188 |
Unrealized Losses | ||
Less than 12 Months | (384) | (2,476) |
12 Months or Longer | (679) | 0 |
Total | (1,063) | (2,476) |
Residential mortgage-backed securities | ||
Fair Value | ||
Less than 12 Months | 175,847 | 181,562 |
12 Months or Longer | 66,380 | 10,854 |
Total | 242,227 | 192,416 |
Unrealized Losses | ||
Less than 12 Months | (1,296) | (2,148) |
12 Months or Longer | (1,639) | (52) |
Total | (2,935) | (2,200) |
Commercial mortgage-backed securities | ||
Fair Value | ||
Less than 12 Months | 75,121 | 157,055 |
12 Months or Longer | 90,822 | 12,597 |
Total | 165,943 | 169,652 |
Unrealized Losses | ||
Less than 12 Months | (700) | (3,446) |
12 Months or Longer | (2,361) | (94) |
Total | (3,061) | (3,540) |
Collateralized loan obligations | ||
Fair Value | ||
Less than 12 Months | 2,976 | |
12 Months or Longer | 2,969 | |
Total | 5,945 | |
Unrealized Losses | ||
Less than 12 Months | (1) | |
12 Months or Longer | (30) | |
Total | (31) | |
Corporate obligations | ||
Fair Value | ||
Less than 12 Months | 3,472 | 4,032 |
12 Months or Longer | 0 | 0 |
Total | 3,472 | 4,032 |
Unrealized Losses | ||
Less than 12 Months | (44) | (9) |
12 Months or Longer | 0 | 0 |
Total | $ (44) | (9) |
Other securities | ||
Fair Value | ||
Less than 12 Months | 6,998 | |
12 Months or Longer | 0 | |
Total | 6,998 | |
Unrealized Losses | ||
Less than 12 Months | (19) | |
12 Months or Longer | 0 | |
Total | $ (19) |
Investment Securities - Realize
Investment Securities - Realized Gains and Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |||
Gross realized gains | $ 193 | $ 1,518 | $ 2,109 |
Gross realized losses | (187) | (203) | (593) |
Net realized gains | $ 6 | $ 1,315 | $ 1,516 |
Investment Securities - Amortiz
Investment Securities - Amortized Cost and Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Investment Holdings [Line Items] | ||
Amortized Cost | $ 267,611 | $ 247,872 |
Fair Value | 267,160 | 248,087 |
Washington and Oregon state to secure public deposits | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 206,377 | 214,834 |
Fair Value | 206,425 | 215,247 |
Repurchase agreements | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 48,750 | 29,481 |
Fair Value | 48,237 | 29,294 |
Other securities pledged | ||
Investment Holdings [Line Items] | ||
Amortized Cost | 12,484 | 3,557 |
Fair Value | $ 12,498 | $ 3,546 |
Loans Receivable - Textuals (De
Loans Receivable - Textuals (Details) | 12 Months Ended |
Dec. 31, 2017segment | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Number of loan segments | 4 |
Maximum percentage consumer loans (percent) | 80.00% |
One-to-four family residential | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Maximum percent of appraised value or underlying collateral mortgage (not to exceed 80%) residential loans (percent) | 80.00% |
One-to-four family residential | Minimum | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Loan term | 15 years |
One-to-four family residential | Maximum | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Loan term | 30 years |
Loans Receivable - Components o
Loans Receivable - Components of Loans Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gross loans receivable | $ 2,845,712 | $ 2,638,397 | ||
Net deferred loan costs | 3,359 | 2,352 | ||
Loans receivable, net | 2,849,071 | 2,640,749 | ||
Allowance for loan losses | (32,086) | (31,083) | $ (29,746) | $ (27,729) |
Total loans receivable, net | 2,816,985 | 2,609,666 | ||
Commercial business | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gross loans receivable | 2,254,140 | 2,076,688 | ||
Allowance for loan losses | (21,999) | (22,382) | (22,064) | (20,186) |
Commercial business | Commercial and industrial | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gross loans receivable | 645,396 | 637,773 | ||
Allowance for loan losses | (9,910) | (10,968) | (9,972) | (10,553) |
Commercial business | Owner-occupied commercial real estate | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gross loans receivable | 622,150 | 558,035 | ||
Allowance for loan losses | (3,992) | (3,661) | (4,370) | (4,032) |
Commercial business | Non-owner occupied commercial real estate | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gross loans receivable | 986,594 | 880,880 | ||
Allowance for loan losses | (8,097) | (7,753) | (7,722) | (5,601) |
One-to-four family residential | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gross loans receivable | 86,997 | 77,391 | ||
Allowance for loan losses | (1,056) | (1,015) | (1,157) | (1,200) |
Real estate construction and land development | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gross loans receivable | 149,484 | 159,178 | ||
Allowance for loan losses | (2,052) | (2,156) | (1,871) | (2,758) |
Real estate construction and land development | One-to-four family residential | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gross loans receivable | 51,985 | 50,414 | ||
Allowance for loan losses | (862) | (797) | (1,058) | (1,786) |
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 | 97,499 | 108,764 | ||
Allowance for loan losses | (1,190) | (1,359) | (813) | (972) |
Consumer | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gross loans receivable | 355,091 | 325,140 | ||
Allowance for loan losses | $ (6,081) | $ (5,024) | $ (4,309) | $ (2,769) |
Loans Receivable - Concentratio
Loans Receivable - Concentrations of Credit (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
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 | Dec. 31, 2017 | Dec. 31, 2016 |
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | $ 2,730,283 | $ 2,521,876 |
OAEM | 43,942 | 25,708 |
Substandard | 70,962 | 90,813 |
Doubtful/Loss | 525 | 0 |
Total | 2,845,712 | 2,638,397 |
Potential problem loans receivable | 83,500 | 87,800 |
Government guaranteed potential problem loans | 3,100 | 1,100 |
Commercial business | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 2,148,602 | 1,975,241 |
OAEM | 42,698 | 24,058 |
Substandard | 62,840 | 77,389 |
Doubtful/Loss | 0 | 0 |
Total | 2,254,140 | 2,076,688 |
Commercial business | Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 597,697 | 601,273 |
OAEM | 19,536 | 5,048 |
Substandard | 28,163 | 31,452 |
Doubtful/Loss | 0 | 0 |
Total | 645,396 | 637,773 |
Commercial business | Owner-occupied commercial real estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 595,455 | 532,585 |
OAEM | 12,668 | 4,437 |
Substandard | 14,027 | 21,013 |
Doubtful/Loss | 0 | 0 |
Total | 622,150 | 558,035 |
Commercial business | Non-owner occupied commercial real estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 955,450 | 841,383 |
OAEM | 10,494 | 14,573 |
Substandard | 20,650 | 24,924 |
Doubtful/Loss | 0 | 0 |
Total | 986,594 | 880,880 |
One-to-four family residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 85,762 | 76,020 |
OAEM | 0 | 0 |
Substandard | 1,235 | 1,371 |
Doubtful/Loss | 0 | 0 |
Total | 86,997 | 77,391 |
Real estate construction and land development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 146,329 | 150,475 |
OAEM | 1,244 | 1,650 |
Substandard | 1,911 | 7,053 |
Doubtful/Loss | 0 | 0 |
Total | 149,484 | 159,178 |
Real estate construction and land development | One-to-four family residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 49,925 | 44,752 |
OAEM | 537 | 500 |
Substandard | 1,523 | 5,162 |
Doubtful/Loss | 0 | 0 |
Total | 51,985 | 50,414 |
Real estate construction and land development | Five or more family residential and commercial properties | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 96,404 | 105,723 |
OAEM | 707 | 1,150 |
Substandard | 388 | 1,891 |
Doubtful/Loss | 0 | 0 |
Total | 97,499 | 108,764 |
Consumer | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Pass | 349,590 | 320,140 |
OAEM | 0 | 0 |
Substandard | 4,976 | 5,000 |
Doubtful/Loss | 525 | 0 |
Total | $ 355,091 | $ 325,140 |
Loans Receivable - Nonaccrual L
Loans Receivable - Nonaccrual Loans (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | $ 10,703 | $ 10,909 |
Nonaccrual originated loans guaranteed by governmental agencies | 1,900 | 2,800 |
Commercial business | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 9,098 | 8,580 |
Commercial business | Commercial and industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 3,110 | 3,531 |
Commercial business | Owner-occupied commercial real estate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 4,090 | 3,728 |
Commercial business | Non-owner occupied commercial real estate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 1,898 | 1,321 |
One-to-four family residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 81 | 94 |
Real estate construction and land development | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 1,247 | 2,008 |
Real estate construction and land development | One-to-four family residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | 1,247 | 2,008 |
Consumer | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross nonaccrual loans | $ 277 | $ 227 |
Loans Receivable - Past Due Loa
Loans Receivable - Past Due Loans (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | $ 15,445,000 | $ 15,270,000 |
Current | 2,830,267,000 | 2,623,127,000 |
Total | 2,845,712,000 | 2,638,397,000 |
90 Days or More and Still Accruing | 0 | 0 |
30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 7,716,000 | 8,132,000 |
90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 7,729,000 | 7,138,000 |
Commercial business | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 10,851,000 | 9,875,000 |
Current | 2,243,289,000 | 2,066,813,000 |
Total | 2,254,140,000 | 2,076,688,000 |
Commercial business | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 5,140,000 | 5,227,000 |
Commercial business | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 5,711,000 | 4,648,000 |
Commercial business | Commercial and industrial | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 4,165,000 | 4,420,000 |
Current | 641,231,000 | 633,353,000 |
Total | 645,396,000 | 637,773,000 |
Commercial business | Commercial and industrial | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 2,993,000 | 2,687,000 |
Commercial business | Commercial and industrial | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,172,000 | 1,733,000 |
Commercial business | Owner-occupied commercial real estate | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 2,502,000 | 4,722,000 |
Current | 619,648,000 | 553,313,000 |
Total | 622,150,000 | 558,035,000 |
Commercial business | Owner-occupied commercial real estate | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,277,000 | 1,807,000 |
Commercial business | Owner-occupied commercial real estate | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,225,000 | 2,915,000 |
Commercial business | Non-owner occupied commercial real estate | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 4,184,000 | 733,000 |
Current | 982,410,000 | 880,147,000 |
Total | 986,594,000 | 880,880,000 |
Commercial business | Non-owner occupied commercial real estate | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 870,000 | 733,000 |
Commercial business | Non-owner occupied commercial real estate | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 3,314,000 | 0 |
One-to-four family residential | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 513,000 | 523,000 |
Current | 86,484,000 | 76,868,000 |
Total | 86,997,000 | 77,391,000 |
One-to-four family residential | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 513,000 | 523,000 |
One-to-four family residential | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 0 | 0 |
Real estate construction and land development | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,455,000 | 2,475,000 |
Current | 148,029,000 | 156,703,000 |
Total | 149,484,000 | 159,178,000 |
Real estate construction and land development | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 124,000 | 90,000 |
Real estate construction and land development | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,331,000 | 2,385,000 |
Real estate construction and land development | One-to-four family residential | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,415,000 | 2,098,000 |
Current | 50,570,000 | 48,316,000 |
Total | 51,985,000 | 50,414,000 |
Real estate construction and land development | One-to-four family residential | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 84,000 | 90,000 |
Real estate construction and land development | One-to-four family residential | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,331,000 | 2,008,000 |
Real estate construction and land development | Five or more family residential and commercial properties | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 40,000 | 377,000 |
Current | 97,459,000 | 108,387,000 |
Total | 97,499,000 | 108,764,000 |
Real estate construction and land development | Five or more family residential and commercial properties | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 40,000 | 0 |
Real estate construction and land development | Five or more family residential and commercial properties | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 0 | 377,000 |
Consumer | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 2,626,000 | 2,397,000 |
Current | 352,465,000 | 322,743,000 |
Total | 355,091,000 | 325,140,000 |
Consumer | 30-89 Days | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 1,939,000 | 2,292,000 |
Consumer | 90 Days or Greater | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | $ 687,000 | $ 105,000 |
Loans Receivable - Impaired Loa
Loans Receivable - Impaired Loans (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment With No Specific Valuation Allowance | $ 10,399 | $ 10,085 |
Recorded Investment With Specific Valuation Allowance | 27,060 | 23,113 |
Total Recorded Investment | 37,459 | 33,198 |
Unpaid Contractual Principal Balance | 39,334 | 35,226 |
Related Specific Valuation Allowance | 3,355 | 2,734 |
Government guarantee of originated impaired loans | 3,200 | 3,500 |
Commercial business | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment With No Specific Valuation Allowance | 9,301 | 7,794 |
Recorded Investment With Specific Valuation Allowance | 25,525 | 20,623 |
Total Recorded Investment | 34,826 | 28,417 |
Unpaid Contractual Principal Balance | 35,715 | 29,742 |
Related Specific Valuation Allowance | 3,169 | 2,507 |
Commercial business | Commercial and industrial | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment With No Specific Valuation Allowance | 2,127 | 1,739 |
Recorded Investment With Specific Valuation Allowance | 9,872 | 10,636 |
Total Recorded Investment | 11,999 | 12,375 |
Unpaid Contractual Principal Balance | 12,489 | 13,249 |
Related Specific Valuation Allowance | 1,326 | 1,199 |
Commercial business | Owner-occupied commercial real estate | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment With No Specific Valuation Allowance | 2,452 | 1,150 |
Recorded Investment With Specific Valuation Allowance | 4,356 | 3,574 |
Total Recorded Investment | 6,808 | 4,724 |
Unpaid Contractual Principal Balance | 7,054 | 5,107 |
Related Specific Valuation Allowance | 621 | 511 |
Commercial business | Non-owner occupied commercial real estate | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment With No Specific Valuation Allowance | 4,722 | 4,905 |
Recorded Investment With Specific Valuation Allowance | 11,297 | 6,413 |
Total Recorded Investment | 16,019 | 11,318 |
Unpaid Contractual Principal Balance | 16,172 | 11,386 |
Related Specific Valuation Allowance | 1,222 | 797 |
One-to-four family residential | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment With No Specific Valuation Allowance | 0 | 0 |
Recorded Investment With Specific Valuation Allowance | 299 | 321 |
Total Recorded Investment | 299 | 321 |
Unpaid Contractual Principal Balance | 308 | 325 |
Related Specific Valuation Allowance | 93 | 97 |
Real estate construction and land development | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment With No Specific Valuation Allowance | 938 | 2,243 |
Recorded Investment With Specific Valuation Allowance | 954 | 1,907 |
Total Recorded Investment | 1,892 | 4,150 |
Unpaid Contractual Principal Balance | 2,845 | 4,834 |
Related Specific Valuation Allowance | 39 | 66 |
Real estate construction and land development | One-to-four family residential | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment With No Specific Valuation Allowance | 938 | 2,243 |
Recorded Investment With Specific Valuation Allowance | 309 | 828 |
Total Recorded Investment | 1,247 | 3,071 |
Unpaid Contractual Principal Balance | 2,200 | 3,755 |
Related Specific Valuation Allowance | 2 | 6 |
Real estate construction and land development | Five or more family residential and commercial properties | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment With No Specific Valuation Allowance | 0 | 0 |
Recorded Investment With Specific Valuation Allowance | 645 | 1,079 |
Total Recorded Investment | 645 | 1,079 |
Unpaid Contractual Principal Balance | 645 | 1,079 |
Related Specific Valuation Allowance | 37 | 60 |
Consumer | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment With No Specific Valuation Allowance | 160 | 48 |
Recorded Investment With Specific Valuation Allowance | 282 | 262 |
Total Recorded Investment | 442 | 310 |
Unpaid Contractual Principal Balance | 466 | 325 |
Related Specific Valuation Allowance | $ 54 | $ 64 |
Loans Receivable - Average Reco
Loans Receivable - Average Recorded Investment of Impaired Loans (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Financing Receivable, Modifications [Line Items] | |||
Average recorded investment of impaired loans | $ 32,751,000 | $ 32,341,000 | $ 29,661,000 |
Nonaccrual | |||
Financing Receivable, Modifications [Line Items] | |||
Interest income recognized | 0 | 0 | 0 |
Restructured performing | |||
Financing Receivable, Modifications [Line Items] | |||
Interest income recognized | 1,200,000 | 651,000 | 780,000 |
Commercial business | |||
Financing Receivable, Modifications [Line Items] | |||
Average recorded investment of impaired loans | 28,873,000 | 26,456,000 | 23,384,000 |
Commercial business | Commercial and industrial | |||
Financing Receivable, Modifications [Line Items] | |||
Average recorded investment of impaired loans | 11,310,000 | 10,207,000 | 9,781,000 |
Commercial business | Owner-occupied commercial real estate | |||
Financing Receivable, Modifications [Line Items] | |||
Average recorded investment of impaired loans | 5,401,000 | 4,540,000 | 4,346,000 |
Commercial business | Non-owner occupied commercial real estate | |||
Financing Receivable, Modifications [Line Items] | |||
Average recorded investment of impaired loans | 12,162,000 | 11,709,000 | 9,257,000 |
One-to-four family residential | |||
Financing Receivable, Modifications [Line Items] | |||
Average recorded investment of impaired loans | 309,000 | 279,000 | 257,000 |
Real estate construction and land development | |||
Financing Receivable, Modifications [Line Items] | |||
Average recorded investment of impaired loans | 3,218,000 | 4,961,000 | 5,849,000 |
Real estate construction and land development | One-to-four family residential | |||
Financing Receivable, Modifications [Line Items] | |||
Average recorded investment of impaired loans | 2,315,000 | 3,305,000 | 3,841,000 |
Real estate construction and land development | Five or more family residential and commercial properties | |||
Financing Receivable, Modifications [Line Items] | |||
Average recorded investment of impaired loans | 903,000 | 1,656,000 | 2,008,000 |
Consumer | |||
Financing Receivable, Modifications [Line Items] | |||
Average recorded investment of impaired loans | $ 351,000 | $ 645,000 | $ 171,000 |
Loans Receivable - Performing a
Loans Receivable - Performing and Nonaccrual TDR (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | ||
Performing TDR Loans | $ 26,757 | $ 22,288 |
Nonaccrual TDR Loans | 5,193 | 6,900 |
Performing TDR loans, Allowance for loan losses | 2,635 | 1,965 |
Nonaccrual TDR loans, Allowance for loan losses | 379 | 437 |
Unfunded commitment to borrowers related to TDR loans | $ 1,200 | $ 249 |
Loans Receivable - Modified TDR
Loans Receivable - Modified TDRs (Details) - Troubled Debt Restructured Loans | 12 Months Ended | ||
Dec. 31, 2017USD ($)contract | Dec. 31, 2016USD ($)contract | Dec. 31, 2015USD ($)contract | |
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 36 | 35 | 38 |
Outstanding Principal Balance | $ 19,200,000 | $ 13,438,000 | $ 17,447,000 |
Commercial business | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 26 | 23 | 33 |
Outstanding Principal Balance | $ 18,152,000 | $ 10,088,000 | $ 15,119,000 |
Commercial business | Commercial and industrial | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 19 | 19 | 25 |
Outstanding Principal Balance | $ 7,212,000 | $ 7,398,000 | $ 6,312,000 |
Commercial business | Owner-occupied commercial real estate | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 3 | 2 | 4 |
Outstanding Principal Balance | $ 1,366,000 | $ 569,000 | $ 1,311,000 |
Commercial business | Non-owner occupied commercial real estate | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 4 | 2 | 4 |
Outstanding Principal Balance | $ 9,574,000 | $ 2,121,000 | $ 7,496,000 |
Real estate construction and land development | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 2 | 6 | 4 |
Outstanding Principal Balance | $ 938,000 | $ 3,284,000 | $ 2,291,000 |
Real estate construction and land development | One-to-four family residential | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 2 | 5 | 4 |
Outstanding Principal Balance | $ 938,000 | $ 2,206,000 | $ 2,291,000 |
Initial advance at the time of modification | $ 0 | $ 0 | $ 0 |
Real estate construction and land development | Five or more family residential and commercial properties | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 0 | 1 | 0 |
Outstanding Principal Balance | $ 0 | $ 1,078,000 | $ 0 |
Consumer | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 8 | 6 | 1 |
Outstanding Principal Balance | $ 110,000 | $ 66,000 | $ 37,000 |
Loans Receivable - TDRs Textual
Loans Receivable - TDRs Textuals (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)contract | Dec. 31, 2016USD ($)contract | Dec. 31, 2015USD ($)contract | |
Financing Receivable, Modifications [Line Items] | |||
Related specific valuation allowance for TDRs | $ 3,355 | $ 2,734 | |
Consumer | |||
Financing Receivable, Modifications [Line Items] | |||
Related specific valuation allowance for TDRs | 54 | 64 | |
Commercial business | |||
Financing Receivable, Modifications [Line Items] | |||
Related specific valuation allowance for TDRs | 3,169 | 2,507 | |
Commercial business | Commercial and industrial | |||
Financing Receivable, Modifications [Line Items] | |||
Related specific valuation allowance for TDRs | 1,326 | 1,199 | |
Commercial business | Non-owner occupied commercial real estate | |||
Financing Receivable, Modifications [Line Items] | |||
Related specific valuation allowance for TDRs | $ 1,222 | $ 797 | |
Troubled Debt Restructured Loans | |||
Financing Receivable, Modifications [Line Items] | |||
Number of contracts modified | contract | 36 | 35 | 38 |
Number of contracts with no modifications | contract | 21 | 17 | 18 |
Total outstanding principal balance with no prior modifications | $ 12,100 | $ 7,200 | $ 7,000 |
Number of contracts modified that subsequently defaulted | contract | 5 | 3 | 2 |
Loans modified during the previous twelve months and subsequently defaulted | $ 1,308 | $ 1,631 | $ 1,755 |
Troubled Debt Restructured Loans | Modified during the year | |||
Financing Receivable, Modifications [Line Items] | |||
Related specific valuation allowance for TDRs | 1,800 | 1,000 | 1,700 |
Troubled Debt Restructured Loans | Modified subsequently | |||
Financing Receivable, Modifications [Line Items] | |||
Related specific valuation allowance for TDRs | $ 1 | $ 111 | $ 191 |
Troubled Debt Restructured Loans | Past modified maturity date | |||
Financing Receivable, Modifications [Line Items] | |||
Number of contracts modified that subsequently defaulted | contract | 4 | ||
Troubled Debt Restructured Loans | Consumer | |||
Financing Receivable, Modifications [Line Items] | |||
Number of contracts modified | contract | 8 | 6 | 1 |
Number of contracts modified that subsequently defaulted | contract | 1 | 0 | 0 |
Loans modified during the previous twelve months and subsequently defaulted | $ 7 | $ 0 | $ 0 |
Troubled Debt Restructured Loans | Commercial business | |||
Financing Receivable, Modifications [Line Items] | |||
Number of contracts modified | contract | 26 | 23 | 33 |
Number of contracts modified that subsequently defaulted | contract | 2 | 1 | 2 |
Loans modified during the previous twelve months and subsequently defaulted | $ 363 | $ 488 | $ 1,755 |
Troubled Debt Restructured Loans | Commercial business | Commercial and industrial | |||
Financing Receivable, Modifications [Line Items] | |||
Number of contracts modified | contract | 19 | 19 | 25 |
Number of contracts modified that subsequently defaulted | contract | 1 | 0 | 2 |
Loans modified during the previous twelve months and subsequently defaulted | $ 283 | $ 0 | $ 1,755 |
Troubled Debt Restructured Loans | Commercial business | Commercial and industrial | 30-89 days past due | |||
Financing Receivable, Modifications [Line Items] | |||
Number of contracts modified that subsequently defaulted | contract | 1 | ||
Loans modified during the previous twelve months and subsequently defaulted | $ 1,700 | ||
Troubled Debt Restructured Loans | Commercial business | Non-owner occupied commercial real estate | |||
Financing Receivable, Modifications [Line Items] | |||
Number of contracts modified | contract | 4 | 2 | 4 |
Loans Receivable - TDRs Subsequ
Loans Receivable - TDRs Subsequently Defaulted (Details) - Troubled Debt Restructured Loans $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)contract | Dec. 31, 2016USD ($)contract | Dec. 31, 2015USD ($)contract | |
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 5 | 3 | 2 |
Outstanding Principal Balance | $ | $ 1,308 | $ 1,631 | $ 1,755 |
Commercial business | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 2 | 1 | 2 |
Outstanding Principal Balance | $ | $ 363 | $ 488 | $ 1,755 |
Commercial business | Commercial and industrial | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 1 | 0 | 2 |
Outstanding Principal Balance | $ | $ 283 | $ 0 | $ 1,755 |
Commercial business | Owner-occupied commercial real estate | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 1 | 1 | 0 |
Outstanding Principal Balance | $ | $ 80 | $ 488 | $ 0 |
Real estate construction and land development | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 2 | 2 | 0 |
Outstanding Principal Balance | $ | $ 938 | $ 1,143 | $ 0 |
Real estate construction and land development | One-to-four family residential | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 2 | 2 | 0 |
Outstanding Principal Balance | $ | $ 938 | $ 1,143 | $ 0 |
Consumer | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 1 | 0 | 0 |
Outstanding Principal Balance | $ | $ 7 | $ 0 | $ 0 |
Loans Receivable - Purchased Cr
Loans Receivable - Purchased Credit Impaired Loans (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | $ 46,639 | $ 71,731 |
Recorded Investment | 40,603 | 64,448 |
Commercial business | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 35,343 | 55,743 |
Recorded Investment | 27,769 | 48,650 |
Commercial business | Commercial and industrial | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 8,818 | 13,067 |
Recorded Investment | 2,912 | 9,317 |
Commercial business | Owner-occupied commercial real estate | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 12,230 | 17,639 |
Recorded Investment | 11,515 | 15,973 |
Commercial business | Non-owner occupied commercial real estate | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 14,295 | 25,037 |
Recorded Investment | 13,342 | 23,360 |
One-to-four family residential | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 4,120 | 5,120 |
Recorded Investment | 5,255 | 4,905 |
Real estate construction and land development | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 3,202 | 5,572 |
Recorded Investment | 2,124 | 4,611 |
Real estate construction and land development | One-to-four family residential | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 841 | 2,958 |
Recorded Investment | 89 | 2,123 |
Real estate construction and land development | Five or more family residential and commercial properties | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 2,361 | 2,614 |
Recorded Investment | 2,035 | 2,488 |
Consumer | ||
Financing Receivable, Impaired [Line Items] | ||
Outstanding Principal | 3,974 | 5,296 |
Recorded Investment | $ 5,455 | $ 6,282 |
Loans Receivable - Change in Ac
Loans Receivable - Change in Accretable Yield (Details) - PCI Loans - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | |||
Balance at the beginning of the year | $ 13,860 | $ 17,592 | $ 21,092 |
Accretion | (3,471) | (4,962) | (6,993) |
Disposal and other | (2,758) | (3,329) | (3,111) |
Change in accretable yield | 3,593 | 4,559 | 6,604 |
Balance at the end of the year | $ 11,224 | $ 13,860 | $ 17,592 |
Loans Receivable - Related Part
Loans Receivable - Related Party Loans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Loans and Leases Receivable, Related Parties [Roll Forward] | |||
Balance outstanding at beginning of year | $ 19,917 | $ 20,775 | $ 9,164 |
Principal additions | 0 | 738 | 12,189 |
Elimination of outstanding loan balance due to change in related party status | (10,930) | ||
Principal reductions | (527) | (1,596) | (578) |
Balance outstanding at end of year | 8,460 | 19,917 | $ 20,775 |
Unfunded commitments to related parties | $ 750 | $ 891 |
Loans Receivable - Mortgage Ban
Loans Receivable - Mortgage Banking Activities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Receivables [Abstract] | |||
Loans held for sale | $ 2,288 | $ 11,662 | |
One-to-four family residential | |||
One-to-four family residential loans: | |||
Originated | 144,066 | 178,169 | $ 164,974 |
Sold | 113,786 | 141,127 | 132,365 |
Gains on sales of loans, net | 3,412 | 3,723 | $ 3,150 |
Contractual amounts of commitments to sell and fund with off-balance sheet risk: | |||
Commitments to sell mortgage loans | 10,140 | 18,166 | |
Commitments to fund mortgage loans (at interest rates approximating market rates) for portfolio or for sale: | |||
Fixed rate | 10,894 | 19,301 | |
Variable or adjustable rate | 56 | 4,189 | |
Total commitments to fund mortgage loans | $ 10,950 | $ 23,490 |
Loans Receivable - SBA Loans (D
Loans Receivable - SBA Loans (Details) - SBA Loans - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
SBA Loans [Line Items] | |||
SBA loans serviced for others with participating interest, gross loan balance | $ 53,809 | $ 48,359 | |
SBA loans serviced for others with participating interest, participation balance owned by Bank | 12,394 | 11,218 | |
Servicing fee income and fees from SBA loans serviced for others | $ 467 | $ 460 | $ 392 |
Allowance for Loan Losses - Sum
Allowance for Loan Losses - Summary of Changes in Loan Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of changes in allowance for loan losses | |||||||||||
Balance at the beginning of the year | $ 31,083 | $ 29,746 | $ 31,083 | $ 29,746 | $ 27,729 | ||||||
Charge-offs | (4,838) | (6,085) | (3,482) | ||||||||
Recoveries of loans previously charged-off | 1,621 | 2,491 | 1,127 | ||||||||
Provision for loan losses | $ 1,338 | $ 884 | $ 1,131 | $ 867 | $ 1,177 | $ 1,495 | $ 1,120 | $ 1,139 | 4,220 | 4,931 | 4,372 |
Balance at the end of the year | $ 32,086 | $ 31,083 | $ 32,086 | $ 31,083 | $ 29,746 |
Allowance for Loan Losses - Act
Allowance for Loan Losses - Activity in Allowance for Losses Disaggregated on Basis of Impairment (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of allowance for loan losses on the basis of impairment method | |||||||||||
Balance at the beginning of the year | $ 31,083 | $ 29,746 | $ 31,083 | $ 29,746 | $ 27,729 | ||||||
Charge-offs | (4,838) | (6,085) | (3,482) | ||||||||
Recoveries | 1,621 | 2,491 | 1,127 | ||||||||
Provision for loan losses | $ 1,338 | $ 884 | $ 1,131 | 867 | $ 1,177 | $ 1,495 | $ 1,120 | 1,139 | 4,220 | 4,931 | 4,372 |
Balance at the end of the year | 32,086 | 31,083 | 32,086 | 31,083 | 29,746 | ||||||
Commercial business | |||||||||||
Schedule of allowance for loan losses on the basis of impairment method | |||||||||||
Balance at the beginning of the year | 22,382 | 22,064 | 22,382 | 22,064 | 20,186 | ||||||
Charge-offs | (2,438) | (4,153) | (1,676) | ||||||||
Recoveries | 947 | 1,844 | 476 | ||||||||
Provision for loan losses | 1,108 | 2,627 | 3,078 | ||||||||
Balance at the end of the year | 21,999 | 22,382 | 21,999 | 22,382 | 22,064 | ||||||
Commercial business | Commercial and industrial | |||||||||||
Schedule of allowance for loan losses on the basis of impairment method | |||||||||||
Balance at the beginning of the year | 10,968 | 9,972 | 10,968 | 9,972 | 10,553 | ||||||
Charge-offs | (859) | (3,265) | (1,488) | ||||||||
Recoveries | 792 | 1,844 | 476 | ||||||||
Provision for loan losses | (991) | 2,417 | 431 | ||||||||
Balance at the end of the year | 9,910 | 10,968 | 9,910 | 10,968 | 9,972 | ||||||
Commercial business | Owner-occupied commercial real estate | |||||||||||
Schedule of allowance for loan losses on the basis of impairment method | |||||||||||
Balance at the beginning of the year | 3,661 | 4,370 | 3,661 | 4,370 | 4,032 | ||||||
Charge-offs | (1,579) | (538) | 0 | ||||||||
Recoveries | 155 | 0 | 0 | ||||||||
Provision for loan losses | 1,755 | (171) | 338 | ||||||||
Balance at the end of the year | 3,992 | 3,661 | 3,992 | 3,661 | 4,370 | ||||||
Commercial business | Non-owner occupied commercial real estate | |||||||||||
Schedule of allowance for loan losses on the basis of impairment method | |||||||||||
Balance at the beginning of the year | 7,753 | 7,722 | 7,753 | 7,722 | 5,601 | ||||||
Charge-offs | 0 | (350) | (188) | ||||||||
Recoveries | 0 | 0 | 0 | ||||||||
Provision for loan losses | 344 | 381 | 2,309 | ||||||||
Balance at the end of the year | 8,097 | 7,753 | 8,097 | 7,753 | 7,722 | ||||||
One-to-four family residential | |||||||||||
Schedule of allowance for loan losses on the basis of impairment method | |||||||||||
Balance at the beginning of the year | 1,015 | 1,157 | 1,015 | 1,157 | 1,200 | ||||||
Charge-offs | (30) | 0 | 0 | ||||||||
Recoveries | 2 | 2 | 13 | ||||||||
Provision for loan losses | 69 | (144) | (56) | ||||||||
Balance at the end of the year | 1,056 | 1,015 | 1,056 | 1,015 | 1,157 | ||||||
Real estate construction and land development | |||||||||||
Schedule of allowance for loan losses on the basis of impairment method | |||||||||||
Balance at the beginning of the year | 2,156 | 1,871 | 2,156 | 1,871 | 2,758 | ||||||
Charge-offs | (556) | (154) | (106) | ||||||||
Recoveries | 202 | 83 | 100 | ||||||||
Provision for loan losses | 250 | 356 | (881) | ||||||||
Balance at the end of the year | 2,052 | 2,156 | 2,052 | 2,156 | 1,871 | ||||||
Real estate construction and land development | One-to-four family residential | |||||||||||
Schedule of allowance for loan losses on the basis of impairment method | |||||||||||
Balance at the beginning of the year | 797 | 1,058 | 797 | 1,058 | 1,786 | ||||||
Charge-offs | (556) | (100) | (106) | ||||||||
Recoveries | 202 | 83 | 100 | ||||||||
Provision for loan losses | 419 | (244) | (722) | ||||||||
Balance at the end of the year | 862 | 797 | 862 | 797 | 1,058 | ||||||
Real estate construction and land development | Five or more family residential and commercial properties | |||||||||||
Schedule of allowance for loan losses on the basis of impairment method | |||||||||||
Balance at the beginning of the year | 1,359 | 813 | 1,359 | 813 | 972 | ||||||
Charge-offs | 0 | (54) | 0 | ||||||||
Recoveries | 0 | 0 | 0 | ||||||||
Provision for loan losses | (169) | 600 | (159) | ||||||||
Balance at the end of the year | 1,190 | 1,359 | 1,190 | 1,359 | 813 | ||||||
Consumer | |||||||||||
Schedule of allowance for loan losses on the basis of impairment method | |||||||||||
Balance at the beginning of the year | 5,024 | 4,309 | 5,024 | 4,309 | 2,769 | ||||||
Charge-offs | (1,814) | (1,778) | (1,700) | ||||||||
Recoveries | 470 | 562 | 538 | ||||||||
Provision for loan losses | 2,401 | 1,931 | 2,702 | ||||||||
Balance at the end of the year | 6,081 | 5,024 | 6,081 | 5,024 | 4,309 | ||||||
Unallocated | |||||||||||
Schedule of allowance for loan losses on the basis of impairment method | |||||||||||
Balance at the beginning of the year | $ 506 | $ 345 | 506 | 345 | 816 | ||||||
Charge-offs | 0 | 0 | 0 | ||||||||
Recoveries | 0 | 0 | 0 | ||||||||
Provision for loan losses | 392 | 161 | (471) | ||||||||
Balance at the end of the year | $ 898 | $ 506 | $ 898 | $ 506 | $ 345 |
Allowance for Loan Losses - Rec
Allowance for Loan Losses - Recorded Investment Disaggregated on Basis of Impairment (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Allowance for Loan Losses Disaggregated: | ||||
Loans Individually Evaluated for Impairment | $ 3,355 | $ 2,734 | ||
Loans Collectively Evaluated for Impairment | 24,732 | 21,791 | ||
PCI Loans | 3,999 | 6,558 | ||
Total Allowance for Loan Losses | 32,086 | 31,083 | $ 29,746 | $ 27,729 |
Loan Receivables, Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 37,459 | 33,198 | ||
Loans Collectively Evaluated for Impairment | 2,767,650 | 2,540,751 | ||
PCI Loans | 40,603 | 64,448 | ||
Total Gross Loans Receivable | 2,845,712 | 2,638,397 | ||
Commercial business | ||||
Allowance for Loan Losses Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 3,169 | 2,507 | ||
Loans Collectively Evaluated for Impairment | 16,034 | 15,024 | ||
PCI Loans | 2,796 | 4,851 | ||
Total Allowance for Loan Losses | 21,999 | 22,382 | 22,064 | 20,186 |
Loan Receivables, Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 34,826 | 28,417 | ||
Loans Collectively Evaluated for Impairment | 2,191,545 | 1,999,621 | ||
PCI Loans | 27,769 | 48,650 | ||
Total Gross Loans Receivable | 2,254,140 | 2,076,688 | ||
Commercial business | Commercial and industrial | ||||
Allowance for Loan Losses Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 1,326 | 1,199 | ||
Loans Collectively Evaluated for Impairment | 7,558 | 8,048 | ||
PCI Loans | 1,026 | 1,721 | ||
Total Allowance for Loan Losses | 9,910 | 10,968 | 9,972 | 10,553 |
Loan Receivables, Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 11,999 | 12,375 | ||
Loans Collectively Evaluated for Impairment | 630,485 | 616,081 | ||
PCI Loans | 2,912 | 9,317 | ||
Total Gross Loans Receivable | 645,396 | 637,773 | ||
Commercial business | Owner-occupied commercial real estate | ||||
Allowance for Loan Losses Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 621 | 511 | ||
Loans Collectively Evaluated for Impairment | 2,557 | 1,834 | ||
PCI Loans | 814 | 1,316 | ||
Total Allowance for Loan Losses | 3,992 | 3,661 | 4,370 | 4,032 |
Loan Receivables, Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 6,808 | 4,724 | ||
Loans Collectively Evaluated for Impairment | 603,827 | 537,338 | ||
PCI Loans | 11,515 | 15,973 | ||
Total Gross Loans Receivable | 622,150 | 558,035 | ||
Commercial business | Non-owner occupied commercial real estate | ||||
Allowance for Loan Losses Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 1,222 | 797 | ||
Loans Collectively Evaluated for Impairment | 5,919 | 5,142 | ||
PCI Loans | 956 | 1,814 | ||
Total Allowance for Loan Losses | 8,097 | 7,753 | 7,722 | 5,601 |
Loan Receivables, Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 16,019 | 11,318 | ||
Loans Collectively Evaluated for Impairment | 957,233 | 846,202 | ||
PCI Loans | 13,342 | 23,360 | ||
Total Gross Loans Receivable | 986,594 | 880,880 | ||
One-to-four family residential | ||||
Allowance for Loan Losses Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 93 | 97 | ||
Loans Collectively Evaluated for Impairment | 798 | 643 | ||
PCI Loans | 165 | 275 | ||
Total Allowance for Loan Losses | 1,056 | 1,015 | 1,157 | 1,200 |
Loan Receivables, Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 299 | 321 | ||
Loans Collectively Evaluated for Impairment | 81,443 | 72,165 | ||
PCI Loans | 5,255 | 4,905 | ||
Total Gross Loans Receivable | 86,997 | 77,391 | ||
Real estate construction and land development | ||||
Allowance for Loan Losses Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 39 | 66 | ||
Loans Collectively Evaluated for Impairment | 1,699 | 1,706 | ||
PCI Loans | 314 | 384 | ||
Total Allowance for Loan Losses | 2,052 | 2,156 | 1,871 | 2,758 |
Loan Receivables, Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 1,892 | 4,150 | ||
Loans Collectively Evaluated for Impairment | 145,468 | 150,417 | ||
PCI Loans | 2,124 | 4,611 | ||
Total Gross Loans Receivable | 149,484 | 159,178 | ||
Real estate construction and land development | One-to-four family residential | ||||
Allowance for Loan Losses Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 2 | 6 | ||
Loans Collectively Evaluated for Impairment | 635 | 538 | ||
PCI Loans | 225 | 253 | ||
Total Allowance for Loan Losses | 862 | 797 | 1,058 | 1,786 |
Loan Receivables, Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 1,247 | 3,071 | ||
Loans Collectively Evaluated for Impairment | 50,649 | 45,220 | ||
PCI Loans | 89 | 2,123 | ||
Total Gross Loans Receivable | 51,985 | 50,414 | ||
Real estate construction and land development | Five or more family residential and commercial properties | ||||
Allowance for Loan Losses Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 37 | 60 | ||
Loans Collectively Evaluated for Impairment | 1,064 | 1,168 | ||
PCI Loans | 89 | 131 | ||
Total Allowance for Loan Losses | 1,190 | 1,359 | 813 | 972 |
Loan Receivables, Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 645 | 1,079 | ||
Loans Collectively Evaluated for Impairment | 94,819 | 105,197 | ||
PCI Loans | 2,035 | 2,488 | ||
Total Gross Loans Receivable | 97,499 | 108,764 | ||
Consumer | ||||
Allowance for Loan Losses Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 54 | 64 | ||
Loans Collectively Evaluated for Impairment | 5,303 | 3,912 | ||
PCI Loans | 724 | 1,048 | ||
Total Allowance for Loan Losses | 6,081 | 5,024 | 4,309 | 2,769 |
Loan Receivables, Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 442 | 310 | ||
Loans Collectively Evaluated for Impairment | 349,194 | 318,548 | ||
PCI Loans | 5,455 | 6,282 | ||
Total Gross Loans Receivable | 355,091 | 325,140 | ||
Unallocated | ||||
Allowance for Loan Losses Disaggregated: | ||||
Loans Individually Evaluated for Impairment | 0 | 0 | ||
Loans Collectively Evaluated for Impairment | 898 | 506 | ||
PCI Loans | 0 | 0 | ||
Total Allowance for Loan Losses | $ 898 | $ 506 | $ 345 | $ 816 |
FDIC Indemnification Asset - Te
FDIC Indemnification Asset - Textuals (Details) $ in Thousands | Aug. 04, 2015USD ($)acquisition | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) |
Banking and Thrift [Abstract] | ||||||
Number of FDIC-assisted acquisitions | acquisition | 3 | |||||
Consideration paid to FDIC for the termination of shared-loss agreements | $ 7,100 | |||||
Gain on termination of FDIC shared-loss agreements | $ 1,700 | $ 0 | $ 0 | $ 1,747 | ||
FDIC indemnification asset | $ 0 | $ 388 | $ 1,116 | |||
FDIC clawback liability | $ 9,300 |
FDIC Indemnification Asset - Ro
FDIC Indemnification Asset - Rollforward (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
FDIC Indemnification Asset [Roll Forward] | |
Balance at the beginning of the year | $ 1,116 |
Cash payments received or receivable from the FDIC | (231) |
FDIC share of additional estimated gains | (352) |
Net amortization | (145) |
Change due to termination of FDIC shared-loss agreements | (388) |
Balance at the end of the year | $ 0 |
Other Real Estate Owned - Chang
Other Real Estate Owned - Changes in Other Real Estate Owned (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes in other real estate owned | |||
Balance at the beginning of the year | $ 754 | $ 2,019 | $ 3,355 |
Additions | 32 | 1,431 | 2,845 |
Proceeds from dispositions | (930) | (2,486) | (3,555) |
Gain (loss) on sales, net | 144 | 173 | (97) |
Valuation adjustment | 0 | (383) | (529) |
Balance at the end of the year | $ 0 | $ 754 | $ 2,019 |
Other Real Estate Owned - Textu
Other Real Estate Owned - Textuals (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Mortgage Loans on Real Estate [Line Items] | ||||
Carrying amount of other real estate owned from foreclosure | $ 0 | $ 754,000 | $ 2,019,000 | $ 3,355,000 |
Mortgage loans secured by residential real estate properties | 660,000 | |||
One-to-four family residential | ||||
Mortgage Loans on Real Estate [Line Items] | ||||
Carrying amount of other real estate owned from foreclosure | $ 0 |
Premises and Equipment (Details
Premises and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||
Total premises and equipment | $ 93,361 | $ 93,832 | |
Accumulated depreciation | 33,036 | 29,921 | |
Premises and equipment, net | 60,325 | 63,911 | |
Depreciation | 3,900 | 3,900 | $ 4,000 |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Total premises and equipment | 21,483 | 22,677 | |
Buildings and building improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total premises and equipment | 50,984 | 52,432 | |
Furniture, fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total premises and equipment | $ 20,894 | $ 18,723 |
Goodwill and Other Intangible94
Goodwill and Other Intangible Assets - Textuals (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill additions | $ 0 | $ 0 | $ 0 |
Goodwill impairment charges | $ 0 | $ 0 | $ 0 |
Washington Banking | Core Deposits | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 10 years | ||
Valley Community Bancshares | Core Deposits | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 10 years | ||
Northwest Commercial Bank | Core Deposits | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 5 years | ||
Cowlitz Bank | Core Deposits | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 9 years |
Goodwill and Other Intangible95
Goodwill and Other Intangible Assets - Change in Other Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-lived Intangible Assets [Roll Forward] | |||
Balance at the beginning of the year | $ 7,374 | $ 8,789 | $ 10,889 |
Less: Amortization | 1,286 | 1,415 | 2,100 |
Balance at the end of the year | $ 6,088 | $ 7,374 | $ 8,789 |
Goodwill and Other Intangible96
Goodwill and Other Intangible Assets - Future Amortization Expense (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,018 | $ 1,122 |
2,019 | 1,043 |
2,020 | 989 |
2,021 | 938 |
2,022 | 887 |
Thereafter | 1,109 |
Intangible assets, net | $ 6,088 |
Deposits - Components of Deposi
Deposits - Components of Deposits (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Amount | ||
Noninterest demand deposits | $ 944,791 | $ 882,091 |
Interest bearing demand deposits | 1,051,752 | 963,821 |
Money market accounts | 499,618 | 523,875 |
Savings accounts | 498,501 | 502,460 |
Total non-maturity deposits | 2,994,662 | 2,872,247 |
Certificate of deposit accounts | 398,398 | 357,401 |
Total deposits | $ 3,393,060 | $ 3,229,648 |
Percent | ||
Noninterest demand deposits (as a percent) | 27.80% | 27.30% |
Interest bearing demand deposits (as a percent) | 31.10% | 29.80% |
Money market accounts (as a percent) | 14.70% | 16.20% |
Savings accounts (as a percent) | 14.70% | 15.60% |
Total non-maturity deposits (as a percent) | 88.30% | 88.90% |
Certificate of deposit accounts (as a percent) | 11.70% | 11.10% |
Total deposits (as a percent) | 100.00% | 100.00% |
Deposits - Textuals (Details)
Deposits - Textuals (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deposits [Abstract] | ||
Accrued interest payable on deposits | $ 124 | $ 186 |
Certificates of deposit equal to or in excess of $250,000 | $ 113,700 | $ 54,800 |
Deposits - Schedule of Interest
Deposits - Schedule of Interest Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Deposits [Abstract] | |||
Interest bearing demand deposits | $ 1,812 | $ 1,569 | $ 1,476 |
Money market accounts | 682 | 749 | 922 |
Savings accounts | 1,311 | 756 | 445 |
Certificate of deposit accounts | 2,244 | 1,936 | 2,386 |
Total interest expense | $ 6,049 | $ 5,010 | $ 5,229 |
Deposits - Schedule of Maturiti
Deposits - Schedule of Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deposits [Abstract] | ||
2,018 | $ 258,657 | |
2,019 | 81,407 | |
2,020 | 22,401 | |
2,021 | 10,708 | |
2,022 | 25,169 | |
Thereafter | 56 | |
Certificates of deposit | $ 398,398 | $ 357,401 |
Junior Subordinated Debentures
Junior Subordinated Debentures (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2007 | May 01, 2014 | |
Debt Instrument [Line Items] | ||||
Issued amount | $ 25,000 | |||
Debt term | 30 years | |||
Adjustable rate of trust preferred securities | 3.25% | |||
Junior subordinated debentures | $ 20,009 | $ 19,717 | ||
Junior Subordinated Debentures | ||||
Debt Instrument [Line Items] | ||||
Weighted average rate | 5.11% | 4.50% | ||
LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 1.56% | |||
Washington Banking | ||||
Debt Instrument [Line Items] | ||||
Assumed trust preferred securities and junior subordinated debentures, fair value | $ 18,900 |
Repurchase Agreements (Details)
Repurchase Agreements (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Assets Sold under Agreements to Repurchase [Line Items] | ||
Maturity period | 1 day | |
Repurchase agreement obligations | $ 31,821 | $ 22,104 |
U.S. Treasury and U.S. Government-sponsored agencies | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreement obligations | 0 | 2,944 |
Residential mortgage-backed securities | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreement obligations | 11,239 | 5,191 |
Commercial mortgage-backed securities | ||
Assets Sold under Agreements to Repurchase [Line Items] | ||
Repurchase agreement obligations | $ 20,582 | $ 13,969 |
Other Borrowings - FHLB Advance
Other Borrowings - FHLB Advances (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | ||
Credit facility with the FHLB | $ 881,100 | |
Advances outstanding | 92,500 | $ 79,600 |
FHLB Advances: | ||
Average balance during the year | 105,646 | 13,349 |
Maximum month-end balance during the year | $ 137,450 | $ 79,600 |
Weighted average rate during the year | 1.16% | 0.55% |
Weighted average rate at end of year | 1.56% | 0.81% |
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 ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | ||
Advance line maintained to purchase federal funds | $ 90,000,000 | |
Federal funds purchased | $ 0 | $ 0 |
Other Borrowings - Credit Facil
Other Borrowings - Credit Facilities (Details) - Federal Reserve Bank Advances - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Line of Credit Facility [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 82,500,000 | |
Borrowings outstanding | $ 0 | $ 0 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($)hour | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Percentage of employer contribution fully vested | 100.00% | ||
Carrying value of obligation related to deferred compensation plan | $ 2,800,000 | $ 2,200,000 | |
Accrued expenses and other liabilities | Washington Banking | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Carrying value of obligation | $ 250,000 | 1,100,000 | |
401(k) Plan and Trust Salary Saving Plan | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Minimum service days required for eligibility under the plan | 30 days | ||
Employer matching contribution, percent of employee's gross pay | 50.00% | ||
Maximum annual contributions per employee, percent | 3.00% | ||
Defined contribution plan, employer matching contribution amount | $ 1,100,000 | 1,000,000 | $ 954,000 |
401(k) Plan and Trust | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Minimum hours of service required for eligibility under the plan | hour | 1,000 | ||
Minimum age required for eligibility under the plan | 18 years | ||
Employer profit sharing contributions | $ 0 | 0 | 0 |
Deferred Compensation Plan | |||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||
Compensation expense | 652,000 | 540,000 | 570,000 |
Company's contributions | $ 453,000 | $ 521,000 | $ 296,000 |
Commitments and Contingencies -
Commitments and Contingencies - Lease Commitments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rental expense | $ 3.8 | $ 4.4 | $ 4.6 |
Commitments and Contingencie108
Commitments and Contingencies - Future Minimum Rental Payments (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 3,074 |
2,019 | 2,681 |
2,020 | 2,385 |
2,021 | 1,640 |
2,022 | 929 |
Thereafter | 2,241 |
Future minimum annual rental commitments | $ 12,950 |
Commitments and Contingencie109
Commitments and Contingencies - Outstanding Commitments to Extend Credit (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Other Commitments [Line Items] | ||
Total outstanding commitments | $ 713,202 | $ 626,013 |
Commercial business | ||
Other Commitments [Line Items] | ||
Total outstanding commitments | 383,630 | 380,483 |
Commercial business | Commercial and industrial | ||
Other Commitments [Line Items] | ||
Total outstanding commitments | 363,272 | 368,308 |
Commercial business | Owner-occupied commercial real estate | ||
Other Commitments [Line Items] | ||
Total outstanding commitments | 6,815 | 3,443 |
Commercial business | Non-owner occupied commercial real estate | ||
Other Commitments [Line Items] | ||
Total outstanding commitments | 13,543 | 8,732 |
One-to-four family residential | ||
Other Commitments [Line Items] | ||
Total outstanding commitments | 0 | 0 |
Real estate construction and land development | ||
Other Commitments [Line Items] | ||
Total outstanding commitments | 124,947 | 101,125 |
Real estate construction and land development | One-to-four family residential | ||
Other Commitments [Line Items] | ||
Total outstanding commitments | 38,160 | 23,004 |
Real estate construction and land development | Five or more family residential and commercial properties | ||
Other Commitments [Line Items] | ||
Total outstanding commitments | 86,787 | 78,121 |
Consumer | ||
Other Commitments [Line Items] | ||
Total outstanding commitments | $ 204,625 | $ 144,405 |
Commitments and Contingencie110
Commitments and Contingencies - Variable Interests (Details) | 12 Months Ended | |||||
Dec. 31, 2017USD ($)tranchinvestment | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2034USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Variable Interest Entity [Line Items] | ||||||
Number of equity investments in LIHTCs | investment | 2 | |||||
Investments in unconsolidated LIHTCs | $ 54,000,000 | $ 23,300,000 | ||||
Tax benefits | 2,900,000 | 640,000 | $ 273,000 | |||
Commitments | 39,800,000 | 18,300,000 | ||||
Impairment losses on LIHTC investments | 0 | 0 | 0 | |||
Carrying value of NMTC | 25,800,000 | 26,800,000 | ||||
Investment income | 735,000 | $ 740,000 | $ 562,000 | |||
Subsidiaries | Investment Tax Credit Carryforward | ||||||
Variable Interest Entity [Line Items] | ||||||
Qualified Equity Investments | $ 25,000,000 | |||||
Number of tranches | tranch | 3 | |||||
Percentage of tranche required to fund to claim the entire tax credit | 85.00% | |||||
Subsidiaries | Investment Tax Credit Carryforward | 2020 | ||||||
Variable Interest Entity [Line Items] | ||||||
Gross tax credits related to the Company's CDEs | $ 9,800,000 | |||||
Forecast | ||||||
Variable Interest Entity [Line Items] | ||||||
Qualified Affordable Housing Project Investments, future commitment | $ 5,200,000 | $ 26,000,000 | $ 8,600,000 |
Derivative Financial Instrum111
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Prepaid expenses and other assets | ||
Derivative [Line Items] | ||
Estimated Fair Value - Interest rate swaps with customer | $ 3,400 | $ 2,800 |
Accrued expenses and other liabilities | ||
Derivative [Line Items] | ||
Estimated Fair Value - Interest rate swap with third party | 3,400 | 2,800 |
Non-hedging interest rate derivatives | Interest rate swaps | ||
Derivative [Line Items] | ||
Notional Amounts - Interest rate swaps with customer | 146,537 | 102,709 |
Notional Amounts - Interest rate swap with third party | 146,537 | 102,709 |
Estimated Fair Value - Interest rate swaps with customer | (882) | (1,099) |
Estimated Fair Value - Interest rate swap with third party | $ 882 | $ 1,099 |
Stockholders' Equity - Reconcil
Stockholders' Equity - Reconciliation of Weighted Average Shares (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net income: | |||||||||||
Net income | $ 10,023 | $ 10,624 | $ 11,828 | $ 9,316 | $ 9,893 | $ 11,039 | $ 8,895 | $ 9,091 | $ 41,791 | $ 38,918 | $ 37,489 |
Less: Dividends and undistributed earnings allocated to participating securities | (293) | (358) | (328) | ||||||||
Net income allocated to common shareholders | $ 41,498 | $ 38,560 | $ 37,161 | ||||||||
Basic: | |||||||||||
Weighted average common shares outstanding (in shares) | 29,937,400 | 29,963,365 | 30,057,558 | ||||||||
Less: Restricted stock awards (in shares) | (179,581) | (285,063) | (267,943) | ||||||||
Total basic weighted average common shares outstanding (in shares) | 29,757,819 | 29,678,302 | 29,789,615 | ||||||||
Diluted: | |||||||||||
Basic weighted average common shares outstanding (in shares) | 29,757,819 | 29,678,302 | 29,789,615 | ||||||||
Incremental shares from stock options (in shares) | 91,512 | 13,851 | 22,725 | ||||||||
Total diluted weighted average common shares outstanding (in shares) | 29,849,331 | 29,692,153 | 29,812,340 |
Stockholders' Equity - Textuals
Stockholders' Equity - Textuals (Details) - $ / shares | Oct. 23, 2014 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 |
Class of Stock [Line Items] | |||||
Anti-dilutive securities excluded from computation (in shares) | 0 | 436 | 4,320 | ||
Shares Related to Withholding Taxes on the Vesting of Restricted Stock | |||||
Class of Stock [Line Items] | |||||
Repurchased shares | 29,429 | 29,512 | 22,300 | ||
Average price of shares repurchased (in usd per share) | $ 25.01 | $ 17.82 | $ 17.09 | ||
Eleventh Plan | |||||
Class of Stock [Line Items] | |||||
Outstanding share percent | 5.00% | ||||
Outstanding common shares in the plan | 1,513,000 | ||||
Repurchased shares | 0 | 138,000 | 441,966 | 579,966 | |
Average price of shares repurchased (in usd per share) | $ 0 | $ 17.16 | $ 16.64 | $ 16.76 |
Stockholders' Equity - Dividend
Stockholders' Equity - Dividends (Details) - $ / shares | Oct. 25, 2017 | Jul. 25, 2017 | Apr. 25, 2017 | Jan. 25, 2017 | Oct. 26, 2016 | Jul. 20, 2016 | Apr. 20, 2016 | Jan. 27, 2016 | Oct. 21, 2015 | Jul. 22, 2015 | Apr. 22, 2015 | Jan. 28, 2015 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Subsequent Event [Line Items] | |||||||||||||||||||||||
Declared | Oct. 25, 2017 | Jul. 25, 2017 | Apr. 25, 2017 | Jan. 25, 2017 | Oct. 26, 2016 | Jul. 20, 2016 | Apr. 20, 2016 | Jan. 27, 2016 | Oct. 21, 2015 | Jul. 22, 2015 | Apr. 22, 2015 | Jan. 28, 2015 | |||||||||||
Cash Dividend per Share (in usd per share) | $ 0.13 | $ 0.13 | $ 0.13 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.10 | $ 0.23 | $ 0.13 | $ 0.13 | $ 0.12 | $ 0.37 | $ 0.12 | $ 0.12 | $ 0.11 | $ 0.61 | $ 0.72 | $ 0.53 |
Record Date | Nov. 8, 2017 | Aug. 10, 2017 | May 10, 2017 | Feb. 9, 2017 | Nov. 8, 2016 | Aug. 4, 2016 | May 5, 2016 | Feb. 10, 2016 | Nov. 4, 2015 | Aug. 6, 2015 | May 7, 2015 | Feb. 10, 2015 | |||||||||||
Paid Date | Nov. 22, 2017 | Aug. 24, 2017 | May 24, 2017 | Feb. 23, 2017 | Nov. 22, 2016 | Aug. 18, 2016 | May 19, 2016 | Feb. 24, 2016 | Nov. 18, 2015 | Aug. 20, 2015 | May 21, 2015 | Feb. 24, 2015 | |||||||||||
Special Dividend | |||||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||||
Declared | Oct. 25, 2017 | Oct. 26, 2016 | Oct. 21, 2015 | ||||||||||||||||||||
Cash Dividend per Share (in usd per share) | $ 0.10 | $ 0.25 | $ 0.10 | ||||||||||||||||||||
Record Date | Nov. 8, 2017 | Nov. 8, 2016 | Nov. 4, 2015 | ||||||||||||||||||||
Paid Date | Nov. 22, 2017 | Nov. 22, 2016 | Nov. 18, 2015 |
Stockholders' Equity - Shares R
Stockholders' Equity - Shares Repurchased (Details) - Eleventh Plan - $ / shares | 12 Months Ended | 36 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | |
Equity, Class of Treasury Stock [Line Items] | ||||
Repurchased shares | 0 | 138,000 | 441,966 | 579,966 |
Stock repurchase average share price (in usd per share) | $ 0 | $ 17.16 | $ 16.64 | $ 16.76 |
Accumulated Other Comprehens116
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance of AOCI at the beginning of the year | $ 481,763 | $ 469,970 | $ 454,506 |
Transfer of investment securities from held to maturity to available for sale, net of tax of $0, $0 and $334, respectively | 0 | 0 | 618 |
Other comprehensive income (loss) | 1,526 | (5,165) | (819) |
ASU 2018-02 Implementation | 0 | ||
Balance of AOCI at the end of the year | 508,305 | 481,763 | 469,970 |
Changes in fair value of available for sale securities | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance of AOCI at the beginning of the year | 2,559 | 3,567 | |
Other comprehensive income (loss) before reclassification (1) | (559) | ||
Amounts reclassified from AOCI for gain on sale of investment securities included in net income (1) | (1,067) | ||
Transfer of investment securities from held to maturity to available for sale, net of tax of $0, $0 and $334, respectively | 618 | ||
Other comprehensive income (loss) | (1,008) | ||
Balance of AOCI at the end of the year | 2,559 | ||
Accretion of other-than- temporary impairment on held to maturity securities | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance of AOCI at the beginning of the year | 0 | (189) | |
Other comprehensive income (loss) before reclassification (1) | 108 | ||
Amounts reclassified from AOCI for gain on sale of investment securities included in net income (1) | 81 | ||
Transfer of investment securities from held to maturity to available for sale, net of tax of $0, $0 and $334, respectively | 0 | ||
Other comprehensive income (loss) | 189 | ||
Balance of AOCI at the end of the year | 0 | ||
AOCI attributable to parent | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance of AOCI at the beginning of the year | (2,606) | 2,559 | 3,378 |
Other comprehensive income (loss) before reclassification (1) | 1,530 | (4,311) | (451) |
Amounts reclassified from AOCI for gain on sale of investment securities included in net income (1) | (4) | (854) | (986) |
Transfer of investment securities from held to maturity to available for sale, net of tax of $0, $0 and $334, respectively | 618 | ||
Other comprehensive income (loss) | 1,526 | (5,165) | (819) |
ASU 2018-02 Implementation | (218) | 0 | |
Balance of AOCI at the end of the year | $ (1,298) | $ (2,606) | $ 2,559 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Measurement on Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Investment securities available for sale | $ 810,530 | $ 794,645 |
Recurring | ||
Assets | ||
Investment securities available for sale | 810,530 | 794,645 |
Derivative assets - interest rate swaps | 3,418 | 2,804 |
Liabilities | ||
Derivative liabilities - interest rate swaps | 3,418 | 2,804 |
Recurring | U.S. Treasury and U.S. Government-sponsored agencies | ||
Assets | ||
Investment securities available for sale | 13,442 | 1,569 |
Recurring | Municipal securities | ||
Assets | ||
Investment securities available for sale | 250,015 | 237,256 |
Recurring | Residential mortgage-backed securities | ||
Assets | ||
Investment securities available for sale | 280,211 | 309,176 |
Recurring | Commercial mortgage-backed securities | ||
Assets | ||
Investment securities available for sale | 217,079 | 208,318 |
Recurring | Collateralized loan obligations | ||
Assets | ||
Investment securities available for sale | 4,580 | 10,478 |
Recurring | Corporate obligations | ||
Assets | ||
Investment securities available for sale | 16,770 | 16,706 |
Recurring | Other securities | ||
Assets | ||
Investment securities available for sale | 28,433 | 11,142 |
Recurring | Level 1 | ||
Assets | ||
Investment securities available for sale | 146 | 123 |
Derivative assets - interest rate swaps | 0 | 0 |
Liabilities | ||
Derivative liabilities - interest rate swaps | 0 | 0 |
Recurring | Level 1 | U.S. Treasury and U.S. Government-sponsored agencies | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Municipal securities | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Residential mortgage-backed securities | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Commercial mortgage-backed securities | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Collateralized loan obligations | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Corporate obligations | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 1 | Other securities | ||
Assets | ||
Investment securities available for sale | 146 | 123 |
Recurring | Level 2 | ||
Assets | ||
Investment securities available for sale | 810,384 | 794,522 |
Derivative assets - interest rate swaps | 3,418 | 2,804 |
Liabilities | ||
Derivative liabilities - interest rate swaps | 3,418 | 2,804 |
Recurring | Level 2 | U.S. Treasury and U.S. Government-sponsored agencies | ||
Assets | ||
Investment securities available for sale | 13,442 | 1,569 |
Recurring | Level 2 | Municipal securities | ||
Assets | ||
Investment securities available for sale | 250,015 | 237,256 |
Recurring | Level 2 | Residential mortgage-backed securities | ||
Assets | ||
Investment securities available for sale | 280,211 | 309,176 |
Recurring | Level 2 | Commercial mortgage-backed securities | ||
Assets | ||
Investment securities available for sale | 217,079 | 208,318 |
Recurring | Level 2 | Collateralized loan obligations | ||
Assets | ||
Investment securities available for sale | 4,580 | 10,478 |
Recurring | Level 2 | Corporate obligations | ||
Assets | ||
Investment securities available for sale | 16,770 | 16,706 |
Recurring | Level 2 | Other securities | ||
Assets | ||
Investment securities available for sale | 28,287 | 11,019 |
Recurring | Level 3 | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Derivative assets - interest rate swaps | 0 | 0 |
Liabilities | ||
Derivative liabilities - interest rate swaps | 0 | 0 |
Recurring | Level 3 | U.S. Treasury and U.S. Government-sponsored agencies | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Municipal securities | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Residential mortgage-backed securities | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Commercial mortgage-backed securities | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Collateralized loan obligations | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Corporate obligations | ||
Assets | ||
Investment securities available for sale | 0 | 0 |
Recurring | Level 3 | Other securities | ||
Assets | ||
Investment securities available for sale | $ 0 | $ 0 |
Fair Value Measurements - Fa118
Fair Value Measurements - Fair Value Measurement on Nonrecurring Basis (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Level 1 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | $ 0 | $ 0 |
Level 2 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | 0 |
Level 3 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 2,810,401 | 2,675,811 |
Nonrecurring | Impaired Loans | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Basis | 976 | 1,829 |
Impaired loans | 307 | 1,634 |
Net Losses (Gains) Recorded in Earnings | (558) | (157) |
Nonrecurring | Impaired Loans | Level 1 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | 0 |
Nonrecurring | Impaired Loans | Level 2 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | 0 |
Nonrecurring | Impaired Loans | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 307 | 1,634 |
Nonrecurring | Impaired Loans | Commercial and industrial | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Basis | 205 | |
Impaired loans | 200 | |
Net Losses (Gains) Recorded in Earnings | 5 | |
Nonrecurring | Impaired Loans | Commercial and industrial | Level 1 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Commercial and industrial | Level 2 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Commercial and industrial | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 200 | |
Nonrecurring | Impaired Loans | Owner-occupied commercial real estate | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Basis | 780 | |
Impaired loans | 603 | |
Net Losses (Gains) Recorded in Earnings | (145) | |
Nonrecurring | Impaired Loans | Owner-occupied commercial real estate | Level 1 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Owner-occupied commercial real estate | Level 2 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Owner-occupied commercial real estate | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 603 | |
Nonrecurring | Impaired Loans | One-to-four family residential | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Basis | 828 | |
Impaired loans | 822 | |
Net Losses (Gains) Recorded in Earnings | (23) | |
Nonrecurring | Impaired Loans | One-to-four family residential | Level 1 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | One-to-four family residential | Level 2 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | One-to-four family residential | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 822 | |
Nonrecurring | Impaired Loans | Commercial business | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Basis | 985 | |
Impaired loans | 803 | |
Net Losses (Gains) Recorded in Earnings | (140) | |
Nonrecurring | Impaired Loans | Commercial business | Level 1 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Commercial business | Level 2 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Commercial business | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 803 | |
Nonrecurring | Impaired Loans | Real estate construction and land development | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Basis | 828 | |
Impaired loans | 822 | |
Net Losses (Gains) Recorded in Earnings | (23) | |
Nonrecurring | Impaired Loans | Real estate construction and land development | Level 1 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Real estate construction and land development | Level 2 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Real estate construction and land development | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 822 | |
Nonrecurring | Impaired Loans | Real estate construction and land development | One-to-four family residential | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Basis | 976 | |
Impaired loans | 307 | |
Net Losses (Gains) Recorded in Earnings | (558) | |
Nonrecurring | Impaired Loans | Real estate construction and land development | One-to-four family residential | Level 1 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Real estate construction and land development | One-to-four family residential | Level 2 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Real estate construction and land development | One-to-four family residential | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | $ 307 | |
Nonrecurring | Impaired Loans | Consumer | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Basis | 16 | |
Impaired loans | 9 | |
Net Losses (Gains) Recorded in Earnings | 6 | |
Nonrecurring | Impaired Loans | Consumer | Level 1 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Consumer | Level 2 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | 0 | |
Nonrecurring | Impaired Loans | Consumer | Level 3 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Impaired loans | $ 9 |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information, Level 3 (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Level 3 | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Fair Value | $ 2,810,401 | $ 2,675,811 |
Impaired Loans | Nonrecurring | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Fair Value | 307 | 1,634 |
Impaired Loans | Level 3 | Nonrecurring | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Fair Value | $ 307 | $ 1,634 |
Valuation Technique(s) | Market approach | Market approach |
Unobservable Input(s) | Adjustment for differences between the comparable sales | Adjustment for differences between the comparable sales |
Impaired Loans | Level 3 | Nonrecurring | Minimum | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Range of Inputs; Weighted Average | (91.50%) | (23.80%) |
Impaired Loans | Level 3 | Nonrecurring | Maximum | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Range of Inputs; Weighted Average | (14.40%) | 63.90% |
Impaired Loans | Level 3 | Nonrecurring | Weighted Average | ||
Fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Range of Inputs; Weighted Average | (44.00%) | 20.40% |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Value and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Level 1 | ||
Financial Assets: | ||
Cash and cash equivalents | $ 103,015 | $ 103,745 |
Investment securities available for sale | 146 | 123 |
Loans held for sale | 0 | 0 |
Total loans receivable, net | 0 | 0 |
Accrued interest receivable | 23 | 3 |
Derivative assets - interest rate swaps | 0 | 0 |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 2,994,662 | 2,872,247 |
Certificate of deposit accounts | 0 | 0 |
Federal Home Loan Bank advances | 0 | 0 |
Securities sold under agreement to repurchase | 31,821 | 22,104 |
Junior subordinated debentures | 0 | 0 |
Accrued interest payable | 45 | 44 |
Derivative liabilities - interest rate swaps | 0 | 0 |
Level 2 | ||
Financial Assets: | ||
Cash and cash equivalents | 0 | 0 |
Investment securities available for sale | 810,384 | 794,522 |
Loans held for sale | 2,364 | 11,988 |
Total loans receivable, net | 0 | 0 |
Accrued interest receivable | 3,772 | 3,472 |
Derivative assets - interest rate swaps | 3,418 | 2,804 |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 0 | 0 |
Certificate of deposit accounts | 397,039 | 357,536 |
Federal Home Loan Bank advances | 92,500 | 79,600 |
Securities sold under agreement to repurchase | 0 | 0 |
Junior subordinated debentures | 0 | 0 |
Accrued interest payable | 79 | 142 |
Derivative liabilities - interest rate swaps | 3,418 | 2,804 |
Level 3 | ||
Financial Assets: | ||
Cash and cash equivalents | 0 | 0 |
Investment securities available for sale | 0 | 0 |
Loans held for sale | 0 | 0 |
Total loans receivable, net | 2,810,401 | 2,675,811 |
Accrued interest receivable | 8,449 | 7,450 |
Derivative assets - interest rate swaps | 0 | 0 |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 0 | 0 |
Certificate of deposit accounts | 0 | 0 |
Federal Home Loan Bank advances | 0 | 0 |
Securities sold under agreement to repurchase | 0 | 0 |
Junior subordinated debentures | 18,500 | 15,000 |
Accrued interest payable | 38 | 29 |
Derivative liabilities - interest rate swaps | 0 | 0 |
Carrying Value | ||
Financial Assets: | ||
Cash and cash equivalents | 103,015 | 103,745 |
Investment securities available for sale | 810,530 | 794,645 |
Federal Home Loan Bank stock | 8,347 | 7,564 |
Loans held for sale | 2,288 | 11,662 |
Total loans receivable, net | 2,816,985 | 2,609,666 |
Accrued interest receivable | 12,244 | 10,925 |
Derivative assets - interest rate swaps | 3,418 | 2,804 |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 2,994,662 | 2,872,247 |
Certificate of deposit accounts | 398,398 | 357,401 |
Federal Home Loan Bank advances | 92,500 | 79,600 |
Securities sold under agreement to repurchase | 31,821 | 22,104 |
Junior subordinated debentures | 20,009 | 19,717 |
Accrued interest payable | 162 | 215 |
Derivative liabilities - interest rate swaps | 3,418 | 2,804 |
Fair Value | ||
Financial Assets: | ||
Cash and cash equivalents | 103,015 | 103,745 |
Investment securities available for sale | 810,530 | 794,645 |
Loans held for sale | 2,364 | 11,988 |
Total loans receivable, net | 2,810,401 | 2,675,811 |
Accrued interest receivable | 12,244 | 10,925 |
Derivative assets - interest rate swaps | 3,418 | 2,804 |
Financial Liabilities: | ||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts | 2,994,662 | 2,872,247 |
Certificate of deposit accounts | 397,039 | 357,536 |
Federal Home Loan Bank advances | 92,500 | 79,600 |
Securities sold under agreement to repurchase | 31,821 | 22,104 |
Junior subordinated debentures | 18,500 | 15,000 |
Accrued interest payable | 162 | 215 |
Derivative liabilities - interest rate swaps | $ 3,418 | $ 2,804 |
Stock-Based Compensation - Text
Stock-Based Compensation - Textuals (Details) - shares | Jul. 24, 2014 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares remain available for future issuances under stock-based compensation plans | 1,072,809 | |
the Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized for issuance | 1,500,000 | |
Employee Stock Option | Option 1 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Expiration period | 5 years | |
Employee Stock Option | Option 2 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
Expiration period | 10 years | |
Restricted Stock Awards | Award 1 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
Restricted Stock Awards | Award 2 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Awards, Textuals (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Proceeds from exercise of stock options | $ 164,000 | $ 540,000 | $ 751,000 |
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | 0 | 0 | 0 |
Tax benefit | 0 | 0 | 0 |
Intrinsic value of options exercised | 161,000 | 177,000 | 299,000 |
Proceeds from exercise of stock options | $ 164,000 | $ 540,000 | $ 751,000 |
Stock-Based Compensation - S123
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Shares | |||
Outstanding at beginning of period (in shares) | 37,495 | 79,408 | 156,407 |
Exercised (in shares) | (12,662) | (37,713) | (61,529) |
Forfeited or expired (in shares) | (1,602) | (4,200) | (15,470) |
Outstanding at end of period (in shares) | 23,231 | 37,495 | 79,408 |
Vested and expected to vest at end of period (in shares) | 23,231 | ||
Exercisable at end of period (in shares) | 23,231 | ||
Weighted-Average Exercise Price | |||
Outstanding at beginning of period (in usd per share) | $ 13.77 | $ 14.19 | $ 13.59 |
Exercised (in usd per share) | 12.97 | 14.31 | 12.15 |
Forfeited or expired (in usd per share) | 13.76 | 16.80 | 16.27 |
Outstanding at end of period (in usd per share) | 14.21 | $ 13.77 | $ 14.19 |
Vested and expected to vest at end of period (in usd per share) | 14.21 | ||
Exercisable at end of period (in usd per share) | $ 14.21 | ||
Weighted-Average Remaining Contractual Term, Outstanding | 2 years 1 month 20 days | ||
Weighted-Average Remaining Contractual Term, Vested and expected to vest | 2 years 1 month 20 days | ||
Weighted-Average Remaining Contractual Term, Exercisable | 2 years 1 month 20 days | ||
Aggregate Intrinsic Value, Outstanding | $ 385 | ||
Aggregate Intrinsic Value, Vested and expected to vest | 385 | ||
Aggregate Intrinsic Value, Exercisable | $ 385 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Awards, Textuals (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock awards issued, net of forfeitures | $ 2,900 | $ 2,000 | $ 1,600 |
Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | 1,400 | 1,800 | 1,600 |
Tax benefit | 488 | $ 644 | $ 546 |
Total unrecognized compensation expense | $ 1,500 | ||
Weighted average, recognition period | 1 year 7 months 6 days |
Stock-Based Compensation - R125
Stock-Based Compensation - Restricted Stock Award Activity (Details) - Restricted Stock Awards - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Shares | |||
Nonvested at beginning of period (in shares) | 261,296 | 264,521 | 238,669 |
Granted (in shares) | 0 | 121,039 | 121,320 |
Vested (in shares) | (113,479) | (112,516) | (92,486) |
Forfeited (in shares) | (10,418) | (11,748) | (2,982) |
Nonvested at end of period (in shares) | 137,399 | 261,296 | 264,521 |
Weighted-Average Grant Date Fair Value | |||
Nonvested at beginning of period (in usd per share) | $ 16.80 | $ 15.92 | $ 15.20 |
Granted (in usd per share) | 0 | 17.60 | 16.72 |
Vested (in usd per share) | 16.55 | 15.62 | 15.12 |
Forfeited (in usd per share) | 16.80 | 16.62 | 15.73 |
Nonvested at end of period (in usd per share) | $ 17 | $ 16.80 | $ 15.92 |
Stock-Based Compensation - R126
Stock-Based Compensation - Restricted Stock Units, Textuals (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
RSU | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Performance period | 3 years |
Compensation expense | $ 712 |
Tax benefit | 249 |
Total unrecognized compensation expense | $ 1,600 |
Weighted average, recognition period | 2 years 7 days |
PRSU | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Performance period | 3 years |
PRSU | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Actual payout percentage | 0.00% |
PRSU | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Actual payout percentage | 150.00% |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair Value Assumptions (Details) - PRSU | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares issued | shares | 6,089 |
Expected Term in Years | 2 years 10 months 6 days |
Expected Dividend Yield (as a percent) | 0.00% |
Weighted-Average Fair Value (in usd per share) | $ / shares | $ 24.39 |
Correlation Coefficient Rate | 75.93% |
Volatility Rate | 21.80% |
Weighted Average | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted-Average Risk Free Interest Rate | 1.40% |
Peer Company | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Volatility Rate, Minimum | 17.80% |
Volatility Rate, Maximum | 63.10% |
Peer Company | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Correlation Coefficient Rate | 8.24% |
Peer Company | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Correlation Coefficient Rate | 89.79% |
Stock-Based Compensation - RSU
Stock-Based Compensation - RSU Activity (Details) - RSU | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Shares | |
Nonvested at beginning of period (in shares) | shares | 0 |
Granted (in shares) | shares | 92,356 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | (1,812) |
Nonvested at end of period (in shares) | shares | 90,544 |
Weighted-Average Grant Date Fair Value | |
Nonvested at beginning of period (in usd per share) | $ / shares | $ 0 |
Granted (in usd per share) | $ / shares | 25.31 |
Vested (in usd per share) | $ / shares | 0 |
Forfeited (in usd per share) | $ / shares | 25.35 |
Nonvested at end of period (in usd per share) | $ / shares | $ 25.31 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||||||||||
Current tax expense | $ 12,171 | $ 6,885 | $ 9,760 | ||||||||
Deferred tax expense | 6,185 | 6,918 | 4,058 | ||||||||
Income tax expense | $ 7,270 | $ 3,922 | $ 4,075 | $ 3,089 | $ 3,362 | $ 4,121 | $ 3,169 | $ 3,151 | $ 18,356 | $ 13,803 | $ 13,818 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Effective Income Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||||||||||
Federal statutory tax rate (as a percent) | 35.00% | 35.00% | 35.00% | ||||||||
Income tax expense at Federal statutory rate | $ 21,051 | $ 18,452 | $ 17,957 | ||||||||
Tax-exempt instruments | (3,212) | (3,198) | (2,482) | ||||||||
Non-deductible acquisition costs | 210 | 0 | 0 | ||||||||
Federal tax credits and other benefits | (1,510) | (931) | (880) | ||||||||
Effects of BOLI | (531) | (511) | (474) | ||||||||
Revaluation of net deferred tax assets | 2,568 | 0 | 0 | ||||||||
Tax resolutions | 0 | 0 | (300) | ||||||||
Other, net | (220) | (9) | (3) | ||||||||
Income tax expense | $ 7,270 | $ 3,922 | $ 4,075 | $ 3,089 | $ 3,362 | $ 4,121 | $ 3,169 | $ 3,151 | 18,356 | 13,803 | 13,818 |
Amortization Method Qualified Affordable Housing Project Investments, Amortization | $ 2,200 | $ 523 | $ 209 |
Income Taxes - Deferred Income
Income Taxes - Deferred Income Tax Asset (Liability) (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Allowance for loan losses | $ 3,330 | $ 4,739 |
Accrued compensation | 1,779 | 2,685 |
Stock compensation | 660 | 910 |
Net unrealized losses charged to other comprehensive income on securities | 347 | 1,388 |
Market discount on purchased loans | 3,908 | 10,506 |
Foregone interest on nonaccrual loans | 471 | 1,536 |
Net operating loss carryforward acquired from NCB | 270 | 483 |
Other deferred tax assets | 763 | 1,483 |
Total deferred tax assets | 11,528 | 23,730 |
Deferred tax liabilities: | ||
Deferred loan fees, net | (2,518) | (3,736) |
Premises and equipment | (1,091) | (1,660) |
FHLB stock | (557) | (926) |
Goodwill and other intangible assets | (304) | (740) |
Federal tax credits | (1,107) | (1,314) |
Junior subordinated debentures | (1,215) | (2,122) |
Other deferred tax liabilities | (847) | (1,223) |
Total deferred tax liabilities | (7,639) | (11,721) |
Deferred tax asset, net | $ 3,889 | $ 12,009 |
Income Taxes - Textuals (Detail
Income Taxes - Textuals (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Net operating loss carryforward | $ 1,300,000 | $ 1,400,000 | |
Valuation allowance | 0 | 0 | |
Interest and penalties accrued | 0 | 0 | |
Interest expense and penalties | 0 | $ 0 | $ 0 |
Taxable temporary difference | 2,800,000 | ||
Deferred tax liability not recognized | $ 980,000 |
Regulatory Capital Requireme133
Regulatory Capital Requirements (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||
Common Equity Tier One Capital Required for Capital Adequacy | $ 154,522 | $ 142,688 |
Common Equity Tier One Capital Required for Capital Adequacy to Average Assets | 4.50% | 4.50% |
Common Equity Tier One Capital | $ 386,689 | $ 362,350 |
Common Equity Tier One Capital to Average Assets | 11.30% | 11.40% |
Tier One Leverage Capital Required for Capital Adequacy | $ 159,494 | $ 148,144 |
Tier One Leverage Capital Required for Capital Adequacy to Average Assets | 4.00% | 4.00% |
Tier One Leverage Capital | $ 406,687 | $ 381,989 |
Tier One Leverage Capital to Average Assets | 10.20% | 10.30% |
Tier One Risk Based Capital Required for Capital Adequacy | $ 206,029 | $ 190,250 |
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets | 6.00% | 6.00% |
Tier One Risk Based Capital | $ 406,687 | $ 381,989 |
Tier One Risk Based Capital to Risk Weighted Assets | 11.80% | 12.00% |
Capital Required for Capital Adequacy | $ 274,706 | $ 253,667 |
Capital Required for Capital Adequacy to Risk Weighted Assets | 8.00% | 8.00% |
Capital | $ 439,044 | $ 413,320 |
Capital to Risk Weighted Assets | 12.80% | 13.00% |
Capital conservation buffer, percentage | 4.71% | |
Heritage Bank | ||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||
Common Equity Tier One Capital Required for Capital Adequacy | $ 154,400 | $ 142,573 |
Common Equity Tier One Capital Required for Capital Adequacy to Average Assets | 4.50% | 4.50% |
Common Equity Tier One Capital Required to be Well-Capitalized | $ 223,023 | $ 205,938 |
Common Equity Tier One Capital Required to be Well Capitalized to Average Assets | 6.50% | 6.50% |
Common Equity Tier One Capital | $ 391,092 | $ 369,915 |
Common Equity Tier One Capital to Average Assets | 11.40% | 11.70% |
Tier One Leverage Capital Required for Capital Adequacy | $ 159,300 | $ 148,024 |
Tier One Leverage Capital Required for Capital Adequacy to Average Assets | 4.00% | 4.00% |
Tier One Leverage Capital Required to be Well Capitalized | $ 199,125 | $ 185,030 |
Tier One Leverage Capital Required to be Well Capitalized to Average Assets | 5.00% | 5.00% |
Tier One Leverage Capital | $ 391,092 | $ 369,915 |
Tier One Leverage Capital to Average Assets | 9.80% | 10.00% |
Tier One Risk Based Capital Required for Capital Adequacy | $ 205,867 | $ 190,097 |
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets | 6.00% | 6.00% |
Tier One Risk Based Capital Required to be Well Capitalized | $ 274,490 | $ 253,462 |
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets | 8.00% | 8.00% |
Tier One Risk Based Capital | $ 391,092 | $ 369,915 |
Tier One Risk Based Capital to Risk Weighted Assets | 11.40% | 11.70% |
Capital Required for Capital Adequacy | $ 274,490 | $ 253,462 |
Capital Required for Capital Adequacy to Risk Weighted Assets | 8.00% | 8.00% |
Capital Required to be Well Capitalized | $ 343,112 | $ 316,828 |
Capital Required to be Well Capitalized to Risk Weighted Assets | 10.00% | 10.00% |
Capital | $ 423,348 | $ 401,168 |
Capital to Risk Weighted Assets | 12.30% | 12.70% |
Capital conservation buffer, percentage | 4.26% |
Heritage Financial Corporati134
Heritage Financial Corporation (Parent Company Only) - Condensed Statements of Financial Condition (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
ASSETS | ||||
Total assets | $ 4,113,270 | $ 3,878,981 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
Junior subordinated debentures | 20,009 | 19,717 | ||
Other liabilities | 67,575 | 46,149 | ||
Total stockholders’ equity | 508,305 | 481,763 | $ 469,970 | $ 454,506 |
Total liabilities and stockholders’ equity | 4,113,270 | 3,878,981 | ||
Parent Company | ||||
ASSETS | ||||
Cash and interest earning deposits | 11,904 | 10,568 | $ 6,722 | $ 8,835 |
Investment in subsidiary bank | 512,655 | 489,388 | ||
Other assets | 4,696 | 2,601 | ||
Total assets | 529,255 | 502,557 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
Junior subordinated debentures | 20,009 | 19,717 | ||
Other liabilities | 941 | 1,077 | ||
Total stockholders’ equity | 508,305 | 481,763 | ||
Total liabilities and stockholders’ equity | $ 529,255 | $ 502,557 |
Heritage Financial Corporati135
Heritage Financial Corporation (Parent Company Only) - Condensed Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Income Statements, Captions [Line Items] | |||||||||||
Total interest income | $ 39,606 | $ 37,324 | $ 36,087 | $ 34,863 | $ 34,571 | $ 35,114 | $ 34,592 | $ 34,235 | $ 147,880 | $ 138,512 | $ 135,739 |
Junior subordinated debentures | 1,014 | 880 | 827 | ||||||||
Total interest expense | 2,389 | 2,333 | 1,907 | 1,717 | 1,516 | 1,508 | 1,507 | 1,475 | 8,346 | 6,006 | 6,120 |
Net interest income | 37,217 | 34,991 | 34,180 | 33,146 | 33,055 | 33,606 | 33,085 | 32,760 | 139,534 | 132,506 | 129,619 |
Total noninterest income | 9,002 | 8,394 | 10,663 | 7,349 | 8,186 | 9,867 | 6,576 | 6,990 | 35,408 | 31,619 | 32,268 |
Professional services | 4,777 | 3,606 | 3,536 | ||||||||
Other expense | 9,903 | 9,567 | 10,395 | ||||||||
Total noninterest expense | 27,588 | 27,955 | 27,809 | 27,223 | 26,809 | 26,818 | 26,477 | 26,369 | 110,575 | 106,473 | 106,208 |
Income before income taxes | 17,293 | 14,546 | 15,903 | 12,405 | 13,255 | 15,160 | 12,064 | 12,242 | 60,147 | 52,721 | 51,307 |
Income tax expense | 7,270 | 3,922 | 4,075 | 3,089 | 3,362 | 4,121 | 3,169 | 3,151 | 18,356 | 13,803 | 13,818 |
Net income | $ 10,023 | $ 10,624 | $ 11,828 | $ 9,316 | $ 9,893 | $ 11,039 | $ 8,895 | $ 9,091 | 41,791 | 38,918 | 37,489 |
Parent Company | |||||||||||
Condensed Income Statements, Captions [Line Items] | |||||||||||
Interest and dividends on interest earning deposits and other assets | 44 | 34 | 28 | ||||||||
Total interest income | 44 | 34 | 28 | ||||||||
Junior subordinated debentures | 1,014 | 880 | 827 | ||||||||
Total interest expense | 1,014 | 880 | 827 | ||||||||
Net interest income | (970) | (846) | (799) | ||||||||
Dividends from subsidiary bank | 23,000 | 30,000 | 22,000 | ||||||||
Equity in undistributed income of subsidiary bank | 21,755 | 11,848 | 18,131 | ||||||||
Total noninterest income | 44,755 | 41,848 | 40,131 | ||||||||
Professional services | 768 | 385 | 263 | ||||||||
Other expense | 3,726 | 3,437 | 3,120 | ||||||||
Total noninterest expense | 4,494 | 3,822 | 3,383 | ||||||||
Income before income taxes | 39,291 | 37,180 | 35,949 | ||||||||
Income tax expense | (2,500) | (1,738) | (1,540) | ||||||||
Net income | $ 41,791 | $ 38,918 | $ 37,489 |
Heritage Financial Corporati136
Heritage Financial Corporation (Parent Company Only) - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||||||||||
Net income | $ 10,023 | $ 10,624 | $ 11,828 | $ 9,316 | $ 9,893 | $ 11,039 | $ 8,895 | $ 9,091 | $ 41,791 | $ 38,918 | $ 37,489 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Stock-based compensation expense | 2,103 | 1,840 | 1,555 | ||||||||
Net cash provided by operating activities | 73,513 | 53,980 | 51,397 | ||||||||
Cash flows from financing activities: | |||||||||||
Common stock cash dividends paid | (18,305) | (21,569) | (15,916) | ||||||||
Proceeds from exercise of stock options | 164 | 540 | 751 | ||||||||
Net excess tax benefit from exercise of stock options and vesting of restricted stock | 0 | 123 | 140 | ||||||||
Repurchase of common stock | (737) | (2,894) | (7,736) | ||||||||
Net cash provided by financing activities | 167,151 | 176,051 | 170,228 | ||||||||
Net (decrease) increase in cash and cash equivalents | (730) | (22,895) | 5,004 | ||||||||
Parent Company | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | 41,791 | 38,918 | 37,489 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Equity in undistributed income of subsidiary bank | (21,755) | (11,848) | (18,131) | ||||||||
Net excess tax benefit from exercise of stock options and vesting of restricted stock | 0 | (123) | (140) | ||||||||
Stock-based compensation expense | 2,103 | 1,840 | 1,555 | ||||||||
Net change in other assets and liabilities | (1,925) | (1,141) | (125) | ||||||||
Net cash provided by operating activities | 20,214 | 27,646 | 20,648 | ||||||||
Cash flows from financing activities: | |||||||||||
Common stock cash dividends paid | (18,305) | (21,569) | (15,916) | ||||||||
Proceeds from exercise of stock options | 164 | 540 | 751 | ||||||||
Net excess tax benefit from exercise of stock options and vesting of restricted stock | 0 | 123 | 140 | ||||||||
Repurchase of common stock | (737) | (2,894) | (7,736) | ||||||||
Net cash provided by financing activities | (18,878) | (23,800) | (22,761) | ||||||||
Net (decrease) increase in cash and cash equivalents | 1,336 | 3,846 | (2,113) | ||||||||
Cash and cash equivalents at beginning of year | $ 10,568 | $ 6,722 | 10,568 | 6,722 | 8,835 | ||||||
Cash and cash equivalents at end of year | $ 11,904 | $ 10,568 | $ 11,904 | $ 10,568 | $ 6,722 |
Selected Quarterly Financial137
Selected Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 25, 2017 | Jul. 25, 2017 | Apr. 25, 2017 | Jan. 25, 2017 | Oct. 26, 2016 | Jul. 20, 2016 | Apr. 20, 2016 | Jan. 27, 2016 | Oct. 21, 2015 | Jul. 22, 2015 | Apr. 22, 2015 | Jan. 28, 2015 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||
Interest income | $ 39,606 | $ 37,324 | $ 36,087 | $ 34,863 | $ 34,571 | $ 35,114 | $ 34,592 | $ 34,235 | $ 147,880 | $ 138,512 | $ 135,739 | ||||||||||||
Interest expense | 2,389 | 2,333 | 1,907 | 1,717 | 1,516 | 1,508 | 1,507 | 1,475 | 8,346 | 6,006 | 6,120 | ||||||||||||
Net interest income | 37,217 | 34,991 | 34,180 | 33,146 | 33,055 | 33,606 | 33,085 | 32,760 | 139,534 | 132,506 | 129,619 | ||||||||||||
Provision for loan losses | 1,338 | 884 | 1,131 | 867 | 1,177 | 1,495 | 1,120 | 1,139 | 4,220 | 4,931 | 4,372 | ||||||||||||
Net interest income after provision for loan losses | 35,879 | 34,107 | 33,049 | 32,279 | 31,878 | 32,111 | 31,965 | 31,621 | 135,314 | 127,575 | 125,247 | ||||||||||||
Noninterest income | 9,002 | 8,394 | 10,663 | 7,349 | 8,186 | 9,867 | 6,576 | 6,990 | 35,408 | 31,619 | 32,268 | ||||||||||||
Noninterest expense | 27,588 | 27,955 | 27,809 | 27,223 | 26,809 | 26,818 | 26,477 | 26,369 | 110,575 | 106,473 | 106,208 | ||||||||||||
Income before income taxes | 17,293 | 14,546 | 15,903 | 12,405 | 13,255 | 15,160 | 12,064 | 12,242 | 60,147 | 52,721 | 51,307 | ||||||||||||
Income tax expense | 7,270 | 3,922 | 4,075 | 3,089 | 3,362 | 4,121 | 3,169 | 3,151 | 18,356 | 13,803 | 13,818 | ||||||||||||
Net income | $ 10,023 | $ 10,624 | $ 11,828 | $ 9,316 | $ 9,893 | $ 11,039 | $ 8,895 | $ 9,091 | $ 41,791 | $ 38,918 | $ 37,489 | ||||||||||||
Basic earnings per common share (in usd per share) | $ 0.33 | $ 0.35 | $ 0.40 | $ 0.31 | $ 0.33 | $ 0.37 | $ 0.30 | $ 0.30 | $ 1.39 | $ 1.30 | $ 1.25 | ||||||||||||
Diluted earnings per common share (in usd per share) | 0.33 | 0.35 | 0.40 | 0.31 | 0.33 | 0.37 | 0.30 | 0.30 | 1.39 | 1.30 | 1.25 | ||||||||||||
Cash dividends declared on common stock (in usd per share) | $ 0.13 | $ 0.13 | $ 0.13 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.10 | $ 0.23 | $ 0.13 | $ 0.13 | $ 0.12 | $ 0.37 | $ 0.12 | $ 0.12 | $ 0.11 | $ 0.61 | $ 0.72 | $ 0.53 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 16, 2018 | Jun. 30, 2016 |
Business and occupation tax audit | ||
Subsequent Event [Line Items] | ||
Total amount of preliminary findings with back interest | $ 1.6 | |
Subsequent event | Puget Sound Merger | ||
Subsequent Event [Line Items] | ||
Number of Heritage common stock for each share of Puget Sound stock (in shares) | 1.1688 | |
Number of shares issued | 4,112,347 | |
Closing date price (in usd per share) | $ 31.80 | |
Total consideration paid | $ 130.8 |