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Washington
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91-1857900
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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201 Fifth Avenue SW, Olympia, WA
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98501
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock
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NASDAQ Stock Market LLC
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Large accelerated filer
ý
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Emerging growth company
¨
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Page
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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ITEM 5.
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ITEM 6.
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ITEM 7.
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ITEM 7A.
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ITEM 8.
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NOTE 1.
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NOTE 2.
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NOTE 3.
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NOTE 4.
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NOTE 5.
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NOTE 6.
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NOTE 7.
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NOTE 8.
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NOTE 9.
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NOTE 10.
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NOTE 11.
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NOTE 12.
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NOTE 13.
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NOTE 14.
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NOTE 15.
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NOTE 16.
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NOTE 17.
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NOTE 18.
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NOTE 19.
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NOTE 20.
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NOTE 21.
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NOTE 22.
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NOTE 23.
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NOTE 24.
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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ITEM 10.
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ITEM 11.
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ITEM 12.
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ITEM 13.
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ITEM 14.
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ITEM 15.
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ITEM 16.
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•
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our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel from our recent mergers with Puget Sound Bancorp, Inc., and Premier Commercial Bancorp, or may in the future acquire, into our operations and our ability to realize related revenue synergies and cost savings within expected time frames or at all, and any goodwill charges related thereto and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, which might be greater than expected;
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•
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the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets, which may lead to increased losses and non-performing assets in our loan portfolio, and may result in our allowance for loan losses not being adequate to cover actual losses, and require us to increase our allowance for loan losses and provision for loan losses;
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•
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changes in general economic conditions, either nationally or in our market areas;
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•
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changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources;
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•
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risks related to acquiring assets in or entering markets in which we have not previously operated and may not be familiar;
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•
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fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas;
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•
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results of examinations of us by the bank regulators, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for loan losses, write-down assets, change our regulatory capital position, affect our ability to borrow funds or maintain or increase deposits, or impose additional requirements on us, any of which could affect our ability to continue our growth through mergers, acquisitions or similar transactions and adversely affect our liquidity and earnings;
|
•
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legislative or regulatory changes that adversely affect our business including but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act"), the Expected Credit Loss model required by the Financial Accounting Standards Board through Accounting Standard Update 2016-13 beginning with the Form 10-Q as of the first quarter of 2020, and implementing regulations, changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules as a result of Basel III;
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•
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our ability to control operating costs and expenses;
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•
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increases in premiums for deposit insurance;
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•
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the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation;
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•
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staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges;
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•
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disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions;
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•
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our ability to retain key members of our senior management team;
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•
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costs and effects of litigation, including settlements and judgments;
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•
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our ability to implement our growth strategies;
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•
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increased competitive pressures among financial service companies;
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•
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changes in consumer spending, borrowing and savings habits;
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•
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the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions;
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•
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adverse changes in the securities markets;
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•
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inability of key third-party providers to perform their obligations to us;
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•
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changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board (“FASB"), including additional guidance and
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•
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other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described elsewhere in this Form 10-K.
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Name
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Age as of
December 31,
2018
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Position
|
|
Has Served the
Company or Heritage Bank Since
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Brian L. Vance
|
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64
|
|
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Chief Executive Officer of Heritage
|
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1996
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Jeffrey J. Deuel
|
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60
|
|
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President of Heritage; President and Chief Executive Officer of Heritage Bank
|
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2010
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Donald J. Hinson
|
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57
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|
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Executive Vice President and Chief Financial Officer of Heritage and Heritage Bank
|
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2005
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David A. Spurling
|
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65
|
|
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Executive Vice President and Chief Credit Officer of Heritage and Heritage Bank
|
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2001
|
Bryan McDonald
|
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47
|
|
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Executive Vice President and Chief Operating Officer of Heritage and Heritage Bank
|
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2014
|
•
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we may be exposed to potential asset quality issues or unknown or contingent liabilities of the banks, businesses, assets and liabilities we acquire. If these issues or liabilities exceed our estimates, our results of operations and financial condition may be materially negatively affected;
|
•
|
higher than expected deposit attrition;
|
•
|
potential diversion of our management's time and attention;
|
•
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prices at which acquisitions are made can fluctuate with market conditions. We have experienced times during which acquisitions could not be made in specific markets at prices we considered acceptable and expect that we may continue to experience this condition in the future;
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•
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the acquisition of other entities generally requires integration of systems, procedures and personnel of the acquired entity into our company to make the transaction economically successful. This integration process is complicated and time consuming and can also be disruptive to the customers of the acquired business. If the integration process is not conducted successfully and with minimal effect on the acquired business and its customers, we may not realize the anticipated economic benefits of an acquisition within the expected time frame, and we may lose customers or employees of the acquired business. We may also experience greater than anticipated customer losses even if the integration process is successful. These risks may be present in our Puget Sound Merger and Premier Merger that were completed during the first and third quarters of 2018, respectively;
|
•
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to finance an acquisition, we may borrow funds, thereby increasing our leverage and diminishing our liquidity, or raise additional capital, which could dilute the interests of our existing shareholders;
|
•
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from 2006 through 2018, we completed eight acquisitions or mergers, including one acquisition in 2006, two acquisitions during 2010, two acquisitions during 2013, one merger in 2014 and two acquisitions in 2018 that enhanced our rate of growth. We may not be able to continue to sustain our past rate of growth or to grow at all in the future;
|
•
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we expect our net income will increase following our acquisitions; however, we also expect our general and administrative expenses and consequently our efficiency ratios will also increase. Ultimately, we would expect our efficiency ratio to improve; however, if we are not successful in our integration process, this may not occur, and our acquisitions or branching activities may not be accretive to earnings in the short or long-term; and
|
•
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to the extent our costs of an acquisition exceed the fair value of the net assets acquired, the acquisition will generate goodwill. As discussed below under “-
If the goodwill we have recorded in connection with acquisitions becomes impaired, our earnings and capital could be reduced
,” we are required to assess our goodwill for impairment at least annually, and any goodwill impairment charge could have a material adverse effect on our results of operations and financial condition.
|
•
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the cash flow of the borrower, guarantors and/or the project being financed;
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•
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the changes and uncertainties as to the future value of the collateral, in the case of a collateralized loan;
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•
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the character and creditworthiness of a particular borrower or guarantor;
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•
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changes in economic and industry conditions; and
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•
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the duration of the loan.
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•
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our general reserve, based on our historical default and loss experience;
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•
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our specific reserve, based on our evaluation of impaired loans and their underlying collateral or discounted cash flows; and
|
•
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current macroeconomic factors, regulatory requirements and management’s expectation of future events.
|
•
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loan delinquencies, problem assets and foreclosures may increase;
|
•
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we may increase our allowance for loan losses;
|
•
|
the sale of foreclosed assets may be slow;
|
•
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our provision for loan losses may increase;
|
•
|
demand for our products and services may decline, possibly resulting in a decrease in our total loans;
|
•
|
collateral for loans made may decline further in value, exposing us to increased risk of loss on existing loans;
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•
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the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and
|
•
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the amount of our deposits may decrease and the composition of our deposits may be adversely affected.
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Occupancy Type
|
|||||
County
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State
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Number of Branches
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Owned
|
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Leased
|
|||
Clark
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WA
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2
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|
1
|
|
|
1
|
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Cowlitz
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WA
|
|
2
|
|
|
2
|
|
|
—
|
|
Island
(1)
|
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WA
|
|
7
|
|
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6
|
|
|
1
|
|
Kittitas
(1)
|
|
WA
|
|
1
|
|
|
1
|
|
|
—
|
|
King
|
|
WA
|
|
8
|
|
|
3
|
|
|
5
|
|
Mason
|
|
WA
|
|
1
|
|
|
1
|
|
|
—
|
|
Multnomah
|
|
OR
|
|
2
|
|
|
—
|
|
|
2
|
|
Pierce
|
|
WA
|
|
13
|
|
|
8
|
|
|
5
|
|
San Juan
|
|
WA
|
|
1
|
|
|
—
|
|
|
1
|
|
Skagit
(1)
|
|
WA
|
|
3
|
|
|
3
|
|
|
—
|
|
Snohomish
|
|
WA
|
|
8
|
|
|
6
|
|
|
2
|
|
Thurston
(1)
|
|
WA
|
|
4
|
|
|
3
|
|
|
1
|
|
Washington
|
|
OR
|
|
5
|
|
|
1
|
|
|
4
|
|
Whatcom
|
|
WA
|
|
3
|
|
|
3
|
|
|
—
|
|
Yakima
|
|
WA
|
|
4
|
|
|
4
|
|
|
—
|
|
Total
|
|
|
|
64
|
|
|
42
|
|
|
22
|
|
(1)
|
One Island County branch, one Skagit County branch, one Thurston County branch and the one branch in Kittitas County have land leases, which are not included in the leased section above as the building is owned.
|
Declared
|
|
Cash
Dividend per Share
|
|
Record Date
|
|
Paid
|
|
|
January 25, 2017
|
|
$0.12
|
|
February 9, 2017
|
|
February 23, 2017
|
|
|
April 25, 2017
|
|
$0.13
|
|
May 10, 2017
|
|
May 24, 2017
|
|
|
July 25, 2017
|
|
$0.13
|
|
August 10, 2017
|
|
August 24, 2017
|
|
|
October 25, 2017
|
|
$0.13
|
|
November 8, 2017
|
|
November 22, 2017
|
|
|
October 25, 2017
|
|
$0.10
|
|
November 8, 2017
|
|
November 22, 2017
|
|
*
|
January 24, 2018
|
|
$0.15
|
|
February 7, 2018
|
|
February 21, 2018
|
|
|
April 25, 2018
|
|
$0.15
|
|
May 10, 2018
|
|
May 24, 2018
|
|
|
July 24, 2018
|
|
$0.15
|
|
August 9, 2018
|
|
August 23, 2018
|
|
|
October 24, 2018
|
|
$0.17
|
|
November 7, 2018
|
|
November 21, 2018
|
|
|
October 24, 2018
|
|
$0.10
|
|
November 7, 2018
|
|
November 21, 2018
|
|
*
|
January 23, 2019
|
|
$0.18
|
|
February 7, 2019
|
|
February 21, 2019
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Repurchased shares to pay withholding taxes
(1)
|
53,256
|
|
|
29,429
|
|
|
29,512
|
|
|||
Stock repurchase to pay withholding taxes average share price
|
$
|
31.99
|
|
|
$
|
25.01
|
|
|
$
|
17.82
|
|
(1)
|
During the year ended December 31, 2018, the Company repurchased 26,741 shares related to the withholding taxes due on the accelerated vesting of the restricted stock units of Puget Sound which were converted to Heritage common stock shares with a share price of $31.80 under the terms of the Puget Sound Merger.
|
Period
|
|
Total Number of
Shares
Purchased
(1)
|
|
Average Price
Paid Per Share
(1)
|
|
Cumulative Total Number of Shares Purchased as
Part of Publicly
Announced Plans or Programs
|
|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans or
Programs
|
|||||
October 1, 2018— October 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
7,893,389
|
|
|
935,034
|
|
November 1, 2018—November 30, 2018
|
|
—
|
|
|
—
|
|
|
7,893,389
|
|
|
935,034
|
|
|
December 1, 2018—December 31, 2018
|
|
68
|
|
|
31.79
|
|
|
7,893,389
|
|
|
935,034
|
|
|
Total
|
|
68
|
|
|
$
|
31.79
|
|
|
|
|
|
(1)
|
All of the common shares repurchased by the Company between October 1,
2018
and
December 31, 2018
, were shares of restricted stock that represented the cancellation of stock to pay withholding taxes.
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||
Index
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||
Heritage Financial Corporation
|
|
$
|
100.00
|
|
|
$
|
105.74
|
|
|
$
|
116.98
|
|
|
$
|
166.45
|
|
|
$
|
203.56
|
|
|
$
|
200.82
|
|
NASDAQ Composite Index
|
|
100.00
|
|
|
114.75
|
|
|
122.74
|
|
|
133.62
|
|
|
173.22
|
|
|
168.30
|
|
||||||
SNL U.S. Bank NASDAQ Index
|
|
100.00
|
|
|
103.57
|
|
|
111.80
|
|
|
155.02
|
|
|
163.20
|
|
|
137.56
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||||||
Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
|
$
|
199,359
|
|
|
$
|
147,709
|
|
|
$
|
138,512
|
|
|
$
|
135,739
|
|
|
$
|
121,106
|
|
Interest expense
|
|
12,413
|
|
|
8,346
|
|
|
6,006
|
|
|
6,120
|
|
|
5,681
|
|
|||||
Net interest income
|
|
186,946
|
|
|
139,363
|
|
|
132,506
|
|
|
129,619
|
|
|
115,425
|
|
|||||
Provision for loan losses
|
|
5,129
|
|
|
4,220
|
|
|
4,931
|
|
|
4,372
|
|
|
4,594
|
|
|||||
Noninterest income
|
|
31,665
|
|
|
35,579
|
|
|
31,619
|
|
|
32,268
|
|
|
16,467
|
|
|||||
Noninterest expense
|
|
149,395
|
|
|
110,575
|
|
|
106,473
|
|
|
106,208
|
|
|
99,379
|
|
|||||
Income tax expense
(1)
|
|
11,030
|
|
|
18,356
|
|
|
13,803
|
|
|
13,818
|
|
|
6,905
|
|
|||||
Net income
|
|
53,057
|
|
|
41,791
|
|
|
38,918
|
|
|
37,489
|
|
|
21,014
|
|
|||||
Earnings per common share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
1.49
|
|
|
$
|
1.39
|
|
|
$
|
1.30
|
|
|
$
|
1.25
|
|
|
$
|
0.82
|
|
Diluted
|
|
1.49
|
|
|
1.39
|
|
|
1.30
|
|
|
1.25
|
|
|
0.82
|
|
|||||
Dividend payout ratio to common shareholders
(2)
|
|
48.3
|
%
|
|
43.9
|
%
|
|
55.4
|
%
|
|
42.4
|
%
|
|
61.0
|
%
|
|||||
Performance Ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net interest spread
(3)
|
|
4.15
|
%
|
|
3.83
|
%
|
|
3.89
|
%
|
|
4.04
|
%
|
|
4.45
|
%
|
|||||
Net interest margin
(4)
|
|
4.29
|
|
|
3.93
|
|
|
3.96
|
|
|
4.11
|
|
|
4.53
|
|
|||||
Efficiency ratio
(5)
|
|
68.34
|
|
|
63.21
|
|
|
64.87
|
|
|
65.61
|
|
|
75.35
|
|
|||||
Noninterest expense to average assets
|
|
3.00
|
|
|
2.78
|
|
|
2.84
|
|
|
3.01
|
|
|
3.49
|
|
|||||
Return on average assets
|
|
1.07
|
|
|
1.05
|
|
|
1.04
|
|
|
1.06
|
|
|
0.74
|
|
|||||
Return on average common equity
|
|
7.72
|
|
|
8.36
|
|
|
8.01
|
|
|
8.08
|
|
|
5.61
|
|
(1)
|
The Tax Cuts and Jobs Act enacted December 22, 2017 decreased the federal corporate income tax rate from 35% to 21% beginning January 1, 2018 and impacted the comparability of our results. The results for the year ended December 31, 2017 included a $2.6 million increase to the income tax expense as a result of the revaluation of our deferred tax assets and liabilities to account for the tax rate change.
|
(2)
|
Dividend payout ratio is declared dividends per common share divided by diluted earnings per common share.
|
(3)
|
Net interest spread is the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities.
|
(4)
|
Net interest margin is net interest income divided by average interest earning assets.
|
(5)
|
The efficiency ratio is noninterest expense divided by the sum of net interest income and noninterest income.
|
|
|
December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
|
$
|
5,316,927
|
|
|
$
|
4,113,270
|
|
|
$
|
3,878,981
|
|
|
$
|
3,650,792
|
|
|
$
|
3,457,750
|
|
Total loans receivable, net
|
|
3,619,118
|
|
|
2,816,985
|
|
|
2,609,666
|
|
|
2,372,296
|
|
|
2,223,348
|
|
|||||
Investment securities
|
|
976,095
|
|
|
810,530
|
|
|
794,645
|
|
|
811,869
|
|
|
778,660
|
|
|||||
Goodwill and other intangible assets
|
|
261,553
|
|
|
125,117
|
|
|
126,403
|
|
|
127,818
|
|
|
129,918
|
|
|||||
Deposits
|
|
4,432,402
|
|
|
3,393,060
|
|
|
3,229,648
|
|
|
3,108,287
|
|
|
2,906,331
|
|
|||||
Federal Home Loan Bank advances
|
|
—
|
|
|
92,500
|
|
|
79,600
|
|
|
—
|
|
|
—
|
|
|||||
Junior subordinated debentures
|
|
20,302
|
|
|
20,009
|
|
|
19,717
|
|
|
19,424
|
|
|
19,082
|
|
|||||
Securities sold under agreement to repurchase
|
|
31,487
|
|
|
31,821
|
|
|
22,104
|
|
|
23,214
|
|
|
32,181
|
|
|||||
Stockholders’ equity
|
|
760,723
|
|
|
508,305
|
|
|
481,763
|
|
|
469,970
|
|
|
454,506
|
|
|||||
Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per common share
|
|
$
|
20.63
|
|
|
$
|
16.98
|
|
|
$
|
16.08
|
|
|
$
|
15.68
|
|
|
$
|
15.02
|
|
Stockholders' equity to assets ratio
|
|
14.3
|
%
|
|
12.4
|
%
|
|
12.4
|
%
|
|
12.9
|
%
|
|
13.1
|
%
|
|||||
Net loans to deposits
(1)
|
|
82.4
|
%
|
|
84.0
|
%
|
|
81.8
|
%
|
|
77.3
|
%
|
|
77.5
|
%
|
|||||
Capital Ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total risk-based capital ratio
|
|
12.9
|
%
|
|
12.8
|
%
|
|
13.0
|
%
|
|
13.7
|
%
|
|
15.1
|
%
|
|||||
Tier 1 risk-based capital ratio
|
|
12.1
|
|
|
11.8
|
|
|
12.0
|
|
|
12.7
|
|
|
13.9
|
|
|||||
Leverage ratio
|
|
10.5
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
10.2
|
|
|||||
Common equity Tier 1 capital to risk-weighted assets
|
|
11.7
|
|
|
11.3
|
|
|
11.4
|
|
|
12.00
|
|
|
N/A
|
|
|||||
Asset Quality Ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Nonperforming loans to loans receivable, net
|
|
0.37
|
%
|
|
0.38
|
%
|
|
0.41
|
%
|
|
0.40
|
%
|
|
0.51
|
%
|
|||||
Allowance for loan losses to loans receivable, net
|
|
0.96
|
|
|
1.13
|
|
|
1.18
|
|
|
1.24
|
|
|
1.23
|
|
|||||
Allowance for loan losses to nonperforming loans
|
|
255.73
|
|
|
299.79
|
|
|
284.93
|
|
|
307.67
|
|
|
239.62
|
|
|||||
Nonperforming assets to total assets
|
|
0.30
|
|
|
0.26
|
|
|
0.30
|
|
|
0.32
|
|
|
0.43
|
|
|||||
Net charge-off on loans to average loans receivable, net
|
|
0.06
|
|
|
0.12
|
|
|
0.14
|
|
|
0.10
|
|
|
0.30
|
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Number of banking offices
|
|
64
|
|
|
59
|
|
|
63
|
|
|
67
|
|
|
66
|
|
|||||
Number of full-time equivalent employees
|
|
859
|
|
|
735
|
|
|
760
|
|
|
717
|
|
|
748
|
|
|||||
Deposits per branch
|
|
69,256
|
|
|
57,509
|
|
|
51,264
|
|
|
46,392
|
|
|
44,035
|
|
|||||
Assets per full-time equivalent
|
|
6,190
|
|
|
5,596
|
|
|
5,104
|
|
|
5,092
|
|
|
4,623
|
|
(1)
|
Loans receivable, net of deferred costs divided by deposits.
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
historical loss experience in the loan portfolio;
|
•
|
impact of environmental factors, including:
|
◦
|
levels of and trends in delinquencies, classified and impaired loans;
|
◦
|
levels of and trends in charge-offs and recoveries;
|
◦
|
trends in volume and terms of loans;
|
◦
|
effects of changes in risk selection and underwriting standards, and other changes in lending policies, procedures and practices;
|
◦
|
experience, ability, and depth of lending management and other relevant staff;
|
◦
|
national and local economic trends and conditions;
|
◦
|
other external factors such as competition, legal and regulatory;
|
◦
|
effects of changes in credit concentrations; and
|
◦
|
other factors.
|
|
December 31, 2018
|
|
December 31, 2017
|
|
Change 2018 vs. 2017
|
|
Percent Change 2018 vs. 2017
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Cash and cash equivalents
|
$
|
161,910
|
|
|
$
|
103,015
|
|
|
$
|
58,895
|
|
|
57.2
|
%
|
Investment securities available for sale, at fair value
|
976,095
|
|
|
810,530
|
|
|
165,565
|
|
|
20.4
|
|
|||
Loans held for sale
|
1,555
|
|
|
2,288
|
|
|
(733
|
)
|
|
(32.0
|
)
|
|||
Total loans receivable, net
|
3,619,118
|
|
|
2,816,985
|
|
|
802,133
|
|
|
28.5
|
|
|||
Other real estate owned
|
1,983
|
|
|
—
|
|
|
1,983
|
|
|
—
|
|
|||
Premises and equipment, net
|
81,100
|
|
|
60,325
|
|
|
20,775
|
|
|
34.4
|
|
|||
FHLB stock, at cost
|
6,076
|
|
|
8,347
|
|
|
(2,271
|
)
|
|
(27.2
|
)%
|
|||
Bank owned life insurance
|
93,612
|
|
|
75,091
|
|
|
18,521
|
|
|
24.7
|
|
|||
Accrued interest receivable
|
15,403
|
|
|
12,244
|
|
|
3,159
|
|
|
25.8
|
|
|||
Prepaid expenses and other assets
|
98,522
|
|
|
99,328
|
|
|
(806
|
)
|
|
(0.8
|
)
|
|||
Other intangible assets, net
|
20,614
|
|
|
6,088
|
|
|
14,526
|
|
|
238.6
|
|
|||
Goodwill
|
240,939
|
|
|
119,029
|
|
|
121,910
|
|
|
102.4
|
|
|||
Total assets
|
$
|
5,316,927
|
|
|
$
|
4,113,270
|
|
|
$
|
1,203,657
|
|
|
29.3
|
%
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
|||||||||||||||
|
Fair Value
|
|
% of
Total
Investments
|
|
Fair Value
|
|
% of
Total
Investments
|
|
Fair Value
|
|
% of
Total
Investments
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
101,603
|
|
|
10.4
|
%
|
|
$
|
13,442
|
|
|
1.7
|
%
|
|
$
|
1,569
|
|
|
0.2
|
%
|
Municipal securities
|
158,864
|
|
|
16.3
|
|
|
250,015
|
|
|
30.8
|
|
|
237,256
|
|
|
29.9
|
|
|||
Mortgage-backed securities and collateralized mortgage obligations
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Residential
|
331,602
|
|
|
34.0
|
|
|
280,211
|
|
|
34.5
|
|
|
309,176
|
|
|
38.9
|
|
|||
Commercial
|
333,761
|
|
|
34.2
|
|
|
217,079
|
|
|
26.8
|
|
|
208,318
|
|
|
26.2
|
|
|||
Collateralized loan obligations
|
—
|
|
|
—
|
|
|
4,580
|
|
|
0.6
|
|
|
10,478
|
|
|
1.3
|
|
|||
Corporate obligations
|
25,563
|
|
|
2.6
|
|
|
16,770
|
|
|
2.1
|
|
|
16,706
|
|
|
2.1
|
|
|||
Other securities
(2)(3)
|
24,702
|
|
|
2.5
|
|
|
28,433
|
|
|
3.5
|
|
|
11,142
|
|
|
1.4
|
|
|||
Total
|
$
|
976,095
|
|
|
100.0
|
%
|
|
$
|
810,530
|
|
|
100.0
|
%
|
|
$
|
794,645
|
|
|
100.0
|
%
|
(1)
|
Issued and guaranteed by U.S. Government-sponsored agencies.
|
(2)
|
Primarily asset-backed securities issued and guaranteed by U.S. Government-sponsored agencies.
|
(3)
|
As a result of the adoption of FASB Accounting Standard Update 2016-01 on January 1, 2018, equity investments of $146,000 and $123,000 as of December 31, 2017 and 2016, respectively, are no longer classified as investment securities available for sale and their presentation is not comparable to the presentation as of December 31, 2018.
|
|
One Year or Less
|
|
Over One to Five
Years
|
|
Over Five to Ten
Years
|
|
Over Ten Years
|
|
Total
|
|||||||||||||||||||||||||
|
Fair
Value
|
|
Yield
(2)
|
|
Fair
Value
|
|
Yield
(2)
|
|
Fair
Value
|
|
Yield
(2)
|
|
Fair
Value
|
|
Yield
(2)
|
|
Fair
Value
|
|
Yield
(2)
|
|||||||||||||||
|
(Dollars in thousands)
|
|
|
|
|
|||||||||||||||||||||||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
15,936
|
|
|
2.50
|
%
|
|
$
|
44,462
|
|
|
2.98
|
%
|
|
$
|
35,190
|
|
|
3.56
|
%
|
|
$
|
6,015
|
|
|
2.99
|
%
|
|
$
|
101,603
|
|
|
3.11
|
%
|
Municipal securities
|
13,587
|
|
|
3.14
|
|
|
25,957
|
|
|
3.07
|
|
|
30,601
|
|
|
3.27
|
|
|
88,719
|
|
|
3.24
|
|
|
158,864
|
|
|
3.21
|
|
|||||
Mortgage-backed securities and collateralized mortgage obligations
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Residential
|
206
|
|
|
0.94
|
|
|
3,027
|
|
|
2.33
|
|
|
73,986
|
|
|
2.49
|
|
|
254,383
|
|
|
2.88
|
|
|
331,602
|
|
|
2.78
|
|
|||||
Commercial
|
7,901
|
|
|
1.56
|
|
|
94,395
|
|
|
2.55
|
|
|
129,002
|
|
|
2.80
|
|
|
102,463
|
|
|
2.89
|
|
|
333,761
|
|
|
2.72
|
|
|||||
Corporate obligations
|
848
|
|
|
2.87
|
|
|
24,715
|
|
|
3.40
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,563
|
|
|
3.38
|
|
|||||
Other securities
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,702
|
|
|
3.81
|
|
|
24,702
|
|
|
3.81
|
|
|||||
Total
|
$
|
38,478
|
|
|
2.53
|
%
|
|
$
|
192,556
|
|
|
2.82
|
%
|
|
$
|
268,779
|
|
|
2.87
|
%
|
|
$
|
476,282
|
|
|
3.00
|
%
|
|
$
|
976,095
|
|
|
2.91
|
%
|
(1)
|
Issued and guaranteed by U.S. Government-sponsored agencies.
|
(2)
|
Taxable equivalent weighted average yield.
|
(3)
|
Primarily asset-backed securities issued and guaranteed by U.S. Government-sponsored agencies.
|
|
December 31,
|
|||||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||||||||||||
|
Balance
|
|
% of Total
(2)
|
|
Balance
|
|
% of Total
(2)
|
|
Balance
|
|
% of Total
(2)
|
|
Balance
|
|
% of Total
(2)
|
|
Balance
|
|
% of Total
(2)
|
|||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial and industrial
|
$
|
853,606
|
|
|
23.4
|
%
|
|
$
|
645,396
|
|
|
22.7
|
%
|
|
$
|
637,773
|
|
|
24.2
|
%
|
|
$
|
596,726
|
|
|
24.8
|
%
|
|
$
|
570,453
|
|
|
25.3
|
%
|
Owner-occupied commercial real estate
|
779,814
|
|
|
21.3
|
|
|
622,150
|
|
|
21.8
|
|
|
558,035
|
|
|
21.1
|
|
|
572,609
|
|
|
23.8
|
|
|
574,687
|
|
|
25.5
|
|
|||||
Non-owner occupied commercial real estate
|
1,304,463
|
|
|
35.7
|
|
|
986,594
|
|
|
34.6
|
|
|
880,880
|
|
|
33.4
|
|
|
753,986
|
|
|
31.4
|
|
|
663,935
|
|
|
29.5
|
|
|||||
Total commercial business
|
2,937,883
|
|
|
80.4
|
|
|
2,254,140
|
|
|
79.1
|
|
|
2,076,688
|
|
|
78.7
|
|
|
1,923,321
|
|
|
80.0
|
|
|
1,809,075
|
|
|
80.3
|
|
|||||
One-to-four family residential
(1)
|
101,763
|
|
|
2.8
|
|
|
86,997
|
|
|
3.1
|
|
|
77,391
|
|
|
2.9
|
|
|
72,548
|
|
|
3.0
|
|
|
69,530
|
|
|
3.1
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
One-to-four family residential
|
102,730
|
|
|
2.8
|
|
|
51,985
|
|
|
1.8
|
|
|
50,414
|
|
|
1.9
|
|
|
51,752
|
|
|
2.2
|
|
|
49,195
|
|
|
2.2
|
|
|||||
Five or more family residential and commercial properties
|
112,730
|
|
|
3.1
|
|
|
97,499
|
|
|
3.4
|
|
|
108,764
|
|
|
4.1
|
|
|
55,325
|
|
|
2.3
|
|
|
64,920
|
|
|
2.9
|
|
|||||
Total real estate construction and land development
|
215,460
|
|
|
5.9
|
|
|
149,484
|
|
|
5.2
|
|
|
159,178
|
|
|
6.0
|
|
|
107,077
|
|
|
4.5
|
|
|
114,115
|
|
|
5.1
|
|
|||||
Consumer
|
395,545
|
|
|
10.8
|
|
|
355,091
|
|
|
12.5
|
|
|
325,140
|
|
|
12.3
|
|
|
298,167
|
|
|
12.4
|
|
|
259,294
|
|
|
11.5
|
|
|||||
Gross loans receivable
|
3,650,651
|
|
|
99.9
|
|
|
2,845,712
|
|
|
99.9
|
|
|
2,638,397
|
|
|
99.9
|
|
|
2,401,113
|
|
|
99.9
|
|
|
2,252,014
|
|
|
100.0
|
|
|||||
Net deferred loan costs (fees)
|
3,509
|
|
|
0.1
|
|
|
3,359
|
|
|
0.1
|
|
|
2,352
|
|
|
0.1
|
|
|
929
|
|
|
0.1
|
|
|
(937
|
)
|
|
—
|
|
|||||
Loans receivable, net
|
$
|
3,654,160
|
|
|
100.0
|
%
|
|
$
|
2,849,071
|
|
|
100.0
|
%
|
|
$
|
2,640,749
|
|
|
100.0
|
%
|
|
$
|
2,402,042
|
|
|
100.0
|
%
|
|
$
|
2,251,077
|
|
|
100.0
|
%
|
(1)
|
Excludes loans held for sale of
$1.6 million
,
$2.3 million
,
$11.7 million
,
$7.7 million
and
$5.6 million
as of December 31,
2018
,
2017
,
2016
,
2015
and
2014
, respectively.
|
(2)
|
Percent of loans receivable, net.
|
|
|
Maturing
|
||||||||||||||
|
|
One Year or Less
|
|
Over One to Five Years
|
|
Over Five Years
|
|
Total
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Commercial business
|
|
$
|
434,492
|
|
|
$
|
637,472
|
|
|
$
|
1,865,919
|
|
|
$
|
2,937,883
|
|
One-to-four family residential
|
|
112
|
|
|
2,337
|
|
|
99,314
|
|
|
101,763
|
|
||||
Real estate construction and land development
|
|
137,297
|
|
|
31,313
|
|
|
46,850
|
|
|
215,460
|
|
||||
Consumer
|
|
19,091
|
|
|
127,153
|
|
|
249,301
|
|
|
395,545
|
|
||||
Gross loans receivable
|
|
$
|
590,992
|
|
|
$
|
798,275
|
|
|
$
|
2,261,384
|
|
|
$
|
3,650,651
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed rate loans
|
|
$
|
96,139
|
|
|
$
|
573,664
|
|
|
$
|
642,831
|
|
|
$
|
1,312,634
|
|
Variable or adjustable rate loans
|
|
494,853
|
|
|
224,611
|
|
|
1,618,553
|
|
|
2,338,017
|
|
||||
Total
|
|
$
|
590,992
|
|
|
$
|
798,275
|
|
|
$
|
2,261,384
|
|
|
$
|
3,650,651
|
|
|
|
December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||
Nonaccrual loans:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial business
|
|
$
|
12,564
|
|
|
$
|
9,098
|
|
|
$
|
8,580
|
|
|
$
|
7,122
|
|
|
$
|
8,596
|
|
One-to-four family residential
|
|
71
|
|
|
81
|
|
|
94
|
|
|
38
|
|
|
—
|
|
|||||
Real estate construction and land development
|
|
899
|
|
|
1,247
|
|
|
2,008
|
|
|
2,414
|
|
|
2,831
|
|
|||||
Consumer
|
|
169
|
|
|
277
|
|
|
227
|
|
|
94
|
|
|
145
|
|
|||||
Total nonaccrual loans
(1)
|
|
13,703
|
|
|
10,703
|
|
|
10,909
|
|
|
9,668
|
|
|
11,572
|
|
|||||
Other real estate owned
|
|
1,983
|
|
|
—
|
|
|
754
|
|
|
2,019
|
|
|
3,355
|
|
|||||
Total nonperforming assets
|
|
$
|
15,686
|
|
|
$
|
10,703
|
|
|
$
|
11,663
|
|
|
$
|
11,687
|
|
|
$
|
14,927
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for loan losses
|
|
$
|
35,042
|
|
|
$
|
32,086
|
|
|
$
|
31,083
|
|
|
$
|
29,746
|
|
|
$
|
27,729
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for loan losses to loans receivable, net
|
|
0.96
|
%
|
|
1.13
|
%
|
|
1.18
|
%
|
|
1.24
|
%
|
|
1.23
|
%
|
|||||
Allowance for loan losses to nonaccrual loans
|
|
255.73
|
%
|
|
299.79
|
%
|
|
284.93
|
%
|
|
307.67
|
%
|
|
239.62
|
%
|
|||||
Nonperforming loans to loans receivable, net
|
|
0.37
|
%
|
|
0.38
|
%
|
|
0.41
|
%
|
|
0.40
|
%
|
|
0.51
|
%
|
|||||
Nonperforming assets to total assets
|
|
0.30
|
%
|
|
0.26
|
%
|
|
0.30
|
%
|
|
0.32
|
%
|
|
0.43
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Performing TDR loans:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial business
|
|
$
|
22,170
|
|
|
$
|
25,729
|
|
|
$
|
19,837
|
|
|
$
|
17,345
|
|
|
$
|
14,421
|
|
One-to-four family residential
|
|
208
|
|
|
218
|
|
|
227
|
|
|
236
|
|
|
245
|
|
|||||
Real estate construction and land development
|
|
—
|
|
|
645
|
|
|
2,141
|
|
|
3,014
|
|
|
3,927
|
|
|||||
Consumer
|
|
358
|
|
|
165
|
|
|
83
|
|
|
100
|
|
|
66
|
|
|||||
Total performing TDR loans
|
|
$
|
22,736
|
|
|
$
|
26,757
|
|
|
$
|
22,288
|
|
|
$
|
20,695
|
|
|
$
|
18,659
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accruing loans past due 90 days or more
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Potential problem loans
|
|
101,349
|
|
|
83,543
|
|
|
87,762
|
|
|
110,357
|
|
|
162,930
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Nonaccrual loans
|
|
|
|
||||
Balance, beginning of period
|
$
|
10,703
|
|
|
$
|
10,909
|
|
Addition of previously classified pass graded loans
|
5,469
|
|
|
2,405
|
|
||
Addition of previously classified potential problem loans
|
5,319
|
|
|
3,253
|
|
||
Addition of previously classified TDR loans
|
786
|
|
|
1,556
|
|
||
Addition of acquired loans
|
130
|
|
|
—
|
|
||
Transfer of loans to accrual status
|
—
|
|
|
(968
|
)
|
||
Charge-offs
|
(1,027
|
)
|
|
(1,219
|
)
|
||
Net principal payments
|
(7,677
|
)
|
|
(5,233
|
)
|
||
Balance, end of period
|
$
|
13,703
|
|
|
$
|
10,703
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Performing TDR loans
|
|
|
|
||||
Balance, beginning of period
|
$
|
26,757
|
|
|
$
|
22,288
|
|
Addition of previously classified pass graded loans
|
2,165
|
|
|
12,244
|
|
||
Addition of previously classified potential problem loans
|
9,651
|
|
|
2,189
|
|
||
Addition of former nonaccrual loans
|
—
|
|
|
968
|
|
||
Transfers of loans to nonaccrual and troubled debt restructured status
|
(786
|
)
|
|
(1,556
|
)
|
||
Charge-offs
|
—
|
|
|
(16
|
)
|
||
Net principal payments
|
(15,051
|
)
|
|
(9,360
|
)
|
||
Balance, end of period
|
$
|
22,736
|
|
|
$
|
26,757
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Potential problem loans
|
|
|
|
||||
Balance, beginning of period
|
$
|
83,543
|
|
|
$
|
87,762
|
|
Addition of previously classified pass graded loans
|
59,238
|
|
|
52,039
|
|
||
Acquired in Premier and Puget Mergers
(1)
|
18,869
|
|
|
—
|
|
||
Net principal payments
|
(28,184
|
)
|
|
(37,636
|
)
|
||
Upgrades to pass graded loan status
|
(16,746
|
)
|
|
(5,245
|
)
|
||
Transfers of loan to nonaccrual and troubled debt restructured status
|
(14,970
|
)
|
|
(6,866
|
)
|
||
Transfers of loans to other real estate owned
|
—
|
|
|
(32
|
)
|
||
Transfer of loan to held for sale
|
—
|
|
|
(5,779
|
)
|
||
Charge-offs
|
(401
|
)
|
|
(700
|
)
|
||
Balance, end of period
|
$
|
101,349
|
|
|
$
|
83,543
|
|
|
|
At or For the Years Ended December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||
Allowance for loan losses at beginning of the year
|
|
$
|
32,086
|
|
|
$
|
31,083
|
|
|
$
|
29,746
|
|
|
$
|
27,729
|
|
|
$
|
28,824
|
|
Provision for loan losses
|
|
5,129
|
|
|
4,220
|
|
|
4,931
|
|
|
4,372
|
|
|
4,594
|
|
|||||
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial business
|
|
(1,400
|
)
|
|
(2,438
|
)
|
|
(4,153
|
)
|
|
(1,676
|
)
|
|
(5,252
|
)
|
|||||
One-to-four family residential
|
|
(45
|
)
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|||||
Real estate construction and land development
|
|
—
|
|
|
(556
|
)
|
|
(154
|
)
|
|
(106
|
)
|
|
(345
|
)
|
|||||
Consumer
|
|
(2,160
|
)
|
|
(1,814
|
)
|
|
(1,778
|
)
|
|
(1,700
|
)
|
|
(969
|
)
|
|||||
Total charge-offs
|
|
(3,605
|
)
|
|
(4,838
|
)
|
|
(6,085
|
)
|
|
(3,482
|
)
|
|
(6,597
|
)
|
|||||
Recoveries:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial business
|
|
908
|
|
|
947
|
|
|
1,844
|
|
|
476
|
|
|
716
|
|
|||||
One-to-four family residential
|
|
—
|
|
|
2
|
|
|
2
|
|
|
13
|
|
|
7
|
|
|||||
Real estate construction and land development
|
|
11
|
|
|
202
|
|
|
83
|
|
|
100
|
|
|
43
|
|
|||||
Consumer
|
|
513
|
|
|
470
|
|
|
562
|
|
|
538
|
|
|
142
|
|
|||||
Total recoveries
|
|
1,432
|
|
|
1,621
|
|
|
2,491
|
|
|
1,127
|
|
|
908
|
|
|||||
Net charge-offs
|
|
(2,173
|
)
|
|
(3,217
|
)
|
|
(3,594
|
)
|
|
(2,355
|
)
|
|
(5,689
|
)
|
|||||
Allowance for loan losses at end of the year
|
|
$
|
35,042
|
|
|
$
|
32,086
|
|
|
$
|
31,083
|
|
|
$
|
29,746
|
|
|
$
|
27,729
|
|
Gross loans receivable at end of the year
(1)
|
|
$
|
3,650,651
|
|
|
$
|
2,845,712
|
|
|
$
|
2,638,397
|
|
|
$
|
2,401,113
|
|
|
$
|
2,252,014
|
|
Average loans receivable during the year
(1)
|
|
3,414,424
|
|
|
2,703,934
|
|
|
2,489,730
|
|
|
2,316,175
|
|
|
1,871,696
|
|
|||||
Net charge-offs on loans to average loans receivable
|
|
0.06
|
%
|
|
0.12
|
%
|
|
0.14
|
%
|
|
0.10
|
%
|
|
0.30
|
%
|
(1)
|
Excludes loans held for sale.
|
|
December 31,
|
|||||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||||||||||||
|
Allowance
for Loan
Losses
|
|
% of
Total
(1)
|
|
Allowance
for Loan
Losses
|
|
% of
Total
(1)
|
|
Allowance
for Loan
Losses
|
|
% of
Total
(1)
|
|
Allowance
for Loan
Losses
|
|
% of
Total
(1)
|
|
Allowance
for Loan
Losses
|
|
% of
Total
(1)
|
|||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||||
Commercial business
|
$
|
23,711
|
|
|
80.5
|
%
|
|
$
|
21,999
|
|
|
79.1
|
%
|
|
$
|
22,382
|
|
|
78.8
|
%
|
|
$
|
22,064
|
|
|
80.1
|
%
|
|
$
|
20,186
|
|
|
80.3
|
%
|
One-to-four family residential
|
1,203
|
|
|
2.8
|
|
|
1,056
|
|
|
3.1
|
|
|
1,015
|
|
|
2.9
|
|
|
1,157
|
|
|
3.0
|
|
|
1,200
|
|
|
3.1
|
|
|||||
Real estate construction
|
2,194
|
|
|
5.9
|
|
|
2,052
|
|
|
5.3
|
|
|
2,156
|
|
|
6.0
|
|
|
1,871
|
|
|
4.5
|
|
|
2,758
|
|
|
5.1
|
|
|||||
Consumer
|
6,581
|
|
|
10.8
|
|
|
6,081
|
|
|
12.5
|
|
|
5,024
|
|
|
12.3
|
|
|
4,309
|
|
|
12.4
|
|
|
2,769
|
|
|
11.5
|
|
|||||
Unallocated
|
1,353
|
|
|
—
|
|
|
898
|
|
|
—
|
|
|
506
|
|
|
—
|
|
|
345
|
|
|
—
|
|
|
816
|
|
|
—
|
|
|||||
Total allowance for loan losses
|
$
|
35,042
|
|
|
100.0
|
%
|
|
$
|
32,086
|
|
|
100.0
|
%
|
|
$
|
31,083
|
|
|
100.0
|
%
|
|
$
|
29,746
|
|
|
100.0
|
%
|
|
$
|
27,729
|
|
|
100.0
|
%
|
(1)
|
Represents the percent of loans receivable by loan category to total gross loans receivable.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
General Valuation Allowance:
|
|
|
|
||||
Allowance for loan losses
|
$
|
27,854
|
|
|
$
|
24,732
|
|
Gross loans, excluding PCI and impaired loans
|
3,589,305
|
|
|
2,767,650
|
|
||
Percentage
|
0.78
|
%
|
|
0.89
|
%
|
||
|
|
|
|
||||
PCI Allowance:
|
|
|
|
||||
Allowance for loan losses
|
$
|
3,018
|
|
|
$
|
3,999
|
|
Gross PCI loans
|
24,907
|
|
|
40,603
|
|
||
Percentage
|
12.12
|
%
|
|
9.85
|
%
|
||
|
|
|
|
||||
Specific Valuation Allowance:
|
|
|
|
||||
Allowance for loan losses
|
$
|
4,170
|
|
|
$
|
3,355
|
|
Gross impaired loans
|
36,439
|
|
|
37,459
|
|
||
Percentage
|
11.44
|
%
|
|
8.96
|
%
|
||
|
|
|
|
||||
Total Allowance for Loan Losses:
|
|
|
|
||||
Allowance for loan losses
|
$
|
35,042
|
|
|
$
|
32,086
|
|
Gross loans receivable
|
3,650,651
|
|
|
2,845,712
|
|
||
Percentage
|
0.96
|
%
|
|
1.13
|
%
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
|||||||||||||||
|
|
Amount
|
|
Percent of Total
|
|
Amount
|
|
Percent of Total
|
|
Amount
|
|
Percent of Total
|
|||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
Noninterest demand deposits
|
|
$
|
1,362,268
|
|
|
30.7
|
%
|
|
$
|
944,791
|
|
|
27.8
|
%
|
|
$
|
882,091
|
|
|
27.3
|
%
|
Interest bearing demand deposits
|
|
1,317,513
|
|
|
29.7
|
|
|
1,051,752
|
|
|
31.1
|
|
|
963,821
|
|
|
29.8
|
|
|||
Money market accounts
|
|
765,316
|
|
|
17.3
|
|
|
499,618
|
|
|
14.7
|
|
|
523,875
|
|
|
16.2
|
|
|||
Savings accounts
|
|
520,413
|
|
|
11.8
|
|
|
498,501
|
|
|
14.7
|
|
|
502,460
|
|
|
15.6
|
|
|||
Total non-maturity deposits
|
|
3,965,510
|
|
|
89.5
|
|
|
2,994,662
|
|
|
88.3
|
|
|
2,872,247
|
|
|
88.9
|
|
|||
Certificate of deposit accounts
|
|
466,892
|
|
|
10.5
|
|
|
398,398
|
|
|
11.7
|
|
|
357,401
|
|
|
11.1
|
|
|||
Total deposits
|
|
$
|
4,432,402
|
|
|
100.0
|
%
|
|
$
|
3,393,060
|
|
|
100.0
|
%
|
|
$
|
3,229,648
|
|
|
100.0
|
%
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
|
Average
Balance
|
|
Average
Yield/Rate
|
|
Average
Balance
|
|
Average
Yield/Rate
|
|
Average
Balance
|
|
Average
Yield/Rate
|
|||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
Interest bearing demand deposits and money market accounts
|
|
$
|
1,916,319
|
|
|
0.23
|
%
|
|
$
|
1,498,619
|
|
|
0.17
|
%
|
|
$
|
1,464,198
|
|
|
0.16
|
%
|
Savings accounts
|
|
513,680
|
|
|
0.40
|
|
|
499,435
|
|
|
0.26
|
|
|
485,482
|
|
|
0.16
|
|
|||
Certificate of deposit accounts
|
|
463,124
|
|
|
0.85
|
|
|
378,044
|
|
|
0.59
|
|
|
388,286
|
|
|
0.50
|
|
|||
Total interest bearing deposits
|
|
2,893,123
|
|
|
0.36
|
|
|
2,376,098
|
|
|
0.25
|
|
|
2,337,966
|
|
|
0.21
|
|
|||
Noninterest demand deposits
|
|
1,240,621
|
|
|
—
|
|
|
902,716
|
|
|
—
|
|
|
829,912
|
|
|
—
|
|
|||
Total deposits
|
|
$
|
4,133,744
|
|
|
0.25
|
%
|
|
$
|
3,278,814
|
|
|
0.18
|
%
|
|
$
|
3,167,878
|
|
|
0.16
|
%
|
|
December 31, 2018
|
||
|
(In thousands)
|
||
Remaining maturity:
|
|
||
Three months or less
|
$
|
88,527
|
|
Over three months through six months
|
48,781
|
|
|
Over six months through twelve months
|
63,878
|
|
|
Over twelve months
|
96,042
|
|
|
Total
|
$
|
297,228
|
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Balance, beginning of period
|
$
|
508,305
|
|
|
$
|
481,763
|
|
Common stock issued in the Premier and Puget Mergers
|
230,043
|
|
|
—
|
|
||
Net income
|
53,057
|
|
|
41,791
|
|
||
Dividends declared
|
(25,791
|
)
|
|
(18,305
|
)
|
||
Other comprehensive (loss) income, net
|
(6,064
|
)
|
|
1,526
|
|
||
Other
|
1,173
|
|
|
1,530
|
|
||
Balance, end of period
|
$
|
760,723
|
|
|
$
|
508,305
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Dividends paid per common share
|
$
|
0.72
|
|
|
$
|
0.61
|
|
|
$
|
0.72
|
|
Dividend payout ratio
(1)
|
48.3
|
%
|
|
43.9
|
%
|
|
55.4
|
%
|
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||||||||||||||
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
|
|||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total loans receivable, net
|
$
|
3,414,424
|
|
|
$
|
175,466
|
|
|
5.14
|
%
|
|
$
|
2,703,934
|
|
|
$
|
129,213
|
|
|
4.78
|
%
|
|
$
|
2,489,730
|
|
|
$
|
122,147
|
|
|
4.91
|
%
|
Taxable securities
|
677,893
|
|
|
17,602
|
|
|
2.60
|
|
|
570,969
|
|
|
12,688
|
|
|
2.22
|
|
|
589,867
|
|
|
11,215
|
|
|
1.90
|
|
||||||
Nontaxable securities
|
190,209
|
|
|
4,649
|
|
|
2.44
|
|
|
226,934
|
|
|
5,269
|
|
|
2.32
|
|
|
221,708
|
|
|
4,870
|
|
|
2.20
|
|
||||||
Other interest earning assets
|
76,117
|
|
|
1,642
|
|
|
2.16
|
|
|
45,949
|
|
|
539
|
|
|
1.17
|
|
|
44,951
|
|
|
280
|
|
|
0.62
|
|
||||||
Total interest earning assets
|
4,358,643
|
|
|
199,359
|
|
|
4.57
|
|
|
3,547,786
|
|
|
147,709
|
|
|
4.16
|
|
|
3,346,256
|
|
|
138,512
|
|
|
4.14
|
|
||||||
Noninterest earning assets
|
615,372
|
|
|
|
|
|
|
433,566
|
|
|
|
|
|
|
399,279
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
4,974,015
|
|
|
|
|
|
|
$
|
3,981,352
|
|
|
|
|
|
|
$
|
3,745,535
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||||||||||||||
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
|
|||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||
Liabilities and Stockholders' Equity:
|
||||||||||||||||||||||||||||||||
Certificate of deposit accounts
|
$
|
463,124
|
|
|
$
|
3,959
|
|
|
0.85
|
%
|
|
$
|
378,044
|
|
|
$
|
2,244
|
|
|
0.59
|
%
|
|
$
|
388,286
|
|
|
$
|
1,936
|
|
|
0.50
|
%
|
Savings accounts
|
513,680
|
|
|
2,056
|
|
|
0.40
|
|
|
499,435
|
|
|
1,311
|
|
|
0.26
|
|
|
485,482
|
|
|
756
|
|
|
0.16
|
|
||||||
Interest bearing demand and money market accounts
|
1,916,319
|
|
|
4,382
|
|
|
0.23
|
|
|
1,498,619
|
|
|
2,494
|
|
|
0.17
|
|
|
1,464,198
|
|
|
2,318
|
|
|
0.16
|
|
||||||
Total interest bearing deposits
|
2,893,123
|
|
|
10,397
|
|
|
0.36
|
|
|
2,376,098
|
|
|
6,049
|
|
|
0.25
|
|
|
2,337,966
|
|
|
5,010
|
|
|
0.21
|
|
||||||
Junior subordinated debentures
|
20,145
|
|
|
1,263
|
|
|
6.27
|
|
|
19,860
|
|
|
1,014
|
|
|
5.11
|
|
|
19,565
|
|
|
880
|
|
|
4.50
|
|
||||||
FHLB advances and other borrowings
|
33,914
|
|
|
671
|
|
|
1.98
|
|
|
105,648
|
|
|
1,226
|
|
|
1.16
|
|
|
13,349
|
|
|
74
|
|
|
0.55
|
|
||||||
Securities sold under agreement to repurchase
|
31,426
|
|
|
82
|
|
|
0.26
|
|
|
25,434
|
|
|
57
|
|
|
0.22
|
|
|
20,392
|
|
|
42
|
|
|
0.21
|
|
||||||
Total interest bearing liabilities
|
2,978,608
|
|
|
12,413
|
|
|
0.42
|
|
|
2,527,040
|
|
|
8,346
|
|
|
0.33
|
|
|
2,391,272
|
|
|
6,006
|
|
|
0.25
|
|
||||||
Demand and other noninterest bearing deposits
|
1,240,621
|
|
|
|
|
|
|
902,716
|
|
|
|
|
|
|
829,912
|
|
|
|
|
|
||||||||||||
Other noninterest bearing liabilities
|
67,692
|
|
|
|
|
|
|
51,820
|
|
|
|
|
|
|
38,474
|
|
|
|
|
|
||||||||||||
Stockholders’ equity
|
687,094
|
|
|
|
|
|
|
499,776
|
|
|
|
|
|
|
485,877
|
|
|
|
|
|
||||||||||||
Total liabilities and stock-holders’ equity
|
$
|
4,974,015
|
|
|
|
|
|
|
$
|
3,981,352
|
|
|
|
|
|
|
$
|
3,745,535
|
|
|
|
|
|
|||||||||
Net interest income
|
|
|
$
|
186,946
|
|
|
|
|
|
|
$
|
139,363
|
|
|
|
|
|
|
$
|
132,506
|
|
|
|
|||||||||
Net interest spread
|
|
|
|
|
4.15
|
%
|
|
|
|
|
|
3.83
|
%
|
|
|
|
|
|
3.89
|
%
|
||||||||||||
Net interest margin
|
|
|
|
|
4.29
|
%
|
|
|
|
|
|
3.93
|
%
|
|
|
|
|
|
3.96
|
%
|
||||||||||||
Average interest earning assets to average interest bearing liabilities
|
|
|
|
|
146.33
|
%
|
|
|
|
|
|
140.39
|
%
|
|
|
|
|
|
139.94
|
%
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2018 Compared to 2017
Increase (Decrease) Due to
|
|
2017 Compared to 2016
Increase (Decrease) Due to
|
||||||||||||||||||||
|
|
Volume
|
|
Rate
|
|
Total
|
|
Volume
|
|
Rate
|
|
Total
|
||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||
Interest Earning Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans
|
|
$
|
36,512
|
|
|
$
|
9,741
|
|
|
$
|
46,253
|
|
|
$
|
10,236
|
|
|
$
|
(3,170
|
)
|
|
$
|
7,066
|
|
Taxable securities
|
|
2,776
|
|
|
2,138
|
|
|
4,914
|
|
|
(420
|
)
|
|
1,893
|
|
|
1,473
|
|
||||||
Nontaxable securities
|
|
(898
|
)
|
|
278
|
|
|
(620
|
)
|
|
121
|
|
|
278
|
|
|
399
|
|
||||||
Other interest earning assets
|
|
651
|
|
|
452
|
|
|
1,103
|
|
|
12
|
|
|
247
|
|
|
259
|
|
||||||
Interest income
|
|
$
|
39,041
|
|
|
$
|
12,609
|
|
|
$
|
51,650
|
|
|
$
|
9,949
|
|
|
$
|
(752
|
)
|
|
$
|
9,197
|
|
Interest Bearing Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Certificate of deposit accounts
|
|
$
|
727
|
|
|
$
|
988
|
|
|
$
|
1,715
|
|
|
$
|
(61
|
)
|
|
$
|
369
|
|
|
$
|
308
|
|
Savings accounts
|
|
57
|
|
|
688
|
|
|
745
|
|
|
37
|
|
|
518
|
|
|
555
|
|
||||||
Interest bearing demand and money market accounts
|
|
955
|
|
|
933
|
|
|
1,888
|
|
|
57
|
|
|
119
|
|
|
176
|
|
||||||
Total interest bearing deposits
|
|
1,739
|
|
|
2,609
|
|
|
4,348
|
|
|
33
|
|
|
1,006
|
|
|
1,039
|
|
||||||
Junior subordinated debentures
|
|
18
|
|
|
231
|
|
|
249
|
|
|
15
|
|
|
119
|
|
|
134
|
|
||||||
Securities sold under agreement to repurchase
|
|
16
|
|
|
9
|
|
|
25
|
|
|
11
|
|
|
4
|
|
|
15
|
|
||||||
FHLB advances and other borrowings
|
|
(1,419
|
)
|
|
864
|
|
|
(555
|
)
|
|
1,071
|
|
|
81
|
|
|
1,152
|
|
||||||
Interest expense
|
|
$
|
354
|
|
|
$
|
3,713
|
|
|
$
|
4,067
|
|
|
$
|
1,130
|
|
|
$
|
1,210
|
|
|
$
|
2,340
|
|
Net Interest Income
|
|
$
|
38,687
|
|
|
$
|
8,896
|
|
|
$
|
47,583
|
|
|
$
|
8,819
|
|
|
$
|
(1,962
|
)
|
|
$
|
6,857
|
|
|
|
Year Ended December 31,
|
||||
|
|
2018
|
|
2017
|
||
Net interest margin (GAAP)
|
|
4.29
|
%
|
|
3.93
|
%
|
Exclude impact on net interest margin from incremental accretion on purchased loans
(1)
|
|
0.18
|
%
|
|
0.18
|
%
|
Net interest margin, excluding incremental accretion on purchased loans (non-GAAP)
(1) (2)
|
|
4.11
|
%
|
|
3.75
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Service charges and other fees
|
$
|
18,914
|
|
|
$
|
18,004
|
|
|
$
|
910
|
|
|
5.1
|
%
|
Gain on sale of investment securities, net
|
137
|
|
|
6
|
|
|
131
|
|
|
2,183.3
|
|
|||
Gain on sale of loans, net
|
2,759
|
|
|
7,696
|
|
|
(4,937
|
)
|
|
(64.2
|
)
|
|||
Interest rate swap fees
|
564
|
|
|
1,045
|
|
|
(481
|
)
|
|
(46.0
|
)
|
|||
Other income
|
9,291
|
|
|
8,828
|
|
|
463
|
|
|
5.2
|
|
|||
Total noninterest income
|
$
|
31,665
|
|
|
$
|
35,579
|
|
|
$
|
(3,914
|
)
|
|
(11.0
|
)%
|
|
Year Ended December 31,
|
|
|
|||||||||||
|
2018
|
|
2017
|
|
Change
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Gain on sale of mortgage loans, net
|
$
|
2,403
|
|
|
$
|
3,412
|
|
|
$
|
(1,009
|
)
|
|
(29.6
|
)%
|
Gain on sale of guaranteed portion of SBA loans, net
|
356
|
|
|
1,286
|
|
|
(930
|
)
|
|
(72.3
|
)
|
|||
Gain on sale of other loans, net
|
—
|
|
|
2,998
|
|
|
(2,998
|
)
|
|
(100.0
|
)
|
|||
Gain on sale of loans, net
|
$
|
2,759
|
|
|
$
|
7,696
|
|
|
$
|
(4,937
|
)
|
|
(64.2
|
)%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Compensation and employee benefits
|
$
|
86,830
|
|
|
$
|
64,268
|
|
|
$
|
22,562
|
|
|
35.1
|
%
|
Occupancy and equipment
|
19,779
|
|
|
15,396
|
|
|
4,383
|
|
|
28.5
|
|
|||
Data processing
|
9,888
|
|
|
8,176
|
|
|
1,712
|
|
|
20.9
|
|
|||
Marketing
|
3,228
|
|
|
2,943
|
|
|
285
|
|
|
9.7
|
|
|||
Professional services
|
9,670
|
|
|
4,777
|
|
|
4,893
|
|
|
102.4
|
|
|||
State and local taxes
|
3,210
|
|
|
2,461
|
|
|
749
|
|
|
30.4
|
|
|||
Federal deposit insurance premium
|
1,480
|
|
|
1,435
|
|
|
45
|
|
|
3.1
|
|
|||
Other real estate owned, net
|
106
|
|
|
(70
|
)
|
|
176
|
|
|
(251.4
|
)
|
|||
Amortization of intangible assets
|
3,819
|
|
|
1,286
|
|
|
2,533
|
|
|
197.0
|
|
|||
Other expense
|
11,385
|
|
|
9,903
|
|
|
1,482
|
|
|
15.0
|
|
|||
Total noninterest expense
|
$
|
149,395
|
|
|
$
|
110,575
|
|
|
$
|
38,820
|
|
|
35.1
|
%
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Compensation and employee benefits
|
$
|
5,455
|
|
|
$
|
—
|
|
Occupancy and equipment
|
45
|
|
|
2
|
|
||
Data processing
|
1,365
|
|
|
113
|
|
||
Marketing
|
24
|
|
|
1
|
|
||
Professional services
|
3,046
|
|
|
690
|
|
||
Other expense
|
456
|
|
|
4
|
|
||
Total merger related expenses
|
$
|
10,391
|
|
|
$
|
810
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(Dollars in thousands)
|
||||||
Loan yield (GAAP)
|
|
4.78
|
%
|
|
4.91
|
%
|
||
Exclude impact on loan yield from incremental accretion on purchased loans
(1)
|
|
0.23
|
|
|
0.29
|
|
||
Loan yield, excluding incremental accretion on purchased loans (non-GAAP)
(1)(2)
|
|
4.55
|
%
|
|
4.62
|
%
|
||
|
|
|
|
|
||||
Incremental accretion on purchased loans
(1)
|
|
$
|
6,320
|
|
|
$
|
7,155
|
|
|
|
Year Ended December 31,
|
||||
|
|
2017
|
|
2016
|
||
|
|
(Dollars in thousands)
|
||||
Net interest margin (GAAP)
|
|
3.93
|
%
|
|
3.96
|
%
|
Exclude impact on net interest margin from incremental accretion on purchased loans
(1)
|
|
0.18
|
|
|
0.21
|
|
Net interest margin, excluding incremental accretion on purchased loans (non-GAAP)
(1) (2)
|
|
3.75
|
%
|
|
3.75
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change 2017 vs. 2016
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Service charges and other fees
|
$
|
18,004
|
|
|
$
|
14,354
|
|
|
$
|
3,650
|
|
|
25.4
|
%
|
Gain on sale of investment securities, net
|
6
|
|
|
1,315
|
|
|
(1,309
|
)
|
|
(99.5
|
)
|
|||
Gain on sale of loans, net
|
7,696
|
|
|
6,994
|
|
|
702
|
|
|
10.0
|
|
|||
Interest rate swap fees
|
1,045
|
|
|
1,854
|
|
|
(809
|
)
|
|
(43.6
|
)
|
|||
Other income
|
8,828
|
|
|
7,102
|
|
|
1,726
|
|
|
24.3
|
|
|||
Total noninterest income
|
$
|
35,579
|
|
|
$
|
31,619
|
|
|
$
|
3,960
|
|
|
12.5
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change 2017 vs. 2016
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Gain on sale of mortgage loans, net
|
$
|
3,412
|
|
|
$
|
3,723
|
|
|
$
|
(311
|
)
|
|
(8.4
|
)%
|
Gain on sale of guaranteed portion of SBA loans, net
|
1,286
|
|
|
1,016
|
|
|
270
|
|
|
26.6
|
|
|||
Gain on sale of other loans, net
|
2,998
|
|
|
2,255
|
|
|
743
|
|
|
32.9
|
|
|||
Gain on sale of loans, net
|
$
|
7,696
|
|
|
$
|
6,994
|
|
|
$
|
702
|
|
|
10.0
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change 2016 vs. 2015
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Compensation and employee benefits
|
$
|
64,268
|
|
|
$
|
61,405
|
|
|
$
|
2,863
|
|
|
4.7
|
%
|
Occupancy and equipment
|
15,396
|
|
|
15,763
|
|
|
(367
|
)
|
|
(2.3
|
)
|
|||
Data processing
|
8,176
|
|
|
7,312
|
|
|
864
|
|
|
11.8
|
|
|||
Marketing
|
2,943
|
|
|
2,835
|
|
|
108
|
|
|
3.8
|
|
|||
Professional services
|
4,777
|
|
|
3,606
|
|
|
1,171
|
|
|
32.5
|
|
|||
State and local taxes
|
2,461
|
|
|
2,616
|
|
|
(155
|
)
|
|
(5.9
|
)
|
|||
Federal deposit insurance premium
|
1,435
|
|
|
1,620
|
|
|
(185
|
)
|
|
(11.4
|
)
|
|||
Other real estate owned, net
|
(70
|
)
|
|
334
|
|
|
(404
|
)
|
|
(121.0
|
)
|
|||
Amortization of intangible assets
|
1,286
|
|
|
1,415
|
|
|
(129
|
)
|
|
(9.1
|
)
|
|||
Other expense
|
9,903
|
|
|
9,567
|
|
|
336
|
|
|
3.5
|
|
|||
Total noninterest expense
|
$
|
110,575
|
|
|
$
|
106,473
|
|
|
$
|
4,102
|
|
|
3.9
|
%
|
|
|
December 31, 2018
|
||||||||||||||||||||||
|
|
One Year or Less
|
|
One to Three Years
|
|
Over Three to Five Years
|
|
Over Five Years
|
|
Other
(1)
|
|
Total
|
||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||
Contractual payments by period:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deposits
|
|
$
|
313,830
|
|
|
$
|
108,283
|
|
|
$
|
44,761
|
|
|
$
|
18
|
|
|
$
|
3,965,510
|
|
|
$
|
4,432,402
|
|
Junior subordinated debentures
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
|
—
|
|
|
25,000
|
|
||||||
Operating leases
|
|
4,766
|
|
|
6,728
|
|
|
3,272
|
|
|
1,788
|
|
|
—
|
|
|
16,554
|
|
||||||
Total contractual obligations
|
|
$
|
318,596
|
|
|
$
|
115,011
|
|
|
$
|
48,033
|
|
|
$
|
26,806
|
|
|
$
|
3,965,510
|
|
|
$
|
4,473,956
|
|
(1)
|
Represents interest bearing and noninterest bearing checking, money market and checking accounts which can generally be withdrawn on demand and thereby have an undefined maturity.
|
|
|
December 31, 2018
|
||||||||||||||||||||||
|
|
Estimated Maturity or Repricing Within
|
||||||||||||||||||||||
|
|
Three Months or Less
|
|
Over Three Months to 12
Months
|
|
Over One to Five Years
|
|
Over Five to 15
Years
|
|
Over
15 Years
|
|
Total
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
Interest Earnings Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans receivable
(1)
|
|
$
|
938,334
|
|
|
$
|
234,894
|
|
|
$
|
1,737,157
|
|
|
$
|
655,536
|
|
|
$
|
84,730
|
|
|
$
|
3,650,651
|
|
Investment securities
|
|
167,513
|
|
|
74,657
|
|
|
220,039
|
|
|
303,035
|
|
|
210,851
|
|
|
976,095
|
|
||||||
Interest earning deposits
|
|
69,206
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69,206
|
|
||||||
Total interest earning assets
|
|
$
|
1,175,053
|
|
|
$
|
309,551
|
|
|
$
|
1,957,196
|
|
|
$
|
958,571
|
|
|
$
|
295,581
|
|
|
$
|
4,695,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Percentage of interest earning assets
|
|
25.0
|
%
|
|
6.6
|
%
|
|
41.7
|
%
|
|
20.4
|
%
|
|
6.3
|
%
|
|
100.0
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Bearing Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total interest bearing deposits
(2)
|
|
$
|
2,722,519
|
|
|
$
|
193,211
|
|
|
$
|
154,326
|
|
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
3,070,134
|
|
Junior subordinated debentures
|
|
20,302
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,302
|
|
||||||
Securities sold under agreement to repurchase
|
|
31,487
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,487
|
|
||||||
Total interest bearing liabilities
|
|
$
|
2,774,308
|
|
|
$
|
193,211
|
|
|
$
|
154,326
|
|
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
3,121,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest bearing liabilities, as a percentage of total interest earning assets
|
|
59.1
|
%
|
|
4.1
|
%
|
|
3.3
|
%
|
|
—
|
%
|
|
—
|
%
|
|
66.5
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate sensitivity gap
|
|
$
|
(1,599,255
|
)
|
|
$
|
116,340
|
|
|
$
|
1,802,870
|
|
|
$
|
958,493
|
|
|
$
|
295,581
|
|
|
$
|
1,574,029
|
|
Interest rate sensitivity gap, as a percentage of total interest earning assets
|
|
(34.1
|
)%
|
|
2.5
|
%
|
|
38.4
|
%
|
|
20.4
|
%
|
|
6.3
|
%
|
|
33.5
|
%
|
||||||
Cumulative interest rate sensitivity gap
|
|
$
|
(1,599,255
|
)
|
|
$
|
(1,482,915
|
)
|
|
$
|
319,955
|
|
|
$
|
1,278,448
|
|
|
$
|
1,574,029
|
|
|
|
||
Cumulative interest rate sensitivity gap, as a percentage of total interest earning assets
|
|
(34.1
|
)%
|
|
(31.6
|
)%
|
|
6.8
|
%
|
|
27.2
|
%
|
|
33.5
|
%
|
|
|
(1)
|
Excludes net deferred loan costs and allowance for loan losses.
|
(2)
|
Adjustable-rate liabilities are included in the period in which interest rates are next scheduled to adjust rather than in the period they are due to mature. Although regular savings, demand, NOW, and money market deposit accounts are subject to immediate withdrawal, based on historical experience management considers a substantial amount of such accounts to be core deposits having significantly longer maturities.
|
|
|
By Expected Maturity Date
|
||||||||||||||||||||||||||
|
|
Year Ended December 31, 2018
|
||||||||||||||||||||||||||
|
|
Three Months or Less
|
|
Over Three Months to 12 Months
|
|
Over One Year to Five Years
|
|
Over Five Years to 15 Years
|
|
Over
15 Years
|
|
Total
|
|
Fair Value
|
||||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Investment Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Amounts maturing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed rate
|
|
$
|
58,389
|
|
|
$
|
60,650
|
|
|
$
|
179,649
|
|
|
$
|
300,244
|
|
|
$
|
210,851
|
|
|
$
|
809,783
|
|
|
|
||
Weighted average interest rate
|
|
3.13
|
%
|
|
2.81
|
%
|
|
2.79
|
%
|
|
2.85
|
%
|
|
2.81
|
%
|
|
2.84
|
%
|
|
|
||||||||
Adjustable rate
|
|
$
|
4,141
|
|
|
$
|
207
|
|
|
$
|
11,926
|
|
|
$
|
45,338
|
|
|
$
|
104,700
|
|
|
$
|
166,312
|
|
|
|
||
Weighted average interest rate
|
|
3.65
|
%
|
|
0.94
|
%
|
|
3.88
|
%
|
|
3.04
|
%
|
|
3.21
|
%
|
|
3.22
|
%
|
|
|
||||||||
Total
|
|
$
|
62,530
|
|
|
$
|
60,857
|
|
|
$
|
191,575
|
|
|
$
|
345,582
|
|
|
$
|
315,551
|
|
|
$
|
976,095
|
|
|
$
|
976,095
|
|
Loans
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Amounts maturing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed rate
|
|
$
|
30,154
|
|
|
$
|
65,986
|
|
|
$
|
573,664
|
|
|
$
|
558,100
|
|
|
$
|
84,730
|
|
|
$
|
1,312,634
|
|
|
|
||
Weighted average interest rate
|
|
5.37
|
%
|
|
5.31
|
%
|
|
4.65
|
%
|
|
4.44
|
%
|
|
4.50
|
%
|
|
4.60
|
%
|
|
|
||||||||
Adjustable rate
|
|
$
|
184,381
|
|
|
$
|
310,472
|
|
|
$
|
224,609
|
|
|
$
|
1,401,867
|
|
|
$
|
216,688
|
|
|
$
|
2,338,017
|
|
|
|
||
Weighted average interest rate
|
|
6.20
|
%
|
|
6.06
|
%
|
|
5.55
|
%
|
|
4.71
|
%
|
|
5.09
|
%
|
|
5.13
|
%
|
|
|
||||||||
Total
|
|
$
|
214,535
|
|
|
$
|
376,458
|
|
|
$
|
798,273
|
|
|
$
|
1,959,967
|
|
|
$
|
301,418
|
|
|
$
|
3,650,651
|
|
|
$
|
3,614,348
|
|
Certificate of Deposit Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Amounts maturing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed rate
|
|
$
|
122,420
|
|
|
$
|
191,410
|
|
|
$
|
153,044
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
466,892
|
|
|
$
|
470,222
|
|
Weighted average interest rate
|
|
0.80
|
%
|
|
0.96
|
%
|
|
1.52
|
%
|
|
0.78
|
%
|
|
—
|
%
|
|
1.10
|
%
|
|
|
||||||||
Junior Subordinated Debentures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Amounts maturing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Adjustable rate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,302
|
|
|
$
|
20,302
|
|
|
$
|
20,500
|
|
Weighted average interest rate
(2)
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
6.27
|
%
|
|
6.27
|
%
|
|
|
(1)
|
Excludes deferred loan costs (fees), net and allowance for loan losses.
|
(2)
|
The contractual interest rate of the junior subordinated debentures was
4.37%
at
December 31, 2018
. The weighted average interest rate includes the effects of the discount accretion for the Washington Banking Merger purchase accounting adjustment.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
||||
Cash on hand and in banks
|
$
|
92,704
|
|
|
$
|
78,293
|
|
Interest earning deposits
|
69,206
|
|
|
24,722
|
|
||
Cash and cash equivalents
|
161,910
|
|
|
103,015
|
|
||
Investment securities available for sale, at fair value
|
976,095
|
|
|
810,530
|
|
||
Loans held for sale
|
1,555
|
|
|
2,288
|
|
||
Loans receivable, net
|
3,654,160
|
|
|
2,849,071
|
|
||
Allowance for loan losses
|
(35,042
|
)
|
|
(32,086
|
)
|
||
Total loans receivable, net
|
3,619,118
|
|
|
2,816,985
|
|
||
Other real estate owned
|
1,983
|
|
|
—
|
|
||
Premises and equipment, net
|
81,100
|
|
|
60,325
|
|
||
Federal Home Loan Bank stock, at cost
|
6,076
|
|
|
8,347
|
|
||
Bank owned life insurance
|
93,612
|
|
|
75,091
|
|
||
Accrued interest receivable
|
15,403
|
|
|
12,244
|
|
||
Prepaid expenses and other assets
|
98,522
|
|
|
99,328
|
|
||
Other intangible assets, net
|
20,614
|
|
|
6,088
|
|
||
Goodwill
|
240,939
|
|
|
119,029
|
|
||
Total assets
|
$
|
5,316,927
|
|
|
$
|
4,113,270
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Deposits
|
$
|
4,432,402
|
|
|
$
|
3,393,060
|
|
Federal Home Loan Bank advances
|
—
|
|
|
92,500
|
|
||
Junior subordinated debentures
|
20,302
|
|
|
20,009
|
|
||
Securities sold under agreement to repurchase
|
31,487
|
|
|
31,821
|
|
||
Accrued expenses and other liabilities
|
72,013
|
|
|
67,575
|
|
||
Total liabilities
|
4,556,204
|
|
|
3,604,965
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, no par value, 2,500,000 shares authorized; no shares issued and outstanding at December 31, 2018 and 2017
|
—
|
|
|
—
|
|
||
Common stock, no par value, 50,000,000 shares authorized;
36,874,055 and 29,927,746 shares issued and outstanding at December 31, 2018 and 2017, respectively
|
591,806
|
|
|
360,590
|
|
||
Retained earnings
|
176,372
|
|
|
149,013
|
|
||
Accumulated other comprehensive loss, net
|
(7,455
|
)
|
|
(1,298
|
)
|
||
Total stockholders’ equity
|
760,723
|
|
|
508,305
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,316,927
|
|
|
$
|
4,113,270
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
INTEREST INCOME:
|
|
|
|
|
|
||||||
Interest and fees on loans
|
$
|
175,466
|
|
|
$
|
129,213
|
|
|
$
|
122,147
|
|
Taxable interest on investment securities
|
17,602
|
|
|
12,688
|
|
|
11,215
|
|
|||
Nontaxable interest on investment securities
|
4,649
|
|
|
5,269
|
|
|
4,870
|
|
|||
Interest on other interest earning assets
|
1,642
|
|
|
539
|
|
|
280
|
|
|||
Total interest income
|
199,359
|
|
|
147,709
|
|
|
138,512
|
|
|||
INTEREST EXPENSE:
|
|
|
|
|
|
||||||
Deposits
|
10,397
|
|
|
6,049
|
|
|
5,010
|
|
|||
Junior subordinated debentures
|
1,263
|
|
|
1,014
|
|
|
880
|
|
|||
Other borrowings
|
753
|
|
|
1,283
|
|
|
116
|
|
|||
Total interest expense
|
12,413
|
|
|
8,346
|
|
|
6,006
|
|
|||
Net interest income
|
186,946
|
|
|
139,363
|
|
|
132,506
|
|
|||
Provision for loan losses
|
5,129
|
|
|
4,220
|
|
|
4,931
|
|
|||
Net interest income after provision for loan losses
|
181,817
|
|
|
135,143
|
|
|
127,575
|
|
|||
NONINTEREST INCOME:
|
|
|
|
|
|
||||||
Service charges and other fees
|
18,914
|
|
|
18,004
|
|
|
14,354
|
|
|||
Gain on sale of investment securities, net
|
137
|
|
|
6
|
|
|
1,315
|
|
|||
Gain on sale of loans, net
|
2,759
|
|
|
7,696
|
|
|
6,994
|
|
|||
Interest rate swap fees
|
564
|
|
|
1,045
|
|
|
1,854
|
|
|||
Other income
|
9,291
|
|
|
8,828
|
|
|
7,102
|
|
|||
Total noninterest income
|
31,665
|
|
|
35,579
|
|
|
31,619
|
|
|||
NONINTEREST EXPENSE:
|
|
|
|
|
|
||||||
Compensation and employee benefits
|
86,830
|
|
|
64,268
|
|
|
61,405
|
|
|||
Occupancy and equipment
|
19,779
|
|
|
15,396
|
|
|
15,763
|
|
|||
Data processing
|
9,888
|
|
|
8,176
|
|
|
7,312
|
|
|||
Marketing
|
3,228
|
|
|
2,943
|
|
|
2,835
|
|
|||
Professional services
|
9,670
|
|
|
4,777
|
|
|
3,606
|
|
|||
State and local taxes
|
3,210
|
|
|
2,461
|
|
|
2,616
|
|
|||
Federal deposit insurance premium
|
1,480
|
|
|
1,435
|
|
|
1,620
|
|
|||
Other real estate owned, net
|
106
|
|
|
(70
|
)
|
|
334
|
|
|||
Amortization of intangible assets
|
3,819
|
|
|
1,286
|
|
|
1,415
|
|
|||
Other expense
|
11,385
|
|
|
9,903
|
|
|
9,567
|
|
|||
Total noninterest expense
|
149,395
|
|
|
110,575
|
|
|
106,473
|
|
|||
Income before income taxes
|
64,087
|
|
|
60,147
|
|
|
52,721
|
|
|||
Income tax expense
|
11,030
|
|
|
18,356
|
|
|
13,803
|
|
|||
Net income
|
$
|
53,057
|
|
|
$
|
41,791
|
|
|
$
|
38,918
|
|
Basic earnings per common share
|
$
|
1.49
|
|
|
$
|
1.39
|
|
|
$
|
1.30
|
|
Diluted earnings per common share
|
$
|
1.49
|
|
|
$
|
1.39
|
|
|
$
|
1.30
|
|
Dividends declared per common share
|
$
|
0.72
|
|
|
$
|
0.61
|
|
|
$
|
0.72
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
$
|
53,057
|
|
|
$
|
41,791
|
|
|
$
|
38,918
|
|
Change in fair value of investment securities available for sale, net of tax of $(1,591), $826 and $(2,316), respectively
|
(5,956
|
)
|
|
1,530
|
|
|
(4,311
|
)
|
|||
Reclassification adjustment for net gain from sale of investment securities available for sale included in income, net of tax of $(29), $(2) and $(461), respectively
|
(108
|
)
|
|
(4
|
)
|
|
(854
|
)
|
|||
Other comprehensive (loss) income
|
(6,064
|
)
|
|
1,526
|
|
|
(5,165
|
)
|
|||
Comprehensive income
|
$
|
46,993
|
|
|
$
|
43,317
|
|
|
$
|
33,753
|
|
|
Number of
common
shares
|
|
Common
stock
|
|
Retained
earnings
|
|
Accumulated other comprehensive income (loss), net
|
|
Total
stock-
holders’
equity
|
|||||||||
Balance at December 31, 2015
|
29,975
|
|
|
$
|
359,451
|
|
|
$
|
107,960
|
|
|
$
|
2,559
|
|
|
$
|
469,970
|
|
Restricted stock awards granted, net of forfeitures
|
110
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Exercise of stock options (including excess tax benefits from nonqualified stock options)
|
38
|
|
|
560
|
|
|
—
|
|
|
—
|
|
|
560
|
|
||||
Stock-based compensation expense
|
—
|
|
|
1,840
|
|
|
—
|
|
|
—
|
|
|
1,840
|
|
||||
Net excess tax benefits from vesting of restricted stock
|
—
|
|
|
103
|
|
|
—
|
|
|
—
|
|
|
103
|
|
||||
Common stock repurchased
|
(168
|
)
|
|
(2,894
|
)
|
|
—
|
|
|
—
|
|
|
(2,894
|
)
|
||||
Net income
|
—
|
|
|
—
|
|
|
38,918
|
|
|
—
|
|
|
38,918
|
|
||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,165
|
)
|
|
(5,165
|
)
|
||||
Cash dividends declared on common stock ($0.72 per share)
|
—
|
|
|
—
|
|
|
(21,569
|
)
|
|
—
|
|
|
(21,569
|
)
|
||||
Balance at December 31, 2016
|
29,955
|
|
|
359,060
|
|
|
125,309
|
|
|
(2,606
|
)
|
|
481,763
|
|
||||
Restricted stock awards forfeited
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Exercise of stock options
|
13
|
|
|
164
|
|
|
—
|
|
|
—
|
|
|
164
|
|
||||
Stock-based compensation expense
|
—
|
|
|
2,103
|
|
|
—
|
|
|
—
|
|
|
2,103
|
|
||||
Common stock repurchased
|
(30
|
)
|
|
(737
|
)
|
|
—
|
|
|
—
|
|
|
(737
|
)
|
||||
Net income
|
—
|
|
|
—
|
|
|
41,791
|
|
|
—
|
|
|
41,791
|
|
||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
1,526
|
|
|
1,526
|
|
||||
Cash dividends declared on common stock ($0.61 per share)
|
—
|
|
|
—
|
|
|
(18,305
|
)
|
|
—
|
|
|
(18,305
|
)
|
||||
ASU 2018-02 Implementation
|
—
|
|
|
—
|
|
|
218
|
|
|
(218
|
)
|
|
—
|
|
||||
Balance at December 31, 2017
|
29,928
|
|
|
360,590
|
|
|
149,013
|
|
|
(1,298
|
)
|
|
508,305
|
|
||||
Restricted stock units vested, net of restricted stock awards forfeited
|
29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Exercise of stock options
|
10
|
|
|
133
|
|
|
—
|
|
|
—
|
|
|
133
|
|
||||
Stock-based compensation expense
|
—
|
|
|
2,744
|
|
|
—
|
|
|
—
|
|
|
2,744
|
|
||||
Common stock repurchased
|
(53
|
)
|
|
(1,704
|
)
|
|
—
|
|
|
—
|
|
|
(1,704
|
)
|
||||
Net income
|
—
|
|
|
—
|
|
|
53,057
|
|
|
—
|
|
|
53,057
|
|
||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,064
|
)
|
|
(6,064
|
)
|
||||
Common stock issued in business combinations
|
6,960
|
|
|
230,043
|
|
|
—
|
|
|
—
|
|
|
230,043
|
|
||||
Cash dividends declared on common stock ($0.72 per share)
|
—
|
|
|
—
|
|
|
(25,791
|
)
|
|
—
|
|
|
(25,791
|
)
|
||||
ASU 2016-01 Implementation
|
—
|
|
|
—
|
|
|
93
|
|
|
(93
|
)
|
|
—
|
|
||||
Balance at December 31, 2018
|
36,874
|
|
|
$
|
591,806
|
|
|
$
|
176,372
|
|
|
$
|
(7,455
|
)
|
|
$
|
760,723
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
53,057
|
|
|
$
|
41,791
|
|
|
$
|
38,918
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation of premises and equipment, amortization of securities available for sale, and amortization of discount of junior subordinated debentures
|
9,808
|
|
|
10,704
|
|
|
12,709
|
|
|||
Changes in net deferred loan costs, net of amortization
|
(150
|
)
|
|
(1,007
|
)
|
|
(1,422
|
)
|
|||
Provision for loan losses
|
5,129
|
|
|
4,220
|
|
|
4,931
|
|
|||
Net change in accrued interest receivable, prepaid expenses and other assets, accrued expenses and other liabilities
|
10,195
|
|
|
11,634
|
|
|
2,147
|
|
|||
Stock-based compensation expense
|
2,744
|
|
|
2,103
|
|
|
1,840
|
|
|||
Net excess tax benefit from exercise of stock-based compensation
|
—
|
|
|
—
|
|
|
(123
|
)
|
|||
Amortization of intangible assets
|
3,819
|
|
|
1,286
|
|
|
1,415
|
|
|||
Origination of loans held for sale
|
(76,101
|
)
|
|
(108,696
|
)
|
|
(145,107
|
)
|
|||
Proceeds from sale of loans
|
79,237
|
|
|
121,482
|
|
|
148,121
|
|
|||
Earnings on bank owned life insurance
|
(1,753
|
)
|
|
(1,424
|
)
|
|
(1,460
|
)
|
|||
Valuation adjustment on other real estate owned
|
49
|
|
|
—
|
|
|
383
|
|
|||
Gain on sale of loans, net
|
(2,759
|
)
|
|
(7,696
|
)
|
|
(6,994
|
)
|
|||
Gain on sale of investment securities, net
|
(137
|
)
|
|
(6
|
)
|
|
(1,315
|
)
|
|||
Gain on sale of assets held for sale
|
(798
|
)
|
|
(747
|
)
|
|
—
|
|
|||
Loss on sale of other real estate owned
|
—
|
|
|
(144
|
)
|
|
(173
|
)
|
|||
Impairment of assets held for sale
|
75
|
|
|
—
|
|
|
—
|
|
|||
Loss on sale or write-off of furniture, equipment and leasehold improvements
|
32
|
|
|
13
|
|
|
110
|
|
|||
Net cash provided by operating activities
|
82,447
|
|
|
73,513
|
|
|
53,980
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Loans originated, net of principal payments
|
(98,563
|
)
|
|
(235,154
|
)
|
|
(263,387
|
)
|
|||
Maturities of other interest earning deposits
|
—
|
|
|
—
|
|
|
6,709
|
|
|||
Maturities, calls and payments of investment securities available for sale
|
92,563
|
|
|
98,894
|
|
|
129,408
|
|
|||
Purchase of investment securities available for sale
|
(342,141
|
)
|
|
(149,914
|
)
|
|
(267,657
|
)
|
|||
Purchase of premises and equipment
|
(23,265
|
)
|
|
(3,063
|
)
|
|
(6,722
|
)
|
|||
Proceeds from sales of other loans
|
9,993
|
|
|
28,874
|
|
|
21,077
|
|
|||
Proceeds from sales of other real estate owned
|
198
|
|
|
930
|
|
|
2,486
|
|
|||
Proceeds from sales of investment securities available for sale
|
156,014
|
|
|
31,028
|
|
|
140,373
|
|
|||
Proceeds from sales of assets held for sale
|
1,908
|
|
|
1,849
|
|
|
—
|
|
|||
Proceeds from redemption of Federal Home Loan Bank stock
|
26,538
|
|
|
30,018
|
|
|
23,732
|
|
|||
Purchases of Federal Home Loan Bank stock
|
(22,524
|
)
|
|
(30,801
|
)
|
|
(27,148
|
)
|
|||
Proceeds from sales of premises and equipment
|
28
|
|
|
—
|
|
|
659
|
|
|||
Purchase of bank owned life insurance
|
(54
|
)
|
|
(4,394
|
)
|
|
(8,000
|
)
|
|||
Proceeds from BOLI death benefit
|
—
|
|
|
1,101
|
|
|
—
|
|
|||
Capital contributions to low-income housing tax credit partnerships and new market tax credit partnerships, net
|
(8,303
|
)
|
|
(10,762
|
)
|
|
(4,456
|
)
|
|||
Net cash received from acquisitions
|
105,974
|
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(101,634
|
)
|
|
(241,394
|
)
|
|
(252,926
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Net increase in deposits
|
214,740
|
|
|
163,412
|
|
|
121,361
|
|
|||
Federal Home Loan Bank advances
|
554,950
|
|
|
763,350
|
|
|
660,900
|
|
|||
Repayments of Federal Home Loan Bank advances
|
(663,450
|
)
|
|
(750,450
|
)
|
|
(581,300
|
)
|
|||
Common stock cash dividends paid
|
(25,791
|
)
|
|
(18,305
|
)
|
|
(21,569
|
)
|
|||
Net (decrease)/increase in securities sold under agreement to repurchase
|
(796
|
)
|
|
9,717
|
|
|
(1,110
|
)
|
|||
Proceeds from exercise of stock options
|
133
|
|
|
164
|
|
|
540
|
|
|||
Net excess tax benefit from exercise of stock-based compensation
|
—
|
|
|
—
|
|
|
123
|
|
|||
Repurchase of common stock
|
(1,704
|
)
|
|
(737
|
)
|
|
(2,894
|
)
|
|||
Net cash provided by financing activities
|
78,082
|
|
|
167,151
|
|
|
176,051
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
58,895
|
|
|
(730
|
)
|
|
(22,895
|
)
|
|||
Cash and cash equivalents at beginning of year
|
103,015
|
|
|
103,745
|
|
|
126,640
|
|
|||
Cash and cash equivalents at end of year
|
$
|
161,910
|
|
|
$
|
103,015
|
|
|
$
|
103,745
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
12,385
|
|
|
$
|
8,399
|
|
|
$
|
5,998
|
|
Cash paid for income taxes
|
5,634
|
|
|
2,045
|
|
|
11,500
|
|
|||
|
|
|
|
|
|
||||||
Supplemental non-cash disclosures of cash flow information:
|
|
|
|
|
|
||||||
Transfers of loans receivable to other real estate owned
|
$
|
434
|
|
|
$
|
32
|
|
|
$
|
1,431
|
|
Transfers of properties held for sale recorded in premises and equipment, net to prepaid expenses and other assets
|
1,836
|
|
|
2,687
|
|
|
—
|
|
|||
Transfer of BOLI to prepaid expenses and other assets
|
421
|
|
|
—
|
|
|
—
|
|
|||
Investment in low income housing tax credit partnership and related funding commitment
|
—
|
|
|
33,171
|
|
|
19,663
|
|
|||
Business Combinations:
|
|
|
|
|
|
||||||
Common stock issued for business combinations
|
$
|
230,043
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Assets acquired (liabilities assumed) in acquisitions:
|
|
|
|
|
|
||||||
Investment securities available for sale
|
84,846
|
|
|
—
|
|
|
—
|
|
|||
Loans receivable
|
718,620
|
|
|
—
|
|
|
—
|
|
|||
Other real estate owned
|
1,796
|
|
|
—
|
|
|
—
|
|
|||
Premises and equipment
|
3,785
|
|
|
—
|
|
|
—
|
|
|||
Federal Home Loan Bank stock
|
1,743
|
|
|
—
|
|
|
—
|
|
|||
Accrued interest receivable
|
2,454
|
|
|
—
|
|
|
—
|
|
|||
Bank owned life insurance
|
17,116
|
|
|
—
|
|
|
—
|
|
|||
Prepaid expenses and other assets
|
2,957
|
|
|
—
|
|
|
—
|
|
|||
Other intangible assets
|
18,345
|
|
|
—
|
|
|
—
|
|
|||
Goodwill
|
121,910
|
|
|
—
|
|
|
—
|
|
|||
Deposits
|
(824,602
|
)
|
|
—
|
|
|
—
|
|
|||
Federal Home Loan Bank advances
|
(16,000
|
)
|
|
—
|
|
|
—
|
|
|||
Securities sold under agreement to repurchase
|
(462
|
)
|
|
—
|
|
|
—
|
|
|||
Accrued expenses and other liabilities
|
(8,439
|
)
|
|
—
|
|
|
—
|
|
(1)
|
Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements
|
•
|
Service Charges on Deposit Accounts: The Company earns fees from its deposit customers from a variety of deposit products and services. Non-transaction based fees such as account maintenance fees and monthly statement fees are considered to be provided to the customer under a day-to-day contract with ongoing renewals. Revenues for these non-transaction fees are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Transaction-based fees such as non-sufficient fund charges, stop payment charges and wire fees are recognized at the time the transaction is executed as the contract duration does not extend beyond the service performed.
|
•
|
Wealth Management and Trust Services: The Company earns fees from contracts with customers for fiduciary and brokerage activities. Revenues are generally recognized on a monthly basis and are generally based on a percentage of the customer’s assets under management or based on investment or insurance solutions that are implemented for the customer.
|
•
|
Merchant Processing Services and Debit and Credit Card Fees: The Company earns fees from cardholder transactions conducted through third party payment network providers which consist of (i) interchange fees earned from the payment network as a debit card issuer, (ii) referral fee income, and (iii) ongoing merchant fees earned for referring customers to the payment processing provider. These fees are recognized when the transaction occurs, but may settle on a daily or monthly basis.
|
•
|
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.
|
(2)
|
Business Combinations
|
|
Premier Merger
|
|
Puget Sound Merger
|
||||
|
(In thousands)
|
||||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
22,534
|
|
|
$
|
25,889
|
|
Interest earning deposits
|
3,309
|
|
|
54,247
|
|
||
Investment securities available for sale
|
4,493
|
|
|
80,353
|
|
||
Loans receivable
(1)
|
330,158
|
|
|
388,462
|
|
||
Other real estate owned
|
1,796
|
|
|
—
|
|
||
Premises and equipment, net
|
3,053
|
|
|
732
|
|
||
Federal Home Loan Bank stock, at cost
|
1,120
|
|
|
623
|
|
||
Bank owned life insurance
|
10,852
|
|
|
6,264
|
|
||
Accrued interest receivable
|
1,006
|
|
|
1,448
|
|
||
Prepaid expenses and other assets
|
1,603
|
|
|
1,354
|
|
||
Other intangible assets
|
7,075
|
|
|
11,270
|
|
||
Total assets acquired
|
$
|
386,999
|
|
|
$
|
570,642
|
|
Liabilities
|
|
|
|
||||
Deposits
|
$
|
318,717
|
|
|
$
|
505,885
|
|
Federal Home Loan Bank advances
|
16,000
|
|
|
—
|
|
||
Securities sold under agreement to repurchase
|
462
|
|
|
—
|
|
||
Accrued expenses and other liabilities
|
5,935
|
|
|
2,504
|
|
||
Total liabilities acquired
|
$
|
341,114
|
|
|
$
|
508,389
|
|
|
|
|
|
||||
Fair value of net assets acquired
|
$
|
45,885
|
|
|
$
|
62,253
|
|
(1)
|
The outstanding loan balance acquired in the Premier Merger and Puget Sound Merger was
$335.4 million
and
$392.7 million
, respectively, at the acquisition date.
|
|
Premier Merger
|
|
Puget Sound Merger
|
||||
|
(In thousands)
|
||||||
Consideration transferred
|
$
|
99,275
|
|
|
$
|
130,773
|
|
|
|
|
|
||||
Cost basis of net assets on merger date
|
$
|
40,629
|
|
|
$
|
54,405
|
|
Fair value adjustments:
|
|
|
|
||||
Investment securities
|
(135
|
)
|
|
(348
|
)
|
||
Total loans receivable, net
|
(111
|
)
|
|
1,400
|
|
||
Other real estate owned
|
(1,017
|
)
|
|
—
|
|
||
Premises and equipment
|
1,312
|
|
|
(121
|
)
|
||
Other intangible assets
|
7,075
|
|
|
9,207
|
|
||
Prepaid expenses and other assets
|
(1,912
|
)
|
|
(2,282
|
)
|
||
Deposits
|
(310
|
)
|
|
(62
|
)
|
||
Accrued expenses and other liabilities
|
354
|
|
|
54
|
|
||
Fair value of net assets on merger date
|
$
|
45,885
|
|
|
$
|
62,253
|
|
|
|
|
|
||||
Goodwill recognized from the mergers
|
$
|
53,390
|
|
|
$
|
68,520
|
|
|
Premier Merger
(1)
|
|
Puget Sound Merger
(1)
|
|
Total
|
||||||
|
Year ended December 31, 2018
|
||||||||||
|
(In thousands)
|
||||||||||
Interest income: Interest and fees on loans
(2)
|
$
|
10,462
|
|
|
$
|
21,898
|
|
|
$
|
32,360
|
|
Interest income: Interest and fees on investments
(3)
|
76
|
|
|
59
|
|
|
135
|
|
|||
Interest income: Other interest earning assets
|
174
|
|
|
113
|
|
|
287
|
|
|||
Interest expense
|
(445
|
)
|
|
(682
|
)
|
|
(1,127
|
)
|
|||
Provision for loan losses for loans
|
(700
|
)
|
|
(850
|
)
|
|
(1,550
|
)
|
|||
Noninterest income
|
125
|
|
|
472
|
|
|
597
|
|
|||
Noninterest expense
(4)
|
(7,558
|
)
|
|
(11,230
|
)
|
|
(18,788
|
)
|
|||
Net effect, pre-tax
|
$
|
2,134
|
|
|
$
|
9,780
|
|
|
$
|
11,914
|
|
|
Pro Forma for the Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Dollars in thousands, except per share amounts)
|
||||||
Net interest income
|
$
|
194,989
|
|
|
$
|
174,190
|
|
Net income
|
69,515
|
|
|
41,551
|
|
||
Basic earnings per common share
|
$
|
1.88
|
|
|
$
|
1.12
|
|
Dilutive Earnings per common share
|
$
|
1.87
|
|
|
$
|
1.12
|
|
(3)
|
Investment Securities
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
(In thousands)
|
||||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
101,595
|
|
|
$
|
155
|
|
|
$
|
(147
|
)
|
|
$
|
101,603
|
|
Municipal securities
|
158,461
|
|
|
1,209
|
|
|
(806
|
)
|
|
158,864
|
|
||||
Mortgage-backed securities and collateralized mortgage obligations
(1)
:
|
|
|
|
|
|
|
|
||||||||
Residential
|
337,295
|
|
|
426
|
|
|
(6,119
|
)
|
|
331,602
|
|
||||
Commercial
|
338,250
|
|
|
1,035
|
|
|
(5,524
|
)
|
|
333,761
|
|
||||
Corporate obligations
|
25,662
|
|
|
36
|
|
|
(135
|
)
|
|
25,563
|
|
||||
Other asset-backed securities
|
24,278
|
|
|
424
|
|
|
—
|
|
|
24,702
|
|
||||
Total
|
$
|
985,541
|
|
|
$
|
3,285
|
|
|
$
|
(12,731
|
)
|
|
$
|
976,095
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
13,460
|
|
|
$
|
6
|
|
|
$
|
(24
|
)
|
|
$
|
13,442
|
|
Municipal securities
|
247,358
|
|
|
3,720
|
|
|
(1,063
|
)
|
|
250,015
|
|
||||
Mortgage-backed securities and collateralized mortgage obligations
(1)
:
|
|
|
|
|
|
|
|
||||||||
Residential
|
282,724
|
|
|
422
|
|
|
(2,935
|
)
|
|
280,211
|
|
||||
Commercial
|
219,696
|
|
|
444
|
|
|
(3,061
|
)
|
|
217,079
|
|
||||
Collateralized loan obligations
|
4,561
|
|
|
19
|
|
|
—
|
|
|
4,580
|
|
||||
Corporate obligations
|
16,594
|
|
|
220
|
|
|
(44
|
)
|
|
16,770
|
|
||||
Other securities
(2)
|
27,781
|
|
|
652
|
|
|
—
|
|
|
28,433
|
|
||||
Total
|
$
|
812,174
|
|
|
$
|
5,483
|
|
|
$
|
(7,127
|
)
|
|
$
|
810,530
|
|
(1)
|
Issued and guaranteed by U.S. Government-sponsored agencies.
|
(2)
|
Primarily asset-backed securities.
|
|
Amortized Cost
|
|
Fair Value
|
||||
|
(In thousands)
|
||||||
Due in one year or less
|
$
|
38,547
|
|
|
$
|
38,478
|
|
Due after one year through five years
|
193,191
|
|
|
192,556
|
|
||
Due after five years through ten years
|
272,408
|
|
|
268,779
|
|
||
Due after ten years
|
481,395
|
|
|
476,282
|
|
||
Total
|
$
|
985,541
|
|
|
$
|
976,095
|
|
|
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, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
46,992
|
|
|
$
|
(58
|
)
|
|
$
|
7,350
|
|
|
$
|
(89
|
)
|
|
$
|
54,342
|
|
|
$
|
(147
|
)
|
Municipal securities
|
31,157
|
|
|
(159
|
)
|
|
38,792
|
|
|
(647
|
)
|
|
69,949
|
|
|
(806
|
)
|
||||||
Mortgage-backed securities and collateralized mortgage obligations
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
66,620
|
|
|
(247
|
)
|
|
193,726
|
|
|
(5,872
|
)
|
|
260,346
|
|
|
(6,119
|
)
|
||||||
Commercial
|
43,531
|
|
|
(272
|
)
|
|
190,585
|
|
|
(5,252
|
)
|
|
234,116
|
|
|
(5,524
|
)
|
||||||
Corporate obligations
|
13,736
|
|
|
(87
|
)
|
|
1,951
|
|
|
(48
|
)
|
|
15,687
|
|
|
(135
|
)
|
||||||
Total
|
$
|
202,036
|
|
|
$
|
(823
|
)
|
|
$
|
432,404
|
|
|
$
|
(11,908
|
)
|
|
$
|
634,440
|
|
|
$
|
(12,731
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
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
|
)
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Gross realized gains
|
$
|
273
|
|
|
$
|
193
|
|
|
$
|
1,518
|
|
Gross realized losses
|
(136
|
)
|
|
(187
|
)
|
|
(203
|
)
|
|||
Net realized gains
|
$
|
137
|
|
|
$
|
6
|
|
|
$
|
1,315
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Washington and Oregon state to secure public deposits
|
$
|
199,026
|
|
|
$
|
196,786
|
|
|
$
|
206,377
|
|
|
$
|
206,425
|
|
Repurchase agreements
|
48,173
|
|
|
47,407
|
|
|
48,750
|
|
|
48,237
|
|
||||
Other securities pledged
|
20,778
|
|
|
20,482
|
|
|
12,484
|
|
|
12,498
|
|
||||
Total
|
$
|
267,977
|
|
|
$
|
264,675
|
|
|
$
|
267,611
|
|
|
$
|
267,160
|
|
(4)
|
Loans Receivable
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
853,606
|
|
|
$
|
645,396
|
|
Owner-occupied commercial real estate
|
779,814
|
|
|
622,150
|
|
||
Non-owner occupied commercial real estate
|
1,304,463
|
|
|
986,594
|
|
||
Total commercial business
|
2,937,883
|
|
|
2,254,140
|
|
||
One-to-four family residential
|
101,763
|
|
|
86,997
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
102,730
|
|
|
51,985
|
|
||
Five or more family residential and commercial properties
|
112,730
|
|
|
97,499
|
|
||
Total real estate construction and land development
|
215,460
|
|
|
149,484
|
|
||
Consumer
|
395,545
|
|
|
355,091
|
|
||
Gross loans receivable
|
3,650,651
|
|
|
2,845,712
|
|
||
Net deferred loan costs
|
3,509
|
|
|
3,359
|
|
||
Loans receivable, net
|
3,654,160
|
|
|
2,849,071
|
|
||
Allowance for loan losses
|
(35,042
|
)
|
|
(32,086
|
)
|
||
Total loans receivable, net
|
$
|
3,619,118
|
|
|
$
|
2,816,985
|
|
•
|
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.
|
|
December 31, 2018
|
||||||||||||||||||
|
Pass
|
|
OAEM
|
|
Substandard
|
|
Doubtful/Loss
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
788,395
|
|
|
$
|
16,168
|
|
|
$
|
49,043
|
|
|
$
|
—
|
|
|
$
|
853,606
|
|
Owner-occupied commercial real estate
|
741,227
|
|
|
27,724
|
|
|
10,863
|
|
|
—
|
|
|
779,814
|
|
|||||
Non-owner occupied commercial real estate
|
1,283,077
|
|
|
9,438
|
|
|
11,948
|
|
|
—
|
|
|
1,304,463
|
|
|||||
Total commercial business
|
2,812,699
|
|
|
53,330
|
|
|
71,854
|
|
|
—
|
|
|
2,937,883
|
|
|||||
One-to-four family residential
|
100,401
|
|
|
—
|
|
|
1,362
|
|
|
—
|
|
|
101,763
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
101,519
|
|
|
258
|
|
|
953
|
|
|
—
|
|
|
102,730
|
|
|||||
Five or more family residential and commercial properties
|
112,678
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
112,730
|
|
|||||
Total real estate construction and land development
|
214,197
|
|
|
310
|
|
|
953
|
|
|
—
|
|
|
215,460
|
|
|||||
Consumer
|
390,808
|
|
|
—
|
|
|
4,213
|
|
|
524
|
|
|
395,545
|
|
|||||
Gross loans receivable
|
$
|
3,518,105
|
|
|
$
|
53,640
|
|
|
$
|
78,382
|
|
|
$
|
524
|
|
|
$
|
3,650,651
|
|
|
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, 2018
|
|
December 31, 2017
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
6,639
|
|
|
$
|
3,110
|
|
Owner-occupied commercial real estate
|
4,212
|
|
|
4,090
|
|
||
Non-owner occupied commercial real estate
|
1,713
|
|
|
1,898
|
|
||
Total commercial business
|
12,564
|
|
|
9,098
|
|
||
One-to-four family residential
|
71
|
|
|
81
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
899
|
|
|
1,247
|
|
||
Total real estate construction and land development
|
899
|
|
|
1,247
|
|
||
Consumer
|
169
|
|
|
277
|
|
||
Nonaccrual loans
|
$
|
13,703
|
|
|
$
|
10,703
|
|
|
December 31, 2018
|
||||||||||||||||||
|
30-89 Days
|
|
90 Days or
Greater
|
|
Total Past
Due
|
|
Current
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
2,988
|
|
|
$
|
2,281
|
|
|
$
|
5,269
|
|
|
$
|
848,337
|
|
|
$
|
853,606
|
|
Owner-occupied commercial real estate
|
563
|
|
|
600
|
|
|
1,163
|
|
|
778,651
|
|
|
779,814
|
|
|||||
Non-owner occupied commercial real estate
|
5,347
|
|
|
1,461
|
|
|
6,808
|
|
|
1,297,655
|
|
|
1,304,463
|
|
|||||
Total commercial business
|
8,898
|
|
|
4,342
|
|
|
13,240
|
|
|
2,924,643
|
|
|
2,937,883
|
|
|||||
One-to-four family residential
|
227
|
|
|
—
|
|
|
227
|
|
|
101,536
|
|
|
101,763
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
665
|
|
|
234
|
|
|
899
|
|
|
101,831
|
|
|
102,730
|
|
|||||
Five or more family residential and commercial properties
|
—
|
|
|
—
|
|
|
—
|
|
|
112,730
|
|
|
112,730
|
|
|||||
Total real estate construction and land development
|
665
|
|
|
234
|
|
|
899
|
|
|
214,561
|
|
|
215,460
|
|
|||||
Consumer
|
2,568
|
|
|
—
|
|
|
2,568
|
|
|
392,977
|
|
|
395,545
|
|
|||||
Gross loans receivable
|
$
|
12,358
|
|
|
$
|
4,576
|
|
|
$
|
16,934
|
|
|
$
|
3,633,717
|
|
|
$
|
3,650,651
|
|
|
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, 2018
|
||||||||||||||||||
|
Recorded
Investment With
No Specific
Valuation
Allowance
|
|
Recorded
Investment With
Specific
Valuation
Allowance
|
|
Total
Recorded
Investment
|
|
Unpaid
Contractual
Principal
Balance
|
|
Related
Specific
Valuation
Allowance
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
2,523
|
|
|
$
|
20,119
|
|
|
$
|
22,642
|
|
|
$
|
24,176
|
|
|
$
|
2,607
|
|
Owner-occupied commercial real estate
|
816
|
|
|
5,000
|
|
|
5,816
|
|
|
6,150
|
|
|
1,142
|
|
|||||
Non-owner occupied commercial real estate
|
3,352
|
|
|
2,924
|
|
|
6,276
|
|
|
6,414
|
|
|
206
|
|
|||||
Total commercial business
|
6,691
|
|
|
28,043
|
|
|
34,734
|
|
|
36,740
|
|
|
3,955
|
|
|||||
One-to-four family residential
|
—
|
|
|
279
|
|
|
279
|
|
|
293
|
|
|
76
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
899
|
|
|
—
|
|
|
899
|
|
|
1,662
|
|
|
—
|
|
|||||
Total real estate construction and land development
|
899
|
|
|
—
|
|
|
899
|
|
|
1,662
|
|
|
—
|
|
|||||
Consumer
|
—
|
|
|
527
|
|
|
527
|
|
|
538
|
|
|
139
|
|
|||||
Total
|
$
|
7,590
|
|
|
$
|
28,849
|
|
|
$
|
36,439
|
|
|
$
|
39,233
|
|
|
$
|
4,170
|
|
|
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
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Commercial business:
|
|
|
|
|
|
||||||
Commercial and industrial
|
$
|
16,773
|
|
|
$
|
11,310
|
|
|
$
|
10,207
|
|
Owner-occupied commercial real estate
|
11,312
|
|
|
5,401
|
|
|
4,540
|
|
|||
Non-owner occupied commercial real estate
|
9,465
|
|
|
12,162
|
|
|
11,709
|
|
|||
Total commercial business
|
37,550
|
|
|
28,873
|
|
|
26,456
|
|
|||
One-to-four family residential
|
290
|
|
|
309
|
|
|
279
|
|
|||
Real estate construction and land development:
|
|
|
|
|
|
||||||
One-to-four family residential
|
1,091
|
|
|
2,315
|
|
|
3,305
|
|
|||
Five or more family residential and commercial properties
|
129
|
|
|
903
|
|
|
1,656
|
|
|||
Total real estate construction and land development
|
1,220
|
|
|
3,218
|
|
|
4,961
|
|
|||
Consumer
|
428
|
|
|
351
|
|
|
645
|
|
|||
Total
|
$
|
39,488
|
|
|
$
|
32,751
|
|
|
$
|
32,341
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Performing
TDRs
|
|
Nonaccrual
TDRs
|
|
Performing
TDRs |
|
Nonaccrual
TDRs |
||||||||
|
(In thousands)
|
||||||||||||||
TDR loans
|
$
|
22,736
|
|
|
$
|
6,943
|
|
|
$
|
26,757
|
|
|
$
|
5,193
|
|
Allowance for loan losses on TDR loans
|
2,257
|
|
|
658
|
|
|
2,635
|
|
|
379
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Number of
Contracts
(1)
|
|
Recorded Investment
(1) (2)
|
|
Number of
Contracts
(1)
|
|
Recorded Investment
(1) (2)
|
|
Number of
Contracts
(1)
|
|
Recorded Investment
(1) (2)
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial and industrial
|
31
|
|
|
$
|
16,129
|
|
|
19
|
|
|
$
|
7,212
|
|
|
19
|
|
|
$
|
7,398
|
|
Owner-occupied commercial real estate
|
4
|
|
|
2,521
|
|
|
3
|
|
|
1,366
|
|
|
2
|
|
|
569
|
|
|||
Non-owner occupied commercial real estate
|
3
|
|
|
2,944
|
|
|
4
|
|
|
9,574
|
|
|
2
|
|
|
2,121
|
|
|||
Total commercial business
|
38
|
|
|
21,594
|
|
|
26
|
|
|
18,152
|
|
|
23
|
|
|
10,088
|
|
|||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
One-to-four family residential
|
2
|
|
|
665
|
|
|
2
|
|
|
938
|
|
|
5
|
|
|
2,206
|
|
|||
Five or more family residential and commercial properties
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1,078
|
|
|||
Total real estate construction and land development
|
2
|
|
|
665
|
|
|
2
|
|
|
938
|
|
|
6
|
|
|
3,284
|
|
|||
Consumer
|
13
|
|
|
236
|
|
|
8
|
|
|
110
|
|
|
6
|
|
|
66
|
|
|||
Total TDR loans
|
53
|
|
|
$
|
22,495
|
|
|
36
|
|
|
$
|
19,200
|
|
|
35
|
|
|
$
|
13,438
|
|
(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,
2018
,
2017
and
2016
.
|
(2)
|
Includes subsequent payments after modifications and reflects the balance as of period end. As the Bank did not forgive any principal or interest balance as part of the loan modification, the Bank’s recorded investment in each loan at the date of modification (pre-modification) did not change as a result of the modification (post-modification), 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,
2018
,
2017
and
2016
.
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Number of
Contracts
|
|
Recorded Investment
(1)
|
|
Number of
Contracts |
|
Recorded Investment
(1)
|
|
Number of
Contracts |
|
Recorded Investment
(1)
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial and industrial
|
5
|
|
|
$
|
1,890
|
|
|
1
|
|
|
$
|
283
|
|
|
—
|
|
|
$
|
—
|
|
Owner-occupied commercial real estate
|
1
|
|
|
65
|
|
|
1
|
|
|
80
|
|
|
1
|
|
|
488
|
|
|||
Total commercial business
|
6
|
|
|
1,955
|
|
|
2
|
|
|
363
|
|
|
1
|
|
|
488
|
|
|||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
One-to-four family residential
|
2
|
|
|
665
|
|
|
2
|
|
|
938
|
|
|
2
|
|
|
1,143
|
|
|||
Total real estate construction and land development
|
2
|
|
|
665
|
|
|
2
|
|
|
938
|
|
|
2
|
|
|
1,143
|
|
|||
Consumer
|
—
|
|
|
—
|
|
|
1
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|||
Total
|
8
|
|
|
$
|
2,620
|
|
|
5
|
|
|
$
|
1,308
|
|
|
3
|
|
|
$
|
1,631
|
|
(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,
2018
,
2017
and
2016
.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Outstanding Principal
|
|
Recorded Investment
|
|
Outstanding Principal
|
|
Recorded Investment
|
||||||||
|
(In thousands)
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
$
|
6,319
|
|
|
$
|
3,433
|
|
|
$
|
8,818
|
|
|
$
|
2,912
|
|
Owner-occupied commercial real estate
|
7,830
|
|
|
7,215
|
|
|
12,230
|
|
|
11,515
|
|
||||
Non-owner occupied commercial real estate
|
8,685
|
|
|
7,059
|
|
|
14,295
|
|
|
13,342
|
|
||||
Total commercial business
|
22,834
|
|
|
17,707
|
|
|
35,343
|
|
|
27,769
|
|
||||
One-to-four family residential
|
3,169
|
|
|
3,315
|
|
|
4,120
|
|
|
5,255
|
|
||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||||
One-to-four family residential
|
67
|
|
|
380
|
|
|
841
|
|
|
89
|
|
||||
Five or more family residential and commercial properties
|
188
|
|
|
43
|
|
|
2,361
|
|
|
2,035
|
|
||||
Total real estate construction and land development
|
255
|
|
|
423
|
|
|
3,202
|
|
|
2,124
|
|
||||
Consumer
|
2,203
|
|
|
3,462
|
|
|
3,974
|
|
|
5,455
|
|
||||
Gross PCI loans
|
$
|
28,461
|
|
|
$
|
24,907
|
|
|
$
|
46,639
|
|
|
$
|
40,603
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Balance at the beginning of the year
|
$
|
11,224
|
|
|
$
|
13,860
|
|
|
$
|
17,592
|
|
Accretion
|
(2,674
|
)
|
|
(3,471
|
)
|
|
(4,962
|
)
|
|||
Disposal and other
|
(2,871
|
)
|
|
(2,758
|
)
|
|
(3,329
|
)
|
|||
Reclassification from (to) nonaccreatable difference
|
3,814
|
|
|
3,593
|
|
|
4,559
|
|
|||
Balance at the end of the year
|
$
|
9,493
|
|
|
$
|
11,224
|
|
|
$
|
13,860
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(in thousands)
|
||||||||||
Balance outstanding at the beginning of year
|
|
$
|
8,460
|
|
|
$
|
19,917
|
|
|
$
|
20,775
|
|
Elimination of outstanding loan balance due to change in related party status
|
|
—
|
|
|
(10,930
|
)
|
|
—
|
|
|||
Principal additions
|
|
211
|
|
|
—
|
|
|
738
|
|
|||
Principal reductions
|
|
(304
|
)
|
|
(527
|
)
|
|
(1,596
|
)
|
|||
Balance outstanding at the end of year
|
|
$
|
8,367
|
|
|
$
|
8,460
|
|
|
$
|
19,917
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
One-to-four family residential loans:
|
|
|
|
|
|
|
||||||
Originated
(1)
|
|
$
|
121,998
|
|
|
$
|
144,066
|
|
|
$
|
178,169
|
|
Sold
|
|
76,834
|
|
|
113,786
|
|
|
141,127
|
|
|||
Gain on sale of loans, net
(2)
|
|
2,403
|
|
|
3,412
|
|
|
3,723
|
|
(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.
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
|
(In thousands)
|
||||||
Commitments to sell mortgage loans
|
|
$
|
3,910
|
|
|
$
|
10,140
|
|
|
|
|
|
|
||||
Commitments to fund mortgage loans (at interest rates approximating market rates) for portfolio or for sale:
|
|
|
|
|
||||
Fixed rate
|
|
$
|
6,593
|
|
|
$
|
10,894
|
|
Variable or adjustable rate
|
|
1,008
|
|
|
56
|
|
||
Total commitments to fund mortgage loans
|
|
$
|
7,601
|
|
|
$
|
10,950
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
|
(In thousands)
|
||||||
SBA loans serviced for others with participating interest, gross loan balance
|
|
$
|
54,335
|
|
|
$
|
53,809
|
|
SBA loans serviced for others with participating interest, participation balance owned by Bank
(1)
|
|
12,715
|
|
|
12,394
|
|
(5)
|
Allowance for Loan Losses
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Balance at the beginning of the year
|
$
|
32,086
|
|
|
$
|
31,083
|
|
|
$
|
29,746
|
|
Charge-offs
|
(3,605
|
)
|
|
(4,838
|
)
|
|
(6,085
|
)
|
|||
Recoveries of loans previously charged-off
|
1,432
|
|
|
1,621
|
|
|
2,491
|
|
|||
Provision for loan losses
|
5,129
|
|
|
4,220
|
|
|
4,931
|
|
|||
Balance at the end of the year
|
$
|
35,042
|
|
|
$
|
32,086
|
|
|
$
|
31,083
|
|
|
Balance at Beginning of Year
|
|
Charge-offs
|
|
Recoveries
|
|
Provision for Loan Losses
|
|
Balance at End of Year
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
9,910
|
|
|
$
|
(1,250
|
)
|
|
$
|
901
|
|
|
$
|
1,782
|
|
|
$
|
11,343
|
|
Owner-occupied commercial real estate
|
3,992
|
|
|
(1
|
)
|
|
7
|
|
|
900
|
|
|
4,898
|
|
|||||
Non-owner occupied commercial real estate
|
8,097
|
|
|
(149
|
)
|
|
—
|
|
|
(478
|
)
|
|
7,470
|
|
|||||
Total commercial business
|
21,999
|
|
|
(1,400
|
)
|
|
908
|
|
|
2,204
|
|
|
23,711
|
|
|||||
One-to-four family residential
|
1,056
|
|
|
(45
|
)
|
|
—
|
|
|
192
|
|
|
1,203
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
862
|
|
|
—
|
|
|
11
|
|
|
367
|
|
|
1,240
|
|
|||||
Five or more family residential and commercial properties
|
1,190
|
|
|
—
|
|
|
—
|
|
|
(236
|
)
|
|
954
|
|
|||||
Total real estate construction and land development
|
2,052
|
|
|
—
|
|
|
11
|
|
|
131
|
|
|
2,194
|
|
|||||
Consumer
|
6,081
|
|
|
(2,160
|
)
|
|
513
|
|
|
2,147
|
|
|
6,581
|
|
|||||
Unallocated
|
898
|
|
|
—
|
|
|
—
|
|
|
455
|
|
|
1,353
|
|
|||||
Total
|
$
|
32,086
|
|
|
$
|
(3,605
|
)
|
|
$
|
1,432
|
|
|
$
|
5,129
|
|
|
$
|
35,042
|
|
|
Loans Individually Evaluated for Impairment
|
|
Loans Collectively Evaluated for Impairment
|
|
PCI Loans
|
|
Total Allowance for Loan Losses
|
||||||||
|
(In thousands)
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
$
|
2,607
|
|
|
$
|
7,913
|
|
|
$
|
823
|
|
|
$
|
11,343
|
|
Owner-occupied commercial real estate
|
1,142
|
|
|
3,063
|
|
|
693
|
|
|
4,898
|
|
||||
Non-owner occupied commercial real estate
|
206
|
|
|
6,630
|
|
|
634
|
|
|
7,470
|
|
||||
Total commercial business
|
3,955
|
|
|
17,606
|
|
|
2,150
|
|
|
23,711
|
|
||||
One-to-four family residential
|
76
|
|
|
1,015
|
|
|
112
|
|
|
1,203
|
|
||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||||
One-to-four family residential
|
—
|
|
|
1,040
|
|
|
200
|
|
|
1,240
|
|
||||
Five or more family residential and commercial properties
|
—
|
|
|
875
|
|
|
79
|
|
|
954
|
|
||||
Total real estate construction and land development
|
—
|
|
|
1,915
|
|
|
279
|
|
|
2,194
|
|
||||
Consumer
|
139
|
|
|
5,965
|
|
|
477
|
|
|
6,581
|
|
||||
Unallocated
|
—
|
|
|
1,353
|
|
|
—
|
|
|
1,353
|
|
||||
Total
|
$
|
4,170
|
|
|
$
|
27,854
|
|
|
$
|
3,018
|
|
|
$
|
35,042
|
|
|
Loans Individually Evaluated for Impairment
|
|
Loans Collectively Evaluated for Impairment
|
|
PCI Loans
|
|
Total Gross Loans Receivable
|
||||||||
|
(In thousands)
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
$
|
22,642
|
|
|
$
|
827,531
|
|
|
$
|
3,433
|
|
|
$
|
853,606
|
|
Owner-occupied commercial real estate
|
5,816
|
|
|
766,783
|
|
|
7,215
|
|
|
779,814
|
|
||||
Non-owner occupied commercial real estate
|
6,276
|
|
|
1,291,128
|
|
|
7,059
|
|
|
1,304,463
|
|
||||
Total commercial business
|
34,734
|
|
|
2,885,442
|
|
|
17,707
|
|
|
2,937,883
|
|
||||
One-to-four family residential
|
279
|
|
|
98,169
|
|
|
3,315
|
|
|
101,763
|
|
||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||||
One-to-four family residential
|
899
|
|
|
101,451
|
|
|
380
|
|
|
102,730
|
|
||||
Five or more family residential and commercial properties
|
—
|
|
|
112,687
|
|
|
43
|
|
|
112,730
|
|
||||
Total real estate construction and land development
|
899
|
|
|
214,138
|
|
|
423
|
|
|
215,460
|
|
||||
Consumer
|
527
|
|
|
391,556
|
|
|
3,462
|
|
|
395,545
|
|
||||
Total
|
$
|
36,439
|
|
|
$
|
3,589,305
|
|
|
$
|
24,907
|
|
|
$
|
3,650,651
|
|
|
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
|
|
|
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
|
|
|
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
|
|
|
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
|
|
(6)
|
Other Real Estate Owned
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands
|
||||||||||
Balance at the beginning of the year
|
$
|
—
|
|
|
$
|
754
|
|
|
$
|
2,019
|
|
Additions
|
434
|
|
|
32
|
|
|
1,431
|
|
|||
Additions from acquisitions
|
1,796
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from dispositions
|
(198
|
)
|
|
(930
|
)
|
|
(2,486
|
)
|
|||
Gain on sale, net
|
—
|
|
|
144
|
|
|
173
|
|
|||
Valuation adjustment
|
(49
|
)
|
|
—
|
|
|
(383
|
)
|
|||
Balance at the end of the year
|
$
|
1,983
|
|
|
$
|
—
|
|
|
$
|
754
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
|
(In thousands)
|
||||||
Land
|
|
$
|
22,954
|
|
|
$
|
21,483
|
|
Buildings and building improvements
|
|
69,315
|
|
|
50,984
|
|
||
Furniture, fixtures and equipment
|
|
25,354
|
|
|
20,894
|
|
||
Total premises and equipment
|
|
117,623
|
|
|
93,361
|
|
||
Less: Accumulated depreciation
|
|
36,523
|
|
|
33,036
|
|
||
Premises and equipment, net
|
|
$
|
81,100
|
|
|
$
|
60,325
|
|
(8)
|
Goodwill and Other Intangible Assets
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Balance at the beginning of the period
|
$
|
119,029
|
|
|
$
|
119,029
|
|
|
$
|
119,029
|
|
Additions as a result of acquisitions
(1)
|
121,910
|
|
|
—
|
|
|
—
|
|
|||
Balance at the end of the period
|
$
|
240,939
|
|
|
$
|
119,029
|
|
|
$
|
119,029
|
|
(1)
|
See
Note (2) Business Combinations
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Balance at the beginning of the year
|
$
|
6,088
|
|
|
$
|
7,374
|
|
|
$
|
8,789
|
|
Additions as a result of acquisitions
(1)
|
18,345
|
|
|
—
|
|
|
—
|
|
|||
Amortization
|
(3,819
|
)
|
|
(1,286
|
)
|
|
(1,415
|
)
|
|||
Balance at the end of the year
|
$
|
20,614
|
|
|
$
|
6,088
|
|
|
$
|
7,374
|
|
(1)
|
See
Note (2) Business Combinations
|
|
|
Year Ending December 31,
|
||
|
|
(In thousands)
|
||
2019
|
|
$
|
4,001
|
|
2020
|
|
3,525
|
|
|
2021
|
|
3,111
|
|
|
2022
|
|
2,750
|
|
|
2023
|
|
2,435
|
|
|
Thereafter
|
|
4,792
|
|
|
|
|
$
|
20,614
|
|
(9)
|
Deposits
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
Noninterest demand deposits
|
|
$
|
1,362,268
|
|
|
30.7
|
%
|
|
$
|
944,791
|
|
|
27.8
|
%
|
Interest bearing demand deposits
|
|
1,317,513
|
|
|
29.7
|
|
|
1,051,752
|
|
|
31.1
|
|
||
Money market accounts
|
|
765,316
|
|
|
17.3
|
|
|
499,618
|
|
|
14.7
|
|
||
Savings accounts
|
|
520,413
|
|
|
11.8
|
|
|
498,501
|
|
|
14.7
|
|
||
Total non-maturity deposits
|
|
3,965,510
|
|
|
89.5
|
|
|
2,994,662
|
|
|
88.3
|
|
||
Certificate of deposit accounts
|
|
466,892
|
|
|
10.5
|
|
|
398,398
|
|
|
11.7
|
|
||
Total deposits
|
|
$
|
4,432,402
|
|
|
100.0
|
%
|
|
$
|
3,393,060
|
|
|
100.0
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Interest bearing demand deposits
|
|
$
|
2,728
|
|
|
$
|
1,812
|
|
|
$
|
1,569
|
|
Money market accounts
|
|
1,654
|
|
|
682
|
|
|
749
|
|
|||
Savings accounts
|
|
2,056
|
|
|
1,311
|
|
|
756
|
|
|||
Certificate of deposit accounts
|
|
3,959
|
|
|
2,244
|
|
|
1,936
|
|
|||
|
|
$
|
10,397
|
|
|
$
|
6,049
|
|
|
$
|
5,010
|
|
|
|
Year Ending December 31,
|
||
|
|
(In thousands)
|
||
2019
|
|
$
|
313,830
|
|
2020
|
|
93,675
|
|
|
2021
|
|
14,608
|
|
|
2022
|
|
24,914
|
|
|
2023
|
|
19,847
|
|
|
Thereafter
|
|
18
|
|
|
|
|
$
|
466,892
|
|
(10)
|
Junior Subordinated Debentures
|
|
Year Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Weighted average rate
(1)
|
6.27
|
%
|
|
5.11
|
%
|
|
4.50
|
%
|
(11)
|
Repurchase Agreements
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(In thousands)
|
||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
4,878
|
|
|
$
|
—
|
|
Mortgage-backed securities and collateralized mortgage obligations
(1)
:
|
|
|
|
||||
Residential
|
9,335
|
|
|
11,239
|
|
||
Commercial
|
17,274
|
|
|
20,582
|
|
||
Total repurchase agreements
|
$
|
31,487
|
|
|
$
|
31,821
|
|
(12)
|
Other Borrowings
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(In thousands)
|
||||||
FHLB Advances:
|
|
|
|
||||
Average balance during the year
|
$
|
33,913
|
|
|
$
|
105,646
|
|
Maximum month-end balance during the year
|
$
|
154,500
|
|
|
$
|
137,450
|
|
Weighted average rate during the year
|
1.98
|
%
|
|
1.16
|
%
|
||
Weighted average rate at the end of year
|
n/a
|
|
|
1.56
|
%
|
(13)
|
Employee Benefit Plans
|
(14)
|
Commitments and Contingencies
|
|
|
Year Ending December 31,
|
||
|
|
(In thousands)
|
||
2019
|
|
$
|
4,766
|
|
2020
|
|
4,251
|
|
|
2021
|
|
2,477
|
|
|
2022
|
|
1,704
|
|
|
2023
|
|
1,568
|
|
|
Thereafter
|
|
1,788
|
|
|
|
|
$
|
16,554
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
|
||||
Commercial and industrial
|
|
$
|
568,215
|
|
|
$
|
363,272
|
|
Owner-occupied commercial real estate
|
|
13,065
|
|
|
6,815
|
|
||
Non-owner occupied commercial real estate
|
|
13,621
|
|
|
13,543
|
|
||
Total commercial business
|
|
594,901
|
|
|
383,630
|
|
||
One-to-four family residential
|
|
—
|
|
|
—
|
|
||
Real estate construction and land development:
|
|
|
|
|
||||
One-to-four family residential
|
|
59,772
|
|
|
38,160
|
|
||
Five or more family residential and commercial properties
|
|
95,535
|
|
|
86,787
|
|
||
Total real estate construction and land development
|
|
155,307
|
|
|
124,947
|
|
||
Consumer
|
|
239,822
|
|
|
204,625
|
|
||
Total outstanding commitments
|
|
$
|
990,030
|
|
|
$
|
713,202
|
|
(15)
|
Derivative Financial Instruments
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Notional Amounts
|
|
Estimated Fair Value
|
|
Notional Amounts
|
|
Estimated Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Non-hedging interest rate derivatives
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps with customer
(1)
|
$
|
171,798
|
|
|
$
|
(1,643
|
)
|
|
$
|
146,537
|
|
|
$
|
(882
|
)
|
Interest rate swap with third party
(1)
|
171,798
|
|
|
1,643
|
|
|
146,537
|
|
|
882
|
|
(16)
|
Stockholders’ Equity
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Net income:
|
|
|
|
|
|
||||||
Net income
|
$
|
53,057
|
|
|
$
|
41,791
|
|
|
$
|
38,918
|
|
Dividends and undistributed earnings allocated to participating securities
|
(321
|
)
|
|
(293
|
)
|
|
(358
|
)
|
|||
Net income allocated to common shareholders
|
$
|
52,736
|
|
|
$
|
41,498
|
|
|
$
|
38,560
|
|
Basic:
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
35,281,408
|
|
|
29,937,400
|
|
|
29,963,365
|
|
|||
Restricted stock awards
|
(87,405
|
)
|
|
(179,581
|
)
|
|
(285,063
|
)
|
|||
Total basic weighted average common shares outstanding
|
35,194,003
|
|
|
29,757,819
|
|
|
29,678,302
|
|
|||
Diluted:
|
|
|
|
|
|
||||||
Basic weighted average common shares outstanding
|
35,194,003
|
|
|
29,757,819
|
|
|
29,678,302
|
|
|||
Effect of potentially dilutive common shares
(1)
|
177,587
|
|
|
91,512
|
|
|
13,851
|
|
|||
Total diluted weighted average common shares outstanding
|
35,371,590
|
|
|
29,849,331
|
|
|
29,692,153
|
|
Declared
|
|
Cash Dividend per Share
|
|
Record Date
|
|
Paid Date
|
|
|
January 27, 2016
|
|
$0.11
|
|
February 10, 2016
|
|
February 24, 2016
|
|
|
April 20, 2016
|
|
$0.12
|
|
May 5, 2016
|
|
May 19, 2016
|
|
|
July 20, 2016
|
|
$0.12
|
|
August 4, 2016
|
|
August 18, 2016
|
|
|
October 26, 2016
|
|
$0.12
|
|
November 8, 2016
|
|
November 22, 2016
|
|
|
October 26, 2016
|
|
$0.25
|
|
November 8, 2016
|
|
November 22, 2016
|
|
*
|
January 25, 2017
|
|
$0.12
|
|
February 9, 2017
|
|
February 23, 2017
|
|
|
April 25, 2017
|
|
$0.13
|
|
May 10, 2017
|
|
May 24, 2017
|
|
|
July 25, 2017
|
|
$0.13
|
|
August 10, 2017
|
|
August 24, 2017
|
|
|
October 25, 2017
|
|
$0.13
|
|
November 8, 2017
|
|
November 22, 2017
|
|
|
October 25, 2017
|
|
$0.10
|
|
November 8, 2017
|
|
November 22, 2017
|
|
*
|
January 24, 2018
|
|
$0.15
|
|
February 7, 2018
|
|
February 21, 2018
|
|
|
April 25, 2018
|
|
$0.15
|
|
May 10, 2018
|
|
May 24, 2018
|
|
|
July 24, 2018
|
|
$0.15
|
|
August 9, 2018
|
|
August 23, 2018
|
|
|
October 24, 2018
|
|
$0.17
|
|
November 7, 2018
|
|
November 21, 2018
|
|
|
October 24, 2018
|
|
$0.10
|
|
November 7, 2018
|
|
November 21, 2018
|
|
*
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Repurchased shares to pay withholding taxes
(1)
|
53,256
|
|
|
29,429
|
|
|
29,512
|
|
|||
Stock repurchase to pay withholding taxes average share price
|
$
|
31.99
|
|
|
$
|
25.01
|
|
|
$
|
17.82
|
|
(17)
|
Accumulated Other Comprehensive Loss
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||
|
(In thousands)
|
||||||||||
Balance of AOCI at the beginning of the year
|
$
|
(1,298
|
)
|
|
$
|
(2,606
|
)
|
|
$
|
2,559
|
|
Other comprehensive (loss) income before reclassification
|
(5,956
|
)
|
|
1,530
|
|
|
(4,311
|
)
|
|||
Amounts reclassified from AOCI for gain on sale of investment securities included in net income
|
(108
|
)
|
|
(4
|
)
|
|
(854
|
)
|
|||
Net current period other comprehensive (loss) income
|
(6,064
|
)
|
|
1,526
|
|
|
(5,165
|
)
|
|||
ASU 2016-01 and 2018-02 Implementations
|
(93
|
)
|
|
(218
|
)
|
|
—
|
|
|||
Balance of AOCI at the end of the year
|
$
|
(7,455
|
)
|
|
$
|
(1,298
|
)
|
|
$
|
(2,606
|
)
|
(18)
|
Fair Value Measurements
|
|
December 31, 2018
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Investment securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
101,603
|
|
|
$
|
15,936
|
|
|
$
|
85,667
|
|
|
$
|
—
|
|
Municipal securities
|
158,864
|
|
|
—
|
|
|
158,864
|
|
|
—
|
|
||||
Mortgage backed securities and collateralized mortgage obligations:
|
|
|
|
|
|
|
|
||||||||
Residential
|
331,602
|
|
|
—
|
|
|
331,602
|
|
|
—
|
|
||||
Commercial
|
333,761
|
|
|
—
|
|
|
333,761
|
|
|
—
|
|
||||
Corporate obligations
|
25,563
|
|
|
—
|
|
|
25,563
|
|
|
—
|
|
||||
Other asset-backed securities
|
24,702
|
|
|
|
|
|
24,702
|
|
|
—
|
|
||||
Total investment securities available for sale
|
976,095
|
|
|
15,936
|
|
|
960,159
|
|
|
—
|
|
||||
Derivative assets - interest rate swaps
|
5,095
|
|
|
—
|
|
|
5,095
|
|
|
—
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities - interest rate swaps
|
$
|
5,095
|
|
|
$
|
—
|
|
|
$
|
5,095
|
|
|
$
|
—
|
|
|
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
|
|
|
$
|
—
|
|
|
Basis
(1)
|
|
Fair Value at December 31, 2018
|
|
|
||||||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Net Losses
Recorded in
Earnings
During
the Year Ended December 31, 2018
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial and industrial
|
$
|
117
|
|
|
$
|
107
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
107
|
|
|
$
|
10
|
|
Non-owner occupied commercial real estate
|
1,378
|
|
|
1,102
|
|
|
—
|
|
|
—
|
|
|
1,102
|
|
|
150
|
|
||||||
Total commercial business
|
1,495
|
|
|
1,209
|
|
|
—
|
|
|
—
|
|
|
1,209
|
|
|
160
|
|
||||||
Consumer
|
9
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
8
|
|
||||||
Total assets measured at fair value on a nonrecurring basis
|
$
|
1,504
|
|
|
$
|
1,216
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,216
|
|
|
$
|
168
|
|
(1)
|
Basis represents the unpaid principal balance of impaired loans.
|
|
Basis
(1)
|
|
Fair Value at December 31, 2017
|
|
|
||||||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Net Losses
(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.
|
|
December 31, 2018
|
||||||||
|
Fair
Value
|
|
Valuation
Technique(s)
|
|
Unobservable Input(s)
|
|
Range of Inputs; Weighted
Average
|
||
|
(Dollars in thousands)
|
||||||||
Impaired loans
|
$
|
1,216
|
|
|
Market approach
|
|
Adjustment for differences between the comparable sales
|
|
10.4% - (37.3%); (10.9%)
|
|
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, 2018
|
||||||||||||||||||
|
Carrying
Value
|
|
Fair Value
|
|
Fair Value Measurements Using:
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
161,910
|
|
|
$
|
161,910
|
|
|
$
|
161,910
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment securities available for sale
|
976,095
|
|
|
976,095
|
|
|
15,936
|
|
|
960,159
|
|
|
—
|
|
|||||
Federal Home Loan Bank stock
|
6,076
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Loans held for sale
|
1,555
|
|
|
1,605
|
|
|
—
|
|
|
1,605
|
|
|
—
|
|
|||||
Total loans receivable, net
|
3,619,118
|
|
|
3,614,348
|
|
|
—
|
|
|
—
|
|
|
3,614,348
|
|
|||||
Accrued interest receivable
|
15,403
|
|
|
15,403
|
|
|
68
|
|
|
4,091
|
|
|
11,244
|
|
|||||
Derivative assets - interest rate swaps
|
5,095
|
|
|
5,095
|
|
|
—
|
|
|
5,095
|
|
|
—
|
|
|||||
Equity security
|
114
|
|
|
114
|
|
|
114
|
|
|
—
|
|
|
—
|
|
|||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts
|
$
|
3,965,510
|
|
|
$
|
3,965,510
|
|
|
$
|
3,965,510
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Certificate of deposit accounts
|
466,892
|
|
|
470,222
|
|
|
—
|
|
|
470,222
|
|
|
—
|
|
|||||
Securities sold under agreement to repurchase
|
31,487
|
|
|
31,487
|
|
|
31,487
|
|
|
—
|
|
|
—
|
|
|||||
Junior subordinated debentures
|
20,302
|
|
|
20,500
|
|
|
—
|
|
|
—
|
|
|
20,500
|
|
|||||
Accrued interest payable
|
191
|
|
|
191
|
|
|
63
|
|
|
81
|
|
|
47
|
|
|||||
Derivative liabilities - interest rate swaps
|
5,095
|
|
|
5,095
|
|
|
—
|
|
|
5,095
|
|
|
—
|
|
|
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
|
|
|
—
|
|
(19)
|
Stock-Based Compensation
|
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average
Remaining
Contractual
Term (In years)
|
|
Aggregate
Intrinsic
Value (In
thousands)
|
|||||
Outstanding at December 31, 2015
|
79,408
|
|
|
$
|
14.19
|
|
|
|
|
|
||
Exercised
|
(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 at December 31, 2017
|
23,231
|
|
|
14.21
|
|
|
|
|
|
|||
Exercised
|
(9,842
|
)
|
|
13.45
|
|
|
|
|
|
|||
Forfeited or expired
|
(831
|
)
|
|
14.77
|
|
|
|
|
|
|||
Outstanding, vested and expected to vest and exercisable at December 31, 2018
|
12,558
|
|
|
$
|
14.77
|
|
|
1.39
|
|
$
|
188
|
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|||
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
|
|
|
Vested
|
(113,479
|
)
|
|
16.55
|
|
|
Forfeited
|
(10,418
|
)
|
|
16.80
|
|
|
Nonvested at December 31, 2017
|
137,399
|
|
|
17.00
|
|
|
Vested
|
(67,877
|
)
|
|
16.74
|
|
|
Forfeited
|
(3,489
|
)
|
|
16.92
|
|
|
Nonvested at December 31, 2018
|
66,033
|
|
|
$
|
17.28
|
|
|
2018
|
|
2017
|
||
Shares issued
|
5,550
|
|
|
6,089
|
|
Expected Term in Years
|
2.84
|
|
|
2.85
|
|
Weighted-Average Risk Free Interest Rate
|
2.39
|
%
|
|
1.40
|
%
|
Expected Dividend Yield
|
—
|
%
|
|
—
|
%
|
Weighted-Average Fair Value
|
27.69
|
|
|
24.39
|
|
Correlation coefficient
|
ABA NASDAQ Community Bank Index
|
|
ABA NASDAQ Community Bank Index
|
||
Range of peer company volatilities
|
18.99% - 51.42%
|
|
|
17.8% - 63.1%
|
|
Range of peer company correlation coefficients
|
28.16% - 94.29%
|
|
|
8.24% - 89.79%
|
|
Heritage volatility
|
22.30
|
%
|
|
21.80
|
%
|
Heritage correlation coefficient
|
76.44
|
%
|
|
75.93
|
%
|
(20)
|
Cash Requirement
|
(21)
|
Income Taxes
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Current tax expense
|
|
$
|
9,658
|
|
|
$
|
12,171
|
|
|
$
|
6,885
|
|
Deferred tax expense
|
|
1,372
|
|
|
6,185
|
|
|
6,918
|
|
|||
Income tax expense
|
|
$
|
11,030
|
|
|
$
|
18,356
|
|
|
$
|
13,803
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Income tax expense at Federal statutory rate
|
|
$
|
13,502
|
|
|
$
|
21,051
|
|
|
$
|
18,452
|
|
Tax-exempt instruments
|
|
(1,879
|
)
|
|
(3,212
|
)
|
|
(3,198
|
)
|
|||
Non-deductible acquisition costs
|
|
336
|
|
|
210
|
|
|
—
|
|
|||
Federal tax credits and other benefits
(1)
|
|
(515
|
)
|
|
(1,510
|
)
|
|
(931
|
)
|
|||
Effects of BOLI
|
|
(330
|
)
|
|
(531
|
)
|
|
(511
|
)
|
|||
Revaluation of net deferred tax assets
|
|
|
|
|
2,568
|
|
|
—
|
|
|||
Other, net
|
|
(84
|
)
|
|
(220
|
)
|
|
(9
|
)
|
|||
Income tax expense
|
|
$
|
11,030
|
|
|
$
|
18,356
|
|
|
$
|
13,803
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
|
(In thousands)
|
||||||
Deferred tax assets:
|
|
|
|
|
||||
Allowance for loan losses
|
|
$
|
6,941
|
|
|
$
|
6,699
|
|
Accrued compensation
|
|
3,379
|
|
|
1,779
|
|
||
Stock compensation
|
|
769
|
|
|
660
|
|
||
Net unrealized losses charged to other comprehensive income on securities
|
|
2,070
|
|
|
347
|
|
||
Market discount on purchased loans
|
|
1,054
|
|
|
539
|
|
||
Foregone interest on nonaccrual loans
|
|
811
|
|
|
471
|
|
||
Net operating loss carryforward acquired from NCB
|
|
336
|
|
|
270
|
|
||
Other Real Estate Owned
|
|
754
|
|
|
—
|
|
||
Other deferred tax assets
|
|
364
|
|
|
763
|
|
||
Total deferred tax assets
|
|
16,478
|
|
|
11,528
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Deferred loan fees, net
|
|
(3,333
|
)
|
|
(2,518
|
)
|
||
Premises and equipment
|
|
(1,819
|
)
|
|
(1,091
|
)
|
||
FHLB stock
|
|
(569
|
)
|
|
(557
|
)
|
||
Goodwill and other intangible assets
|
|
(3,526
|
)
|
|
(304
|
)
|
||
Federal tax credits
|
|
(1,457
|
)
|
|
(1,107
|
)
|
||
Junior subordinated debentures
|
|
(1,176
|
)
|
|
(1,215
|
)
|
||
Other deferred tax liabilities
|
|
(540
|
)
|
|
(847
|
)
|
||
Total deferred tax liabilities
|
|
(12,420
|
)
|
|
(7,639
|
)
|
||
Deferred tax asset, net
|
|
$
|
4,058
|
|
|
$
|
3,889
|
|
(22)
|
Regulatory Capital Requirements
|
|
|
Minimum
Requirements |
|
Well-
Capitalized Requirements |
|
Actual
|
|||||||||||||
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||
As of December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
The Company consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Common equity Tier 1 capital to risk-weighted assets
|
|
$
|
197,189
|
|
|
4.5
|
%
|
|
N/A
|
|
|
N/A
|
|
$
|
510,618
|
|
|
11.7
|
%
|
Tier 1 leverage capital to average assets
|
|
201,920
|
|
|
4.0
|
|
|
N/A
|
|
|
N/A
|
|
530,920
|
|
|
10.5
|
|
||
Tier 1 capital to risk-weighted assets
|
|
262,918
|
|
|
6.0
|
|
|
N/A
|
|
|
N/A
|
|
530,920
|
|
|
12.1
|
|
||
Total capital to risk-weighted assets
|
|
350,558
|
|
|
8.0
|
|
|
N/A
|
|
|
N/A
|
|
566,268
|
|
|
12.9
|
|
||
Heritage Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Common equity Tier 1 capital to risk-weighted assets
|
|
197,004
|
|
|
4.5
|
|
|
284,561
|
|
|
6.5
|
|
513,993
|
|
|
11.7
|
|
||
Tier 1 leverage capital to average assets
|
|
203,339
|
|
|
4.0
|
|
|
254,174
|
|
|
5.0
|
|
513,993
|
|
|
10.1
|
|
||
Tier 1 capital to risk-weighted assets
|
|
262,671
|
|
|
6.0
|
|
|
350,229
|
|
|
8.0
|
|
513,993
|
|
|
11.7
|
|
||
Total capital to risk-weighted assets
|
|
350,229
|
|
|
8.0
|
|
|
437,786
|
|
|
10.0
|
|
549,341
|
|
|
12.5
|
|
||
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
|
|
(23)
|
Heritage Financial Corporation (Parent Company Only)
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
|
(In thousands)
|
||||||
ASSETS
|
|
|
|
|
||||
Cash and interest earning deposits
|
|
$
|
14,602
|
|
|
$
|
11,904
|
|
Investment in subsidiary bank
|
|
764,097
|
|
|
512,655
|
|
||
Other assets
|
|
2,520
|
|
|
4,696
|
|
||
Total assets
|
|
$
|
781,219
|
|
|
$
|
529,255
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
Junior subordinated debentures
|
|
$
|
20,302
|
|
|
$
|
20,009
|
|
Other liabilities
|
|
194
|
|
|
941
|
|
||
Total stockholders’ equity
|
|
760,723
|
|
|
508,305
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
781,219
|
|
|
$
|
529,255
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
INTEREST INCOME:
|
|
|
|
|
|
|
||||||
Interest and dividends on interest earning deposits and other assets
|
|
$
|
7
|
|
|
$
|
44
|
|
|
$
|
34
|
|
Total interest income
|
|
7
|
|
|
44
|
|
|
34
|
|
|||
INTEREST EXPENSE:
|
|
|
|
|
|
|
||||||
Junior subordinated debentures
|
|
1,263
|
|
|
1,014
|
|
|
880
|
|
|||
Total interest expense
|
|
1,263
|
|
|
1,014
|
|
|
880
|
|
|||
Net interest expense
|
|
(1,256
|
)
|
|
(970
|
)
|
|
(846
|
)
|
|||
NONINTEREST INCOME:
|
|
|
|
|
|
|
||||||
Dividends from subsidiary bank
|
|
30,000
|
|
|
23,000
|
|
|
30,000
|
|
|||
Equity in undistributed income of subsidiary bank
|
|
29,258
|
|
|
21,755
|
|
|
11,848
|
|
|||
Other income
|
|
22
|
|
|
—
|
|
|
—
|
|
|||
Total noninterest income
|
|
59,280
|
|
|
44,755
|
|
|
41,848
|
|
|||
NONONTEREST EXPENSE:
|
|
|
|
|
|
|
||||||
Professional services
|
|
3,063
|
|
|
768
|
|
|
385
|
|
|||
Other expense
|
|
3,833
|
|
|
3,726
|
|
|
3,437
|
|
|||
Total noninterest expense
|
|
6,896
|
|
|
4,494
|
|
|
3,822
|
|
|||
Income before income taxes
|
|
51,128
|
|
|
39,291
|
|
|
37,180
|
|
|||
Income tax benefit
|
|
(1,929
|
)
|
|
(2,500
|
)
|
|
(1,738
|
)
|
|||
Net income
|
|
$
|
53,057
|
|
|
$
|
41,791
|
|
|
$
|
38,918
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
53,057
|
|
|
$
|
41,791
|
|
|
$
|
38,918
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Equity in undistributed income of subsidiary bank
|
|
(29,258
|
)
|
|
(21,755
|
)
|
|
(11,848
|
)
|
|||
Net excess tax benefit from exercise of stock options and vesting of restricted stock
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|||
Stock-based compensation expense
|
|
2,744
|
|
|
2,103
|
|
|
1,840
|
|
|||
Net change in other assets and liabilities
|
|
1,735
|
|
|
(1,925
|
)
|
|
(1,141
|
)
|
|||
Net cash provided by operating activities
|
|
28,278
|
|
|
20,214
|
|
|
27,646
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Net cash received from acquisitions
|
|
1,782
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by investing activities
|
|
1,782
|
|
|
—
|
|
|
—
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Common stock cash dividends paid
|
|
(25,791
|
)
|
|
(18,305
|
)
|
|
(21,569
|
)
|
|||
Proceeds from exercise of stock options
|
|
133
|
|
|
164
|
|
|
540
|
|
|||
Net excess tax benefit from exercise of stock options and vesting of restricted stock
|
|
—
|
|
|
—
|
|
|
123
|
|
|||
Repurchase of common stock
|
|
(1,704
|
)
|
|
(737
|
)
|
|
(2,894
|
)
|
|||
Net cash used in financing activities
|
|
(27,362
|
)
|
|
(18,878
|
)
|
|
(23,800
|
)
|
|||
Net increase in cash and cash equivalents
|
|
2,698
|
|
|
1,336
|
|
|
3,846
|
|
|||
Cash and cash equivalents at the beginning of year
|
|
11,904
|
|
|
10,568
|
|
|
6,722
|
|
|||
Cash and cash equivalents at the end of year
|
|
$
|
14,602
|
|
|
$
|
11,904
|
|
|
$
|
10,568
|
|
|
|
|
|
|
|
|
||||||
Supplemental non-cash disclosures of cash flow information:
|
|
|
|
|
|
|
||||||
Common stock issued for business combinations
|
|
$
|
230,043
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Capital contribution of net assets acquired in business combinations to Bank
|
|
228,261
|
|
|
—
|
|
|
—
|
|
(24)
|
Selected Quarterly Financial Data (Unaudited)
|
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
|
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||
Interest income
|
|
$
|
43,247
|
|
|
$
|
46,671
|
|
|
$
|
54,576
|
|
|
$
|
54,865
|
|
Interest expense
|
|
2,410
|
|
|
2,928
|
|
|
3,480
|
|
|
3,595
|
|
||||
Net interest income
|
|
40,837
|
|
|
43,743
|
|
|
51,096
|
|
|
51,270
|
|
||||
Provision for loan losses
|
|
1,152
|
|
|
1,750
|
|
|
1,065
|
|
|
1,162
|
|
||||
Net interest income after provision for loan losses
|
|
39,685
|
|
|
41,993
|
|
|
50,031
|
|
|
50,108
|
|
||||
Noninterest income
|
|
7,548
|
|
|
7,573
|
|
|
8,080
|
|
|
8,464
|
|
||||
Noninterest expense
|
|
36,747
|
|
|
35,706
|
|
|
39,597
|
|
|
37,345
|
|
||||
Income before provision for income taxes
|
|
10,486
|
|
|
13,860
|
|
|
18,514
|
|
|
21,227
|
|
||||
Income tax expense
|
|
1,399
|
|
|
2,003
|
|
|
3,010
|
|
|
4,618
|
|
||||
Net income
|
|
$
|
9,087
|
|
|
$
|
11,857
|
|
|
$
|
15,504
|
|
|
$
|
16,609
|
|
Basic earnings per common share
|
|
$
|
0.27
|
|
|
$
|
0.35
|
|
|
$
|
0.42
|
|
|
$
|
0.45
|
|
Diluted earnings per common share
|
|
0.27
|
|
|
0.35
|
|
|
0.42
|
|
|
0.45
|
|
||||
Cash dividends declared on common stock
|
|
0.15
|
|
|
0.15
|
|
|
0.15
|
|
|
0.27
|
|
||||
|
||||||||||||||||
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
|
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||
Interest income
|
|
$
|
34,849
|
|
|
$
|
36,041
|
|
|
$
|
37,275
|
|
|
$
|
39,544
|
|
Interest expense
|
|
1,717
|
|
|
1,907
|
|
|
2,333
|
|
|
2,389
|
|
||||
Net interest income
|
|
33,132
|
|
|
34,134
|
|
|
34,942
|
|
|
37,155
|
|
||||
Provision for loan losses
|
|
867
|
|
|
1,131
|
|
|
884
|
|
|
1,338
|
|
||||
Net interest income after provision for loan losses
|
|
32,265
|
|
|
33,003
|
|
|
34,058
|
|
|
35,817
|
|
||||
Noninterest income
|
|
7,363
|
|
|
10,709
|
|
|
8,443
|
|
|
9,064
|
|
||||
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
|
|
Plan Category
|
|
Number of
securities
to be issued
upon vesting of restricted stock awards
|
|
Number of
securities
to be issued
upon vesting of restricted stock units
|
|
Number of
securities
to be issued
upon exercise of outstanding
options
|
|
Weighted-
average
exercise
price of
outstanding
options
|
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans
|
||||||
Equity compensation plans, all of which are approved by security holders
|
|
66,033
|
|
179,185
|
|
12,558
|
|
$14.77
|
|
955,282
|
|
|
|
|
Incorporated by Reference
|
|||||
Exhibit No.
|
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date/Period End Date
|
|
2.1
|
|
|
|
8-K
|
|
2.1
|
|
7/27/17
|
|
|
|
|
|
|
|
|
|
|
|
2.2
|
|
|
|
8-K
|
|
2.1
|
|
3/9/2018
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
|
8-K
|
|
3.1(B)
|
|
5/18/10
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
|
8-K
|
|
3.2
|
|
10/3/16
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
Form of Certificate of Heritage's Common Stock
(3)
|
|
S-1/A
|
|
-
|
|
10/29/97
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
|
10-K
|
|
10.5
|
|
3/9/17
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
|
|
S-8
|
|
-
|
|
5/27/10
|
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
|
|
8-K
|
|
99.2
|
|
2/1/17
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
|
|
DEF 14A
|
|
-
|
|
6/11/14
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
|
|
8-K
|
|
99.6
|
|
2/1/17
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
|
|
10-Q
|
|
10.8
|
|
8/8/14
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
|
|
8-K
|
|
99.7
|
|
2/1/17
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
|
|
10-Q
|
|
10.9
|
|
8/8/14
|
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
|
|
8-K
|
|
99.4
|
|
2/1/17
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
|
|
10-Q
|
|
10.10
|
|
8/8/14
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
|
|
8-K
|
|
99.3
|
|
2/1/17
|
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
|
|
8-K
|
|
99.8
|
|
2/1/17
|
|
|
|
|
|
|
|
|
|
|
|
10.13
|
|
|
|
8-K
|
|
99.5
|
|
2/1/17
|
|
|
|
|
|
|
|
|
|
|
10.14
|
|
|
|
8-K
|
|
10.1
|
|
12/22/16
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
|
|
8-K
|
|
10.2
|
|
12/22/16
|
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
|
|
8-K
|
|
10.3
|
|
12/22/16
|
|
|
|
|
|
|
|
|
|
|
|
10.17
|
|
|
|
8-K
|
|
10.5
|
|
9/7/12
|
|
|
|
|
|
|
|
|
|
|
|
10.18
|
|
|
|
8-K
|
|
10.6
|
|
9/7/12
|
|
|
|
|
|
|
|
|
|
|
|
10.19
|
|
|
|
8-K
|
|
10.7
|
|
9/7/12
|
|
|
|
|
|
|
|
|
|
|
|
10.20
|
|
|
|
8-K
|
|
10.1
|
|
9/7/12
|
|
|
|
|
|
|
|
|
|
|
|
10.21
|
|
|
|
8-K
|
|
10.2
|
|
9/7/12
|
|
|
|
|
|
|
|
|
|
|
|
10.22
|
|
|
|
8-K
|
|
10.3
|
|
9/7/12
|
|
|
|
|
|
|
|
|
|
|
|
10.23
|
|
|
|
8-K
|
|
10.5
|
|
12/22/16
|
|
|
|
|
|
|
|
|
|
|
|
10.24
|
|
|
|
8-K
|
|
10.1
|
|
1/6/14
|
|
|
|
|
|
|
|
|
|
|
|
10.25
|
|
|
|
8-K
|
|
10.2
|
|
1/6/14
|
|
|
|
|
|
|
|
|
|
|
|
10.26
|
|
|
|
S-4
|
|
|
|
1/24/14
|
|
|
|
|
|
|
|
|
|
|
|
10.27
|
|
|
|
8-K
|
|
10.4
|
|
12/22/16
|
|
|
|
|
|
|
|
|
|
|
|
10.28
|
|
|
|
10-K
|
|
10.16
|
|
3/11/15
|
|
|
|
|
|
|
|
|
|
|
|
10.29
|
|
|
|
10-Q
|
|
10.17
|
|
8/6/15
|
|
|
|
|
|
|
|
|
|
|
|
10.30
|
|
|
|
8-K
|
|
10.1
|
|
12/22/15
|
|
|
|
|
|
|
|
|
|
|
|
10.31
|
|
|
|
8-K
|
|
10.1
|
|
7/10/18
|
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
|
|
8-K
|
|
10.2
|
|
7/10/18
|
|
|
|
|
|
|
|
|
|
|
|
10.33
|
|
|
|
8-K
|
|
10.3
|
|
7/10/18
|
|
|
|
|
|
|
|
|
|
|
|
14.0
|
|
|
Code of Ethics and Conduct Policy
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema Document
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
(1)
|
|
|
|
|
|
|
|
|
HERITAGE FINANCIAL CORPORATION
|
|
|
(Registrant)
|
|
|
|
|
|
/S/ BRIAN L. VANCE
|
|
|
Brian L. Vance
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
Principal Executive Officer:
|
|
|
|
/S/ BRIAN L. VANCE
|
|
|
|
Brian L. Vance
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
Principal Financial Officer:
|
|
|
|
/S/ DONALD J. HINSON
|
|
|
|
Donald J. Hinson
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
Brian L. Vance, pursuant to a power of attorney that is being filed with the Annual Report on Form 10-K, has signed this report as attorney in fact for the following directors who constitute a majority of the Board.
|
|||
|
|
|
|
Brian S. Charneski
|
|
|
|
John A. Clees
|
|
|
|
Kimberly T. Ellwanger
|
|
|
|
Deborah J. Gavin
|
|
|
|
Jeffrey S. Lyon
|
|
|
|
Gragg E. Miller
|
|
|
|
Anthony B. Pickering
|
|
|
|
Ann Watson
|
|
|
|
Stephen A. Dennis
|
|
|
|
|
|
By
|
|
|
|
/S/ BRIAN L. VANCE
|
|
|
|
Brian L. Vance
|
|
|
|
Attorney-in-Fact
|
|
|
|
March 1, 2019
|