|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Washington
|
|
91-1857900
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
201 Fifth Avenue SW, Olympia, WA
|
|
98501
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Large accelerated filer
|
¨
|
|
Accelerated filer
|
x
|
Non-accelerated filer
|
¨
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|
Smaller reporting company
|
¨
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Page
|
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|
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Part I.
|
||
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
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Part II.
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
||
|
CERTIFICATIONS
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
ASSETS
|
|
|
|
||||
Cash on hand and in banks
|
$
|
73,067
|
|
|
$
|
40,162
|
|
Interest earning deposits
|
73,458
|
|
|
90,238
|
|
||
Cash and cash equivalents
|
146,525
|
|
|
130,400
|
|
||
Other interest earning deposits
|
14,138
|
|
|
15,662
|
|
||
Investment securities available for sale, at fair value
|
652,477
|
|
|
163,134
|
|
||
Investment securities held to maturity (fair value of $39,539 and $36,340, respectively)
|
38,768
|
|
|
36,154
|
|
||
Loans held for sale
|
7,378
|
|
|
—
|
|
||
Noncovered loans receivable, net
|
2,069,532
|
|
|
1,168,166
|
|
||
Allowance for loan losses for noncovered loans
|
(22,369
|
)
|
|
(22,657
|
)
|
||
Noncovered loans receivable, net of allowance for loan losses
|
2,047,163
|
|
|
1,145,509
|
|
||
Covered loans receivable, net
|
159,662
|
|
|
63,754
|
|
||
Allowance for loan losses for covered loans
|
(6,114
|
)
|
|
(6,167
|
)
|
||
Covered loans receivable, net of allowance for loan losses
|
153,548
|
|
|
57,587
|
|
||
Total loans receivable, net
|
2,200,711
|
|
|
1,203,096
|
|
||
Federal Deposit Insurance Corporation indemnification asset
|
9,120
|
|
|
4,382
|
|
||
Other real estate owned ($3,045 and $182 covered by FDIC shared-loss agreements, respectively)
|
8,106
|
|
|
4,559
|
|
||
Premises and equipment, net
|
66,255
|
|
|
34,348
|
|
||
Federal Home Loan Bank stock, at cost
|
12,547
|
|
|
5,741
|
|
||
Bank owned life insurance
|
32,614
|
|
|
—
|
|
||
Accrued interest receivable
|
9,315
|
|
|
5,462
|
|
||
Prepaid expenses and other assets
|
63,272
|
|
|
25,120
|
|
||
Other intangible assets, net
|
12,164
|
|
|
1,615
|
|
||
Goodwill
|
118,189
|
|
|
29,365
|
|
||
Total assets
|
$
|
3,391,579
|
|
|
$
|
1,659,038
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Deposits
|
$
|
2,866,542
|
|
|
$
|
1,399,189
|
|
Junior subordinated debentures
|
18,973
|
|
|
—
|
|
||
Securities sold under agreement to repurchase
|
25,450
|
|
|
29,420
|
|
||
Accrued expenses and other liabilities
|
30,785
|
|
|
14,667
|
|
||
Total liabilities
|
2,941,750
|
|
|
1,443,276
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, no par value, 2,500,000 shares authorized; no shares issued and outstanding at June 30, 2014 and December 31, 2013
|
—
|
|
|
—
|
|
||
Common stock, no par value, 50,000,000 shares authorized; 30,213,363 and 16,210,747 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively
|
366,158
|
|
|
138,659
|
|
||
Retained earnings
|
82,362
|
|
|
78,265
|
|
||
Accumulated other comprehensive income (loss), net
|
1,309
|
|
|
(1,162
|
)
|
||
Total stockholders’ equity
|
449,829
|
|
|
215,762
|
|
||
Total liabilities and stockholders’ equity
|
$
|
3,391,579
|
|
|
$
|
1,659,038
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
INTEREST INCOME:
|
|
|
|
|
|
|
|
||||||||
Interest and fees on loans
|
$
|
27,446
|
|
|
$
|
16,028
|
|
|
$
|
43,897
|
|
|
$
|
32,747
|
|
Taxable interest on investment securities
|
1,812
|
|
|
404
|
|
|
2,451
|
|
|
777
|
|
||||
Nontaxable interest on investment securities
|
638
|
|
|
345
|
|
|
1,074
|
|
|
680
|
|
||||
Interest and dividends on other interest earning assets
|
127
|
|
|
82
|
|
|
214
|
|
|
139
|
|
||||
Total interest income
|
30,023
|
|
|
16,859
|
|
|
47,636
|
|
|
34,343
|
|
||||
INTEREST EXPENSE:
|
|
|
|
|
|
|
|
||||||||
Deposits
|
1,297
|
|
|
909
|
|
|
2,151
|
|
|
1,847
|
|
||||
Junior subordinated debentures
|
115
|
|
|
—
|
|
|
115
|
|
|
—
|
|
||||
Other borrowings
|
15
|
|
|
10
|
|
|
33
|
|
|
19
|
|
||||
Total interest expense
|
1,427
|
|
|
919
|
|
|
2,299
|
|
|
1,866
|
|
||||
Net interest income
|
28,596
|
|
|
15,940
|
|
|
45,337
|
|
|
32,477
|
|
||||
Provision for loan losses for noncovered loans
|
370
|
|
|
209
|
|
|
349
|
|
|
709
|
|
||||
Provision for loan losses for covered loans
|
321
|
|
|
1,099
|
|
|
800
|
|
|
1,457
|
|
||||
Total provision for loan losses
|
691
|
|
|
1,308
|
|
|
1,149
|
|
|
2,166
|
|
||||
Net interest income after provision for loan losses
|
27,905
|
|
|
14,632
|
|
|
44,188
|
|
|
30,311
|
|
||||
NONINTEREST INCOME:
|
|
|
|
|
|
|
|
||||||||
Bargain purchase gain on bank acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
399
|
|
||||
Service charges and other fees
|
2,777
|
|
|
1,432
|
|
|
4,175
|
|
|
2,785
|
|
||||
Merchant Visa income, net
|
316
|
|
|
211
|
|
|
561
|
|
|
384
|
|
||||
Change in FDIC indemnification asset
|
109
|
|
|
281
|
|
|
72
|
|
|
14
|
|
||||
Gain on sale of investment securities, net
|
87
|
|
|
—
|
|
|
267
|
|
|
—
|
|
||||
Gain on sale of loans, net
|
233
|
|
|
—
|
|
|
233
|
|
|
—
|
|
||||
Other income
|
1,258
|
|
|
433
|
|
|
1,779
|
|
|
1,059
|
|
||||
Total noninterest income
|
4,780
|
|
|
2,357
|
|
|
7,087
|
|
|
4,641
|
|
||||
NONINTEREST EXPENSE:
|
|
|
|
|
|
|
|
||||||||
Compensation and employee benefits
|
12,779
|
|
|
7,617
|
|
|
20,790
|
|
|
15,206
|
|
||||
Occupancy and equipment
|
2,816
|
|
|
1,995
|
|
|
5,433
|
|
|
3,915
|
|
||||
Data processing
|
4,003
|
|
|
720
|
|
|
4,999
|
|
|
1,856
|
|
||||
Marketing
|
496
|
|
|
386
|
|
|
1,001
|
|
|
712
|
|
||||
Professional services
|
3,230
|
|
|
640
|
|
|
4,060
|
|
|
1,670
|
|
||||
State and local taxes
|
554
|
|
|
305
|
|
|
803
|
|
|
584
|
|
||||
Impairment loss on investment securities, net
|
37
|
|
|
24
|
|
|
45
|
|
|
26
|
|
||||
Federal deposit insurance premium
|
460
|
|
|
275
|
|
|
712
|
|
|
507
|
|
||||
Other real estate owned, net
|
214
|
|
|
5
|
|
|
266
|
|
|
(98
|
)
|
||||
Amortization of intangible assets
|
489
|
|
|
114
|
|
|
645
|
|
|
229
|
|
||||
Other expense
|
1,915
|
|
|
926
|
|
|
3,018
|
|
|
2,120
|
|
||||
Total noninterest expense
|
26,993
|
|
|
13,007
|
|
|
41,772
|
|
|
26,727
|
|
||||
Income before income taxes
|
5,692
|
|
|
3,982
|
|
|
9,503
|
|
|
8,225
|
|
||||
Income tax expense
|
1,544
|
|
|
1,292
|
|
|
2,812
|
|
|
2,650
|
|
||||
Net income
|
$
|
4,148
|
|
|
$
|
2,690
|
|
|
$
|
6,691
|
|
|
$
|
5,575
|
|
Basic earnings per common share
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
$
|
0.32
|
|
|
$
|
0.37
|
|
Diluted earnings per common share
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
$
|
0.32
|
|
|
$
|
0.37
|
|
Dividends declared per common share
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income
|
$
|
4,148
|
|
|
$
|
2,690
|
|
|
$
|
6,691
|
|
|
$
|
5,575
|
|
Change in fair value of securities available for sale, net of tax of $1,089, $(1,049), $1,410 and $(1,232), respectively
|
2,022
|
|
|
(1,947
|
)
|
|
2,615
|
|
|
(2,289
|
)
|
||||
Reclassification adjustment of net gain from sale of available for sale securities included in income, net of tax of $(30), $0, $(93) and $0, respectively
|
(57
|
)
|
|
—
|
|
|
(174
|
)
|
|
—
|
|
||||
Accretion of other-than-temporary impairment on securities held to maturity, net of tax of $8, $12, $16 and $19, respectively
|
15
|
|
|
22
|
|
|
30
|
|
|
36
|
|
||||
Other comprehensive income (loss)
|
$
|
1,980
|
|
|
$
|
(1,925
|
)
|
|
$
|
2,471
|
|
|
$
|
(2,253
|
)
|
Comprehensive income
|
$
|
6,128
|
|
|
$
|
765
|
|
|
$
|
9,162
|
|
|
$
|
3,322
|
|
|
Number of
common
shares
|
|
Common
stock
|
|
Retained
earnings
|
|
Accumulated
other
comprehensive
income (loss), net
|
|
Total
stock-
holders’
equity
|
|||||||||
Balance at December 31, 2012
|
15,118
|
|
|
$
|
121,832
|
|
|
$
|
75,362
|
|
|
$
|
1,744
|
|
|
$
|
198,938
|
|
Restricted and unrestricted stock awards issued, net of forfeitures
|
99
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock option compensation expense
|
—
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
42
|
|
||||
Exercise of stock options (including excess tax benefits from nonqualified stock options)
|
3
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
37
|
|
||||
Restricted stock compensation expense
|
—
|
|
|
722
|
|
|
—
|
|
|
—
|
|
|
722
|
|
||||
Excess tax benefits from restricted stock
|
—
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
68
|
|
||||
Common stock repurchased
|
(12
|
)
|
|
(182
|
)
|
|
—
|
|
|
—
|
|
|
(182
|
)
|
||||
Net income
|
—
|
|
|
—
|
|
|
5,575
|
|
|
—
|
|
|
5,575
|
|
||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,253
|
)
|
|
(2,253
|
)
|
||||
Cash dividends declared on common stock ($0.16 per share)
|
—
|
|
|
—
|
|
|
(2,422
|
)
|
|
—
|
|
|
(2,422
|
)
|
||||
Balance at June 30, 2013
|
15,208
|
|
|
$
|
122,519
|
|
|
$
|
78,515
|
|
|
$
|
(509
|
)
|
|
$
|
200,525
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at December 31, 2013
|
16,211
|
|
|
$
|
138,659
|
|
|
$
|
78,265
|
|
|
$
|
(1,162
|
)
|
|
$
|
215,762
|
|
Restricted and unrestricted stock awards issued, net of forfeitures
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock option compensation expense
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Exercise of stock options (including excess tax benefits from nonqualified stock options)
|
38
|
|
|
427
|
|
|
—
|
|
|
—
|
|
|
427
|
|
||||
Restricted stock compensation expense
|
—
|
|
|
539
|
|
|
—
|
|
|
—
|
|
|
539
|
|
||||
Excess tax benefits from restricted stock
|
—
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||
Common stock repurchased
|
(17
|
)
|
|
(271
|
)
|
|
—
|
|
|
—
|
|
|
(271
|
)
|
||||
Net income
|
—
|
|
|
—
|
|
|
6,691
|
|
|
—
|
|
|
6,691
|
|
||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
2,471
|
|
|
2,471
|
|
||||
Common stock issued in business combination
|
13,975
|
|
|
226,751
|
|
|
—
|
|
|
—
|
|
|
226,751
|
|
||||
Cash dividends declared on common stock ($0.16 per share)
|
—
|
|
|
—
|
|
|
(2,594
|
)
|
|
—
|
|
|
(2,594
|
)
|
||||
Balance at June 30, 2014
|
30,213
|
|
|
$
|
366,158
|
|
|
$
|
82,362
|
|
|
$
|
1,309
|
|
|
$
|
449,829
|
|
|
Six Months Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
6,691
|
|
|
$
|
5,575
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
4,829
|
|
|
2,572
|
|
||
Changes in net deferred loan fees, net of amortization
|
(393
|
)
|
|
397
|
|
||
Provision for loan losses
|
1,149
|
|
|
2,166
|
|
||
Net change in accrued interest receivable, prepaid expenses and other assets, accrued expenses and other liabilities
|
(3,176
|
)
|
|
(156
|
)
|
||
Restricted and unrestricted stock compensation expense
|
539
|
|
|
722
|
|
||
Stock option compensation expense
|
20
|
|
|
42
|
|
||
Excess tax benefits from stock options and restricted and unrestricted stock
|
(33
|
)
|
|
(68
|
)
|
||
Amortization of intangible assets
|
645
|
|
|
229
|
|
||
Bargain purchase gain on bank acquisition
|
—
|
|
|
(399
|
)
|
||
Gain on sale of investment securities, net
|
(267
|
)
|
|
—
|
|
||
Impairment loss on investment of securities
|
45
|
|
|
26
|
|
||
Origination of loans held for sale
|
(12,592
|
)
|
|
(6,784
|
)
|
||
Gain on sale of loans
|
(233
|
)
|
|
(142
|
)
|
||
Proceeds from sale of loans
|
9,329
|
|
|
8,602
|
|
||
Earnings on bank owned life insurance
|
(95
|
)
|
|
—
|
|
||
Valuation adjustment on other real estate owned
|
—
|
|
|
(22
|
)
|
||
Gain on other real estate owned, net
|
(65
|
)
|
|
(232
|
)
|
||
Write-off of furniture, equipment and leasehold improvements
|
421
|
|
|
—
|
|
||
Net cash provided by operating activities
|
6,814
|
|
|
12,528
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Loans originated, net of principal payments
|
4,969
|
|
|
(39,426
|
)
|
||
Maturities of other interest earning deposits
|
1,494
|
|
|
—
|
|
||
Maturities of investment securities available for sale
|
17,916
|
|
|
31,369
|
|
||
Maturities of investment securities held to maturity
|
521
|
|
|
784
|
|
||
Purchase of investment securities available for sale
|
(206,075
|
)
|
|
(32,508
|
)
|
||
Purchase of investment securities held to maturity
|
(3,313
|
)
|
|
(3,733
|
)
|
||
Purchase of premises and equipment
|
(1,978
|
)
|
|
(3,451
|
)
|
||
Proceeds from sales of other real estate owned
|
3,857
|
|
|
4,666
|
|
||
Proceeds from sales of investment securities available for sale
|
157,987
|
|
|
—
|
|
||
Proceeds from redemption of FHLB stock
|
258
|
|
|
101
|
|
||
Investment in new market tax credit partnership
|
(25,000
|
)
|
|
—
|
|
||
Net cash received from acquisitions
|
31,591
|
|
|
748
|
|
||
Net cash used in investing activities
|
(17,773
|
)
|
|
(41,450
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Net increase in deposits
|
33,459
|
|
|
18,118
|
|
||
Common stock cash dividends paid
|
(2,594
|
)
|
|
(2,422
|
)
|
||
Net (decrease) increase in securities sold under agreement to repurchase
|
(3,970
|
)
|
|
339
|
|
||
Proceeds from exercise of stock options
|
427
|
|
|
37
|
|
||
Excess tax benefits from stock options and restricted and unrestricted stock
|
33
|
|
|
68
|
|
||
Repurchase of common stock
|
(271
|
)
|
|
(182
|
)
|
||
Net cash provided by financing activities
|
27,084
|
|
|
15,958
|
|
|
Six Months Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Net increase (decrease) in cash and cash equivalents
|
16,125
|
|
|
(12,964
|
)
|
||
Cash and cash equivalents at beginning of period
|
130,400
|
|
|
107,086
|
|
||
Cash and cash equivalents at end of period
|
$
|
146,525
|
|
|
$
|
94,122
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
1,848
|
|
|
$
|
1,874
|
|
Cash paid for income taxes
|
7,000
|
|
|
3,074
|
|
||
Transfers of loans receivable to other real estate owned
|
218
|
|
|
513
|
|
||
Seller-financed sale of other real estate owned
|
—
|
|
|
250
|
|
||
Common stock issued for Washington Banking Merger
|
226,751
|
|
|
—
|
|
||
Assets acquired (liabilities assumed) in acquisitions:
|
|
|
|
||||
Investment securities available for sale
|
458,312
|
|
|
2,753
|
|
||
Loans held for sale
|
3,923
|
|
|
—
|
|
||
Noncovered loans receivable
|
893,824
|
|
|
51,509
|
|
||
Covered loans receivable
|
109,693
|
|
|
—
|
|
||
Other real estate owned
|
7,121
|
|
|
2,279
|
|
||
Premises and equipment
|
31,776
|
|
|
214
|
|
||
Federal Home Loan Bank stock
|
7,064
|
|
|
88
|
|
||
FDIC indemnification asset
|
7,407
|
|
|
—
|
|
||
Accrued interest receivable
|
4,943
|
|
|
232
|
|
||
Bank owned life insurance
|
32,519
|
|
|
—
|
|
||
Prepaid expenses and other assets
|
14,942
|
|
|
4,048
|
|
||
Other intangible asset
|
11,194
|
|
|
156
|
|
||
Deposits
|
(1,433,894
|
)
|
|
(60,442
|
)
|
||
Junior subordinated debentures
|
(18,937
|
)
|
|
—
|
|
||
Accrued expenses and other liabilities
|
(23,551
|
)
|
|
(1,186
|
)
|
(1)
|
Description of Business, Basis of Presentation and Significant Accounting Policies
|
1.
|
Remove inconsistencies and weaknesses in revenue requirements.
|
2.
|
Provide a more robust framework for addressing revenue issues.
|
3.
|
Improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets.
|
4.
|
Provide more useful information to users of financial statements through improved disclosure requirements.
|
5.
|
Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer.
|
(2)
|
Business Combination
|
|
May 1, 2014
|
||
|
(In thousands)
|
||
Assets
|
|
||
Cash and cash equivalents
|
$
|
74,947
|
|
Investment securities available for sale
|
458,312
|
|
|
Loans held for sale
|
3,923
|
|
|
Noncovered loans receivable
|
893,824
|
|
|
Covered loans receivable
|
109,693
|
|
|
FDIC indemnification asset
|
7,407
|
|
|
Other real estate owned ($5,122 covered by FDIC shared-loss agreements)
|
7,121
|
|
|
Federal Home Loan Bank stock
|
7,064
|
|
|
Premises and equipment
|
31,776
|
|
|
Bank owned life insurance
|
32,519
|
|
|
Other intangible assets
|
11,194
|
|
|
Prepaid expenses and other assets
|
19,885
|
|
|
Total assets acquired
|
1,657,665
|
|
|
Liabilities
|
|
||
Deposits
|
1,433,894
|
|
|
Junior subordinated debentures
|
18,937
|
|
|
Accrued expenses and other liabilities
|
23,551
|
|
|
Total liabilities assumed
|
1,476,382
|
|
|
Net assets acquired
|
$
|
181,283
|
|
|
May 1, 2014
|
||
|
(In thousands)
|
||
Cost basis of net assets on merger date
|
$
|
181,782
|
|
Consideration transferred
|
(270,107
|
)
|
|
Fair value adjustments:
|
|
||
Noncovered loans receivable
|
(11,941
|
)
|
|
Covered loans receivable
|
6,003
|
|
|
FDIC indemnification asset
|
590
|
|
|
Other real estate owned
|
387
|
|
|
Premises and equipment
|
(1,540
|
)
|
|
Other intangible assets
|
10,216
|
|
|
Prepaid expenses and other assets
|
(6,241
|
)
|
|
Deposits
|
(1,737
|
)
|
|
Junior subordinated debentures
|
6,837
|
|
|
Accrued expenses and other liabilities
|
(3,073
|
)
|
|
Goodwill recognized from the Washington Banking Merger
|
$
|
(88,824
|
)
|
|
Three and Six Months Ended (1)
|
||
|
(In thousands)
|
||
Interest income: Interest and fees on loans (2)
|
$
|
9,010
|
|
Interest income: Interest and fees on loans (3)
|
1,832
|
|
|
Interest income: Securities and other interest earning assets
|
1,277
|
|
|
Interest expense
|
(469
|
)
|
|
Provision for loan losses for noncovered loans
|
(131
|
)
|
|
Noninterest income
|
2,282
|
|
|
Noninterest expense (4)
|
(7,887
|
)
|
|
Net effect, pre-tax
|
$
|
5,914
|
|
(3)
|
Includes the accretion of the accretable yield on the purchased credit impaired loans and the accretion of the discount on the purchased non-credit impaired loans.
|
(4)
|
Excludes certain compensation and employee benefits for management as it is impracticable to determine due to the integration of the operations for this merger. Also includes certain merger-related costs incurred by the Company.
|
|
Unaudited Pro Forma for the Six Months Ended June 30, 2014
|
||||||||||||||||
|
Company
|
|
Washington Banking
|
|
Pro Forma Adjustments
|
|
|
|
Pro Forma Combined
|
||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||||
Interest income
|
$
|
47,636
|
|
|
$
|
25,091
|
|
|
$
|
2,376
|
|
|
A
|
|
$
|
75,103
|
|
Interest expense
|
2,299
|
|
|
1,484
|
|
|
323
|
|
|
B
|
|
4,106
|
|
||||
Provision for loan losses
|
1,149
|
|
|
(2,150
|
)
|
|
—
|
|
|
C
|
|
(1,001
|
)
|
||||
Noninterest income
|
7,087
|
|
|
1,812
|
|
|
17
|
|
|
D
|
|
8,916
|
|
||||
Noninterest expense
|
41,772
|
|
|
19,514
|
|
|
(5,020
|
)
|
|
E
|
|
56,266
|
|
||||
Income before income taxes
|
9,503
|
|
|
8,055
|
|
|
7,090
|
|
|
|
|
24,648
|
|
||||
Income tax expense
|
2,812
|
|
|
2,609
|
|
|
2,774
|
|
|
F
|
|
8,195
|
|
||||
Net income
|
$
|
6,691
|
|
|
$
|
5,446
|
|
|
$
|
4,316
|
|
|
|
|
$
|
16,453
|
|
Basic earnings per common share
|
$
|
0.32
|
|
|
|
|
|
|
G
|
|
$
|
0.55
|
|
||||
Diluted earnings per common share
|
$
|
0.32
|
|
|
|
|
|
|
G
|
|
$
|
0.55
|
|
|
Unaudited Pro Forma for the Six Months Ended June 30, 2013
|
||||||||||||||||
|
Company
|
|
Washington Banking
|
|
Pro Forma Adjustments
|
|
|
|
Pro Forma Combined
|
||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||||
Interest income
|
$
|
34,343
|
|
|
$
|
38,336
|
|
|
$
|
2,976
|
|
|
A
|
|
$
|
75,655
|
|
Interest expense
|
1,866
|
|
|
2,797
|
|
|
1,019
|
|
|
B
|
|
5,682
|
|
||||
Provision for loan losses
|
2,166
|
|
|
13,714
|
|
|
—
|
|
|
C
|
|
15,880
|
|
||||
Noninterest income
|
4,641
|
|
|
16,043
|
|
|
17
|
|
|
D
|
|
20,701
|
|
||||
Noninterest expense
|
26,727
|
|
|
26,793
|
|
|
102
|
|
|
E
|
|
53,622
|
|
||||
Income before income taxes
|
8,225
|
|
|
11,075
|
|
|
1,872
|
|
|
|
|
21,172
|
|
||||
Income tax expense
|
2,650
|
|
|
3,583
|
|
|
655
|
|
|
F
|
|
6,888
|
|
||||
Net income
|
$
|
5,575
|
|
|
$
|
7,492
|
|
|
$
|
1,217
|
|
|
|
|
$
|
14,284
|
|
Basic earnings per common share
|
$
|
0.37
|
|
|
|
|
|
|
G
|
|
$
|
0.49
|
|
||||
Diluted earnings per common share
|
$
|
0.37
|
|
|
|
|
|
|
G
|
|
$
|
0.49
|
|
(A)
|
Adjustment of interest income from loans due to the estimated amortization of the new interest rate mark and the accretion of the acquisition accounting adjustment relating to the credit mark. The Washington Banking credit and interest rate marks and accretion recorded during the six months ended June 30, 2014 and 2013 as a result of its prior acquisitions were not adjusted.
|
(B)
|
Adjustments to reflect the amortization of the premium resulting from the fair value adjustment of the fixed rate maturities and the discount resulting from the fair value adjustment of the junior subordinated debentures.
|
(C)
|
As acquired loans and leases are recorded at fair value, the Company would expect a reduction in the historical provision for loan and leases losses from legacy Washington Banking; however, no adjustment to the historical amount of Washington Banking's provision for loan and lease losses is reflected in these pro forma statements.
|
(D)
|
Adjustment to reflect the amortization of the interest component of the fair value adjustment of the FDIC indemnification asset.
|
(E)
|
In connection with the Washington Banking Merger, Heritage recognized
$5.6 million
of direct merger-related expenses for the six month period ended June 30, 2014, which were excluded in this adjustment. Also, adjustment reflects the decrease in the depreciation expense as a result of the fair value adjustment to the premises and equipment, which effectively increased non-depreciable assets and decreased depreciable assets. Adjustment additionally reflects the amortization of assumed liabilities included in the the fair value adjustment of accrued expenses and other liabilities.
|
(F)
|
Income tax effect of pro forma adjustments at Company's statutory rate of
35%
, excluding certain nondeductible costs included in the proforma adjustments.
|
(3)
|
Cash and Cash Equivalents
|
(4)
|
Investment Securities
|
|
Securities Available for Sale
|
||||||||||||||
|
June 30, 2014
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrecognized
Gains
|
|
Gross
Unrecognized
Losses
|
|
Fair
Value
|
||||||||
|
(In thousands)
|
||||||||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
14,215
|
|
|
$
|
42
|
|
|
$
|
(29
|
)
|
|
$
|
14,228
|
|
Municipal securities
|
143,980
|
|
|
1,895
|
|
|
(673
|
)
|
|
145,202
|
|
||||
Mortgage backed securities and collateralized mortgage obligations-residential:
|
|
|
|
|
|
|
|
||||||||
U.S. Government-sponsored agencies
|
486,967
|
|
|
2,372
|
|
|
(1,271
|
)
|
|
488,068
|
|
||||
Corporate obligations
|
3,014
|
|
|
—
|
|
|
(11
|
)
|
|
3,003
|
|
||||
Mutual funds and other equities
|
1,962
|
|
|
14
|
|
|
—
|
|
|
1,976
|
|
||||
Total
|
$
|
650,138
|
|
|
$
|
4,323
|
|
|
$
|
(1,984
|
)
|
|
$
|
652,477
|
|
|
Securities Available for Sale
|
||||||||||||||
|
December 31, 2013
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrecognized Gains |
|
Gross
Unrecognized Losses |
|
Fair
Value
|
||||||||
|
(In thousands)
|
||||||||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
6,098
|
|
|
$
|
3
|
|
|
$
|
(62
|
)
|
|
$
|
6,039
|
|
Municipal securities
|
49,989
|
|
|
806
|
|
|
(1,735
|
)
|
|
49,060
|
|
||||
Mortgage backed securities and collateralized mortgage obligations-residential:
|
|
|
|
|
|
|
|
||||||||
U.S. Government agencies
|
108,466
|
|
|
898
|
|
|
(1,329
|
)
|
|
108,035
|
|
||||
Total
|
$
|
164,553
|
|
|
$
|
1,707
|
|
|
$
|
(3,126
|
)
|
|
$
|
163,134
|
|
|
Securities Held to Maturity
|
||||||||||||||
|
June 30, 2014
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrecognized Gains |
|
Gross
Unrecognized Losses |
|
Fair
Value
|
||||||||
|
(In thousands)
|
||||||||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
1,600
|
|
|
$
|
174
|
|
|
$
|
—
|
|
|
$
|
1,774
|
|
Municipal securities
|
24,852
|
|
|
568
|
|
|
(49
|
)
|
|
25,371
|
|
||||
Mortgage backed securities and collateralized mortgage obligations-residential:
|
|
|
|
|
|
|
|
||||||||
U.S. Government-sponsored agencies
|
11,370
|
|
|
295
|
|
|
(137
|
)
|
|
11,528
|
|
||||
Private residential collateralized mortgage obligations
|
946
|
|
|
58
|
|
|
(138
|
)
|
|
866
|
|
||||
Total
|
$
|
38,768
|
|
|
$
|
1,095
|
|
|
$
|
(324
|
)
|
|
$
|
39,539
|
|
|
Securities Held to Maturity
|
||||||||||||||
|
December 31, 2013
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrecognized Gains |
|
Gross
Unrecognized Losses |
|
Fair
Value
|
||||||||
|
(In thousands)
|
||||||||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
1,687
|
|
|
$
|
153
|
|
|
$
|
—
|
|
|
$
|
1,840
|
|
Municipal securities
|
24,290
|
|
|
200
|
|
|
(184
|
)
|
|
24,306
|
|
||||
Mortgage backed securities and collateralized mortgage obligations-residential:
|
|
|
|
|
|
|
|
||||||||
U.S. Government-sponsored agencies
|
9,129
|
|
|
144
|
|
|
(284
|
)
|
|
8,989
|
|
||||
Private residential collateralized mortgage obligations
|
1,048
|
|
|
185
|
|
|
(28
|
)
|
|
1,205
|
|
||||
Total
|
$
|
36,154
|
|
|
$
|
682
|
|
|
$
|
(496
|
)
|
|
$
|
36,340
|
|
|
Securities Available for Sale
|
|
Securities Held to Maturity
|
||||||||||||
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Due in one year or less
|
$
|
4,727
|
|
|
$
|
4,754
|
|
|
$
|
2,080
|
|
|
$
|
2,088
|
|
Due after one year through three years
|
18,601
|
|
|
18,701
|
|
|
6,264
|
|
|
6,329
|
|
||||
Due after three years through five years
|
31,134
|
|
|
31,432
|
|
|
4,732
|
|
|
4,817
|
|
||||
Due after five years through ten years
|
137,414
|
|
|
138,031
|
|
|
17,493
|
|
|
18,093
|
|
||||
Due after ten years
|
458,262
|
|
|
459,559
|
|
|
8,199
|
|
|
8,212
|
|
||||
Total
|
$
|
650,138
|
|
|
$
|
652,477
|
|
|
$
|
38,768
|
|
|
$
|
39,539
|
|
|
Securities Available for Sale
|
||||||||||||||||||||||
|
June 30, 2014
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
12 Months or
Longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
5,556
|
|
|
$
|
(29
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,556
|
|
|
$
|
(29
|
)
|
Municipal securities
|
42,608
|
|
|
(673
|
)
|
|
—
|
|
|
—
|
|
|
42,608
|
|
|
(673
|
)
|
||||||
Mortgage backed securities and collateralized mortgage obligations-residential:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government-sponsored agencies
|
142,252
|
|
|
(1,271
|
)
|
|
—
|
|
|
—
|
|
|
142,252
|
|
|
(1,271
|
)
|
||||||
Corporate obligations
|
3,003
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
3,003
|
|
|
(11
|
)
|
||||||
Total
|
$
|
193,419
|
|
|
$
|
(1,984
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
193,419
|
|
|
$
|
(1,984
|
)
|
|
Securities Available for Sale
|
||||||||||||||||||||||
|
December 31, 2013
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
12 Months or
Longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
3,031
|
|
|
$
|
(62
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,031
|
|
|
$
|
(62
|
)
|
Municipal securities
|
21,471
|
|
|
(1,242
|
)
|
|
4,644
|
|
|
(493
|
)
|
|
26,115
|
|
|
(1,735
|
)
|
||||||
Mortgage backed securities and collateralized mortgage obligations-residential:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government-sponsored agencies
|
56,327
|
|
|
(1,184
|
)
|
|
7,758
|
|
|
(145
|
)
|
|
64,085
|
|
|
(1,329
|
)
|
||||||
Total
|
$
|
80,829
|
|
|
$
|
(2,488
|
)
|
|
$
|
12,402
|
|
|
$
|
(638
|
)
|
|
$
|
93,231
|
|
|
$
|
(3,126
|
)
|
|
Securities Held to Maturity
|
||||||||||||||||||||||
|
June 30, 2014
|
||||||||||||||||||||||
|
Less than 12
Months
|
|
12 Months or
Longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Municipal securities
|
$
|
3,554
|
|
|
$
|
(49
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,554
|
|
|
$
|
(49
|
)
|
Mortgage backed securities and collateralized mortgage obligations-residential:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government-sponsored agencies
|
2,465
|
|
|
(137
|
)
|
|
—
|
|
|
—
|
|
|
2,465
|
|
|
(137
|
)
|
||||||
Private residential collateralized mortgage obligations
|
926
|
|
|
(138
|
)
|
|
—
|
|
|
—
|
|
|
926
|
|
|
(138
|
)
|
||||||
Total
|
$
|
6,945
|
|
|
$
|
(324
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,945
|
|
|
$
|
(324
|
)
|
|
Securities Held to Maturity
|
||||||||||||||||||||||
|
December 31, 2013
|
||||||||||||||||||||||
|
Less than 12
Months
|
|
12 Months or
Longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Municipal securities
|
$
|
10,967
|
|
|
$
|
(184
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,967
|
|
|
$
|
(184
|
)
|
Mortgage backed securities and collateralized mortgage obligations-residential:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government-sponsored agencies
|
4,869
|
|
|
(284
|
)
|
|
—
|
|
|
—
|
|
|
4,869
|
|
|
(284
|
)
|
||||||
Private residential collateralized mortgage obligations
|
211
|
|
|
(5
|
)
|
|
124
|
|
|
(23
|
)
|
|
335
|
|
|
(28
|
)
|
||||||
Total
|
$
|
16,047
|
|
|
$
|
(473
|
)
|
|
$
|
124
|
|
|
$
|
(23
|
)
|
|
$
|
16,171
|
|
|
$
|
(496
|
)
|
|
Life-to-Date Gross Other-Than-Temporary Impairments
|
|
Life-to-Date Other-Than-Temporary Impairments Included in Other Comprehensive Income (Loss)
|
|
Life-to-Date Net
Other-Than-Temporary Impairments Included in Earnings
|
||||||
|
(In thousands)
|
||||||||||
December 31, 2012
|
$
|
2,565
|
|
|
$
|
1,152
|
|
|
$
|
1,413
|
|
Subsequent impairments
|
26
|
|
|
—
|
|
|
26
|
|
|||
June 30, 2013
|
$
|
2,591
|
|
|
$
|
1,152
|
|
|
$
|
1,439
|
|
|
|
|
|
|
|
||||||
December 31, 2013
|
$
|
2,603
|
|
|
$
|
1,152
|
|
|
$
|
1,451
|
|
Subsequent impairments
|
45
|
|
|
—
|
|
|
45
|
|
|||
June 30, 2014
|
$
|
2,648
|
|
|
$
|
1,152
|
|
|
$
|
1,496
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||||
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Washington and Oregon state to secure public deposits
|
$
|
148,052
|
|
|
$
|
149,917
|
|
|
$
|
80,386
|
|
|
$
|
80,881
|
|
Federal Reserve Bank and FHLB to secure borrowing arrangements
|
9,031
|
|
|
9,051
|
|
|
—
|
|
|
—
|
|
||||
Repurchase agreements
|
34,248
|
|
|
34,579
|
|
|
34,170
|
|
|
33,893
|
|
||||
Other securities pledged, principally to secure public deposits
|
12,940
|
|
|
12,969
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
204,271
|
|
|
$
|
206,516
|
|
|
$
|
114,556
|
|
|
$
|
114,774
|
|
(5)
|
Noncovered Loans Receivable
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
534,458
|
|
|
$
|
336,540
|
|
Owner-occupied commercial real estate
|
473,603
|
|
|
281,309
|
|
||
Non-owner occupied commercial real estate
|
637,067
|
|
|
399,979
|
|
||
Total commercial business
|
1,645,128
|
|
|
1,017,828
|
|
||
One-to-four family residential
|
86,422
|
|
|
43,082
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
55,477
|
|
|
19,724
|
|
||
Five or more family residential and commercial properties
|
74,552
|
|
|
48,655
|
|
||
Total real estate construction and land development
|
130,029
|
|
|
68,379
|
|
||
Consumer
|
210,230
|
|
|
41,547
|
|
||
Gross noncovered loans receivable
|
2,071,809
|
|
|
1,170,836
|
|
||
Net deferred loan fees
|
(2,277
|
)
|
|
(2,670
|
)
|
||
Noncovered loans receivable, net
|
2,069,532
|
|
|
1,168,166
|
|
||
Allowance for loan losses
|
(22,369
|
)
|
|
(22,657
|
)
|
||
Noncovered loans receivable, net of allowance for loan losses
|
$
|
2,047,163
|
|
|
$
|
1,145,509
|
|
•
|
Grades 0 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 financials 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.
|
•
|
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.
|
|
June 30, 2014
|
||||||||||||||||||
|
Pass
|
|
OAEM
|
|
Substandard
|
|
Doubtful
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
489,729
|
|
|
$
|
18,708
|
|
|
$
|
25,313
|
|
|
$
|
708
|
|
|
$
|
534,458
|
|
Owner-occupied commercial real estate
|
443,482
|
|
|
13,449
|
|
|
16,672
|
|
|
—
|
|
|
473,603
|
|
|||||
Non-owner occupied commercial real estate
|
587,455
|
|
|
24,029
|
|
|
25,583
|
|
|
—
|
|
|
637,067
|
|
|||||
Total commercial business
|
1,520,666
|
|
|
56,186
|
|
|
67,568
|
|
|
708
|
|
|
1,645,128
|
|
|||||
One-to-four family residential
|
81,682
|
|
|
486
|
|
|
4,254
|
|
|
—
|
|
|
86,422
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
40,169
|
|
|
3,033
|
|
|
12,275
|
|
|
—
|
|
|
55,477
|
|
|||||
Five or more family residential and commercial properties
|
60,270
|
|
|
382
|
|
|
13,900
|
|
|
—
|
|
|
74,552
|
|
|||||
Total real estate construction and land development
|
100,439
|
|
|
3,415
|
|
|
26,175
|
|
|
—
|
|
|
130,029
|
|
|||||
Consumer
|
202,380
|
|
|
1,388
|
|
|
6,462
|
|
|
—
|
|
|
210,230
|
|
|||||
Gross noncovered loans
|
$
|
1,905,167
|
|
|
$
|
61,475
|
|
|
$
|
104,459
|
|
|
$
|
708
|
|
|
$
|
2,071,809
|
|
|
December 31, 2013
|
||||||||||||||||||
|
Pass
|
|
OAEM
|
|
Substandard
|
|
Doubtful
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
304,959
|
|
|
$
|
9,183
|
|
|
$
|
20,849
|
|
|
$
|
1,549
|
|
|
$
|
336,540
|
|
Owner-occupied commercial real estate
|
269,130
|
|
|
3,814
|
|
|
8,365
|
|
|
—
|
|
|
281,309
|
|
|||||
Non-owner occupied commercial real estate
|
381,355
|
|
|
9,037
|
|
|
8,723
|
|
|
864
|
|
|
399,979
|
|
|||||
Total commercial business
|
955,444
|
|
|
22,034
|
|
|
37,937
|
|
|
2,413
|
|
|
1,017,828
|
|
|||||
One-to-four family residential
|
40,245
|
|
|
269
|
|
|
2,568
|
|
|
—
|
|
|
43,082
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
11,582
|
|
|
4,159
|
|
|
3,983
|
|
|
—
|
|
|
19,724
|
|
|||||
Five or more family residential and commercial properties
|
45,332
|
|
|
—
|
|
|
3,323
|
|
|
—
|
|
|
48,655
|
|
|||||
Total real estate construction and land development
|
56,914
|
|
|
4,159
|
|
|
7,306
|
|
|
—
|
|
|
68,379
|
|
|||||
Consumer
|
39,432
|
|
|
248
|
|
|
1,867
|
|
|
—
|
|
|
41,547
|
|
|||||
Gross noncovered loans
|
$
|
1,092,035
|
|
|
$
|
26,710
|
|
|
$
|
49,678
|
|
|
$
|
2,413
|
|
|
$
|
1,170,836
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
6,741
|
|
|
$
|
4,648
|
|
Owner-occupied commercial real estate
|
2,146
|
|
|
1,024
|
|
||
Non-owner occupied commercial real estate
|
2
|
|
|
3
|
|
||
Total commercial business
|
8,889
|
|
|
5,675
|
|
||
One-to-four family residential
|
328
|
|
|
340
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
3,673
|
|
|
1,045
|
|
||
Total real estate construction and land development
|
3,673
|
|
|
1,045
|
|
||
Consumer
|
698
|
|
|
678
|
|
||
Gross noncovered nonaccrual loans
|
$
|
13,588
|
|
|
$
|
7,738
|
|
|
June 30, 2014
|
||||||||||||||||||||||
|
30-89 Days
|
|
90 Days or
Greater
|
|
Total Past
Due
|
|
Current
|
|
Total
|
|
90 Days or More
and Still
Accruing (1)
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial and industrial
|
$
|
2,177
|
|
|
$
|
5,881
|
|
|
$
|
8,058
|
|
|
$
|
526,400
|
|
|
$
|
534,458
|
|
|
$
|
538
|
|
Owner-occupied commercial real estate
|
657
|
|
|
578
|
|
|
1,235
|
|
|
472,368
|
|
|
473,603
|
|
|
—
|
|
||||||
Non-owner occupied commercial real estate
|
268
|
|
|
618
|
|
|
886
|
|
|
636,181
|
|
|
637,067
|
|
|
—
|
|
||||||
Total commercial business
|
3,102
|
|
|
7,077
|
|
|
10,179
|
|
|
1,634,949
|
|
|
1,645,128
|
|
|
538
|
|
||||||
One-to-four family residential
|
—
|
|
|
—
|
|
|
—
|
|
|
86,422
|
|
|
86,422
|
|
|
—
|
|
||||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
One-to-four family residential
|
1,513
|
|
|
2,117
|
|
|
3,630
|
|
|
51,847
|
|
|
55,477
|
|
|
—
|
|
||||||
Five or more family residential and commercial properties
|
2,043
|
|
|
522
|
|
|
2,565
|
|
|
71,987
|
|
|
74,552
|
|
|
—
|
|
||||||
Total real estate construction and land development
|
3,556
|
|
|
2,639
|
|
|
6,195
|
|
|
123,834
|
|
|
130,029
|
|
|
—
|
|
||||||
Consumer
|
1,147
|
|
|
638
|
|
|
1,785
|
|
|
208,445
|
|
|
210,230
|
|
|
—
|
|
||||||
Gross noncovered loans
|
$
|
7,805
|
|
|
$
|
10,354
|
|
|
$
|
18,159
|
|
|
$
|
2,053,650
|
|
|
$
|
2,071,809
|
|
|
$
|
538
|
|
|
December 31, 2013
|
||||||||||||||||||||||
|
30-89 Days
|
|
90 Days or
Greater
|
|
Total Past
Due
|
|
Current
|
|
Total
|
|
90 Days or More
and Still Accruing (1) |
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial and industrial
|
$
|
2,493
|
|
|
$
|
4,379
|
|
|
$
|
6,872
|
|
|
$
|
329,668
|
|
|
$
|
336,540
|
|
|
$
|
—
|
|
Owner-occupied commercial real estate
|
808
|
|
|
849
|
|
|
1,657
|
|
|
279,652
|
|
|
281,309
|
|
|
—
|
|
||||||
Non-owner occupied commercial real estate
|
1,161
|
|
|
179
|
|
|
1,340
|
|
|
398,639
|
|
|
399,979
|
|
|
6
|
|
||||||
Total commercial business
|
4,462
|
|
|
5,407
|
|
|
9,869
|
|
|
1,007,959
|
|
|
1,017,828
|
|
|
6
|
|
||||||
One-to-four family residential
|
571
|
|
|
509
|
|
|
1,080
|
|
|
42,002
|
|
|
43,082
|
|
|
—
|
|
||||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
One-to-four family residential
|
821
|
|
|
1,045
|
|
|
1,866
|
|
|
17,858
|
|
|
19,724
|
|
|
—
|
|
||||||
Five or more family residential and commercial properties
|
384
|
|
|
453
|
|
|
837
|
|
|
47,818
|
|
|
48,655
|
|
|
—
|
|
||||||
Total real estate construction and land development
|
1,205
|
|
|
1,498
|
|
|
2,703
|
|
|
65,676
|
|
|
68,379
|
|
|
—
|
|
||||||
Consumer
|
210
|
|
|
13
|
|
|
223
|
|
|
41,324
|
|
|
41,547
|
|
|
—
|
|
||||||
Gross noncovered loans
|
$
|
6,448
|
|
|
$
|
7,427
|
|
|
$
|
13,875
|
|
|
$
|
1,156,961
|
|
|
$
|
1,170,836
|
|
|
$
|
6
|
|
|
June 30, 2014
|
||||||||||||||||||
|
Recorded
Investment With
No Specific
Valuation
Allowance
|
|
Recorded
Investment With
Specific
Valuation
Allowance
|
|
Total
Recorded
Investment
|
|
Unpaid
Contractual
Principal
Balance
|
|
Related
Specific
Valuation
Allowance
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
5,080
|
|
|
$
|
7,250
|
|
|
$
|
12,330
|
|
|
$
|
12,981
|
|
|
$
|
2,162
|
|
Owner-occupied commercial real estate
|
1,972
|
|
|
2,054
|
|
|
4,026
|
|
|
4,072
|
|
|
375
|
|
|||||
Non-owner occupied commercial real estate
|
3,321
|
|
|
5,017
|
|
|
8,338
|
|
|
8,329
|
|
|
559
|
|
|||||
Total commercial business
|
10,373
|
|
|
14,321
|
|
|
24,694
|
|
|
25,382
|
|
|
3,096
|
|
|||||
One-to-four family residential
|
577
|
|
|
—
|
|
|
577
|
|
|
612
|
|
|
—
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
4,238
|
|
|
1,320
|
|
|
5,558
|
|
|
6,687
|
|
|
102
|
|
|||||
Five or more family residential and commercial properties
|
—
|
|
|
2,103
|
|
|
2,103
|
|
|
2,103
|
|
|
107
|
|
|||||
Total real estate construction and land development
|
4,238
|
|
|
3,423
|
|
|
7,661
|
|
|
8,790
|
|
|
209
|
|
|||||
Consumer
|
888
|
|
|
61
|
|
|
949
|
|
|
953
|
|
|
61
|
|
|||||
Gross noncovered loans
|
$
|
16,076
|
|
|
$
|
17,805
|
|
|
$
|
33,881
|
|
|
$
|
35,737
|
|
|
$
|
3,366
|
|
|
December 31, 2013
|
||||||||||||||||||
|
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
|
$
|
6,140
|
|
|
$
|
4,850
|
|
|
$
|
10,990
|
|
|
$
|
13,287
|
|
|
$
|
2,716
|
|
Owner-occupied commercial real estate
|
1,118
|
|
|
1,880
|
|
|
2,998
|
|
|
3,023
|
|
|
595
|
|
|||||
Non-owner occupied commercial real estate
|
3,300
|
|
|
4,123
|
|
|
7,423
|
|
|
7,412
|
|
|
364
|
|
|||||
Total commercial business
|
10,558
|
|
|
10,853
|
|
|
21,411
|
|
|
23,722
|
|
|
3,675
|
|
|||||
One-to-four family residential
|
592
|
|
|
—
|
|
|
592
|
|
|
619
|
|
|
—
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
3,773
|
|
|
911
|
|
|
4,684
|
|
|
5,426
|
|
|
211
|
|
|||||
Five or more family residential and commercial properties
|
2,404
|
|
|
—
|
|
|
2,404
|
|
|
2,404
|
|
|
—
|
|
|||||
Total real estate construction and land development
|
6,177
|
|
|
911
|
|
|
7,088
|
|
|
7,830
|
|
|
211
|
|
|||||
Consumer
|
100
|
|
|
678
|
|
|
778
|
|
|
780
|
|
|
153
|
|
|||||
Gross noncovered loans
|
$
|
17,427
|
|
|
$
|
12,442
|
|
|
$
|
29,869
|
|
|
$
|
32,951
|
|
|
$
|
4,039
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In thousands)
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
$
|
11,899
|
|
|
$
|
13,585
|
|
|
$
|
11,596
|
|
|
$
|
12,665
|
|
Owner-occupied commercial real estate
|
3,489
|
|
|
2,674
|
|
|
3,325
|
|
|
2,513
|
|
||||
Non-owner occupied commercial real estate
|
7,854
|
|
|
7,835
|
|
|
7,710
|
|
|
7,967
|
|
||||
Total commercial business
|
23,242
|
|
|
24,094
|
|
|
22,631
|
|
|
23,145
|
|
||||
One-to-four family residential
|
581
|
|
|
1,050
|
|
|
585
|
|
|
991
|
|
||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||||
One-to-four family residential
|
6,028
|
|
|
4,133
|
|
|
5,580
|
|
|
3,897
|
|
||||
Five or more family residential and commercial properties
|
2,114
|
|
|
3,025
|
|
|
2,211
|
|
|
3,135
|
|
||||
Total real estate construction and land development
|
8,142
|
|
|
7,158
|
|
|
7,791
|
|
|
7,032
|
|
||||
Consumer
|
967
|
|
|
85
|
|
|
904
|
|
|
150
|
|
||||
Gross noncovered impaired loans
|
$
|
32,932
|
|
|
$
|
32,387
|
|
|
$
|
31,911
|
|
|
$
|
31,318
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||||
|
Performing
TDRs
|
|
Nonaccrual
TDRs
|
|
Performing
TDRs
|
|
Nonaccrual
TDRs |
||||||||
|
(In thousands)
|
||||||||||||||
Noncovered TDRs
|
$
|
20,293
|
|
|
$
|
2,953
|
|
|
$
|
22,131
|
|
|
$
|
2,634
|
|
Allowance for loan losses on noncovered TDRs
|
2,202
|
|
|
342
|
|
|
2,957
|
|
|
191
|
|
|
Three Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
||||||||||
|
Number of
Contracts
(1)
|
|
Outstanding
Principal Balance
(1)(2)
|
|
Number of
Contracts
(1)
|
|
Outstanding
Principal Balance
(1)(2)
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||
Commercial and industrial
|
6
|
|
|
$
|
1,942
|
|
|
9
|
|
|
$
|
1,723
|
|
Owner-occupied commercial real estate
|
—
|
|
|
—
|
|
|
1
|
|
|
29
|
|
||
Non-owner occupied commercial real estate
|
2
|
|
|
1,023
|
|
|
—
|
|
|
—
|
|
||
Total commercial business
|
8
|
|
|
2,965
|
|
|
10
|
|
|
1,752
|
|
||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||
One-to-four family residential
|
1
|
|
|
88
|
|
|
24
|
|
|
3,086
|
|
||
Five or more family residential and commercial properties
|
—
|
|
|
—
|
|
|
1
|
|
|
2,784
|
|
||
Total real estate construction and land development
|
1
|
|
|
88
|
|
|
25
|
|
|
5,870
|
|
||
Consumer
|
—
|
|
|
—
|
|
|
2
|
|
|
43
|
|
||
Total noncovered TDRs
|
9
|
|
|
$
|
3,053
|
|
|
37
|
|
|
$
|
7,665
|
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
||||||||||
|
Number of
Contracts
(1)
|
|
Outstanding
Principal Balance
(1)(2)
|
|
Number of
Contracts
(1)
|
|
Outstanding
Principal Balance
(1)(2)
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||
Commercial and industrial
|
11
|
|
|
$
|
3,072
|
|
|
19
|
|
|
$
|
4,299
|
|
Owner-occupied commercial real estate
|
1
|
|
|
347
|
|
|
1
|
|
|
29
|
|
||
Non-owner occupied commercial real estate
|
2
|
|
|
1,023
|
|
|
—
|
|
|
—
|
|
||
Total commercial business
|
14
|
|
|
4,442
|
|
|
20
|
|
|
4,328
|
|
||
One-to-four family residential
|
—
|
|
|
—
|
|
|
1
|
|
|
256
|
|
||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||
One-to-four family residential
|
1
|
|
|
277
|
|
|
24
|
|
|
3,086
|
|
||
Five or more family residential and commercial properties
|
—
|
|
|
—
|
|
|
1
|
|
|
2,784
|
|
||
Total real estate construction and land development
|
1
|
|
|
277
|
|
|
25
|
|
|
5,870
|
|
||
Consumer
|
3
|
|
|
219
|
|
|
2
|
|
|
43
|
|
||
Total noncovered TDRs
|
18
|
|
|
$
|
4,938
|
|
|
48
|
|
|
$
|
10,497
|
|
(1)
|
Number of contracts and outstanding principal balance represent loans which have balances as of period end as certain loans may have been paid-down or charged-off during the
three and six months ended June 30, 2014 and 2013
.
|
(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. During both the three and six months ended June 30, 2014, the Company's initial advance at the time of modification on these construction loans totaled
$45,000
and the total commitment amount was
$190,000
. During both the
|
|
Three and Six Months Ended June 30, 2014
|
|||||
|
Number of
Contracts
|
|
Outstanding
Principal Balance
|
|||
|
(Dollars in thousands)
|
|||||
Commercial business:
|
|
|
|
|||
Commercial and industrial
|
3
|
|
|
$
|
790
|
|
Non-owner occupied commercial real estate
|
1
|
|
|
2
|
|
|
Total commercial business
|
4
|
|
|
792
|
|
|
Total noncovered loans receivable
|
4
|
|
|
$
|
792
|
|
|
June 30, 2014
|
||||||
|
Outstanding Principal
|
|
Recorded Investment
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
31,160
|
|
|
$
|
25,382
|
|
Owner-occupied commercial real estate
|
14,434
|
|
|
13,224
|
|
||
Non-owner occupied commercial real estate
|
19,462
|
|
|
17,245
|
|
||
Total commercial business
|
65,056
|
|
|
55,851
|
|
||
One-to-four family residential
|
5,038
|
|
|
4,904
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
9,406
|
|
|
5,198
|
|
||
Five or more family residential and commercial properties
|
4,002
|
|
|
4,042
|
|
||
Total real estate construction and land development
|
13,408
|
|
|
9,240
|
|
||
Consumer
|
6,879
|
|
|
7,475
|
|
||
Gross noncovered PCI loans
|
$
|
90,381
|
|
|
$
|
77,470
|
|
|
December 31, 2013
|
||||||
|
Outstanding Principal
|
|
Recorded Investment
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
18,193
|
|
|
$
|
16,779
|
|
Owner-occupied commercial real estate
|
5,510
|
|
|
5,119
|
|
||
Non-owner occupied commercial real estate
|
8,276
|
|
|
6,785
|
|
||
Total commercial business
|
31,979
|
|
|
28,683
|
|
||
One-to-four family residential
|
4,055
|
|
|
3,768
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
1,967
|
|
|
32
|
|
||
Five or more family residential and commercial properties
|
1,077
|
|
|
1,357
|
|
||
Total real estate construction and land development
|
3,044
|
|
|
1,389
|
|
||
Consumer
|
1,150
|
|
|
2,177
|
|
||
Gross noncovered PCI loans
|
$
|
40,228
|
|
|
$
|
36,017
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
|||||||||||||||
Balance at the beginning of the period
|
|
$
|
7,089
|
|
|
$
|
9,604
|
|
|
$
|
7,714
|
|
|
$
|
8,097
|
|
Accretion
|
|
(761
|
)
|
|
(1,080
|
)
|
|
(1,589
|
)
|
|
(2,423
|
)
|
||||
Disposal and other
|
|
(703
|
)
|
|
(776
|
)
|
|
(1,336
|
)
|
|
2,046
|
|
||||
Change in accretable yield (1)
|
|
10,773
|
|
|
615
|
|
|
11,609
|
|
|
643
|
|
||||
Balance at the end of the period
|
|
$
|
16,398
|
|
|
$
|
8,363
|
|
|
$
|
16,398
|
|
|
$
|
8,363
|
|
(6)
|
Covered Loans Receivable
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
25,539
|
|
|
$
|
14,690
|
|
Owner-occupied commercial real estate
|
58,828
|
|
|
24,366
|
|
||
Non-owner occupied commercial real estate
|
47,165
|
|
|
14,625
|
|
||
Total commercial business
|
131,532
|
|
|
53,681
|
|
||
One-to-four family residential
|
12,954
|
|
|
4,777
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
4,948
|
|
|
1,556
|
|
||
Five or more family residential and commercial properties
|
3,574
|
|
|
—
|
|
||
Total real estate construction and land development
|
8,522
|
|
|
1,556
|
|
||
Consumer
|
6,654
|
|
|
3,740
|
|
||
Gross covered loans receivable
|
159,662
|
|
|
63,754
|
|
||
Allowance for loan losses
|
(6,114
|
)
|
|
(6,167
|
)
|
||
Covered loans receivable, net
|
$
|
153,548
|
|
|
$
|
57,587
|
|
|
June 30, 2014
|
||||||||||||||||||
|
Pass
|
|
OAEM
|
|
Substandard
|
|
Doubtful
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
15,928
|
|
|
$
|
3,758
|
|
|
$
|
5,853
|
|
|
$
|
—
|
|
|
$
|
25,539
|
|
Owner-occupied commercial real estate
|
38,724
|
|
|
6,835
|
|
|
13,018
|
|
|
251
|
|
|
58,828
|
|
|||||
Non-owner occupied commercial real estate
|
15,587
|
|
|
2,361
|
|
|
25,880
|
|
|
3,337
|
|
|
47,165
|
|
|||||
Total commercial business
|
70,239
|
|
|
12,954
|
|
|
44,751
|
|
|
3,588
|
|
|
131,532
|
|
|||||
One-to-four family residential
|
10,060
|
|
|
1,242
|
|
|
1,652
|
|
|
|
|
|
12,954
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
3,647
|
|
|
553
|
|
|
748
|
|
|
—
|
|
|
4,948
|
|
|||||
Five or more family residential and commercial properties
|
1,198
|
|
|
—
|
|
|
2,376
|
|
|
—
|
|
|
3,574
|
|
|||||
Total real estate construction and land development
|
4,845
|
|
|
553
|
|
|
3,124
|
|
|
—
|
|
|
8,522
|
|
|||||
Consumer
|
5,454
|
|
|
107
|
|
|
1,093
|
|
|
—
|
|
|
6,654
|
|
|||||
Gross covered loans receivable
|
$
|
90,598
|
|
|
$
|
14,856
|
|
|
$
|
50,620
|
|
|
$
|
3,588
|
|
|
$
|
159,662
|
|
|
December 31, 2013
|
||||||||||||||||||
|
Pass
|
|
OAEM
|
|
Substandard
|
|
Doubtful
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
9,516
|
|
|
$
|
3,887
|
|
|
$
|
702
|
|
|
$
|
585
|
|
|
$
|
14,690
|
|
Owner-occupied commercial real estate
|
21,084
|
|
|
2,318
|
|
|
708
|
|
|
256
|
|
|
24,366
|
|
|||||
Non-owner occupied commercial real estate
|
6,534
|
|
|
55
|
|
|
4,631
|
|
|
3,405
|
|
|
14,625
|
|
|||||
Total commercial business
|
37,134
|
|
|
6,260
|
|
|
6,041
|
|
|
4,246
|
|
|
53,681
|
|
|||||
One-to-four family residential
|
3,739
|
|
|
882
|
|
|
156
|
|
|
—
|
|
|
4,777
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
698
|
|
|
—
|
|
|
858
|
|
|
—
|
|
|
1,556
|
|
|||||
Five or more family residential and commercial properties
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total real estate construction and land development
|
698
|
|
|
—
|
|
|
858
|
|
|
—
|
|
|
1,556
|
|
|||||
Consumer
|
3,116
|
|
|
106
|
|
|
518
|
|
|
—
|
|
|
3,740
|
|
|||||
Gross covered loans receivable
|
$
|
44,687
|
|
|
$
|
7,248
|
|
|
$
|
7,573
|
|
|
$
|
4,246
|
|
|
$
|
63,754
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Owner-occupied commercial real estate
|
$
|
277
|
|
|
$
|
—
|
|
Total commercial business
|
277
|
|
|
—
|
|
||
Consumer
|
7
|
|
|
7
|
|
||
Gross covered nonaccrual loans
|
$
|
284
|
|
|
$
|
7
|
|
|
June 30, 2014
|
||||||||||||||||||||||
|
30-89 Days
|
|
90 Days or
Greater
|
|
Total Past
Due
|
|
Current
|
|
Total
|
|
90 Days or More
and Still
Accruing (1)
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial and industrial
|
$
|
459
|
|
|
$
|
2,834
|
|
|
$
|
3,293
|
|
|
$
|
22,246
|
|
|
$
|
25,539
|
|
|
$
|
—
|
|
Owner-occupied commercial real estate
|
1,849
|
|
|
3,936
|
|
|
5,785
|
|
|
53,043
|
|
|
58,828
|
|
|
—
|
|
||||||
Non-owner occupied commercial real estate
|
481
|
|
|
13,908
|
|
|
14,389
|
|
|
32,776
|
|
|
47,165
|
|
|
—
|
|
||||||
Total commercial business
|
2,789
|
|
|
20,678
|
|
|
23,467
|
|
|
108,065
|
|
|
131,532
|
|
|
—
|
|
||||||
One-to-four family residential
|
113
|
|
|
588
|
|
|
701
|
|
|
12,253
|
|
|
12,954
|
|
|
—
|
|
||||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
One-to-four family residential
|
210
|
|
|
1,351
|
|
|
1,561
|
|
|
3,387
|
|
|
4,948
|
|
|
—
|
|
||||||
Five or more family residential and commercial properties
|
554
|
|
|
645
|
|
|
1,199
|
|
|
2,375
|
|
|
3,574
|
|
|
—
|
|
||||||
Total real estate construction and land development
|
764
|
|
|
1,996
|
|
|
2,760
|
|
|
5,762
|
|
|
8,522
|
|
|
—
|
|
||||||
Consumer
|
107
|
|
|
66
|
|
|
173
|
|
|
6,481
|
|
|
6,654
|
|
|
—
|
|
||||||
Gross covered loans receivable
|
$
|
3,773
|
|
|
$
|
23,328
|
|
|
$
|
27,101
|
|
|
$
|
132,561
|
|
|
$
|
159,662
|
|
|
$
|
—
|
|
|
December 31, 2013
|
||||||||||||||||||||||
|
30-89 Days
|
|
90 Days or
Greater
|
|
Total Past
Due
|
|
Current
|
|
Total
|
|
90 Days or More
and Still Accruing (1) |
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial and industrial
|
$
|
726
|
|
|
$
|
1,156
|
|
|
$
|
1,882
|
|
|
$
|
12,808
|
|
|
$
|
14,690
|
|
|
$
|
—
|
|
Owner-occupied commercial real estate
|
28
|
|
|
147
|
|
|
175
|
|
|
24,191
|
|
|
24,366
|
|
|
—
|
|
||||||
Non-owner occupied commercial real estate
|
—
|
|
|
3,540
|
|
|
3,540
|
|
|
11,085
|
|
|
14,625
|
|
|
—
|
|
||||||
Total commercial business
|
754
|
|
|
4,843
|
|
|
5,597
|
|
|
48,084
|
|
|
53,681
|
|
|
—
|
|
||||||
One-to-four family residential
|
113
|
|
|
—
|
|
|
113
|
|
|
4,664
|
|
|
4,777
|
|
|
—
|
|
||||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
One-to-four family residential
|
213
|
|
|
644
|
|
|
857
|
|
|
699
|
|
|
1,556
|
|
|
—
|
|
||||||
Five or more family residential and commercial properties
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total real estate construction and land development
|
213
|
|
|
644
|
|
|
857
|
|
|
699
|
|
|
1,556
|
|
|
—
|
|
||||||
Consumer
|
67
|
|
|
78
|
|
|
145
|
|
|
3,595
|
|
|
3,740
|
|
|
—
|
|
||||||
Gross covered loans receivable
|
$
|
1,147
|
|
|
$
|
5,565
|
|
|
$
|
6,712
|
|
|
$
|
57,042
|
|
|
$
|
63,754
|
|
|
$
|
—
|
|
|
June 30, 2014
|
||||||||||||||||||
|
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
|
$
|
20
|
|
|
$
|
3,626
|
|
|
$
|
3,646
|
|
|
$
|
3,647
|
|
|
$
|
395
|
|
Owner-occupied commercial real estate
|
—
|
|
|
277
|
|
|
277
|
|
|
281
|
|
|
233
|
|
|||||
Total commercial business
|
20
|
|
|
3,903
|
|
|
3,923
|
|
|
3,928
|
|
|
628
|
|
|||||
Consumer
|
7
|
|
|
—
|
|
|
7
|
|
|
8
|
|
|
—
|
|
|||||
Gross covered impaired loans
|
$
|
27
|
|
|
$
|
3,903
|
|
|
$
|
3,930
|
|
|
$
|
3,936
|
|
|
$
|
628
|
|
|
December 31, 2013
|
||||||||||||||||||
|
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
|
$
|
10
|
|
|
$
|
3,751
|
|
|
$
|
3,761
|
|
|
$
|
3,761
|
|
|
$
|
629
|
|
Owner-occupied commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total commercial business
|
10
|
|
|
3,751
|
|
|
3,761
|
|
|
3,761
|
|
|
629
|
|
|||||
One-to-four family residential
|
—
|
|
|
450
|
|
|
450
|
|
|
423
|
|
|
31
|
|
|||||
Consumer
|
7
|
|
|
—
|
|
|
7
|
|
|
8
|
|
|
—
|
|
|||||
Gross covered impaired loans
|
$
|
17
|
|
|
$
|
4,201
|
|
|
$
|
4,218
|
|
|
$
|
4,192
|
|
|
$
|
660
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In thousands)
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
$
|
3,648
|
|
|
$
|
35
|
|
|
$
|
3,686
|
|
|
$
|
40
|
|
Owner-occupied commercial real estate
|
353
|
|
|
—
|
|
|
235
|
|
|
—
|
|
||||
Total commercial business
|
4,001
|
|
|
35
|
|
|
3,921
|
|
|
40
|
|
||||
One-to-four family residential
|
—
|
|
|
461
|
|
|
150
|
|
|
463
|
|
||||
Consumer
|
7
|
|
|
23
|
|
|
7
|
|
|
28
|
|
||||
Gross covered impaired loans
|
$
|
4,008
|
|
|
$
|
519
|
|
|
$
|
4,078
|
|
|
$
|
531
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||
|
Performing
TDRs
|
|
Nonaccrual
TDRs
|
|
Performing
TDRs |
|
Nonaccrual
TDRs |
||||
|
(In thousands)
|
||||||||||
Covered TDRs
|
3,646
|
|
|
7
|
|
|
4,211
|
|
|
7
|
|
Allowance for loan losses on covered TDRs
|
395
|
|
|
—
|
|
|
660
|
|
|
—
|
|
|
June 30, 2014
|
||||||
|
Outstanding Principal
|
|
Recorded Investment
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
16,206
|
|
|
$
|
12,042
|
|
Owner-occupied commercial real estate
|
28,011
|
|
|
21,277
|
|
||
Non-owner occupied commercial real estate
|
35,862
|
|
|
31,927
|
|
||
Total commercial business
|
80,079
|
|
|
65,246
|
|
||
One-to-four family residential
|
5,449
|
|
|
5,004
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
895
|
|
|
1,967
|
|
||
Five or more family residential and commercial properties
|
3,026
|
|
|
2,376
|
|
||
Total real estate construction and land development
|
3,921
|
|
|
4,343
|
|
||
Consumer
|
2,882
|
|
|
2,521
|
|
||
Gross covered PCI loans
|
$
|
92,331
|
|
|
$
|
77,114
|
|
|
December 31, 2013
|
||||||
|
Outstanding Principal
|
|
Recorded Investment
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
10,608
|
|
|
$
|
8,680
|
|
Owner-occupied commercial real estate
|
11,538
|
|
|
10,923
|
|
||
Non-owner occupied commercial real estate
|
10,611
|
|
|
12,187
|
|
||
Total commercial business
|
32,757
|
|
|
31,790
|
|
||
One-to-four family residential
|
3,966
|
|
|
3,530
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
1,298
|
|
|
1,556
|
|
||
Five or more family residential and commercial properties
|
—
|
|
|
—
|
|
||
Total real estate construction and land development
|
1,298
|
|
|
1,556
|
|
||
Consumer
|
2,022
|
|
|
2,000
|
|
||
Gross covered PCI loans
|
$
|
40,043
|
|
|
$
|
38,876
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In thousands)
|
|||||||||||||||
Balance at the beginning of the period
|
|
$
|
9,063
|
|
|
$
|
14,108
|
|
|
$
|
9,535
|
|
|
$
|
14,286
|
|
Accretion
|
|
(615
|
)
|
|
(1,109
|
)
|
|
(1,300
|
)
|
|
(2,463
|
)
|
||||
Disposal and other
|
|
(392
|
)
|
|
(443
|
)
|
|
(435
|
)
|
|
502
|
|
||||
Change in accretable yield (1)
|
|
3,712
|
|
|
713
|
|
|
3,968
|
|
|
944
|
|
||||
Balance at the end of the period
|
|
$
|
11,768
|
|
|
$
|
13,269
|
|
|
$
|
11,768
|
|
|
$
|
13,269
|
|
(7)
|
Allowance for Loan Losses
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In thousands)
|
||||||||||||||
Balance at the beginning of the period
|
$
|
22,820
|
|
|
$
|
22,837
|
|
|
$
|
22,657
|
|
|
$
|
24,242
|
|
Charge-offs
|
(1,152
|
)
|
|
(662
|
)
|
|
(1,215
|
)
|
|
(2,686
|
)
|
||||
Recoveries of loans previously charged-off
|
331
|
|
|
227
|
|
|
578
|
|
|
346
|
|
||||
Provision for loan losses
|
370
|
|
|
209
|
|
|
349
|
|
|
709
|
|
||||
Balance at the end of the period
|
$
|
22,369
|
|
|
$
|
22,611
|
|
|
$
|
22,369
|
|
|
$
|
22,611
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In thousands)
|
||||||||||||||
Balance at the beginning of the period
|
$
|
6,567
|
|
|
$
|
4,710
|
|
|
$
|
6,167
|
|
|
$
|
4,352
|
|
Charge-offs
|
(775
|
)
|
|
(40
|
)
|
|
(854
|
)
|
|
(40
|
)
|
||||
Recoveries of loans previously charged-off
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Provision for loan losses
|
321
|
|
|
1,099
|
|
|
800
|
|
|
1,457
|
|
||||
Balance at the end of the period
|
$
|
6,114
|
|
|
$
|
5,769
|
|
|
$
|
6,114
|
|
|
$
|
5,769
|
|
|
Commercial
and
industrial
|
|
Owner-
occupied
commercial
real estate
|
|
Non-owner
occupied
commercial
real estate
|
|
One-to-four
family
residential
|
|
Real estate
construction
and land
development:
one-to-four
family
residential
|
|
Real estate
construction
and land
development:
five or more
family
residential
and
commercial
properties
|
|
Consumer
|
|
Unallocated
|
|
Total
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||||||||
Allowance for loan losses for the three months ended June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
March 31, 2014
|
$
|
12,277
|
|
|
$
|
4,463
|
|
|
$
|
5,226
|
|
|
$
|
1,121
|
|
|
$
|
1,979
|
|
|
$
|
1,983
|
|
|
$
|
1,690
|
|
|
$
|
648
|
|
|
$
|
29,387
|
|
Charge-offs
|
(1,403
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(345
|
)
|
|
—
|
|
|
(179
|
)
|
|
—
|
|
|
(1,927
|
)
|
|||||||||
Recoveries
|
269
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
332
|
|
|||||||||
Provisions for / (reallocation of) loan losses
|
161
|
|
|
(263
|
)
|
|
459
|
|
|
34
|
|
|
(144
|
)
|
|
(353
|
)
|
|
644
|
|
|
153
|
|
|
691
|
|
|||||||||
June 30, 2014
|
$
|
11,304
|
|
|
$
|
4,200
|
|
|
$
|
5,685
|
|
|
$
|
1,155
|
|
|
$
|
1,533
|
|
|
$
|
1,630
|
|
|
$
|
2,175
|
|
|
$
|
801
|
|
|
$
|
28,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Allowance for loan losses for the six months ended June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
December 31, 2013
|
$
|
13,478
|
|
|
$
|
4,049
|
|
|
$
|
5,326
|
|
|
$
|
1,100
|
|
|
$
|
1,720
|
|
|
$
|
953
|
|
|
$
|
1,597
|
|
|
$
|
601
|
|
|
$
|
28,824
|
|
Charge-offs
|
(1,482
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(345
|
)
|
|
—
|
|
|
(242
|
)
|
|
—
|
|
|
(2,069
|
)
|
|||||||||
Recoveries
|
501
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
579
|
|
|||||||||
Provisions for / (reallocation of) loan losses
|
(1,193
|
)
|
|
151
|
|
|
359
|
|
|
55
|
|
|
115
|
|
|
677
|
|
|
785
|
|
|
200
|
|
|
1,149
|
|
|||||||||
June 30, 2014
|
$
|
11,304
|
|
|
$
|
4,200
|
|
|
$
|
5,685
|
|
|
$
|
1,155
|
|
|
$
|
1,533
|
|
|
$
|
1,630
|
|
|
$
|
2,175
|
|
|
$
|
801
|
|
|
$
|
28,483
|
|
Allowance for loan losses as of June 30, 2014 allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Noncovered loans individually evaluated for impairment
|
$
|
2,162
|
|
|
$
|
375
|
|
|
$
|
559
|
|
|
$
|
—
|
|
|
$
|
102
|
|
|
$
|
107
|
|
|
$
|
61
|
|
|
$
|
—
|
|
|
$
|
3,366
|
|
Noncovered loans collectively evaluated for impairment
|
5,732
|
|
|
2,046
|
|
|
2,637
|
|
|
624
|
|
|
401
|
|
|
1,432
|
|
|
1,238
|
|
|
801
|
|
|
14,911
|
|
|||||||||
Covered loans individually evaluated for impairment
|
395
|
|
|
233
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
628
|
|
|||||||||
Covered loans collectively evaluated for impairment
|
27
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
111
|
|
|||||||||
Noncovered PCI loans collectively evaluated for impairment
|
2,218
|
|
|
335
|
|
|
345
|
|
|
210
|
|
|
272
|
|
|
91
|
|
|
621
|
|
|
—
|
|
|
4,092
|
|
|||||||||
Covered PCI loans collectively evaluated for impairment
|
770
|
|
|
1,197
|
|
|
2,130
|
|
|
307
|
|
|
758
|
|
|
—
|
|
|
213
|
|
|
—
|
|
|
5,375
|
|
|||||||||
June 30, 2014
|
$
|
11,304
|
|
|
$
|
4,200
|
|
|
$
|
5,685
|
|
|
$
|
1,155
|
|
|
$
|
1,533
|
|
|
$
|
1,630
|
|
|
$
|
2,175
|
|
|
$
|
801
|
|
|
$
|
28,483
|
|
|
Commercial
and
industrial
|
|
Owner-
occupied
commercial
real estate
|
|
Non-owner
occupied
commercial
real estate
|
|
One-to-four
family
residential
|
|
Real estate
construction
and land
development:
one-to-four
family
residential
|
|
Real estate
construction
and land
development:
five or more
family
residential
and
commercial
properties
|
|
Consumer
|
|
Unallocated
|
|
Total
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||||||||
Allowance for loan losses for the three months ended June 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
March 31, 2013
|
$
|
10,844
|
|
|
$
|
3,841
|
|
|
$
|
5,275
|
|
|
$
|
1,206
|
|
|
$
|
2,655
|
|
|
$
|
1,335
|
|
|
$
|
1,495
|
|
|
$
|
896
|
|
|
$
|
27,547
|
|
Charge-offs
|
(541
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59
|
)
|
|
(102
|
)
|
|
—
|
|
|
(702
|
)
|
|||||||||
Recoveries
|
35
|
|
|
155
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
5
|
|
|
—
|
|
|
227
|
|
|||||||||
Provisions for / (reallocation of) loan losses
|
1,840
|
|
|
(271
|
)
|
|
1,012
|
|
|
(108
|
)
|
|
(448
|
)
|
|
(669
|
)
|
|
20
|
|
|
(68
|
)
|
|
1,308
|
|
|||||||||
June 30, 2013
|
$
|
12,178
|
|
|
$
|
3,725
|
|
|
$
|
6,287
|
|
|
$
|
1,098
|
|
|
$
|
2,207
|
|
|
$
|
639
|
|
|
$
|
1,418
|
|
|
$
|
828
|
|
|
$
|
28,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Allowance for loan losses for the six months ended June 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
December 31, 2012
|
$
|
9,912
|
|
|
$
|
4,021
|
|
|
$
|
5,369
|
|
|
$
|
1,221
|
|
|
$
|
3,131
|
|
|
$
|
2,309
|
|
|
$
|
1,761
|
|
|
$
|
870
|
|
|
$
|
28,594
|
|
Charge-offs
|
(2,178
|
)
|
|
—
|
|
|
—
|
|
|
(52
|
)
|
|
—
|
|
|
(142
|
)
|
|
(354
|
)
|
|
—
|
|
|
(2,726
|
)
|
|||||||||
Recoveries
|
145
|
|
|
155
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
14
|
|
|
—
|
|
|
346
|
|
|||||||||
Provisions for / (reallocation of) loan losses
|
4,299
|
|
|
(451
|
)
|
|
918
|
|
|
(71
|
)
|
|
(924
|
)
|
|
(1,560
|
)
|
|
(3
|
)
|
|
(42
|
)
|
|
2,166
|
|
|||||||||
June 30, 2013
|
$
|
12,178
|
|
|
$
|
3,725
|
|
|
$
|
6,287
|
|
|
$
|
1,098
|
|
|
$
|
2,207
|
|
|
$
|
639
|
|
|
$
|
1,418
|
|
|
$
|
828
|
|
|
$
|
28,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Allowance for loan losses as of December 31, 2013 allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Noncovered loans individually evaluated for impairment
|
$
|
2,716
|
|
|
$
|
595
|
|
|
$
|
364
|
|
|
$
|
—
|
|
|
$
|
211
|
|
|
$
|
—
|
|
|
$
|
153
|
|
|
$
|
—
|
|
|
$
|
4,039
|
|
Noncovered loans collectively evaluated for impairment
|
6,727
|
|
|
2,101
|
|
|
2,516
|
|
|
570
|
|
|
429
|
|
|
855
|
|
|
575
|
|
|
601
|
|
|
14,374
|
|
|||||||||
Covered loans individually evaluated for impairment
|
629
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
660
|
|
|||||||||
Covered loans collectively evaluated for impairment
|
18
|
|
|
7
|
|
|
14
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
109
|
|
|||||||||
Noncovered PCI loans collectively evaluated for impairment
|
2,294
|
|
|
348
|
|
|
359
|
|
|
216
|
|
|
291
|
|
|
98
|
|
|
638
|
|
|
—
|
|
|
4,244
|
|
|||||||||
Covered PCI loans collectively evaluated for impairment
|
1,094
|
|
|
998
|
|
|
2,073
|
|
|
270
|
|
|
789
|
|
|
—
|
|
|
174
|
|
|
—
|
|
|
5,398
|
|
|||||||||
December 30, 2013
|
$
|
13,478
|
|
|
$
|
4,049
|
|
|
$
|
5,326
|
|
|
$
|
1,100
|
|
|
$
|
1,720
|
|
|
$
|
953
|
|
|
$
|
1,597
|
|
|
$
|
601
|
|
|
$
|
28,824
|
|
|
Commercial
and
industrial
|
|
Owner-
occupied
commercial
real estate
|
|
Non-owner
occupied
commercial
real estate
|
|
One-to-four
family
residential
|
|
Real estate
construction
and land
development:
one-to-four
family
residential
|
|
Real estate
construction
and land
development:
five or more
family
residential
and
commercial
properties
|
|
Consumer
|
|
Total
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||||
Noncovered loans individually evaluated for impairment
|
$
|
12,330
|
|
|
$
|
4,026
|
|
|
$
|
8,338
|
|
|
$
|
577
|
|
|
$
|
5,558
|
|
|
$
|
2,103
|
|
|
$
|
949
|
|
|
$
|
33,881
|
|
Noncovered loans collectively evaluated for impairment
|
496,746
|
|
|
456,353
|
|
|
611,484
|
|
|
80,941
|
|
|
44,721
|
|
|
68,407
|
|
|
201,806
|
|
|
1,960,458
|
|
||||||||
Covered loans individually evaluated for impairment
|
3,646
|
|
|
277
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
3,930
|
|
||||||||
Covered loans collectively evaluated for impairment
|
9,851
|
|
|
37,274
|
|
|
15,238
|
|
|
7,950
|
|
|
2,981
|
|
|
1,198
|
|
|
4,126
|
|
|
78,618
|
|
||||||||
Noncovered PCI loans collectively evaluated for impairment
|
25,382
|
|
|
13,224
|
|
|
17,245
|
|
|
4,904
|
|
|
5,198
|
|
|
4,042
|
|
|
7,475
|
|
|
77,470
|
|
||||||||
Covered PCI loans collectively evaluated for impairment
|
12,042
|
|
|
21,277
|
|
|
31,927
|
|
|
5,004
|
|
|
1,967
|
|
|
2,376
|
|
|
2,521
|
|
|
77,114
|
|
||||||||
Total gross loans receivable as of June 30, 2014
|
$
|
559,997
|
|
|
$
|
532,431
|
|
|
$
|
684,232
|
|
|
$
|
99,376
|
|
|
$
|
60,425
|
|
|
$
|
78,126
|
|
|
$
|
216,884
|
|
|
$
|
2,231,471
|
|
|
Commercial
and
industrial
|
|
Owner-
occupied
commercial
real estate
|
|
Non-owner
occupied
commercial
real estate
|
|
One-to-four
family
residential
|
|
Real estate
construction
and land
development:
one-to-four
family
residential
|
|
Real estate
construction
and land
development:
five or more
family
residential
and
commercial
properties
|
|
Consumer
|
|
Total
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||||
Noncovered loans individually evaluated for impairment
|
$
|
10,990
|
|
|
$
|
2,998
|
|
|
$
|
7,423
|
|
|
$
|
592
|
|
|
$
|
4,684
|
|
|
$
|
2,404
|
|
|
$
|
778
|
|
|
$
|
29,869
|
|
Noncovered loans collectively evaluated for impairment
|
308,771
|
|
|
273,192
|
|
|
385,771
|
|
|
38,722
|
|
|
15,008
|
|
|
44,894
|
|
|
38,592
|
|
|
1,104,950
|
|
||||||||
Covered loans individually evaluated for impairment
|
3,761
|
|
|
—
|
|
|
—
|
|
|
450
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
4,218
|
|
||||||||
Covered loans collectively evaluated for impairment
|
2,249
|
|
|
13,443
|
|
|
2,438
|
|
|
797
|
|
|
—
|
|
|
—
|
|
|
1,733
|
|
|
20,660
|
|
||||||||
Noncovered PCI loans collectively evaluated for impairment
|
16,779
|
|
|
5,119
|
|
|
6,785
|
|
|
3,768
|
|
|
32
|
|
|
1,357
|
|
|
2,177
|
|
|
36,017
|
|
||||||||
Covered PCI loans collectively evaluated for impairment
|
8,680
|
|
|
10,923
|
|
|
12,187
|
|
|
3,530
|
|
|
1,556
|
|
|
—
|
|
|
2,000
|
|
|
38,876
|
|
||||||||
Total gross loans receivable as of December 31, 2013
|
$
|
351,230
|
|
|
$
|
305,675
|
|
|
$
|
414,604
|
|
|
$
|
47,859
|
|
|
$
|
21,280
|
|
|
$
|
48,655
|
|
|
$
|
45,287
|
|
|
$
|
1,234,590
|
|
(8)
|
FDIC Indemnification Asset
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In thousands)
|
||||||||||||||
Balance at the beginning of the period
|
$
|
3,969
|
|
|
$
|
5,353
|
|
|
$
|
4,382
|
|
|
$
|
7,100
|
|
Additions as a result of the Washington Banking Merger
|
7,407
|
|
|
—
|
|
|
7,407
|
|
|
—
|
|
||||
Cash payments received or receivable from the FDIC
|
(2,365
|
)
|
|
(881
|
)
|
|
(2,741
|
)
|
|
(2,361
|
)
|
||||
FDIC share of additional estimated losses
|
469
|
|
|
523
|
|
|
805
|
|
|
611
|
|
||||
Net amortization
|
(360
|
)
|
|
(242
|
)
|
|
(733
|
)
|
|
(597
|
)
|
||||
Balance at the end of the period
|
$
|
9,120
|
|
|
$
|
4,753
|
|
|
$
|
9,120
|
|
|
$
|
4,753
|
|
(9)
|
Other Real Estate Owned
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In thousands)
|
||||||||||||||
Balance at the beginning of the period
|
$
|
4,284
|
|
|
$
|
5,263
|
|
|
$
|
4,559
|
|
|
$
|
5,666
|
|
Additions
|
—
|
|
|
513
|
|
|
218
|
|
|
513
|
|
||||
Additions from acquisitions
|
7,121
|
|
|
—
|
|
|
7,121
|
|
|
2,279
|
|
||||
Proceeds from dispositions
|
(3,337
|
)
|
|
(1,955
|
)
|
|
(3,857
|
)
|
|
(4,916
|
)
|
||||
Gain on sales, net
|
38
|
|
|
60
|
|
|
65
|
|
|
232
|
|
||||
Valuation adjustment
|
—
|
|
|
(85
|
)
|
|
—
|
|
|
22
|
|
||||
Balance at the end of the period
|
$
|
8,106
|
|
|
$
|
3,796
|
|
|
$
|
8,106
|
|
|
$
|
3,796
|
|
(10)
|
Goodwill and Other Intangible Assets
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Balance at the beginning of the period
|
|
$
|
1,459
|
|
|
$
|
1,127
|
|
|
$
|
1,615
|
|
|
$
|
1,086
|
|
Additions as a result of acquisitions
|
|
11,194
|
|
|
—
|
|
|
11,194
|
|
|
156
|
|
||||
Amortization
|
|
(489
|
)
|
|
(114
|
)
|
|
(645
|
)
|
|
(229
|
)
|
||||
Balance at the end of the period
|
|
$
|
12,164
|
|
|
$
|
1,013
|
|
|
$
|
12,164
|
|
|
$
|
1,013
|
|
(11)
|
Stockholders’ Equity
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Net income:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
4,148
|
|
|
$
|
2,690
|
|
|
$
|
6,691
|
|
|
$
|
5,575
|
|
Less: Dividends and undistributed earnings allocated to participating securities
|
(20
|
)
|
|
(36
|
)
|
|
(32
|
)
|
|
(74
|
)
|
||||
Net income allocated to common shareholders
|
$
|
4,128
|
|
|
$
|
2,654
|
|
|
$
|
6,659
|
|
|
$
|
5,501
|
|
Basic:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
25,592,389
|
|
|
15,151,743
|
|
|
20,929,467
|
|
|
15,140,406
|
|
||||
Less: Restricted stock awards
|
(166,577
|
)
|
|
(171,542
|
)
|
|
(182,051
|
)
|
|
(179,104
|
)
|
||||
Total basic weighted average common shares outstanding
|
25,425,812
|
|
|
14,980,201
|
|
|
20,747,416
|
|
|
14,961,302
|
|
||||
Diluted:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
25,425,812
|
|
|
14,980,201
|
|
|
20,747,416
|
|
|
14,961,302
|
|
||||
Incremental shares from stock options
|
50,091
|
|
|
11,941
|
|
|
58,313
|
|
|
12,440
|
|
||||
Total diluted weighted average common shares outstanding
|
25,475,903
|
|
|
14,992,142
|
|
|
20,805,729
|
|
|
14,973,742
|
|
Declared
|
|
Cash Dividend
per Share
|
|
Record Date
|
|
Paid Date
|
January 30, 2013
|
|
$0.08
|
|
February 8, 2013
|
|
February 22, 2013
|
April 24, 2013
|
|
$0.08
|
|
May 10, 2013
|
|
May 24, 2013
|
January 29, 2014
|
|
$0.08
|
|
February 10, 2014
|
|
February 24, 2014
|
March 27, 2014
|
|
$0.08
|
|
April 8, 2014
|
|
April 23, 2014
|
(12)
|
Junior Subordinated Debentures
|
(13)
|
Stock-Based Compensation
|
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average
Remaining
Contractual
Term (In years)
|
|
Aggregate
Intrinsic
Value (In
thousands)
|
|||||
Outstanding at December 31, 2012
|
300,658
|
|
|
$
|
17.48
|
|
|
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(3,300
|
)
|
|
11.35
|
|
|
|
|
|
|||
Forfeited or expired
|
(71,682
|
)
|
|
22.56
|
|
|
|
|
|
|||
Outstanding at June 30, 2013
|
225,676
|
|
|
$
|
15.96
|
|
|
3.7
|
|
$
|
240
|
|
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2013
|
194,482
|
|
|
$
|
15.82
|
|
|
|
|
|
||
Granted (1)
|
90,248
|
|
|
10.72
|
|
|
|
|
|
|||
Exercised
|
(38,844
|
)
|
|
10.98
|
|
|
|
|
|
|||
Forfeited or expired
|
(35,744
|
)
|
|
23.66
|
|
|
|
|
|
|||
Outstanding at June 30, 2014
|
210,142
|
|
|
$
|
13.19
|
|
|
3.3
|
|
$
|
677
|
|
Vested and expected to vest at June 30, 2014
|
210,142
|
|
|
$
|
13.19
|
|
|
3.3
|
|
$
|
677
|
|
Exercisable at June 30, 2014
|
210,142
|
|
|
$
|
13.19
|
|
|
3.3
|
|
$
|
677
|
|
(1)
|
Options granted during the six months ended June 30, 2014 represent only the stock options issued in conjunction with the Washington Banking Merger. See "Note 2. Business Combination" for additional information. The weighted average exercise price reflects the exchange ratio applied to the original Washington Banking exercise price pursuant to the Merger Agreement.
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|||
Nonvested at December 31, 2012
|
189,670
|
|
|
$
|
14.86
|
|
Granted
|
99,790
|
|
|
14.26
|
|
|
Vested
|
(84,346
|
)
|
|
15.62
|
|
|
Forfeited
|
(964
|
)
|
|
15.52
|
|
|
Nonvested at June 30, 2013
|
204,150
|
|
|
$
|
14.25
|
|
|
|
|
|
|||
Nonvested at December 31, 2013
|
202,939
|
|
|
$
|
14.29
|
|
Granted
|
10,168
|
|
|
16.72
|
|
|
Vested
|
(63,639
|
)
|
|
14.39
|
|
|
Forfeited
|
(3,993
|
)
|
|
14.28
|
|
|
Nonvested at June 30, 2014
|
145,475
|
|
|
$
|
14.42
|
|
(14)
|
Accumulated Other Comprehensive Income (Loss)
|
|
Three Months Ended June 30, 2014
|
||||||||||
|
Changes in
fair value of available for sale securities (1) |
|
Accretion of other-than-
temporary impairment on held to maturity securities (1) |
|
Total
|
||||||
|
(In thousands)
|
||||||||||
Balance of AOCI at the beginning of period
|
$
|
(447
|
)
|
|
$
|
(224
|
)
|
|
$
|
(671
|
)
|
Other comprehensive income before reclassification
|
2,022
|
|
|
15
|
|
|
2,037
|
|
|||
Amounts reclassified from AOCI for gain on sale of investment securities available for sale included in income
|
(57
|
)
|
|
—
|
|
|
(57
|
)
|
|||
Net current period other comprehensive income
|
1,965
|
|
|
15
|
|
|
1,980
|
|
|||
Balance of AOCI at the end of period
|
$
|
1,518
|
|
|
$
|
(209
|
)
|
|
$
|
1,309
|
|
(1)
|
All amounts are net of tax.
|
|
Six Months Ended June 30, 2014
|
||||||||||
|
Changes in
fair value of available for sale securities (1) |
|
Accretion of other-than-
temporary impairment on held to maturity securities (1) |
|
Total
|
||||||
|
(In thousands)
|
||||||||||
Balance of AOCI at the beginning of the period
|
$
|
(923
|
)
|
|
$
|
(239
|
)
|
|
$
|
(1,162
|
)
|
Other comprehensive income before reclassification
|
2,615
|
|
|
30
|
|
|
2,645
|
|
|||
Amounts reclassified from AOCI for gain on sale of investment securities available for sale included in income
|
(174
|
)
|
|
—
|
|
|
(174
|
)
|
|||
Net current period other comprehensive income
|
2,441
|
|
|
30
|
|
|
2,471
|
|
|||
Balance of AOCI at the end of the period
|
$
|
1,518
|
|
|
$
|
(209
|
)
|
|
$
|
1,309
|
|
(1)
|
All amounts are net of tax.
|
|
Three Months Ended June 30, 2013
|
||||||||||
|
Changes in
fair value of available for sale securities (1) |
|
Accretion of other-than-
temporary impairment on held to maturity securities (1) |
|
Total
|
||||||
|
(In thousands)
|
||||||||||
Balance of AOCI at the beginning of the period
|
$
|
1,700
|
|
|
$
|
(284
|
)
|
|
$
|
1,416
|
|
Other comprehensive (loss) income before reclassification
|
(1,947
|
)
|
|
22
|
|
|
(1,925
|
)
|
|||
Amounts reclassified from AOCI
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net current period other comprehensive (loss) income
|
(1,947
|
)
|
|
22
|
|
|
(1,925
|
)
|
|||
Balance of AOCI at the end of the period
|
$
|
(247
|
)
|
|
$
|
(262
|
)
|
|
$
|
(509
|
)
|
(1)
|
All amounts are net of tax.
|
|
Six Months Ended June 30, 2013
|
||||||||||
|
Changes in
fair value of available for sale securities (1) |
|
Accretion of other-than-
temporary impairment on held to maturity securities (1) |
|
Total
|
||||||
|
(In thousands)
|
||||||||||
Balance of AOCI at the beginning of the period
|
$
|
2,042
|
|
|
$
|
(298
|
)
|
|
$
|
1,744
|
|
Other comprehensive (loss) income before reclassification
|
(2,289
|
)
|
|
36
|
|
|
(2,253
|
)
|
|||
Amounts reclassified from AOCI
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net current period other comprehensive (loss) income
|
(2,289
|
)
|
|
36
|
|
|
(2,253
|
)
|
|||
Balance of AOCI at the end of the period
|
$
|
(247
|
)
|
|
$
|
(262
|
)
|
|
$
|
(509
|
)
|
(1)
|
All amounts are net of tax.
|
(15)
|
Fair Value Measurements
|
|
June 30, 2014
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(In thousands)
|
||||||||||||||
Investment securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
14,228
|
|
|
$
|
—
|
|
|
$
|
14,228
|
|
|
$
|
—
|
|
Municipal securities
|
145,202
|
|
|
—
|
|
|
145,202
|
|
|
—
|
|
||||
Mortgage backed securities and collateralized mortgage obligations—residential:
|
|
|
|
|
|
|
|
||||||||
U.S Government-sponsored agencies
|
488,068
|
|
|
—
|
|
|
488,068
|
|
|
—
|
|
||||
Corporate obligations
|
3,003
|
|
|
—
|
|
|
3,003
|
|
|
—
|
|
||||
Mutual funds and other equities
|
1,976
|
|
|
1,976
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
652,477
|
|
|
$
|
1,976
|
|
|
$
|
650,501
|
|
|
$
|
—
|
|
|
December 31, 2013
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(In thousands)
|
||||||||||||||
Investment securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
6,039
|
|
|
$
|
—
|
|
|
$
|
6,039
|
|
|
$
|
—
|
|
Municipal securities
|
49,060
|
|
|
—
|
|
|
49,060
|
|
|
—
|
|
||||
Mortgage backed securities and collateralized mortgage obligations—residential:
|
|
|
|
|
|
|
|
||||||||
U.S Government-sponsored agencies
|
108,035
|
|
|
—
|
|
|
108,035
|
|
|
—
|
|
||||
Total
|
$
|
163,134
|
|
|
$
|
—
|
|
|
$
|
163,134
|
|
|
$
|
—
|
|
|
Basis (1)
|
|
Fair Value at June 30, 2014
|
|
|
|
|
||||||||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Net Losses
(Gains)
Recorded in
Earnings
During
the Three Months Ended June 30, 2014
|
|
Net Losses
(Gains)
Recorded in
Earnings
During
the Six Months Ended June 30, 2014
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||
Noncovered impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial and industrial
|
$
|
7,250
|
|
|
$
|
5,088
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,088
|
|
|
$
|
(79
|
)
|
|
$
|
81
|
|
Owner-occupied commercial real estate
|
2,054
|
|
|
1,679
|
|
|
—
|
|
|
—
|
|
|
1,679
|
|
|
(158
|
)
|
|
(220
|
)
|
|||||||
Non-owner occupied commercial real estate
|
5,017
|
|
|
4,458
|
|
|
—
|
|
|
—
|
|
|
4,458
|
|
|
223
|
|
|
195
|
|
|||||||
Total commercial business
|
14,321
|
|
|
11,225
|
|
|
—
|
|
|
—
|
|
|
11,225
|
|
|
(14
|
)
|
|
56
|
|
|||||||
One-to-four family residential
|
—
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
One-to-four family residential
|
1,320
|
|
|
1,218
|
|
|
—
|
|
|
—
|
|
|
1,218
|
|
|
(32
|
)
|
|
(42
|
)
|
|||||||
Five or more family residential and commercial properties
|
2,103
|
|
|
1,996
|
|
|
—
|
|
|
—
|
|
|
1,996
|
|
|
107
|
|
|
107
|
|
|||||||
Total real estate construction and land development
|
3,423
|
|
|
3,214
|
|
|
—
|
|
|
—
|
|
|
3,214
|
|
|
75
|
|
|
65
|
|
|||||||
Consumer
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
23
|
|
|||||||
Total noncovered impaired loans
|
17,805
|
|
|
14,439
|
|
|
—
|
|
|
—
|
|
|
14,439
|
|
|
60
|
|
|
144
|
|
|||||||
Covered impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial and industrial
|
3,626
|
|
|
3,231
|
|
|
—
|
|
|
—
|
|
|
3,231
|
|
|
—
|
|
|
(234
|
)
|
|||||||
Owner-occupied commercial real estate
|
277
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
(155
|
)
|
|
233
|
|
|||||||
Total commercial business
|
3,903
|
|
|
3,275
|
|
|
—
|
|
|
—
|
|
|
3,275
|
|
|
(155
|
)
|
|
(1
|
)
|
|||||||
Total covered impaired loans
|
3,903
|
|
|
3,275
|
|
|
—
|
|
|
—
|
|
|
3,275
|
|
|
(155
|
)
|
|
(1
|
)
|
|||||||
Investment securities held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Mortgage back securities and collateralized mortgage obligations—residential:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Private residential collateralized mortgage obligations
|
36
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
25
|
|
|
25
|
|
|||||||
Total
|
$
|
21,744
|
|
|
$
|
17,725
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
17,714
|
|
|
$
|
(70
|
)
|
|
$
|
168
|
|
(1)
|
Basis represents the unpaid principal balance of noncovered impaired and covered impaired loans, amortized cost of investment securities held to maturity, and carrying value at ownership date of other real estate owned.
|
|
Basis (1)
|
|
Fair Value at December 31, 2013
|
|
|
|
|
||||||||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Net Losses
(Gains)
Recorded in
Earnings
During
the Three Months Ended June 30, 2013
|
|
Net Losses
(Gains)
Recorded in
Earnings
During
the Six Months Ended June 30, 2013
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||
Noncovered impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial and industrial
|
$
|
4,850
|
|
|
$
|
2,134
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,134
|
|
|
$
|
1,227
|
|
|
$
|
2,271
|
|
Owner-occupied commercial real estate
|
1,880
|
|
|
1,285
|
|
|
—
|
|
|
—
|
|
|
1,285
|
|
|
87
|
|
|
517
|
|
|||||||
Non-owner occupied commercial real estate
|
4,123
|
|
|
3,759
|
|
|
—
|
|
|
—
|
|
|
3,759
|
|
|
(29
|
)
|
|
(41
|
)
|
|||||||
Total commercial business
|
10,853
|
|
|
7,178
|
|
|
—
|
|
|
—
|
|
|
7,178
|
|
|
1,285
|
|
|
2,747
|
|
|||||||
One-to-four family residential
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
16
|
|
|||||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
One-to-four family residential
|
911
|
|
|
700
|
|
|
—
|
|
|
—
|
|
|
700
|
|
|
(70
|
)
|
|
591
|
|
|||||||
Five or more family residential and commercial properties
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total real estate construction and land development
|
911
|
|
|
700
|
|
|
—
|
|
|
—
|
|
|
700
|
|
|
(70
|
)
|
|
591
|
|
|||||||
Consumer
|
678
|
|
|
525
|
|
|
—
|
|
|
—
|
|
|
525
|
|
|
10
|
|
|
10
|
|
|||||||
Total noncovered impaired loans
|
12,442
|
|
|
8,403
|
|
|
—
|
|
|
—
|
|
|
8,403
|
|
|
1,223
|
|
|
3,364
|
|
|||||||
Covered impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial and industrial
|
3,751
|
|
|
3,122
|
|
|
—
|
|
|
—
|
|
|
3,122
|
|
|
(1
|
)
|
|
(2
|
)
|
|||||||
Non-owner occupied commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total commercial business
|
3,751
|
|
|
3,122
|
|
|
—
|
|
|
—
|
|
|
3,122
|
|
|
(1
|
)
|
|
(2
|
)
|
|||||||
One-to-four family residential
|
450
|
|
|
419
|
|
|
—
|
|
|
—
|
|
|
419
|
|
|
(3
|
)
|
|
(5
|
)
|
|||||||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total covered impaired loans
|
4,201
|
|
|
3,541
|
|
|
—
|
|
|
—
|
|
|
3,541
|
|
|
(4
|
)
|
|
(7
|
)
|
|||||||
Investment securities held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Mortgage back securities and collateralized mortgage obligations – residential:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Private residential collateralized mortgage obligations
|
19
|
|
|
19
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
24
|
|
|
26
|
|
|||||||
Other real estate owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial properties
|
1,720
|
|
|
1,222
|
|
|
—
|
|
|
—
|
|
|
1,222
|
|
|
85
|
|
|
106
|
|
|||||||
Total
|
$
|
18,382
|
|
|
$
|
13,185
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
13,166
|
|
|
$
|
1,328
|
|
|
$
|
3,489
|
|
(1)
|
Basis represents the unpaid principal balance of noncovered impaired and covered impaired loans, amortized cost of investment securities held to maturity, and carrying value at ownership date of other real estate owned.
|
|
June 30, 2014
|
||||||||
|
Fair
Value
|
|
Valuation
Technique(s)
|
|
Unobservable Input(s)
|
|
Range of Inputs; Weighted
Average
|
||
|
(Dollars in thousands)
|
||||||||
Noncovered impaired loans
|
$
|
14,439
|
|
|
Market approach
|
|
Adjustment for differences between the comparable sales
|
|
(18.0%) - 3.0%; (5.7%)
|
Covered impaired loans
|
$
|
3,275
|
|
|
Market approach
|
|
Adjustment for differences between the comparable sales
|
|
(50.0%) - 0.0%; (25.0%)
|
|
December 31, 2013
|
||||||||
|
Fair
Value
|
|
Valuation
Technique(s)
|
|
Unobservable Input(s)
|
|
Range of Inputs; Weighted
Average
|
||
|
(Dollars in thousands)
|
||||||||
Noncovered impaired loans
|
$
|
8,403
|
|
|
Market approach
|
|
Adjustment for differences between the comparable sales
|
|
(27.8%) - 19.1%; (7.6%)
|
Covered impaired loans
|
$
|
3,541
|
|
|
Market approach
|
|
Adjustment for differences between the comparable sales
|
|
(50.0%) - 0.0%; (25.0%)
|
Other real estate owned
|
$
|
1,222
|
|
|
Market approach
|
|
Adjustment for differences between the comparable sales
|
|
(60.1)% - 13.6%; (35.2%)
|
|
June 30, 2014
|
||||||||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Fair Value Measurements Using:
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||||
|
(In thousands)
|
||||||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
146,525
|
|
|
$
|
146,525
|
|
|
$
|
146,525
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other interest earning deposits
|
14,138
|
|
|
14,203
|
|
|
—
|
|
|
14,203
|
|
|
—
|
|
|||||
Investment securities available for sale
|
652,477
|
|
|
652,477
|
|
|
1,976
|
|
|
650,501
|
|
|
—
|
|
|||||
Investment securities held to maturity
|
38,768
|
|
|
39,539
|
|
|
—
|
|
|
39,539
|
|
|
—
|
|
|||||
Federal Home Loan Bank stock
|
12,547
|
|
|
N/A
|
|
|
N/A
|
|
|
—
|
|
|
—
|
|
|||||
Loans held for sale
|
7,378
|
|
|
7,529
|
|
|
—
|
|
|
7,529
|
|
|
—
|
|
|||||
Loans receivable, net of allowance for loan losses
|
2,200,711
|
|
|
2,274,865
|
|
|
—
|
|
|
—
|
|
|
2,274,865
|
|
|||||
Accrued interest receivable
|
9,315
|
|
|
9,315
|
|
|
2
|
|
|
2,526
|
|
|
6,787
|
|
|||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits:
|
|
|
|
|
|
|
|
|
|
||||||||||
Noninterest deposits, NOW accounts, money market accounts and savings accounts
|
$
|
2,245,885
|
|
|
$
|
2,245,885
|
|
|
$
|
2,245,885
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Certificate of deposit accounts
|
620,657
|
|
|
621,695
|
|
|
—
|
|
|
621,695
|
|
|
—
|
|
|||||
Total deposits
|
$
|
2,866,542
|
|
|
$
|
2,867,580
|
|
|
$
|
2,245,885
|
|
|
$
|
621,695
|
|
|
$
|
—
|
|
Securities sold under agreement to repurchase
|
$
|
25,450
|
|
|
$
|
25,450
|
|
|
$
|
25,450
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Junior subordinated debentures
|
18,973
|
|
|
18,973
|
|
|
—
|
|
|
—
|
|
|
18,973
|
|
|||||
Accrued interest payable
|
583
|
|
|
583
|
|
|
54
|
|
|
529
|
|
|
—
|
|
|
December 31, 2013
|
||||||||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Fair Value Measurements Using:
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||||
|
(In thousands)
|
||||||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
130,400
|
|
|
$
|
130,400
|
|
|
$
|
130,400
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other interest earning deposits
|
15,662
|
|
|
15,747
|
|
|
—
|
|
|
15,747
|
|
|
—
|
|
|||||
Investment securities available for sale
|
163,134
|
|
|
163,134
|
|
|
—
|
|
|
163,134
|
|
|
—
|
|
|||||
Investment securities held to maturity
|
36,154
|
|
|
36,340
|
|
|
—
|
|
|
36,340
|
|
|
—
|
|
|||||
Federal Home Loan Bank stock
|
5,741
|
|
|
N/A
|
|
|
N/A
|
|
|
—
|
|
|
—
|
|
|||||
Loans receivable, net of allowance
|
1,203,096
|
|
|
1,218,192
|
|
|
—
|
|
|
—
|
|
|
1,218,192
|
|
|||||
Accrued interest receivable
|
5,462
|
|
|
5,462
|
|
|
26
|
|
|
910
|
|
|
4,526
|
|
|||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits:
|
|
|
|
|
|
|
|
|
|
||||||||||
Noninterest deposits, NOW accounts, money market accounts and savings accounts
|
$
|
1,089,759
|
|
|
$
|
1,089,759
|
|
|
$
|
1,089,759
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Certificate of deposit accounts
|
309,430
|
|
|
311,065
|
|
|
—
|
|
|
311,065
|
|
|
—
|
|
|||||
Total deposits
|
$
|
1,399,189
|
|
|
$
|
1,400,824
|
|
|
$
|
1,089,759
|
|
|
$
|
311,065
|
|
|
$
|
—
|
|
Securities sold under agreement to repurchase
|
$
|
29,420
|
|
|
$
|
29,420
|
|
|
$
|
29,420
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accrued interest payable
|
$
|
152
|
|
|
$
|
152
|
|
|
$
|
17
|
|
|
$
|
135
|
|
|
$
|
—
|
|
(16)
|
Subsequent Events
|
|
Three Months Ended June 30,
|
||||||||||||||||||||
|
2014
|
|
2013
|
||||||||||||||||||
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
(1)
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/ Rate (1) |
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
Interest Earning Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans, net
|
$
|
1,878,496
|
|
|
$
|
27,446
|
|
|
5.86
|
%
|
|
$
|
1,065,465
|
|
|
$
|
16,028
|
|
|
6.03
|
%
|
Taxable securities
|
343,571
|
|
|
1,812
|
|
|
2.11
|
|
|
105,687
|
|
|
404
|
|
|
1.53
|
|
||||
Nontaxable securities
|
131,230
|
|
|
638
|
|
|
1.95
|
|
|
57,109
|
|
|
345
|
|
|
2.42
|
|
||||
Other interest earning assets
|
170,087
|
|
|
127
|
|
|
0.30
|
|
|
97,425
|
|
|
82
|
|
|
0.34
|
|
||||
Total interest earning assets
|
$
|
2,523,384
|
|
|
$
|
30,023
|
|
|
4.77
|
%
|
|
$
|
1,325,686
|
|
|
$
|
16,859
|
|
|
5.10
|
%
|
Noninterest earning assets
|
290,048
|
|
|
|
|
|
|
111,293
|
|
|
|
|
|
||||||||
Total assets
|
$
|
2,813,432
|
|
|
|
|
|
|
$
|
1,436,979
|
|
|
|
|
|
||||||
Interest Bearing Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Certificates of deposit
|
$
|
520,269
|
|
|
$
|
777
|
|
|
0.60
|
%
|
|
$
|
292,781
|
|
|
$
|
614
|
|
|
0.84
|
%
|
Savings accounts
|
241,461
|
|
|
52
|
|
|
0.09
|
|
|
134,697
|
|
|
42
|
|
|
0.13
|
|
||||
Interest bearing demand and money market accounts
|
1,059,953
|
|
|
468
|
|
|
0.18
|
|
|
511,049
|
|
|
253
|
|
|
0.20
|
|
||||
Total interest bearing deposits
|
1,821,683
|
|
|
1,297
|
|
|
0.29
|
|
|
938,527
|
|
|
909
|
|
|
0.39
|
|
||||
FHLB advances and other borrowings
|
439
|
|
|
—
|
|
|
0.29
|
|
|
1
|
|
|
—
|
|
|
0.75
|
|
||||
Securities sold under agreement to repurchase
|
24,409
|
|
|
15
|
|
|
0.26
|
|
|
14,831
|
|
|
10
|
|
|
0.26
|
|
||||
Junior subordinated debentures
|
12,694
|
|
|
115
|
|
|
3.62
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total interest bearing liabilities
|
$
|
1,859,225
|
|
|
$
|
1,427
|
|
|
0.31
|
%
|
|
$
|
953,359
|
|
|
$
|
919
|
|
|
0.39
|
%
|
Demand and other noninterest bearing deposits
|
553,284
|
|
|
|
|
|
|
273,307
|
|
|
|
|
|
||||||||
Other noninterest bearing liabilities
|
30,259
|
|
|
|
|
|
|
7,942
|
|
|
|
|
|
||||||||
Stockholders’ equity
|
370,664
|
|
|
|
|
|
|
202,371
|
|
|
|
|
|
||||||||
Total liabilities and stockholders’ equity
|
$
|
2,813,432
|
|
|
|
|
|
|
$
|
1,436,979
|
|
|
|
|
|
||||||
Net interest income
|
|
|
$
|
28,596
|
|
|
|
|
|
|
$
|
15,940
|
|
|
|
||||||
Net interest spread
|
|
|
|
|
4.46
|
%
|
|
|
|
|
|
4.71
|
%
|
||||||||
Net interest margin
|
|
|
|
|
4.55
|
%
|
|
|
|
|
|
4.82
|
%
|
||||||||
Average interest earning assets to average interest bearing liabilities
|
|
|
|
|
135.72
|
%
|
|
|
|
|
|
139.05
|
%
|
|
Six Months Ended June 30, 2014
|
||||||||||||||||||||
|
2014
|
|
2013
|
||||||||||||||||||
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
(1)
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/ Rate (1) |
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
Interest Earning Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans, net
|
$
|
1,543,815
|
|
|
$
|
43,897
|
|
|
5.73
|
%
|
|
$
|
1,053,475
|
|
|
$
|
32,747
|
|
|
6.27
|
%
|
Taxable securities
|
236,313
|
|
|
2,451
|
|
|
2.09
|
|
|
105,955
|
|
|
777
|
|
|
1.48
|
|
||||
Nontaxable securities
|
102,324
|
|
|
1,074
|
|
|
2.12
|
|
|
55,526
|
|
|
680
|
|
|
2.47
|
|
||||
Other interest earning assets
|
140,123
|
|
|
214
|
|
|
0.31
|
|
|
94,317
|
|
|
139
|
|
|
0.30
|
|
||||
Total interest earning assets
|
$
|
2,022,575
|
|
|
$
|
47,636
|
|
|
4.75
|
%
|
|
$
|
1,309,273
|
|
|
$
|
34,343
|
|
|
5.29
|
%
|
Noninterest earning assets
|
213,794
|
|
|
|
|
|
|
112,617
|
|
|
|
|
|
||||||||
Total assets
|
$
|
2,236,369
|
|
|
|
|
|
|
$
|
1,421,890
|
|
|
|
|
|
||||||
Interest Bearing Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Certificates of deposit
|
$
|
411,248
|
|
|
$
|
1,330
|
|
|
0.65
|
%
|
|
$
|
299,027
|
|
|
$
|
1,247
|
|
|
0.84
|
%
|
Savings accounts
|
209,284
|
|
|
92
|
|
|
0.09
|
|
|
131,616
|
|
|
85
|
|
|
0.13
|
|
||||
Interest bearing demand and money market accounts
|
817,057
|
|
|
729
|
|
|
0.18
|
|
|
497,311
|
|
|
515
|
|
|
0.21
|
|
||||
Total interest bearing deposits
|
1,437,589
|
|
|
2,151
|
|
|
0.30
|
|
|
927,954
|
|
|
1,847
|
|
|
0.40
|
|
||||
FHLB advances and other borrowings
|
221
|
|
|
—
|
|
|
0.30
|
|
|
1
|
|
|
—
|
|
|
0.75
|
|
||||
Securities sold under agreement to repurchase
|
26,020
|
|
|
33
|
|
|
0.26
|
|
|
14,162
|
|
|
19
|
|
|
0.27
|
|
||||
Junior subordinated debentures
|
6,382
|
|
|
115
|
|
|
3.62
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total interest bearing liabilities
|
$
|
1,470,212
|
|
|
$
|
2,299
|
|
|
0.32
|
%
|
|
$
|
942,117
|
|
|
$
|
1,866
|
|
|
0.40
|
%
|
Demand and other noninterest bearing deposits
|
449,134
|
|
|
|
|
|
|
268,166
|
|
|
|
|
|
||||||||
Other noninterest bearing liabilities
|
22,408
|
|
|
|
|
|
|
10,036
|
|
|
|
|
|
||||||||
Stockholders’ equity
|
294,615
|
|
|
|
|
|
|
201,571
|
|
|
|
|
|
||||||||
Total liabilities and stockholders’ equity
|
$
|
2,236,369
|
|
|
|
|
|
|
$
|
1,421,890
|
|
|
|
|
|
||||||
Net interest income
|
|
|
$
|
45,337
|
|
|
|
|
|
|
$
|
32,477
|
|
|
|
||||||
Net interest spread
|
|
|
|
|
4.43
|
%
|
|
|
|
|
|
4.89
|
%
|
||||||||
Net interest margin
|
|
|
|
|
4.52
|
%
|
|
|
|
|
|
5.00
|
%
|
||||||||
Average interest earning assets to average interest bearing liabilities
|
|
|
|
|
137.57
|
%
|
|
|
|
|
|
138.97
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Net interest margin, excluding incremental accretion on purchased loans
(1)
|
4.12
|
%
|
|
4.37
|
%
|
|
4.15
|
%
|
|
4.42
|
%
|
Impact on net interest margin from incremental accretion on purchased loans
(1)
|
0.43
|
|
|
0.45
|
|
|
0.37
|
|
|
0.58
|
|
Net interest margin
|
4.55
|
%
|
|
4.82
|
%
|
|
4.52
|
%
|
|
5.00
|
%
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
|
(Dollars in thousands)
|
||||||
General Valuation Allowance:
|
|
|
|
||||
Allowance for loan losses for noncovered loans
|
$
|
19,003
|
|
|
$
|
18,618
|
|
Gross noncovered loans, excluding noncovered impaired loans
|
2,037,928
|
|
|
1,140,967
|
|
||
Percentage
|
0.93
|
%
|
|
1.63
|
%
|
||
|
|
|
|
||||
Specific Valuation Allowance:
|
|
|
|
||||
Allowance for loan losses for noncovered loans
|
$
|
3,366
|
|
|
$
|
4,039
|
|
Gross noncovered loan of impaired loans
|
33,881
|
|
|
29,869
|
|
||
Percentage
|
9.93
|
%
|
|
13.52
|
%
|
||
|
|
|
|
||||
Total Allowance for Loan Losses:
|
|
|
|
||||
Allowance for loan losses for noncovered loans
|
$
|
22,369
|
|
|
$
|
22,657
|
|
Gross noncovered loans
|
2,071,809
|
|
|
1,170,836
|
|
||
Percentage
|
1.08
|
%
|
|
1.94
|
%
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Service charges and other fees
|
$
|
2,777
|
|
|
$
|
1,432
|
|
|
$
|
1,345
|
|
|
93.9
|
%
|
Merchant Visa income, net
|
316
|
|
|
211
|
|
|
105
|
|
|
49.8
|
|
|||
Change in FDIC indemnification asset
|
109
|
|
|
281
|
|
|
(172
|
)
|
|
(61.2
|
)
|
|||
Gain on sale of investment securities, net
|
87
|
|
|
—
|
|
|
87
|
|
|
100.0
|
|
|||
Gain on sale of loans, net
|
233
|
|
|
—
|
|
|
233
|
|
|
100.0
|
|
|||
Other income
|
1,258
|
|
|
433
|
|
|
825
|
|
|
190.5
|
|
|||
Total noninterest income
|
$
|
4,780
|
|
|
$
|
2,357
|
|
|
$
|
2,423
|
|
|
102.8
|
%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Bargain purchase gain on bank acquisition
|
$
|
—
|
|
|
$
|
399
|
|
|
$
|
(399
|
)
|
|
(100.0
|
)%
|
Service charges and other fees
|
4,175
|
|
|
2,785
|
|
|
1,390
|
|
|
49.9
|
|
|||
Merchant Visa income, net
|
561
|
|
|
384
|
|
|
177
|
|
|
46.1
|
|
|||
Change in FDIC indemnification asset
|
72
|
|
|
14
|
|
|
58
|
|
|
414.3
|
|
|||
Gain on sale of investment securities, net
|
267
|
|
|
—
|
|
|
267
|
|
|
100.0
|
|
|||
Gain on sale of loans, net
|
233
|
|
|
—
|
|
|
233
|
|
|
100.0
|
|
|||
Other income
|
1,779
|
|
|
1,059
|
|
|
720
|
|
|
68.0
|
|
|||
Total noninterest income
|
$
|
7,087
|
|
|
$
|
4,641
|
|
|
$
|
2,446
|
|
|
52.7
|
%
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Compensation and employee benefits
|
$
|
12,779
|
|
|
$
|
7,617
|
|
|
$
|
5,162
|
|
|
67.8
|
%
|
Occupancy and equipment
|
2,816
|
|
|
1,995
|
|
|
821
|
|
|
41.2
|
|
|||
Data processing
|
4,003
|
|
|
720
|
|
|
3,283
|
|
|
456.0
|
|
|||
Marketing
|
496
|
|
|
386
|
|
|
110
|
|
|
28.5
|
|
|||
Professional services
|
3,230
|
|
|
640
|
|
|
2,590
|
|
|
404.7
|
|
|||
State and local taxes
|
554
|
|
|
305
|
|
|
249
|
|
|
81.6
|
|
|||
Impairment loss on investment securities, net
|
37
|
|
|
24
|
|
|
13
|
|
|
54.2
|
|
|||
Federal deposit insurance premium
|
460
|
|
|
275
|
|
|
185
|
|
|
67.3
|
|
|||
Other real estate owned, net
|
214
|
|
|
5
|
|
|
209
|
|
|
4,180.0
|
|
|||
Amortization of intangible assets
|
489
|
|
|
114
|
|
|
375
|
|
|
328.9
|
|
|||
Other expense
|
1,915
|
|
|
926
|
|
|
989
|
|
|
106.8
|
|
|||
Total noninterest expense
|
$
|
26,993
|
|
|
$
|
13,007
|
|
|
$
|
13,986
|
|
|
107.5
|
%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Compensation and employee benefits
|
$
|
20,790
|
|
|
$
|
15,206
|
|
|
$
|
5,584
|
|
|
36.7
|
%
|
Occupancy and equipment
|
5,433
|
|
|
3,915
|
|
|
1,518
|
|
|
38.8
|
|
|||
Data processing
|
4,999
|
|
|
1,856
|
|
|
3,143
|
|
|
169.3
|
|
|||
Marketing
|
1,001
|
|
|
712
|
|
|
289
|
|
|
40.6
|
|
|||
Professional services
|
4,060
|
|
|
1,670
|
|
|
2,390
|
|
|
143.1
|
|
|||
State and local taxes
|
803
|
|
|
584
|
|
|
219
|
|
|
37.5
|
|
|||
Impairment loss on investment securities, net
|
45
|
|
|
26
|
|
|
19
|
|
|
73.1
|
|
|||
Federal deposit insurance premium
|
712
|
|
|
507
|
|
|
205
|
|
|
40.4
|
|
|||
Other real estate owned, net
|
266
|
|
|
(98
|
)
|
|
364
|
|
|
371.4
|
|
|||
Amortization of intangible assets
|
645
|
|
|
229
|
|
|
416
|
|
|
181.7
|
|
|||
Other expense
|
3,018
|
|
|
2,120
|
|
|
898
|
|
|
42.4
|
|
|||
Total noninterest expense
|
$
|
41,772
|
|
|
$
|
26,727
|
|
|
$
|
15,045
|
|
|
56.3
|
%
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Company Initiatives:
|
|
|
|
|
|
|
|
|
||||||||
NCB Acquisition
|
|
$
|
—
|
|
|
$
|
74
|
|
|
$
|
—
|
|
|
$
|
782
|
|
Central Valley Bank merger
|
|
—
|
|
|
6
|
|
|
—
|
|
|
129
|
|
||||
Valley Acquisition
|
|
12
|
|
|
232
|
|
|
442
|
|
|
354
|
|
||||
Core system conversion
|
|
17
|
|
|
78
|
|
|
39
|
|
|
78
|
|
||||
Consolidation of existing branches
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
||||
Washington Banking Merger
|
|
5,287
|
|
|
—
|
|
|
5,617
|
|
|
—
|
|
||||
Total expense
|
|
$
|
5,316
|
|
|
$
|
390
|
|
|
$
|
6,109
|
|
|
$
|
1,343
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Expense Caption:
|
|
|
|
|
|
|
|
|
||||||||
Compensation and employee benefits
|
|
$
|
98
|
|
|
$
|
1
|
|
|
$
|
98
|
|
|
$
|
99
|
|
Occupancy and equipment
|
|
2
|
|
|
60
|
|
|
432
|
|
|
93
|
|
||||
Data processing
|
|
2,567
|
|
|
10
|
|
|
2,581
|
|
|
516
|
|
||||
Marketing
|
|
—
|
|
|
33
|
|
|
—
|
|
|
33
|
|
||||
Professional services
|
|
2,607
|
|
|
227
|
|
|
2,920
|
|
|
543
|
|
||||
Other expense
|
|
42
|
|
|
59
|
|
|
78
|
|
|
59
|
|
||||
Total expense
|
|
$
|
5,316
|
|
|
$
|
390
|
|
|
$
|
6,109
|
|
|
$
|
1,343
|
|
|
June 30, 2014
|
|
December 31, 2013
|
|
Change between December 31, 2013 and June 30, 2014
|
|
Washington Banking Merger, fair value at merger date
|
|
Change between December 31, 2013 and June 30, 2014, excluding the balances acquired in the Washington Banking Merger
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents (1)
|
$
|
146,525
|
|
|
$
|
130,400
|
|
|
$
|
16,125
|
|
|
$
|
31,591
|
|
|
$
|
(15,466
|
)
|
Other interest earning deposits
|
14,138
|
|
|
15,662
|
|
|
(1,524
|
)
|
|
—
|
|
|
(1,524
|
)
|
|||||
Investment securities
|
691,245
|
|
|
199,288
|
|
|
491,957
|
|
|
458,312
|
|
|
33,645
|
|
|||||
Loans held for sale
|
7,378
|
|
|
—
|
|
|
7,378
|
|
|
3,923
|
|
|
3,455
|
|
|||||
Noncovered loans receivable, net of allowance for loan losses
|
2,047,163
|
|
|
1,145,509
|
|
|
901,654
|
|
|
893,824
|
|
|
7,830
|
|
|||||
Covered loans receivable, net of allowance for loan losses
|
153,548
|
|
|
57,587
|
|
|
95,961
|
|
|
109,693
|
|
|
(13,732
|
)
|
|||||
FDIC indemnification asset
|
9,120
|
|
|
4,382
|
|
|
4,738
|
|
|
7,407
|
|
|
(2,669
|
)
|
|||||
Other real estate owned
|
8,106
|
|
|
4,559
|
|
|
3,547
|
|
|
7,121
|
|
|
(3,574
|
)
|
|||||
Premises and equipment, net
|
66,255
|
|
|
34,348
|
|
|
31,907
|
|
|
31,776
|
|
|
131
|
|
|||||
Federal Home Loan Bank stock, at cost
|
12,547
|
|
|
5,741
|
|
|
6,806
|
|
|
7,064
|
|
|
(258
|
)
|
|||||
Bank owned life insurance
|
32,614
|
|
|
—
|
|
|
32,614
|
|
|
32,519
|
|
|
95
|
|
|||||
Accrued interest receivable
|
9,315
|
|
|
5,462
|
|
|
3,853
|
|
|
4,944
|
|
|
(1,091
|
)
|
|||||
Prepaid expenses and other assets
|
63,272
|
|
|
25,120
|
|
|
38,152
|
|
|
14,941
|
|
|
23,211
|
|
|||||
Other intangible assets, net
|
12,164
|
|
|
1,615
|
|
|
10,549
|
|
|
11,194
|
|
|
(645
|
)
|
|||||
Goodwill
|
118,189
|
|
|
29,365
|
|
|
88,824
|
|
|
88,824
|
|
|
—
|
|
|||||
Total assets
|
$
|
3,391,579
|
|
|
$
|
1,659,038
|
|
|
$
|
1,732,541
|
|
|
$
|
1,703,133
|
|
|
$
|
29,408
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
$
|
2,866,542
|
|
|
$
|
1,399,189
|
|
|
$
|
1,467,353
|
|
|
$
|
1,433,894
|
|
|
$
|
33,459
|
|
Junior subordinated debentures
|
18,973
|
|
|
—
|
|
|
18,973
|
|
|
18,937
|
|
|
36
|
|
|||||
Securities sold under agreement to repurchase
|
25,450
|
|
|
29,420
|
|
|
(3,970
|
)
|
|
—
|
|
|
(3,970
|
)
|
|||||
Accrued expenses and other liabilities
|
30,785
|
|
|
14,667
|
|
|
16,118
|
|
|
23,551
|
|
|
(7,433
|
)
|
|||||
Total liabilities
|
2,941,750
|
|
|
1,443,276
|
|
|
1,498,474
|
|
|
1,476,382
|
|
|
22,092
|
|
|||||
Stockholders' equity
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||
Common stock
|
366,158
|
|
|
138,659
|
|
|
227,499
|
|
|
226,751
|
|
|
748
|
|
|||||
Retained earnings
|
82,362
|
|
|
78,265
|
|
|
4,097
|
|
|
—
|
|
|
4,097
|
|
|||||
Accumulated other comprehensive income (loss), net
|
1,309
|
|
|
(1,162
|
)
|
|
2,471
|
|
|
—
|
|
|
2,471
|
|
|||||
Total stockholders' equity
|
449,829
|
|
|
215,762
|
|
|
234,067
|
|
|
226,751
|
|
|
7,316
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
3,391,579
|
|
|
$
|
1,659,038
|
|
|
$
|
1,732,541
|
|
|
$
|
1,703,133
|
|
|
$
|
29,408
|
|
(1)
|
Includes the net impact of the cash and cash equivalents acquired from Washington Banking of $74.9 million less the $42.9 million of cash paid as part of the consideration paid for the Washington Banking Merger and $489,000 of capitalized stock issuance costs.
|
|
June 30, 2014
|
|
% of Total
Noncovered
|
|
December 31,
2013
|
|
% of Total
Noncovered |
||||||
|
(Dollars in thousands)
|
||||||||||||
Noncovered loans receivable
|
|
|
|
|
|
|
|
||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||
Commercial and industrial
|
$
|
534,458
|
|
|
25.8
|
%
|
|
$
|
336,540
|
|
|
28.8
|
%
|
Owner-occupied commercial real estate
|
473,603
|
|
|
22.9
|
|
|
281,309
|
|
|
24.1
|
|
||
Non-owner occupied commercial real estate
|
637,067
|
|
|
30.8
|
|
|
399,979
|
|
|
34.2
|
|
||
Total commercial business
|
1,645,128
|
|
|
79.5
|
|
|
1,017,828
|
|
|
87.1
|
|
||
One-to-four family residential mortgages
|
86,422
|
|
|
4.2
|
|
|
43,082
|
|
|
3.7
|
|
||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||
One-to-four family residential
|
55,477
|
|
|
2.7
|
|
|
19,724
|
|
|
1.7
|
|
||
Multifamily residential and commercial properties
|
74,552
|
|
|
3.6
|
|
|
48,655
|
|
|
4.2
|
|
||
Total real estate construction and land development
|
130,029
|
|
|
6.3
|
|
|
68,379
|
|
|
5.9
|
|
||
Consumer
|
210,230
|
|
|
10.1
|
|
|
41,547
|
|
|
3.5
|
|
||
Gross noncovered loans receivable
|
2,071,809
|
|
|
100.1
|
|
|
1,170,836
|
|
|
100.2
|
|
||
Net deferred loan fees
|
(2,277
|
)
|
|
(0.1
|
)
|
|
(2,670
|
)
|
|
(0.2
|
)
|
||
Noncovered loans receivable, net
|
2,069,532
|
|
|
100.0
|
%
|
|
1,168,166
|
|
|
100.0
|
%
|
||
Covered loans receivable
|
159,662
|
|
|
|
|
63,754
|
|
|
|
||||
Total loans receivable, net of net deferred loan fees
|
$
|
2,229,194
|
|
|
|
|
$
|
1,231,920
|
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
|
(Dollars in thousands)
|
||||||
Noncovered nonaccrual loans:
|
|
||||||
Commercial business
|
$
|
8,889
|
|
|
$
|
5,675
|
|
One-to-four family residential
|
328
|
|
|
340
|
|
||
Real estate construction and land development
|
3,673
|
|
|
1,045
|
|
||
Consumer
|
698
|
|
|
678
|
|
||
Total noncovered nonaccrual loans (1)(2)
|
13,588
|
|
|
7,738
|
|
||
Other real estate owned, noncovered
|
5,061
|
|
|
4,377
|
|
||
Total noncovered nonperforming assets
|
$
|
18,649
|
|
|
$
|
12,115
|
|
Noncovered troubled debt restructured performing loans:
|
|
|
|
||||
Commercial business
|
$
|
15,806
|
|
|
$
|
15,735
|
|
One-to-four family residential
|
249
|
|
|
252
|
|
||
Real estate construction and land development
|
3,987
|
|
|
6,043
|
|
||
Consumer
|
251
|
|
|
101
|
|
||
Total noncovered troubled debt restructured performing loans (3)
|
$
|
20,293
|
|
|
$
|
22,131
|
|
Accruing noncovered loans past due 90 days or more (4)
|
538
|
|
|
6
|
|
||
Noncovered potential problem loans (5)
|
136,974
|
|
|
52,814
|
|
||
Allowance for loan losses for noncovered loans
|
22,369
|
|
|
22,657
|
|
||
Allowance for loan losses for noncovered loans to total noncovered loans, net
|
1.08
|
%
|
|
1.94
|
%
|
||
Allowance for loan losses for noncovered loans to noncovered nonperforming loans
|
164.62
|
%
|
|
292.80
|
%
|
||
Noncovered nonperforming loans to total noncovered loans
|
0.66
|
%
|
|
0.66
|
%
|
||
Noncovered nonperforming assets to total noncovered assets
|
0.58
|
%
|
|
0.76
|
%
|
(1)
|
$3.0 million and $2.6 million of noncovered nonperforming loans were considered troubled debt restructurings at
June 30, 2014
and December 31, 2013, respectively.
|
(2)
|
$2.3 million and $1.7 million of noncovered nonperforming loans were guaranteed by government agencies at
June 30, 2014
and December 31 2013, respectively.
|
(3)
|
$935,000 and $1.2 million of noncovered troubled debt restructured performing loans were guaranteed by government agencies at
June 30, 2014
and December 31, 2013.
|
(4)
|
There were no noncovered accruing loans past due 90 days or more that were guaranteed by government agencies at
June 30, 2014
or December 31, 2013.
|
(5)
|
$921,000 and $1.8 million of noncovered potential problem loans were guaranteed by government agencies at
June 30, 2014
and December 31, 2013, respectively.
|
•
|
Effects of changes in risk selection and underwriting standards, and other changes in lending policies, procedures and practices;
|
|
Three Months Ended June 30,
|
|
Six Month Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Noncovered loans receivable, net at the end of the period
|
$
|
2,069,532
|
|
|
$
|
1,034,107
|
|
|
$
|
2,069,532
|
|
|
$
|
1,034,107
|
|
Average noncovered loans receivable during the period
|
1,774,269
|
|
|
987,299
|
|
|
1,455,134
|
|
|
973,371
|
|
||||
Allowance for loan losses for noncovered loans at the beginning of the period
|
22,820
|
|
|
22,837
|
|
|
22,657
|
|
|
24,242
|
|
||||
Provision for loan losses for noncovered loans
|
370
|
|
|
209
|
|
|
349
|
|
|
709
|
|
||||
Charge-offs:
|
|
|
|
|
|
|
|
||||||||
Commercial business
|
(628
|
)
|
|
(541
|
)
|
|
(628
|
)
|
|
(2,178
|
)
|
||||
One-to-four single family residential
|
—
|
|
|
—
|
|
|
—
|
|
|
(52
|
)
|
||||
Real estate construction and land development
|
(345
|
)
|
|
(59
|
)
|
|
(345
|
)
|
|
(142
|
)
|
||||
Consumer
|
(179
|
)
|
|
(62
|
)
|
|
(242
|
)
|
|
(314
|
)
|
||||
Total charge-offs
|
(1,152
|
)
|
|
(662
|
)
|
|
(1,215
|
)
|
|
(2,686
|
)
|
||||
Recoveries:
|
|
|
|
|
|
|
|
||||||||
Commercial business
|
269
|
|
|
190
|
|
|
501
|
|
|
300
|
|
||||
Real estate construction and land development
|
43
|
|
|
32
|
|
|
43
|
|
|
32
|
|
||||
Consumer
|
19
|
|
|
5
|
|
|
34
|
|
|
14
|
|
||||
Total recoveries
|
331
|
|
|
227
|
|
|
578
|
|
|
346
|
|
||||
Net recoveries (charge-offs)
|
(821
|
)
|
|
(435
|
)
|
|
(637
|
)
|
|
(2,340
|
)
|
||||
Allowance for loan losses for noncovered loans at end of period
|
$
|
22,369
|
|
|
$
|
22,611
|
|
|
$
|
22,369
|
|
|
$
|
22,611
|
|
Allowance for loan losses for noncovered loans to total noncovered loans receivable, net
|
1.08
|
%
|
|
2.19
|
%
|
|
1.08
|
%
|
|
2.19
|
%
|
||||
Ratio of net charge-offs during period to average noncovered loans receivable
|
(0.05
|
)%
|
|
(0.04
|
)%
|
|
(0.04
|
)%
|
|
(0.24
|
)%
|
|
June 30, 2014
|
|
% of Total
|
|
December 31, 2013
|
|
% of Total
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Non-interest bearing demand deposits
|
$
|
669,017
|
|
|
23.3
|
%
|
|
$
|
349,902
|
|
|
25.0
|
%
|
NOW accounts
|
723,889
|
|
|
25.3
|
|
|
352,051
|
|
|
25.2
|
|
||
Money market accounts
|
510,374
|
|
|
17.8
|
|
|
232,016
|
|
|
16.6
|
|
||
Savings accounts
|
342,605
|
|
|
11.9
|
|
|
155,790
|
|
|
11.1
|
|
||
Total non-maturity deposits
|
2,245,885
|
|
|
78.3
|
|
|
1,089,759
|
|
|
77.9
|
|
||
Certificate of deposit accounts
|
620,657
|
|
|
21.7
|
|
|
309,430
|
|
|
22.1
|
|
||
Total deposits
|
$
|
2,866,542
|
|
|
100.0
|
%
|
|
$
|
1,399,189
|
|
|
100.0
|
%
|
|
|
Minimum Requirements
|
|
Well-Capitalized Requirements
|
|
Actual
|
|||||||||||||
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||
As of June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
The Company consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Tier 1 leverage capital to average assets
|
|
$
|
107,309
|
|
|
4.0
|
%
|
|
N/A
|
|
|
N/A
|
|
$
|
337,131
|
|
|
12.6
|
%
|
Tier 1 capital to risk-weighted assets
|
|
93,072
|
|
|
4.0
|
|
|
N/A
|
|
|
N/A
|
|
337,131
|
|
|
14.5
|
|
||
Total capital to risk-weighted assets
|
|
186,144
|
|
|
8.0
|
|
|
N/A
|
|
|
N/A
|
|
365,784
|
|
|
15.7
|
|
||
Heritage Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Tier 1 leverage capital to average assets
|
|
107,219
|
|
|
4.0
|
|
|
134,023
|
|
|
5.0
|
|
331,222
|
|
|
12.4
|
|
||
Tier 1 capital to risk-weighted assets
|
|
92,963
|
|
|
4.0
|
|
|
139,444
|
|
|
6.0
|
|
331,222
|
|
|
14.3
|
|
||
Total capital to risk-weighted assets
|
|
185,925
|
|
|
8.0
|
|
|
232,407
|
|
|
10.0
|
|
359,875
|
|
|
15.5
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
As of December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
The Company consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Tier 1 leverage capital to average assets
|
|
$
|
65,847
|
|
|
4.0
|
%
|
|
N/A
|
|
|
N/A
|
|
$
|
185,951
|
|
|
11.3
|
%
|
Tier 1 capital to risk-weighted assets
|
|
47,853
|
|
|
4.0
|
|
|
N/A
|
|
|
N/A
|
|
185,951
|
|
|
15.5
|
|
||
Total capital to risk-weighted assets
|
|
95,706
|
|
|
8.0
|
|
|
N/A
|
|
|
N/A
|
|
201,076
|
|
|
16.8
|
|
||
Heritage Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Tier 1 leverage capital to average assets
|
|
65,831
|
|
|
4.0
|
|
|
82,288
|
|
|
5.0
|
|
182,543
|
|
|
11.1
|
|
||
Tier 1 capital to risk-weighted assets
|
|
47,807
|
|
|
4.0
|
|
|
71,710
|
|
|
6.0
|
|
182,543
|
|
|
15.3
|
|
||
Total capital to risk-weighted assets
|
|
95,613
|
|
|
8.0
|
|
|
119,517
|
|
|
10.0
|
|
197,656
|
|
|
16.5
|
|
•
|
Permits banking organizations that had less than $15 billion in total consolidated assets as of December 31, 2009, or were mutual holding companies as of May 19, 2010, to include in Tier 1 capital trust preferred securities and cumulative perpetual preferred stock that were issued and included in Tier 1 capital prior to May 19, 2010, subject to a limit of 25% of Tier 1 capital elements, excluding any non-qualifying capital instruments and after all regulatory capital deductions and adjustments have been applied to Tier 1 capital.
|
•
|
Establishes new qualifying criteria for regulatory capital, including new limitations on the inclusion of deferred tax assets and mortgage servicing rights.
|
•
|
Requires a minimum ratio of common equity Tier 1 capital to risk-weighted assets of 4.5%.
|
•
|
Increases the minimum Tier 1 capital to risk-weighted assets ratio requirement from 4% to 6%.
|
•
|
Retains the minimum total capital to risk-weighted assets ratio requirement of 8%.
|
•
|
Establishes a minimum leverage ratio requirement of 4%.
|
•
|
Retains the existing regulatory capital framework for one-to-four family residential mortgage exposures.
|
•
|
Permits banking organizations that are not subject to the advanced approaches rule, such as the Company and the Bank, to retain, through a one-time election, the existing treatment for most accumulated other comprehensive income, such that unrealized gains and losses on securities available for sale will not affect regulatory capital amounts and ratios.
|
•
|
Implements a new capital conservation buffer requirement for a banking organization to maintain a common equity capital ratio more than 2.5% above the minimum common equity Tier 1 capital, Tier
|
•
|
Increases capital requirements for past-due loans, high volatility commercial real estate exposures, and certain short-term commitments and securitization exposures.
|
•
|
Expands the recognition of collateral and guarantors in determining risk-weighted assets.
|
•
|
Removes references to credit ratings consistent with the Dodd-Frank Act and establishes due diligence requirements for securitization exposures.
|
Period
|
|
Total Number of
Shares
Purchased(1)
|
|
Average Price
Paid Per Share(1)
|
|
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
|
||||
April 1, 2014— April 30, 2014
|
|
—
|
|
|
$0.00
|
|
7,205,348
|
|
|
160,100
|
|
|
May 1, 2014—May 31, 2014
|
|
1,345
|
|
|
15.59
|
|
|
7,205,348
|
|
|
160,100
|
|
June 1, 2014—June 30, 2014
|
|
6,841
|
|
|
12.39
|
|
7,205,348
|
|
|
160,100
|
|
|
Total
|
|
8,186
|
|
|
$12.91
|
|
7,205,348
|
|
|
160,100
|
|
(1)
|
Common shares repurchased by the Company between April 1, 2014 and June 30, 2014 included only the cancellation of 8,186 shares of restricted stock to pay withholding taxes at an average price per share of $12.91.
|
Exhibit
No.
|
|
|
|
2.1
|
|
|
Purchase and Assumption Agreement for Cowlitz Acquisition (1)
|
|
|
|
|
2.2
|
|
|
Purchase and Assumption Agreement for Pierce Acquisition (2)
|
|
|
|
|
2.3
|
|
|
Definitive Agreement for Valley Acquisition (3)
|
|
|
|
|
2.4
|
|
|
Agreement and Plan of Merger with Washington Banking Company (4)
|
|
|
|
|
3.1
|
|
|
Articles of Incorporation (5)
|
|
|
||
3.2
|
|
|
Amended and Restated Bylaws of the Company (6)
|
|
|
||
10.1
|
|
|
1998 Stock Option and Restricted Stock Award Plan (7)
|
|
|
||
10.2
|
|
|
1997 Stock Option and Restricted Stock Award Plan (8)
|
|
|
||
10.3
|
|
|
2002 Incentive Stock Option Plan, Director Nonqualified Stock Option Plan, and Restricted Stock Option Plan (9)
|
|
|
||
10.4
|
|
|
2006 Incentive Stock Option Plan, Director Nonqualified Stock Option Plan, and Restricted Stock Option Plan (10)
|
|
|
|
|
10.5
|
|
|
Annual Incentive Compensation Plan (11)
|
|
|
||
10.6
|
|
|
2010 Omnibus Equity Plan (12)
|
|
|
|
|
10.7
|
|
|
2014 Omnibus Equity Plan (13)
|
|
|
|
|
10.8
|
|
|
Form of Nonqualified Stock Option Award Agreement under the Heritage Financial Corporation 2014 Omnibus Equity Plan (14)
|
|
|
|
|
10.9
|
|
|
Form of Restricted Stock Award Agreement under the Heritage Financial Corporation 2014 Omnibus Equity Plan (14)
|
|
|
||
10.10
|
|
|
Form of Restricted Stock Unit Award Agreement under the Heritage Financial Corporation 2014 Omnibus Equity Plan (14)
|
|
|
|
|
10.11
|
|
|
Deferred Compensation Plan and Participation Agreements by and between Heritage and each of Brian L. Vance, Jeffrey J. Deuel and Donald J. Hinson (15)
|
|
|
||
10.12
|
|
|
Employment Agreements by and between Heritage and each of Brian L. Vance, Jeffrey J. Deuel and Donald J. Hinson (15)
|
|
|
||
10.13
|
|
|
Employment Agreement and Deferred Compensation Participation Agreement by and between Heritage Bank and David A. Spurling (16)
|
|
|
||
11
|
|
|
Statement regarding computation of earnings per share (17)
|
|
|
||
14.0
|
|
|
Code of Ethics and Conduct Policy (18)
|
|
|
|
|
31.1
|
|
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
||
31.2
|
|
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
||
32.1
|
|
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
||
101
|
|
|
The following materials from Heritage Financial Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, formatted in Extensible Business Reporting Language (“XBRL”): (i) the Unaudited Condensed Consolidated Statements of Financial Condition, (ii) the Unaudited Condensed Consolidated Statements of Income; (iii) the Unaudited Condensed Consolidated Statements of Comprehensive Income, (iv) the Unaudited Condensed Consolidated Statements of Stockholders' Equity; (v) the Unaudited Condensed Consolidated Statements of Cash Flows, and (vi) the Unaudited Notes to Condensed Consolidated Financial Statements (19)
|
(1)
|
Incorporated by reference to the Current Report on Form 8-K dated July 30, 2010.
|
(2)
|
Incorporated by reference to the Current Report on Form 8-K dated November 5, 2010.
|
(3)
|
Incorporated by reference to the Current Report on Form 8-K dated March 11, 2013.
|
(4)
|
Incorporated by reference to the Current Report on Form 8-K dated October 23, 2013.
|
(5)
|
Incorporated by reference to the Registration Statement on Form S-1 (Reg. No. 333-35573) declared effective on November 12, 1997; as amended, said Amendment being incorporated by reference to the Amendment to the Articles of Incorporation of Heritage Financial Corporation filed with the Current Report on Form 8-K dated November 25, 2008.
|
(6)
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Incorporated by reference to the Current Report on Form 8-K dated April 30, 2014.
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(7)
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Incorporated by reference to the Registration Statement on Form S-8 (Reg. No. 333-71415).
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(8)
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Incorporated by reference to the Registration Statement on Form S-8 (Reg. No. 333-57513).
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(9)
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Incorporated by reference to the Registration Statements on Form S-8 (Reg. No. 333-88980; 333-88982; 333-88976).
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(10)
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Incorporated by reference to the Registration Statements on Form S-8 (Reg. No. 333-134473; 333-134474; 333-134475).
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(11)
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Incorporated by reference to the Annual Report on Form 10-K dated March 2, 2010.
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(12)
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Incorporated by reference to the Registration Statement on Form S-8 (Reg. No. 33-167146).
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(13)
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Incorporated by reference to Heritage Financial Corporation's definitive proxy statement dated June 11, 2014.
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(14)
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Included in this Current Report on Form 10-Q dated August 6, 2014.
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(15)
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Incorporated by reference to the Current Report on Form 8-K dated September 7, 2012.
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(16)
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Incorporated by reference to the Current Report on Form 8-K dated January 6, 2014.
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(17)
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Reference is made to Note 11—Stockholders' Equity in the Selected Notes to Condensed Consolidated Financial Statements under Part 1 Item 1 herein.
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(18)
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Registrant elects to satisfy Regulation S-K §229.406(c) by posting its Code of Ethics on its website at
www.HF-WA.com
in the section titled Investor Information: Corporate Governance.
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(19)
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Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise not subject to liability under those sections.
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HERITAGE FINANCIAL CORPORATION
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Date:
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August 8, 2014
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/S/ BRIAN L. VANCE
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Brian L. Vance
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President and Chief Executive Officer
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(Duly Authorized Officer)
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Date:
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August 8, 2014
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/S/ DONALD J. HINSON
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Donald J. Hinson
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Executive Vice President and Chief Financial Officer
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(Principal Financial and Accounting Officer)
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Exhibit No.
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Description of Exhibit
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31.1
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Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101
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The following financial information from Heritage Financial Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 is formatted in XBRL: (i) the Unaudited Condensed Consolidated Statements of Financial Condition, (ii) the Unaudited Condensed Consolidated Statements of Income, (iii) the Unaudited Condensed Consolidated Statements Comprehensive Income, (iv) the Unaudited Condensed Consolidated Statements of Stockholders’ Equity, (v) the Unaudited Condensed Consolidated Statements of Cash Flows, and (vi) the Unaudited Notes to Condensed Consolidated Financial Statements.
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Installment
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Vesting Date applicable to Installment
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___% of Covered Shares
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Date/Event/Other Condition
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Installment
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Restricted Period will end on:
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___% of Covered Shares
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Date/Event/Other Condition
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Installment
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Restricted Period will end on:
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__% of RSUs
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Date/Event/Other Condition
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1.
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I have reviewed the quarterly report on Form 10-Q of Heritage Financial Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Brian L. Vance
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Brian L. Vance
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President and Chief Executive Officer
Principal Executive Officer
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1.
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I have reviewed the quarterly report on Form 10-Q of Heritage Financial Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Donald J. Hinson
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Donald J. Hinson
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Executive Vice President and Chief Financial Officer
Principal Financial Officer
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such Report.
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August 8, 2014
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/s/ Brian L. Vance
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Brian L. Vance
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President and Chief Executive Officer
Principal Executive Officer
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August 8, 2014
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/s/ Donald J. Hinson
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Donald J. Hinson
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Executive Vice President and Chief Financial Officer
Principal Financial Officer
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