|
|
|
|
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
ý
|
|
Accelerated filer
¨
|
|
|
Non-accelerated filer
¨
|
|
Smaller reporting company
¨
|
|
|
|
|
Emerging growth company
¨
|
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
Common stock, no par value
|
HFWA
|
NASDAQ
|
|
|
|
|
Page
|
|
||||
|
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|
|
PART I.
|
||||
ITEM 1.
|
||||
|
|
|||
|
|
|||
|
|
|||
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|
|||
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|
|||
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|
|||
|
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NOTE 1.
|
||
|
|
NOTE 2.
|
||
|
|
NOTE 3.
|
||
|
|
NOTE 4.
|
||
|
|
NOTE 5.
|
||
|
|
NOTE 6.
|
||
|
|
NOTE 7.
|
||
|
|
NOTE 8.
|
||
|
|
NOTE 9.
|
||
|
|
NOTE 10.
|
||
|
|
NOTE 11.
|
||
|
|
NOTE 12.
|
||
|
|
NOTE 13.
|
||
|
|
NOTE 14.
|
||
|
|
NOTE 15.
|
||
|
|
NOTE 16.
|
||
ITEM 2.
|
||||
ITEM 3.
|
||||
ITEM 4.
|
||||
Part II.
|
||||
ITEM 1.
|
||||
ITEM 1A.
|
||||
ITEM 2.
|
||||
ITEM 3.
|
||||
ITEM 4.
|
||||
ITEM 5.
|
||||
ITEM 6.
|
||||
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|
|
|
|
||||
Cash on hand and in banks
|
|
$
|
71,252
|
|
|
$
|
92,704
|
|
Interest earning deposits
|
|
39,918
|
|
|
69,206
|
|
||
Cash and cash equivalents
|
|
111,170
|
|
|
161,910
|
|
||
Investment securities available for sale, at fair value
|
|
985,009
|
|
|
976,095
|
|
||
Loans held for sale
|
|
2,956
|
|
|
1,555
|
|
||
Loans receivable, net
|
|
3,696,431
|
|
|
3,654,160
|
|
||
Allowance for loan losses
|
|
(36,152
|
)
|
|
(35,042
|
)
|
||
Total loans receivable, net
|
|
3,660,279
|
|
|
3,619,118
|
|
||
Other real estate owned
|
|
1,904
|
|
|
1,983
|
|
||
Premises and equipment, net
|
|
80,130
|
|
|
81,100
|
|
||
Federal Home Loan Bank stock, at cost
|
|
7,377
|
|
|
6,076
|
|
||
Bank owned life insurance
|
|
94,099
|
|
|
93,612
|
|
||
Accrued interest receivable
|
|
15,621
|
|
|
15,403
|
|
||
Prepaid expenses and other assets
|
|
123,026
|
|
|
98,522
|
|
||
Other intangible assets, net
|
|
19,589
|
|
|
20,614
|
|
||
Goodwill
|
|
240,939
|
|
|
240,939
|
|
||
Total assets
|
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
||||
Deposits
|
|
$
|
4,393,715
|
|
|
$
|
4,432,402
|
|
Federal Home Loan Bank advances
|
|
25,000
|
|
|
—
|
|
||
Junior subordinated debentures
|
|
20,375
|
|
|
20,302
|
|
||
Securities sold under agreement to repurchase
|
|
24,923
|
|
|
31,487
|
|
||
Accrued expenses and other liabilities
|
|
99,895
|
|
|
72,013
|
|
||
Total liabilities
|
|
4,563,908
|
|
|
4,556,204
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock, no par value, 2,500,000 shares authorized; no shares issued and outstanding at March 31, 2019 and December 31, 2018
|
|
—
|
|
|
—
|
|
||
Common stock, no par value, 50,000,000 shares authorized; 36,899,138 and 36,874,055 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
|
|
591,767
|
|
|
591,806
|
|
||
Retained earnings
|
|
185,863
|
|
|
176,372
|
|
||
Accumulated other comprehensive income (loss), net
|
|
561
|
|
|
(7,455
|
)
|
||
Total stockholders’ equity
|
|
778,191
|
|
|
760,723
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
INTEREST INCOME
|
|
|
|
|
||||
Interest and fees on loans
|
|
$
|
46,699
|
|
|
$
|
38,159
|
|
Taxable interest on investment securities
|
|
5,823
|
|
|
3,529
|
|
||
Nontaxable interest on investment securities
|
|
950
|
|
|
1,341
|
|
||
Interest on other interest earning assets
|
|
356
|
|
|
218
|
|
||
Total interest income
|
|
53,828
|
|
|
43,247
|
|
||
INTEREST EXPENSE
|
|
|
|
|
||||
Deposits
|
|
3,603
|
|
|
1,960
|
|
||
Junior subordinated debentures
|
|
354
|
|
|
283
|
|
||
Other borrowings
|
|
62
|
|
|
167
|
|
||
Total interest expense
|
|
4,019
|
|
|
2,410
|
|
||
Net interest income
|
|
49,809
|
|
|
40,837
|
|
||
Provision for loan losses
|
|
920
|
|
|
1,152
|
|
||
Net interest income after provision for loan losses
|
|
48,889
|
|
|
39,685
|
|
||
NONINTEREST INCOME
|
|
|
|
|
||||
Service charges and other fees
|
|
4,485
|
|
|
4,543
|
|
||
Gain on sale of investment securities, net
|
|
15
|
|
|
35
|
|
||
Gain on sale of loans, net
|
|
252
|
|
|
874
|
|
||
Interest rate swap fees
|
|
—
|
|
|
51
|
|
||
Other income
|
|
2,656
|
|
|
2,045
|
|
||
Total noninterest income
|
|
7,408
|
|
|
7,548
|
|
||
NONINTEREST EXPENSE
|
|
|
|
|
||||
Compensation and employee benefits
|
|
21,914
|
|
|
21,367
|
|
||
Occupancy and equipment
|
|
5,458
|
|
|
4,627
|
|
||
Data processing
|
|
2,173
|
|
|
2,605
|
|
||
Marketing
|
|
1,098
|
|
|
808
|
|
||
Professional services
|
|
1,173
|
|
|
2,837
|
|
||
State/municipal business and use taxes
|
|
798
|
|
|
688
|
|
||
Federal deposit insurance premium
|
|
285
|
|
|
355
|
|
||
Other real estate owned, net
|
|
86
|
|
|
—
|
|
||
Amortization of intangible assets
|
|
1,025
|
|
|
795
|
|
||
Other expense
|
|
2,515
|
|
|
2,665
|
|
||
Total noninterest expense
|
|
36,525
|
|
|
36,747
|
|
||
Income before income taxes
|
|
19,772
|
|
|
10,486
|
|
||
Income tax expense
|
|
3,220
|
|
|
1,399
|
|
||
Net income
|
|
$
|
16,552
|
|
|
$
|
9,087
|
|
Basic earnings per common share
|
|
$
|
0.45
|
|
|
$
|
0.27
|
|
Diluted earnings per common share
|
|
$
|
0.45
|
|
|
$
|
0.27
|
|
Dividends declared per common share
|
|
$
|
0.18
|
|
|
$
|
0.15
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Net income
|
|
$
|
16,552
|
|
|
$
|
9,087
|
|
Change in fair value of investment securities available for sale, net of tax of
$2,145 and $(2,008), respectively
|
|
8,028
|
|
|
(7,516
|
)
|
||
Reclassification adjustment for net gain from sale of investment securities available for sale included in income, net of tax of $(3) and $(8), respectively
|
|
(12
|
)
|
|
(27
|
)
|
||
Other comprehensive income (loss)
|
|
8,016
|
|
|
(7,543
|
)
|
||
Comprehensive income
|
|
$
|
24,568
|
|
|
$
|
1,544
|
|
|
Number of
common
shares
|
|
Common
stock
|
|
Retained
earnings
|
|
Accumulated
other
comprehensive income (loss), net
|
|
Total
stock-
holders’
equity
|
|||||||||
Balance at December 31, 2017
|
29,928
|
|
|
$
|
360,590
|
|
|
$
|
149,013
|
|
|
$
|
(1,298
|
)
|
|
$
|
508,305
|
|
Restricted stock units vested, net of forfeitures of restricted stock awards
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Exercise of stock options
|
1
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||
Stock-based compensation expense
|
—
|
|
|
623
|
|
|
—
|
|
|
—
|
|
|
623
|
|
||||
Common stock repurchased
|
(45
|
)
|
|
(1,438
|
)
|
|
—
|
|
|
—
|
|
|
(1,438
|
)
|
||||
Net income
|
—
|
|
|
—
|
|
|
9,087
|
|
|
—
|
|
|
9,087
|
|
||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,543
|
)
|
|
(7,543
|
)
|
||||
Common stock issued in business combination
|
4,112
|
|
|
130,770
|
|
|
—
|
|
|
—
|
|
|
130,770
|
|
||||
Cash dividends declared on common stock ($0.15 per share)
|
—
|
|
|
—
|
|
|
(5,117
|
)
|
|
—
|
|
|
(5,117
|
)
|
||||
Effects of implementation of accounting change related to equity investments, net
|
—
|
|
|
—
|
|
|
93
|
|
|
(93
|
)
|
|
—
|
|
||||
Balance at March 31, 2018
|
34,018
|
|
|
$
|
490,566
|
|
|
$
|
153,076
|
|
|
$
|
(8,934
|
)
|
|
$
|
634,708
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at December 31, 2018
|
36,874
|
|
|
$
|
591,806
|
|
|
$
|
176,372
|
|
|
$
|
(7,455
|
)
|
|
$
|
760,723
|
|
Restricted stock units vested, net of forfeitures of restricted stock awards
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Exercise of stock options
|
2
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||
Stock-based compensation expense
|
—
|
|
|
741
|
|
|
—
|
|
|
—
|
|
|
741
|
|
||||
Common stock repurchased
|
(26
|
)
|
|
(802
|
)
|
|
—
|
|
|
—
|
|
|
(802
|
)
|
||||
Net income
|
—
|
|
|
—
|
|
|
16,552
|
|
|
—
|
|
|
16,552
|
|
||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
8,016
|
|
|
8,016
|
|
||||
Cash dividends declared on common stock ($0.18 per share)
|
—
|
|
|
—
|
|
|
(6,662
|
)
|
|
—
|
|
|
(6,662
|
)
|
||||
Effects of implementation of accounting change related to operating leases
|
—
|
|
|
—
|
|
|
(399
|
)
|
|
—
|
|
|
(399
|
)
|
||||
Balance at March 31, 2019
|
36,899
|
|
|
$
|
591,767
|
|
|
$
|
185,863
|
|
|
$
|
561
|
|
|
$
|
778,191
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
16,552
|
|
|
$
|
9,087
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation of premises and equipment, amortization of securities available for sale, and amortization of discount of junior subordinated debentures
|
|
2,234
|
|
|
2,631
|
|
||
Changes in net deferred loan costs, net of amortization
|
|
276
|
|
|
9
|
|
||
Provision for loan losses
|
|
920
|
|
|
1,152
|
|
||
Net change in accrued interest receivable, prepaid expenses and other assets, and accrued expenses and other liabilities
|
|
1,345
|
|
|
(4,191
|
)
|
||
Stock-based compensation expense
|
|
741
|
|
|
623
|
|
||
Amortization of intangible assets
|
|
1,025
|
|
|
795
|
|
||
Origination of loans held for sale
|
|
(8,607
|
)
|
|
(20,380
|
)
|
||
Proceeds from sale of loans
|
|
7,458
|
|
|
20,651
|
|
||
Earnings on bank owned life insurance
|
|
(487
|
)
|
|
(335
|
)
|
||
Gain on sale of loans, net
|
|
(252
|
)
|
|
(874
|
)
|
||
Gain on sale of investment securities, net
|
|
(15
|
)
|
|
(35
|
)
|
||
Impairment of right of use asset
|
|
117
|
|
|
—
|
|
||
Loss on sale or write-off of premises and equipment, net
|
|
5
|
|
|
6
|
|
||
Net cash provided by operating activities
|
|
21,312
|
|
|
9,139
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Loans originated, net of principal payments
|
|
(42,357
|
)
|
|
(46,959
|
)
|
||
Maturities, calls and payments of investment securities available for sale
|
|
47,004
|
|
|
24,443
|
|
||
Purchase of investment securities available for sale
|
|
(57,606
|
)
|
|
(69,352
|
)
|
||
Purchase of premises and equipment
|
|
(1,030
|
)
|
|
(2,146
|
)
|
||
Proceeds from sales of other loans
|
|
—
|
|
|
2,813
|
|
||
Proceeds from sales of other real estate owned
|
|
79
|
|
|
—
|
|
||
Proceeds from sales of investment securities available for sale
|
|
10,932
|
|
|
103,032
|
|
||
Proceeds from redemption of Federal Home Loan Bank stock
|
|
2,276
|
|
|
10,130
|
|
||
Purchases of Federal Home Loan Bank stock
|
|
(3,577
|
)
|
|
(7,984
|
)
|
||
Capital contributions to low-income housing tax credit partnerships and new market tax credit partnerships, net
|
|
(80
|
)
|
|
(7,696
|
)
|
||
Net cash received from acquisitions
|
|
—
|
|
|
80,133
|
|
||
Net cash (used in) provided by investing activities
|
|
(44,359
|
)
|
|
86,414
|
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Net (decrease) increase in deposits
|
|
(38,687
|
)
|
|
5,796
|
|
||
Federal Home Loan Bank advances
|
|
76,900
|
|
|
191,450
|
|
||
Repayments of Federal Home Loan Bank advances
|
|
(51,900
|
)
|
|
(253,250
|
)
|
||
Common stock cash dividends paid
|
|
(6,662
|
)
|
|
(5,117
|
)
|
||
Net decrease in securities sold under agreement to repurchase
|
|
(6,564
|
)
|
|
(5,721
|
)
|
||
Proceeds from exercise of stock options
|
|
22
|
|
|
21
|
|
||
Repurchase of common stock
|
|
(802
|
)
|
|
(1,438
|
)
|
||
Net cash used in financing activities
|
|
(27,693
|
)
|
|
(68,259
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Net (decrease) increase in cash and cash equivalents
|
|
(50,740
|
)
|
|
27,294
|
|
||
Cash and cash equivalents at beginning of period
|
|
161,910
|
|
|
103,015
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
111,170
|
|
|
$
|
130,309
|
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
3,801
|
|
|
$
|
2,398
|
|
Cash paid for income taxes
|
|
—
|
|
|
—
|
|
||
|
|
|
|
|
||||
Supplemental non-cash disclosures of cash flow information:
|
|
|
|
|
||||
Transfers of properties held for sale recorded in premises and equipment, net to prepaid expenses and other assets
|
|
763
|
|
|
—
|
|
||
Business Combinations:
|
|
|
|
|
||||
Common stock issued for business combinations
|
|
—
|
|
|
130,770
|
|
||
Assets acquired (liabilities assumed) in acquisitions:
|
|
|
|
|
||||
Investment securities available for sale
|
|
—
|
|
|
80,353
|
|
||
Loans receivable
|
|
—
|
|
|
388,462
|
|
||
Premises and equipment
|
|
—
|
|
|
732
|
|
||
Federal Home Loan Bank stock
|
|
—
|
|
|
623
|
|
||
Accrued interest receivable
|
|
—
|
|
|
1,448
|
|
||
Bank owned life insurance
|
|
—
|
|
|
6,264
|
|
||
Prepaid expenses and other assets
|
|
—
|
|
|
1,354
|
|
||
Other intangible assets
|
|
—
|
|
|
11,270
|
|
||
Deposits
|
|
—
|
|
|
(505,885
|
)
|
||
Accrued expenses and other liabilities
|
|
—
|
|
|
(2,504
|
)
|
(1)
|
Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements
|
(2)
|
Business Combinations
|
(3)
|
Investment Securities
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
(In thousands)
|
||||||||||||||
March 31, 2019
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
98,900
|
|
|
$
|
398
|
|
|
$
|
(44
|
)
|
|
$
|
99,254
|
|
Municipal securities
|
144,399
|
|
|
2,590
|
|
|
(127
|
)
|
|
146,862
|
|
||||
Mortgage-backed securities and collateralized mortgage obligations
(1)
:
|
|
|
|
|
|
|
|
||||||||
Residential
|
349,189
|
|
|
1,224
|
|
|
(3,555
|
)
|
|
346,858
|
|
||||
Commercial
|
342,102
|
|
|
2,417
|
|
|
(2,891
|
)
|
|
341,628
|
|
||||
Corporate obligations
|
25,684
|
|
|
223
|
|
|
(20
|
)
|
|
25,887
|
|
||||
Other asset-backed securities
|
24,023
|
|
|
500
|
|
|
(3
|
)
|
|
24,520
|
|
||||
Total
|
$
|
984,297
|
|
|
$
|
7,352
|
|
|
$
|
(6,640
|
)
|
|
$
|
985,009
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
101,595
|
|
|
$
|
155
|
|
|
$
|
(147
|
)
|
|
$
|
101,603
|
|
Municipal securities
|
158,461
|
|
|
1,209
|
|
|
(806
|
)
|
|
158,864
|
|
||||
Mortgage-backed securities and collateralized mortgage obligations
(1)
:
|
|
|
|
|
|
|
|
||||||||
Residential
|
337,295
|
|
|
426
|
|
|
(6,119
|
)
|
|
331,602
|
|
||||
Commercial
|
338,250
|
|
|
1,035
|
|
|
(5,524
|
)
|
|
333,761
|
|
||||
Corporate obligations
|
25,662
|
|
|
36
|
|
|
(135
|
)
|
|
25,563
|
|
||||
Other asset-backed securities
|
24,278
|
|
|
424
|
|
|
—
|
|
|
24,702
|
|
||||
Total
|
$
|
985,541
|
|
|
$
|
3,285
|
|
|
$
|
(12,731
|
)
|
|
$
|
976,095
|
|
(1)
|
Issued and guaranteed by U.S. Government-sponsored agencies.
|
|
Amortized Cost
|
|
Fair Value
|
||||
|
(In thousands)
|
||||||
Due in one year or less
|
$
|
31,994
|
|
|
$
|
31,967
|
|
Due after one year through five years
|
207,244
|
|
|
207,852
|
|
||
Due after five years through ten years
|
274,601
|
|
|
275,127
|
|
||
Due after ten years
|
470,458
|
|
|
470,063
|
|
||
Total
|
$
|
984,297
|
|
|
$
|
985,009
|
|
|
Less than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
5,079
|
|
|
$
|
(23
|
)
|
|
$
|
2,411
|
|
|
$
|
(21
|
)
|
|
$
|
7,490
|
|
|
$
|
(44
|
)
|
Municipal securities
|
827
|
|
|
(4
|
)
|
|
31,990
|
|
|
(123
|
)
|
|
32,817
|
|
|
(127
|
)
|
||||||
Mortgage-backed securities and collateralized mortgage obligations
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
27,725
|
|
|
(170
|
)
|
|
184,166
|
|
|
(3,385
|
)
|
|
211,891
|
|
|
(3,555
|
)
|
||||||
Commercial
|
23,798
|
|
|
(231
|
)
|
|
174,130
|
|
|
(2,660
|
)
|
|
197,928
|
|
|
(2,891
|
)
|
||||||
Corporate obligations
|
3,874
|
|
|
(12
|
)
|
|
1,992
|
|
|
(8
|
)
|
|
5,866
|
|
|
(20
|
)
|
||||||
Other asset-backed securities
|
1,881
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
1,881
|
|
|
(3
|
)
|
||||||
Total
|
$
|
63,184
|
|
|
$
|
(443
|
)
|
|
$
|
394,689
|
|
|
$
|
(6,197
|
)
|
|
$
|
457,873
|
|
|
$
|
(6,640
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
46,992
|
|
|
$
|
(58
|
)
|
|
$
|
7,350
|
|
|
$
|
(89
|
)
|
|
$
|
54,342
|
|
|
$
|
(147
|
)
|
Municipal securities
|
31,157
|
|
|
(159
|
)
|
|
38,792
|
|
|
(647
|
)
|
|
69,949
|
|
|
(806
|
)
|
||||||
Mortgage-backed securities and collateralized mortgage obligations
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
66,620
|
|
|
(247
|
)
|
|
193,726
|
|
|
(5,872
|
)
|
|
260,346
|
|
|
(6,119
|
)
|
||||||
Commercial
|
43,531
|
|
|
(272
|
)
|
|
190,585
|
|
|
(5,252
|
)
|
|
234,116
|
|
|
(5,524
|
)
|
||||||
Corporate obligations
|
13,736
|
|
|
(87
|
)
|
|
1,951
|
|
|
(48
|
)
|
|
15,687
|
|
|
(135
|
)
|
||||||
Total
|
$
|
202,036
|
|
|
$
|
(823
|
)
|
|
$
|
432,404
|
|
|
$
|
(11,908
|
)
|
|
$
|
634,440
|
|
|
$
|
(12,731
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Gross realized gains
|
$
|
89
|
|
|
$
|
104
|
|
Gross realized losses
|
(74
|
)
|
|
(69
|
)
|
||
Net realized gains
|
$
|
15
|
|
|
$
|
35
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Washington and Oregon state to secure public deposits
|
$
|
198,226
|
|
|
$
|
198,044
|
|
|
$
|
199,026
|
|
|
$
|
196,786
|
|
Repurchase agreements
|
47,209
|
|
|
46,872
|
|
|
48,173
|
|
|
47,407
|
|
||||
Other securities pledged
|
20,533
|
|
|
20,549
|
|
|
20,778
|
|
|
20,482
|
|
||||
Total
|
$
|
265,968
|
|
|
$
|
265,465
|
|
|
$
|
267,977
|
|
|
$
|
264,675
|
|
(4)
|
Loans Receivable
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
838,403
|
|
|
$
|
853,606
|
|
Owner-occupied commercial real estate
|
785,316
|
|
|
779,814
|
|
||
Non-owner occupied commercial real estate
|
1,335,596
|
|
|
1,304,463
|
|
||
Total commercial business
|
2,959,315
|
|
|
2,937,883
|
|
||
One-to-four family residential
|
106,502
|
|
|
101,763
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
110,699
|
|
|
102,730
|
|
||
Five or more family residential and commercial properties
|
126,379
|
|
|
112,730
|
|
||
Total real estate construction and land development
|
237,078
|
|
|
215,460
|
|
||
Consumer
|
390,303
|
|
|
395,545
|
|
||
Gross loans receivable
|
3,693,198
|
|
|
3,650,651
|
|
||
Net deferred loan costs
|
3,233
|
|
|
3,509
|
|
||
Loans receivable, net
|
3,696,431
|
|
|
3,654,160
|
|
||
Allowance for loan losses
|
(36,152
|
)
|
|
(35,042
|
)
|
||
Total loans receivable, net
|
$
|
3,660,279
|
|
|
$
|
3,619,118
|
|
|
March 31, 2019
|
||||||||||||||||||
|
Pass
|
|
OAEM
|
|
Substandard
|
|
Doubtful/Loss
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
780,469
|
|
|
$
|
11,594
|
|
|
$
|
46,340
|
|
|
$
|
—
|
|
|
$
|
838,403
|
|
Owner-occupied commercial real estate
|
747,294
|
|
|
22,576
|
|
|
15,446
|
|
|
—
|
|
|
785,316
|
|
|||||
Non-owner occupied commercial real estate
|
1,310,310
|
|
|
15,149
|
|
|
10,137
|
|
|
—
|
|
|
1,335,596
|
|
|||||
Total commercial business
|
2,838,073
|
|
|
49,319
|
|
|
71,923
|
|
|
—
|
|
|
2,959,315
|
|
|||||
One-to-four family residential
|
105,158
|
|
|
—
|
|
|
1,344
|
|
|
—
|
|
|
106,502
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
109,748
|
|
|
—
|
|
|
951
|
|
|
—
|
|
|
110,699
|
|
|||||
Five or more family residential and commercial properties
|
126,330
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
126,379
|
|
|||||
Total real estate construction and land development
|
236,078
|
|
|
49
|
|
|
951
|
|
|
—
|
|
|
237,078
|
|
|||||
Consumer
|
385,674
|
|
|
—
|
|
|
4,105
|
|
|
524
|
|
|
390,303
|
|
|||||
Gross loans receivable
|
$
|
3,564,983
|
|
|
$
|
49,368
|
|
|
$
|
78,323
|
|
|
$
|
524
|
|
|
$
|
3,693,198
|
|
|
December 31, 2018
|
||||||||||||||||||
|
Pass
|
|
OAEM
|
|
Substandard
|
|
Doubtful/Loss
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
788,395
|
|
|
$
|
16,168
|
|
|
$
|
49,043
|
|
|
$
|
—
|
|
|
$
|
853,606
|
|
Owner-occupied commercial real estate
|
741,227
|
|
|
27,724
|
|
|
10,863
|
|
|
—
|
|
|
779,814
|
|
|||||
Non-owner occupied commercial real estate
|
1,283,077
|
|
|
9,438
|
|
|
11,948
|
|
|
—
|
|
|
1,304,463
|
|
|||||
Total commercial business
|
2,812,699
|
|
|
53,330
|
|
|
71,854
|
|
|
—
|
|
|
2,937,883
|
|
|||||
One-to-four family residential
|
100,401
|
|
|
—
|
|
|
1,362
|
|
|
—
|
|
|
101,763
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
101,519
|
|
|
258
|
|
|
953
|
|
|
—
|
|
|
102,730
|
|
|||||
Five or more family residential and commercial properties
|
112,678
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
112,730
|
|
|||||
Total real estate construction and land development
|
214,197
|
|
|
310
|
|
|
953
|
|
|
—
|
|
|
215,460
|
|
|||||
Consumer
|
390,808
|
|
|
—
|
|
|
4,213
|
|
|
524
|
|
|
395,545
|
|
|||||
Gross loans receivable
|
$
|
3,518,105
|
|
|
$
|
53,640
|
|
|
$
|
78,382
|
|
|
$
|
524
|
|
|
$
|
3,650,651
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
9,394
|
|
|
$
|
6,639
|
|
Owner-occupied commercial real estate
|
4,465
|
|
|
4,212
|
|
||
Non-owner occupied commercial real estate
|
2,445
|
|
|
1,713
|
|
||
Total commercial business
|
16,304
|
|
|
12,564
|
|
||
One-to-four family residential
|
68
|
|
|
71
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
923
|
|
|
899
|
|
||
Total real estate construction and land development
|
923
|
|
|
899
|
|
||
Consumer
|
166
|
|
|
169
|
|
||
Nonaccrual loans
|
$
|
17,461
|
|
|
$
|
13,703
|
|
|
March 31, 2019
|
||||||||||||||||||
|
30-89 Days
|
|
90 Days or
Greater
|
|
Total Past
Due
|
|
Current
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
550
|
|
|
$
|
3,593
|
|
|
$
|
4,143
|
|
|
$
|
834,260
|
|
|
$
|
838,403
|
|
Owner-occupied commercial real estate
|
1,677
|
|
|
349
|
|
|
2,026
|
|
|
783,290
|
|
|
785,316
|
|
|||||
Non-owner occupied commercial real estate
|
3,283
|
|
|
1,843
|
|
|
5,126
|
|
|
1,330,470
|
|
|
1,335,596
|
|
|||||
Total commercial business
|
5,510
|
|
|
5,785
|
|
|
11,295
|
|
|
2,948,020
|
|
|
2,959,315
|
|
|||||
One-to-four family residential
|
38
|
|
|
—
|
|
|
38
|
|
|
106,464
|
|
|
106,502
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
105
|
|
|
258
|
|
|
363
|
|
|
110,336
|
|
|
110,699
|
|
|||||
Five or more family residential and commercial properties
|
—
|
|
|
—
|
|
|
—
|
|
|
126,379
|
|
|
126,379
|
|
|||||
Total real estate construction and land development
|
105
|
|
|
258
|
|
|
363
|
|
|
236,715
|
|
|
237,078
|
|
|||||
Consumer
|
1,347
|
|
|
17
|
|
|
1,364
|
|
|
388,939
|
|
|
390,303
|
|
|||||
Gross loans receivable
|
$
|
7,000
|
|
|
$
|
6,060
|
|
|
$
|
13,060
|
|
|
$
|
3,680,138
|
|
|
$
|
3,693,198
|
|
|
December 31, 2018
|
||||||||||||||||||
|
30-89 Days
|
|
90 Days or
Greater
|
|
Total Past
Due
|
|
Current
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
2,988
|
|
|
$
|
2,281
|
|
|
$
|
5,269
|
|
|
$
|
848,337
|
|
|
$
|
853,606
|
|
Owner-occupied commercial real estate
|
563
|
|
|
600
|
|
|
1,163
|
|
|
778,651
|
|
|
779,814
|
|
|||||
Non-owner occupied commercial real estate
|
5,347
|
|
|
1,461
|
|
|
6,808
|
|
|
1,297,655
|
|
|
1,304,463
|
|
|||||
Total commercial business
|
8,898
|
|
|
4,342
|
|
|
13,240
|
|
|
2,924,643
|
|
|
2,937,883
|
|
|||||
One-to-four family residential
|
227
|
|
|
—
|
|
|
227
|
|
|
101,536
|
|
|
101,763
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
665
|
|
|
234
|
|
|
899
|
|
|
101,831
|
|
|
102,730
|
|
|||||
Five or more family residential and commercial properties
|
—
|
|
|
—
|
|
|
—
|
|
|
112,730
|
|
|
112,730
|
|
|||||
Total real estate construction and land development
|
665
|
|
|
234
|
|
|
899
|
|
|
214,561
|
|
|
215,460
|
|
|||||
Consumer
|
2,568
|
|
|
—
|
|
|
2,568
|
|
|
392,977
|
|
|
395,545
|
|
|||||
Gross loans receivable
|
$
|
12,358
|
|
|
$
|
4,576
|
|
|
$
|
16,934
|
|
|
$
|
3,633,717
|
|
|
$
|
3,650,651
|
|
|
March 31, 2019
|
||||||||||||||||||
|
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
|
$
|
4,791
|
|
|
$
|
17,844
|
|
|
$
|
22,635
|
|
|
$
|
24,051
|
|
|
$
|
2,780
|
|
Owner-occupied commercial real estate
|
463
|
|
|
5,591
|
|
|
6,054
|
|
|
6,451
|
|
|
1,347
|
|
|||||
Non-owner occupied commercial real estate
|
5,163
|
|
|
1,800
|
|
|
6,963
|
|
|
7,032
|
|
|
228
|
|
|||||
Total commercial business
|
10,417
|
|
|
25,235
|
|
|
35,652
|
|
|
37,534
|
|
|
4,355
|
|
|||||
One-to-four family residential
|
—
|
|
|
274
|
|
|
274
|
|
|
289
|
|
|
74
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
923
|
|
|
—
|
|
|
923
|
|
|
1,020
|
|
|
—
|
|
|||||
Total real estate construction and land development
|
923
|
|
|
—
|
|
|
923
|
|
|
1,020
|
|
|
—
|
|
|||||
Consumer
|
—
|
|
|
598
|
|
|
598
|
|
|
607
|
|
|
151
|
|
|||||
Total
|
$
|
11,340
|
|
|
$
|
26,107
|
|
|
$
|
37,447
|
|
|
$
|
39,450
|
|
|
$
|
4,580
|
|
|
December 31, 2018
|
||||||||||||||||||
|
Recorded
Investment With
No Specific
Valuation
Allowance
|
|
Recorded
Investment With
Specific
Valuation
Allowance
|
|
Total
Recorded
Investment
|
|
Unpaid
Contractual
Principal
Balance
|
|
Related
Specific
Valuation
Allowance
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
2,523
|
|
|
$
|
20,119
|
|
|
$
|
22,642
|
|
|
$
|
24,176
|
|
|
$
|
2,607
|
|
Owner-occupied commercial real estate
|
816
|
|
|
5,000
|
|
|
5,816
|
|
|
6,150
|
|
|
1,142
|
|
|||||
Non-owner occupied commercial real estate
|
3,352
|
|
|
2,924
|
|
|
6,276
|
|
|
6,414
|
|
|
206
|
|
|||||
Total commercial business
|
6,691
|
|
|
28,043
|
|
|
34,734
|
|
|
36,740
|
|
|
3,955
|
|
|||||
One-to-four family residential
|
—
|
|
|
279
|
|
|
279
|
|
|
293
|
|
|
76
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
899
|
|
|
—
|
|
|
899
|
|
|
1,662
|
|
|
—
|
|
|||||
Total real estate construction and land development
|
899
|
|
|
—
|
|
|
899
|
|
|
1,662
|
|
|
—
|
|
|||||
Consumer
|
—
|
|
|
527
|
|
|
527
|
|
|
538
|
|
|
139
|
|
|||||
Total
|
$
|
7,590
|
|
|
$
|
28,849
|
|
|
$
|
36,439
|
|
|
$
|
39,233
|
|
|
$
|
4,170
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Commercial business:
|
|
|
|
||||
Commercial and industrial
|
$
|
22,639
|
|
|
$
|
14,261
|
|
Owner-occupied commercial real estate
|
5,935
|
|
|
12,841
|
|
||
Non-owner occupied commercial real estate
|
6,619
|
|
|
10,358
|
|
||
Total commercial business
|
35,193
|
|
|
37,460
|
|
||
One-to-four family residential
|
277
|
|
|
297
|
|
||
Real estate construction and land development:
|
|
|
|
||||
One-to-four family residential
|
911
|
|
|
1,197
|
|
||
Five or more family residential and commercial properties
|
—
|
|
|
322
|
|
||
Total real estate construction and land development
|
911
|
|
|
1,519
|
|
||
Consumer
|
562
|
|
|
411
|
|
||
Total
|
$
|
36,943
|
|
|
$
|
39,687
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
Performing
TDRs
|
|
Nonaccrual
TDRs
|
|
Performing
TDRs
|
|
Nonaccrual
TDRs |
||||||||
|
(In thousands)
|
||||||||||||||
TDR loans
|
$
|
19,986
|
|
|
$
|
5,488
|
|
|
$
|
22,736
|
|
|
$
|
6,943
|
|
Allowance for loan losses on TDR loans
|
2,181
|
|
|
601
|
|
|
2,257
|
|
|
658
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
|
Number of
Contracts
(1)
|
|
Recorded Investment
(1)(2)
|
|
Number of
Contracts
(1)
|
|
Recorded Investment
(1)(2)
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||
Commercial and industrial
|
9
|
|
|
$
|
10,100
|
|
|
9
|
|
|
$
|
4,323
|
|
Owner-occupied commercial real estate
|
2
|
|
|
934
|
|
|
—
|
|
|
—
|
|
||
Non-owner occupied commercial real estate
|
1
|
|
|
2,112
|
|
|
1
|
|
|
2,201
|
|
||
Total commercial business
|
12
|
|
|
13,146
|
|
|
10
|
|
|
6,524
|
|
||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||
One-to-four family residential
|
2
|
|
|
665
|
|
|
—
|
|
|
—
|
|
||
Total real estate construction and land development
|
2
|
|
|
665
|
|
|
—
|
|
|
—
|
|
||
Consumer
|
6
|
|
|
122
|
|
|
3
|
|
|
78
|
|
||
Total loans modified as TDR loans
|
20
|
|
|
$
|
13,933
|
|
|
13
|
|
|
$
|
6,602
|
|
(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 months ended March 31, 2019 and 2018
.
|
(2)
|
Includes subsequent payments after modifications and reflects the balance as of period end. As the Bank did not forgive any principal or interest balance as part of the loan modification, the Bank’s recorded investment in each loan at the date of modification (pre-modification) did not change as a result of the modification (post-modification), except when the modification was the initial advance on a one-to-four family residential real estate construction and land development loan under a master guidance line. There were no advances on these types of loans during the
three months ended March 31, 2019 and 2018
.
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
|
Number of
Contracts
|
|
Recorded Investments
|
|
Number of
Contracts |
|
Recorded Investments
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||
Commercial and industrial
|
1
|
|
|
$
|
829
|
|
|
1
|
|
|
$
|
283
|
|
Owner-occupied properties
|
1
|
|
|
717
|
|
|
—
|
|
|
—
|
|
||
Non-owner occupied commercial real estate
|
1
|
|
|
601
|
|
|
1
|
|
|
75
|
|
||
Total commercial business
|
3
|
|
|
2,147
|
|
|
2
|
|
|
358
|
|
||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||
One-to-four family residential
|
—
|
|
|
—
|
|
|
2
|
|
|
838
|
|
||
Total real estate construction and land development
|
—
|
|
|
—
|
|
|
2
|
|
|
838
|
|
||
Total
|
3
|
|
|
$
|
2,147
|
|
|
4
|
|
|
$
|
1,196
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
Outstanding Principal
|
|
Recorded Investment
|
|
Outstanding Principal
|
|
Recorded Investment
|
||||||||
|
(In thousands)
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
$
|
5,521
|
|
|
$
|
2,713
|
|
|
$
|
6,319
|
|
|
$
|
3,433
|
|
Owner-occupied commercial real estate
|
7,938
|
|
|
7,483
|
|
|
7,830
|
|
|
7,215
|
|
||||
Non-owner occupied commercial real estate
|
8,245
|
|
|
6,651
|
|
|
8,685
|
|
|
7,059
|
|
||||
Total commercial business
|
21,704
|
|
|
16,847
|
|
|
22,834
|
|
|
17,707
|
|
||||
One-to-four family residential
|
3,097
|
|
|
3,251
|
|
|
3,169
|
|
|
3,315
|
|
||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||||
One-to-four family residential
|
27
|
|
|
354
|
|
|
67
|
|
|
380
|
|
||||
Five or more family residential and commercial properties
|
185
|
|
|
41
|
|
|
188
|
|
|
43
|
|
||||
Total real estate construction and land development
|
212
|
|
|
395
|
|
|
255
|
|
|
423
|
|
||||
Consumer
|
1,409
|
|
|
2,680
|
|
|
2,203
|
|
|
3,462
|
|
||||
Gross PCI loans
|
$
|
26,422
|
|
|
$
|
23,173
|
|
|
$
|
28,461
|
|
|
$
|
24,907
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Balance at the beginning of the period
|
|
$
|
9,493
|
|
|
$
|
11,224
|
|
Accretion
|
|
(581
|
)
|
|
(781
|
)
|
||
Disposal and other
|
|
(452
|
)
|
|
(1,698
|
)
|
||
Reclassification from nonaccretable difference
|
|
—
|
|
|
2,524
|
|
||
Balance at the end of the period
|
|
$
|
8,460
|
|
|
$
|
11,269
|
|
(5)
|
Allowance for Loan Losses
|
|
Balance at Beginning of Period
|
|
Charge-offs
|
|
Recoveries
|
|
Provision for Loan Losses
|
|
Balance at End of Period
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Three Months Ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
11,343
|
|
|
$
|
(103
|
)
|
|
$
|
7
|
|
|
$
|
508
|
|
|
$
|
11,755
|
|
Owner-occupied commercial real estate
|
4,898
|
|
|
—
|
|
|
3
|
|
|
355
|
|
|
5,256
|
|
|||||
Non-owner occupied commercial real estate
|
7,470
|
|
|
—
|
|
|
149
|
|
|
206
|
|
|
7,825
|
|
|||||
Total commercial business
|
23,711
|
|
|
(103
|
)
|
|
159
|
|
|
1,069
|
|
|
24,836
|
|
|||||
One-to-four family residential
|
1,203
|
|
|
(15
|
)
|
|
—
|
|
|
59
|
|
|
1,247
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
1,240
|
|
|
—
|
|
|
618
|
|
|
(436
|
)
|
|
1,422
|
|
|||||
Five or more family residential and commercial properties
|
954
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
995
|
|
|||||
Total real estate construction and land development
|
2,194
|
|
|
—
|
|
|
618
|
|
|
(395
|
)
|
|
2,417
|
|
|||||
Consumer
|
6,581
|
|
|
(586
|
)
|
|
117
|
|
|
368
|
|
|
6,480
|
|
|||||
Unallocated
|
1,353
|
|
|
—
|
|
|
—
|
|
|
(181
|
)
|
|
1,172
|
|
|||||
Total
|
$
|
35,042
|
|
|
$
|
(704
|
)
|
|
$
|
894
|
|
|
$
|
920
|
|
|
$
|
36,152
|
|
|
Loans Individually Evaluated for Impairment
|
|
Loans Collectively Evaluated for Impairment
|
|
PCI Loans
|
|
Total Allowance for Loan Losses
|
||||||||
|
(In thousands)
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
$
|
2,780
|
|
|
$
|
8,227
|
|
|
$
|
748
|
|
|
$
|
11,755
|
|
Owner-occupied commercial real estate
|
1,347
|
|
|
3,266
|
|
|
643
|
|
|
5,256
|
|
||||
Non-owner occupied commercial real estate
|
228
|
|
|
7,013
|
|
|
584
|
|
|
7,825
|
|
||||
Total commercial business
|
4,355
|
|
|
18,506
|
|
|
1,975
|
|
|
24,836
|
|
||||
One-to-four family residential
|
74
|
|
|
1,061
|
|
|
112
|
|
|
1,247
|
|
||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||||
One-to-four family residential
|
—
|
|
|
1,222
|
|
|
200
|
|
|
1,422
|
|
||||
Five or more family residential and commercial properties
|
—
|
|
|
916
|
|
|
79
|
|
|
995
|
|
||||
Total real estate construction and land development
|
—
|
|
|
2,138
|
|
|
279
|
|
|
2,417
|
|
||||
Consumer
|
151
|
|
|
5,897
|
|
|
432
|
|
|
6,480
|
|
||||
Unallocated
|
—
|
|
|
1,172
|
|
|
—
|
|
|
1,172
|
|
||||
Total
|
$
|
4,580
|
|
|
$
|
28,774
|
|
|
$
|
2,798
|
|
|
$
|
36,152
|
|
|
Loans Individually Evaluated for Impairment
|
|
Loans Collectively Evaluated for Impairment
|
|
PCI Loans
|
|
Total Gross Loans Receivable
|
||||||||
|
(In thousands)
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
$
|
22,635
|
|
|
$
|
813,055
|
|
|
$
|
2,713
|
|
|
$
|
838,403
|
|
Owner-occupied commercial real estate
|
6,054
|
|
|
771,779
|
|
|
7,483
|
|
|
785,316
|
|
||||
Non-owner occupied commercial real estate
|
6,963
|
|
|
1,321,982
|
|
|
6,651
|
|
|
1,335,596
|
|
||||
Total commercial business
|
35,652
|
|
|
2,906,816
|
|
|
16,847
|
|
|
2,959,315
|
|
||||
One-to-four family residential
|
274
|
|
|
102,977
|
|
|
3,251
|
|
|
106,502
|
|
||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||||
One-to-four family residential
|
923
|
|
|
109,422
|
|
|
354
|
|
|
110,699
|
|
||||
Five or more family residential and commercial properties
|
—
|
|
|
126,338
|
|
|
41
|
|
|
126,379
|
|
||||
Total real estate construction and land development
|
923
|
|
|
235,760
|
|
|
395
|
|
|
237,078
|
|
||||
Consumer
|
598
|
|
|
387,025
|
|
|
2,680
|
|
|
390,303
|
|
||||
Total
|
$
|
37,447
|
|
|
$
|
3,632,578
|
|
|
$
|
23,173
|
|
|
$
|
3,693,198
|
|
|
Balance at Beginning of Period
|
|
Charge-offs
|
|
Recoveries
|
|
Provision for Loan Losses
|
|
Balance at End of Period
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and industrial
|
$
|
9,910
|
|
|
$
|
(81
|
)
|
|
$
|
499
|
|
|
$
|
(385
|
)
|
|
$
|
9,943
|
|
Owner-occupied commercial real estate
|
3,992
|
|
|
—
|
|
|
2
|
|
|
1,046
|
|
|
5,040
|
|
|||||
Non-owner occupied commercial real estate
|
8,097
|
|
|
—
|
|
|
—
|
|
|
(508
|
)
|
|
7,589
|
|
|||||
Total commercial business
|
21,999
|
|
|
(81
|
)
|
|
501
|
|
|
153
|
|
|
22,572
|
|
|||||
One-to-four family residential
|
1,056
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
1,083
|
|
|||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
||||||||||
One-to-four family residential
|
862
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|
941
|
|
|||||
Five or more family residential and commercial properties
|
1,190
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|
1,115
|
|
|||||
Total real estate construction and land development
|
2,052
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
2,056
|
|
|||||
Consumer
|
6,081
|
|
|
(485
|
)
|
|
88
|
|
|
370
|
|
|
6,054
|
|
|||||
Unallocated
|
898
|
|
|
—
|
|
|
—
|
|
|
598
|
|
|
1,496
|
|
|||||
Total
|
$
|
32,086
|
|
|
$
|
(566
|
)
|
|
$
|
589
|
|
|
$
|
1,152
|
|
|
$
|
33,261
|
|
|
Loans Individually Evaluated for Impairment
|
|
Loans Collectively Evaluated for Impairment
|
|
PCI Loans
|
|
Total Allowance for Loan Losses
|
||||||||
|
(In thousands)
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
$
|
2,607
|
|
|
$
|
7,913
|
|
|
$
|
823
|
|
|
$
|
11,343
|
|
Owner-occupied commercial real estate
|
1,142
|
|
|
3,063
|
|
|
693
|
|
|
4,898
|
|
||||
Non-owner occupied commercial real estate
|
206
|
|
|
6,630
|
|
|
634
|
|
|
7,470
|
|
||||
Total commercial business
|
3,955
|
|
|
17,606
|
|
|
2,150
|
|
|
23,711
|
|
||||
One-to-four family residential
|
76
|
|
|
1,015
|
|
|
112
|
|
|
1,203
|
|
||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||||
One-to-four family residential
|
—
|
|
|
1,040
|
|
|
200
|
|
|
1,240
|
|
||||
Five or more family residential and commercial properties
|
—
|
|
|
875
|
|
|
79
|
|
|
954
|
|
||||
Total real estate construction and land development
|
—
|
|
|
1,915
|
|
|
279
|
|
|
2,194
|
|
||||
Consumer
|
139
|
|
|
5,965
|
|
|
477
|
|
|
6,581
|
|
||||
Unallocated
|
—
|
|
|
1,353
|
|
|
—
|
|
|
1,353
|
|
||||
Total
|
$
|
4,170
|
|
|
$
|
27,854
|
|
|
$
|
3,018
|
|
|
$
|
35,042
|
|
|
Loans Individually Evaluated for Impairment
|
|
Loans Collectively Evaluated for Impairment
|
|
PCI Loans
|
|
Total Gross Loans Receivable
|
||||||||
|
(In thousands)
|
||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial
|
$
|
22,642
|
|
|
$
|
827,531
|
|
|
$
|
3,433
|
|
|
$
|
853,606
|
|
Owner-occupied commercial real estate
|
5,816
|
|
|
766,783
|
|
|
7,215
|
|
|
779,814
|
|
||||
Non-owner occupied commercial real estate
|
6,276
|
|
|
1,291,128
|
|
|
7,059
|
|
|
1,304,463
|
|
||||
Total commercial business
|
34,734
|
|
|
2,885,442
|
|
|
17,707
|
|
|
2,937,883
|
|
||||
One-to-four family residential
|
279
|
|
|
98,169
|
|
|
3,315
|
|
|
101,763
|
|
||||
Real estate construction and land development:
|
|
|
|
|
|
|
|
||||||||
One-to-four family residential
|
899
|
|
|
101,451
|
|
|
380
|
|
|
102,730
|
|
||||
Five or more family residential and commercial properties
|
—
|
|
|
112,687
|
|
|
43
|
|
|
112,730
|
|
||||
Total real estate construction and land development
|
899
|
|
|
214,138
|
|
|
423
|
|
|
215,460
|
|
||||
Consumer
|
527
|
|
|
391,556
|
|
|
3,462
|
|
|
395,545
|
|
||||
Total
|
$
|
36,439
|
|
|
$
|
3,589,305
|
|
|
$
|
24,907
|
|
|
$
|
3,650,651
|
|
(6)
|
Other Real Estate Owned
|
|
Three Months Ended
March 31, |
||
|
2019
|
||
|
(In thousands)
|
||
Balance at the beginning of the period
|
$
|
1,983
|
|
Additions
|
—
|
|
|
Additions from acquisitions
|
—
|
|
|
Proceeds from dispositions
|
(79
|
)
|
|
Gain on sales, net
|
—
|
|
|
Balance at the end of the period
|
$
|
1,904
|
|
(7)
|
Goodwill and Other Intangible Assets
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Balance at the beginning of the period
|
|
$
|
240,939
|
|
|
$
|
119,029
|
|
Additions as a result of acquisitions
(1)
|
|
—
|
|
|
68,520
|
|
||
Balance at the end of the period
|
|
$
|
240,939
|
|
|
$
|
187,549
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Balance at the beginning of the period
|
|
$
|
20,614
|
|
|
$
|
6,088
|
|
Additions as a result of acquisitions
(1)
|
|
—
|
|
|
11,270
|
|
||
Amortization
|
|
(1,025
|
)
|
|
(795
|
)
|
||
Balance at the end of the period
|
|
$
|
19,589
|
|
|
$
|
16,563
|
|
(8)
|
Junior Subordinated Debentures
|
|
|
Three Months Ended March 31,
|
||||
|
|
2019
|
|
2018
|
||
Weighted average rate
(1)
|
|
7.06
|
%
|
|
5.73
|
%
|
(1)
|
The weighted average rate includes the accretion of the discount established at the merger date which is amortized over the life of the trust preferred securities.
|
(9)
|
Repurchase Agreements
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(In thousands)
|
||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
4,914
|
|
|
$
|
4,878
|
|
Mortgage-backed securities and collateralized mortgage obligations
(1)
:
|
|
|
|
||||
Residential
|
9,646
|
|
|
9,335
|
|
||
Commercial
|
10,363
|
|
|
17,274
|
|
||
Total repurchase agreements
|
$
|
24,923
|
|
|
$
|
31,487
|
|
(10)
|
Other Borrowings
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
FHLB Advances:
|
|
|
|
||||
Average balance during the period
|
$
|
1,849
|
|
|
$
|
35,733
|
|
Maximum month-end balance during the period
|
$
|
25,000
|
|
|
$
|
37,200
|
|
Weighted average rate during the period
|
3.29
|
%
|
|
1.70
|
%
|
(11)
|
Derivative Financial Instruments
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Notional Amounts
|
|
Estimated Fair Value
|
|
Notional Amounts
|
|
Estimated Fair Value
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Non-hedging interest rate derivatives
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap asset
(1)
|
|
$
|
170,714
|
|
|
$
|
5,285
|
|
|
$
|
171,798
|
|
|
$
|
5,095
|
|
Interest rate swap liability
(1)
|
|
170,714
|
|
|
(5,285
|
)
|
|
171,798
|
|
|
(5,095
|
)
|
(12)
|
Stockholders’ Equity
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Net income:
|
|
|
|
||||
Net income
|
$
|
16,552
|
|
|
$
|
9,087
|
|
Dividends and undistributed earnings allocated to participating securities
|
(52
|
)
|
|
(51
|
)
|
||
Net income allocated to common shareholders
|
$
|
16,500
|
|
|
$
|
9,036
|
|
Basic:
|
|
|
|
||||
Weighted average common shares outstanding
|
36,881,499
|
|
|
33,332,645
|
|
||
Restricted stock awards
|
(55,967
|
)
|
|
(127,099
|
)
|
||
Total basic weighted average common shares outstanding
|
36,825,532
|
|
|
33,205,546
|
|
||
Diluted:
|
|
|
|
||||
Basic weighted average common shares outstanding
|
36,825,532
|
|
|
33,205,546
|
|
||
Effect of potentially dilutive common shares
(1)
|
185,108
|
|
|
142,556
|
|
||
Total diluted weighted average common shares outstanding
|
37,010,640
|
|
|
33,348,102
|
|
(1)
|
Represents the effect of the assumed exercise of stock options and vesting of restricted stock awards and units.
|
Declared
|
|
Cash Dividend per Share
|
|
Record Date
|
|
Paid Date
|
|
|
January 24, 2018
|
|
$0.15
|
|
February 7, 2018
|
|
February 21, 2018
|
|
|
April 25, 2018
|
|
$0.15
|
|
May 10, 2018
|
|
May 24, 2018
|
|
|
July 24, 2018
|
|
$0.15
|
|
August 9, 2018
|
|
August 23, 2018
|
|
|
October 24, 2018
|
|
$0.17
|
|
November 7, 2018
|
|
November 21, 2018
|
|
|
October 24, 2018
|
|
$0.10
|
|
November 7, 2018
|
|
November 21, 2018
|
|
*
|
January 23, 2019
|
|
$0.18
|
|
February 7, 2019
|
|
February 21, 2019
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Repurchased shares to pay withholding taxes
(1)
|
25,854
|
|
|
45,426
|
|
||
Stock repurchase to pay withholding taxes average share price
|
$
|
31.01
|
|
|
$
|
31.66
|
|
(13)
|
Accumulated Other Comprehensive Income (Loss)
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Balance of AOCI at the beginning of period
|
$
|
(7,455
|
)
|
|
$
|
(1,298
|
)
|
Other comprehensive income (loss) before reclassification
|
8,028
|
|
|
(7,516
|
)
|
||
Amounts reclassified from AOCI for gain on sale of investment securities included in net income
|
(12
|
)
|
|
(27
|
)
|
||
Net current period other comprehensive income (loss)
|
8,016
|
|
|
(7,543
|
)
|
||
ASU 2016-01 implementation
|
—
|
|
|
(93
|
)
|
||
Balance of AOCI at the end of period
|
$
|
561
|
|
|
$
|
(8,934
|
)
|
(14)
|
Fair Value Measurements
|
|
March 31, 2019
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Investment securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
99,254
|
|
|
$
|
16,001
|
|
|
$
|
83,253
|
|
|
$
|
—
|
|
Municipal securities
|
146,862
|
|
|
—
|
|
|
146,862
|
|
|
—
|
|
||||
Mortgage-backed securities and collateralized mortgage obligations:
|
|
|
|
|
|
|
|
||||||||
Residential
|
346,858
|
|
|
—
|
|
|
346,858
|
|
|
—
|
|
||||
Commercial
|
341,628
|
|
|
—
|
|
|
341,628
|
|
|
—
|
|
||||
Corporate obligations
|
25,887
|
|
|
—
|
|
|
25,887
|
|
|
—
|
|
||||
Other asset-backed securities
|
24,520
|
|
|
—
|
|
|
24,520
|
|
|
—
|
|
||||
Total investment securities available for sale
|
985,009
|
|
|
16,001
|
|
|
969,008
|
|
|
—
|
|
||||
Equity Security
|
135
|
|
|
135
|
|
|
—
|
|
|
—
|
|
||||
Derivative assets - interest rate swaps
|
5,285
|
|
|
—
|
|
|
5,285
|
|
|
—
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities - interest rate swaps
|
$
|
5,285
|
|
|
$
|
—
|
|
|
$
|
5,285
|
|
|
$
|
—
|
|
|
December 31, 2018
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Investment securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and U.S. Government-sponsored agencies
|
$
|
101,603
|
|
|
$
|
15,936
|
|
|
$
|
85,667
|
|
|
$
|
—
|
|
Municipal securities
|
158,864
|
|
|
—
|
|
|
158,864
|
|
|
—
|
|
||||
Mortgage-backed securities and collateralized mortgage obligations:
|
|
|
|
|
|
|
|
||||||||
Residential
|
331,602
|
|
|
—
|
|
|
331,602
|
|
|
—
|
|
||||
Commercial
|
333,761
|
|
|
—
|
|
|
333,761
|
|
|
—
|
|
||||
Corporate obligations
|
25,563
|
|
|
—
|
|
|
25,563
|
|
|
—
|
|
||||
Other asset-backed securities
|
24,702
|
|
|
—
|
|
|
24,702
|
|
|
—
|
|
||||
Total investment securities available for sale
|
976,095
|
|
|
15,936
|
|
|
960,159
|
|
|
—
|
|
||||
Equity Security
|
114
|
|
|
114
|
|
|
—
|
|
|
—
|
|
||||
Derivative assets - interest rate swaps
|
5,095
|
|
|
—
|
|
|
5,095
|
|
|
—
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities - interest rate swaps
|
$
|
5,095
|
|
|
$
|
—
|
|
|
$
|
5,095
|
|
|
$
|
—
|
|
|
Basis
(1)
|
|
Fair Value at March 31, 2019
|
|
|
||||||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Net Losses (Gains)
Recorded in
Earnings
During
the Three Months Ended March 31, 2019
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial and industrial
|
$
|
109
|
|
|
$
|
98
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
98
|
|
|
$
|
(39
|
)
|
Total commercial business
|
109
|
|
|
98
|
|
|
—
|
|
|
—
|
|
|
98
|
|
|
(39
|
)
|
||||||
Consumer
|
9
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||||
Total assets measured at fair value on a nonrecurring basis
|
$
|
118
|
|
|
$
|
105
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
105
|
|
|
$
|
(39
|
)
|
(1)
|
Basis represents the unpaid principal balance of impaired loans.
|
|
Basis
(1)
|
|
Fair Value at December 31, 2018
|
|
|
||||||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Net Losses
Recorded in
Earnings
During
the Three Months Ended March 31, 2018
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial and industrial
|
$
|
117
|
|
|
$
|
107
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
107
|
|
|
$
|
—
|
|
Non-owner occupied commercial real estate
|
1,378
|
|
|
1,102
|
|
|
—
|
|
|
—
|
|
|
1,102
|
|
|
—
|
|
||||||
Total commercial business
|
1,495
|
|
|
1,209
|
|
|
—
|
|
|
—
|
|
|
1,209
|
|
|
—
|
|
||||||
Consumer
|
9
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||||
Total assets measured at fair value on a nonrecurring basis
|
$
|
1,504
|
|
|
$
|
1,216
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,216
|
|
|
$
|
—
|
|
(1)
|
Basis represents the unpaid principal balance of impaired loans.
|
|
March 31, 2019
|
||||||||
|
Fair
Value
|
|
Valuation
Technique(s)
|
|
Unobservable Input(s)
|
|
Range of Inputs; Weighted
Average
|
||
|
(Dollars in thousands)
|
||||||||
Impaired loans
|
$
|
105
|
|
|
Market approach
|
|
Adjustment for differences between the comparable sales
|
|
N/A
(1)
|
(1)
|
Quantitative disclosures are not provided for collateral-dependent impaired loans because there were no adjustments made to the appraisal or stated values during the current period.
|
|
December 31, 2018
|
||||||||
|
Fair
Value
|
|
Valuation
Technique(s)
|
|
Unobservable Input(s)
|
|
Range of Inputs; Weighted
Average
|
||
|
(Dollars in thousands)
|
||||||||
Impaired loans
|
$
|
1,216
|
|
|
Market approach
|
|
Adjustment for differences between the comparable sales
|
|
10.4% - (37.3%); (10.9%)
|
|
March 31, 2019
|
||||||||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Fair Value Measurements Using:
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||||
|
(In thousands)
|
||||||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
111,170
|
|
|
$
|
111,170
|
|
|
$
|
111,170
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment securities available for sale
|
985,009
|
|
|
985,009
|
|
|
16,001
|
|
|
969,008
|
|
|
—
|
|
|||||
Loans held for sale
|
2,956
|
|
|
3,042
|
|
|
—
|
|
|
3,042
|
|
|
—
|
|
|||||
Total loans receivable, net
|
3,660,279
|
|
|
3,668,110
|
|
|
—
|
|
|
—
|
|
|
3,668,110
|
|
|||||
Accrued interest receivable
|
15,621
|
|
|
15,621
|
|
|
93
|
|
|
3,971
|
|
|
11,557
|
|
|||||
Derivative assets - interest rate swaps
|
5,285
|
|
|
5,285
|
|
|
—
|
|
|
5,285
|
|
|
—
|
|
|||||
Equity security
|
135
|
|
|
135
|
|
|
135
|
|
|
—
|
|
|
—
|
|
|||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts
|
$
|
3,872,589
|
|
|
$
|
3,872,589
|
|
|
$
|
3,872,589
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Certificate of deposit accounts
|
521,126
|
|
|
525,045
|
|
|
—
|
|
|
525,045
|
|
|
—
|
|
|||||
Securities sold under agreement to repurchase
|
24,923
|
|
|
24,923
|
|
|
24,923
|
|
|
—
|
|
|
—
|
|
|||||
Junior subordinated debentures
|
20,375
|
|
|
20,250
|
|
|
—
|
|
|
—
|
|
|
20,250
|
|
|||||
Accrued interest payable
|
409
|
|
|
409
|
|
|
91
|
|
|
267
|
|
|
51
|
|
|||||
Derivative liabilities - interest rate swaps
|
5,285
|
|
|
5,285
|
|
|
—
|
|
|
5,285
|
|
|
—
|
|
|
December 31, 2018
|
||||||||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Fair Value Measurements Using:
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||||
|
(In thousands)
|
||||||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
161,910
|
|
|
$
|
161,910
|
|
|
$
|
161,910
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment securities available for sale
|
976,095
|
|
|
976,095
|
|
|
15,936
|
|
|
960,159
|
|
|
—
|
|
|||||
Loans held for sale
|
1,555
|
|
|
1,605
|
|
|
—
|
|
|
1,605
|
|
|
—
|
|
|||||
Loans receivable, net of allowance for loan losses
|
3,619,118
|
|
|
3,617,857
|
|
|
—
|
|
|
—
|
|
|
3,617,857
|
|
|||||
Accrued interest receivable
|
15,403
|
|
|
15,403
|
|
|
68
|
|
|
4,091
|
|
|
11,244
|
|
|||||
Derivative assets - interest rate swaps
|
5,095
|
|
|
5,095
|
|
|
—
|
|
|
5,095
|
|
|
—
|
|
|||||
Equity security
|
114
|
|
|
114
|
|
|
114
|
|
|
—
|
|
|
—
|
|
|||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts
|
$
|
3,965,510
|
|
|
$
|
3,965,510
|
|
|
$
|
3,965,510
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Certificate of deposit accounts
|
466,892
|
|
|
470,222
|
|
|
—
|
|
|
470,222
|
|
|
—
|
|
|||||
Federal Home Loan Bank advances
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Securities sold under agreement to repurchase
|
31,487
|
|
|
31,487
|
|
|
31,487
|
|
|
—
|
|
|
—
|
|
|||||
Junior subordinated debentures
|
20,302
|
|
|
20,500
|
|
|
—
|
|
|
—
|
|
|
20,500
|
|
|||||
Accrued interest payable
|
191
|
|
|
191
|
|
|
63
|
|
|
81
|
|
|
47
|
|
|||||
Derivative liabilities - interest rate swaps
|
5,095
|
|
|
5,095
|
|
|
—
|
|
|
5,095
|
|
|
—
|
|
(15)
|
Cash Requirement
|
(16)
|
Leases
|
(1)
|
Income related to sub-lease activity is immaterial for the Company and not presented herein.
|
|
Three Months Ended March 31, 2019
|
||
|
(Dollars in thousands)
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
1,187
|
|
ROU assets obtained in exchange for lease liabilities
|
$
|
335
|
|
Weighted average remaining lease term of operating leases, in years
|
8.48
|
|
|
Weighted average discount rate of operating leases
|
3.33
|
%
|
|
Year Ending December 31,
|
||
|
(In thousands)
|
||
2019
|
$
|
3,667
|
|
2020
|
4,581
|
|
|
2021
|
4,155
|
|
|
2022
|
3,730
|
|
|
2023
|
3,738
|
|
|
Thereafter
|
14,215
|
|
|
Total lease payments
|
34,086
|
|
|
Implied interest
|
(4,542
|
)
|
|
Right of use liability
|
$
|
29,544
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended March 31,
|
||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
(1)
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/ Rate (1) |
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
Interest Earning Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total loans receivable, net
(2) (3)
|
$
|
3,622,494
|
|
|
$
|
46,699
|
|
|
5.23
|
%
|
|
$
|
3,150,869
|
|
|
$
|
38,159
|
|
|
4.91
|
%
|
Taxable securities
|
820,981
|
|
|
5,823
|
|
|
2.88
|
|
|
590,623
|
|
|
3,529
|
|
|
2.42
|
|
||||
Nontaxable securities
(3)
|
149,825
|
|
|
950
|
|
|
2.57
|
|
|
223,631
|
|
|
1,341
|
|
|
2.43
|
|
||||
Other interest earning assets
|
55,959
|
|
|
356
|
|
|
2.58
|
|
|
53,597
|
|
|
218
|
|
|
1.65
|
|
||||
Total interest earning assets
|
4,649,259
|
|
|
53,828
|
|
|
4.70
|
%
|
|
4,018,720
|
|
|
43,247
|
|
|
4.36
|
%
|
||||
Noninterest earning assets
|
668,066
|
|
|
|
|
|
|
534,865
|
|
|
|
|
|
||||||||
Total assets
|
$
|
5,317,325
|
|
|
|
|
|
|
$
|
4,553,585
|
|
|
|
|
|
||||||
Interest Bearing Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Certificates of deposit
|
$
|
502,153
|
|
|
$
|
1,440
|
|
|
1.16
|
%
|
|
$
|
423,569
|
|
|
$
|
760
|
|
|
0.73
|
%
|
Savings accounts
|
507,670
|
|
|
674
|
|
|
0.54
|
|
|
506,158
|
|
|
416
|
|
|
0.33
|
|
||||
Interest bearing demand and money market accounts
|
2,051,046
|
|
|
1,489
|
|
|
0.29
|
|
|
1,745,795
|
|
|
784
|
|
|
0.18
|
|
||||
Total interest bearing deposits
|
3,060,869
|
|
|
3,603
|
|
|
0.48
|
|
|
2,675,522
|
|
|
1,960
|
|
|
0.30
|
|
||||
FHLB advances and other borrowings
|
1,849
|
|
|
15
|
|
|
3.29
|
|
|
35,733
|
|
|
150
|
|
|
1.70
|
|
||||
Securities sold under agreement to repurchase
|
33,055
|
|
|
47
|
|
|
0.58
|
|
|
30,265
|
|
|
17
|
|
|
0.23
|
|
||||
Junior subordinated debentures
|
20,328
|
|
|
354
|
|
|
7.06
|
|
|
20,035
|
|
|
283
|
|
|
5.73
|
|
||||
Total interest bearing liabilities
|
3,116,101
|
|
|
4,019
|
|
|
0.52
|
%
|
|
2,761,555
|
|
|
2,410
|
|
|
0.35
|
%
|
||||
Demand and other noninterest bearing deposits
|
1,332,223
|
|
|
|
|
|
|
1,113,286
|
|
|
|
|
|
||||||||
Other noninterest bearing liabilities
|
102,550
|
|
|
|
|
|
|
63,770
|
|
|
|
|
|
||||||||
Stockholders’ equity
|
766,451
|
|
|
|
|
|
|
614,974
|
|
|
|
|
|
||||||||
Total liabilities and stockholders’ equity
|
$
|
5,317,325
|
|
|
|
|
|
|
$
|
4,553,585
|
|
|
|
|
|
||||||
Net interest income
|
|
|
$
|
49,809
|
|
|
|
|
|
|
$
|
40,837
|
|
|
|
||||||
Net interest spread
|
|
|
|
|
4.18
|
%
|
|
|
|
|
|
4.01
|
%
|
||||||||
Net interest margin
|
|
|
|
|
4.34
|
%
|
|
|
|
|
|
4.12
|
%
|
||||||||
Average interest earning assets to average interest bearing liabilities
|
|
|
|
|
149.20
|
%
|
|
|
|
|
|
145.52
|
%
|
(1)
|
Annualized
|
(2)
|
The average loan balances presented in the table are net of allowances for loan losses. Nonaccrual loans have been included in the table as loans carrying a zero yield.
|
(3)
|
Yields on tax-exempt securities and loans have not been stated on a tax-equivalent basis.
|
(1)
|
As of the date of completion of each merger and acquisition transaction, purchased loans were recorded at their estimated fair value, including our estimate of future expected cash flows until the ultimate resolution of these credits. The difference between the contractual loan balance and the fair value represents the purchased discount. The purchased discount is accreted into income over the estimated remaining life of the loan or pool of loans, based upon results of the quarterly cash flow re-estimation. The incremental accretion income represents the amount of income recorded on the purchased loans in excess of the contractual stated interest rate in the individual loan notes.
|
(2)
|
For additional information, see "Non-GAAP Financial Information."
|
|
|
Three Months Ended March 31,
|
||||
|
|
2019
|
|
2018
|
||
Net interest margin (GAAP)
|
|
4.34
|
%
|
|
4.12
|
%
|
Exclude impact on net interest margin from incremental accretion on purchased loans
(1)
|
|
0.12
|
|
|
0.16
|
|
Net interest margin, excluding incremental accretion on purchased loans (non-GAAP)
(1)(2)
|
|
4.22
|
%
|
|
3.96
|
%
|
(1)
|
As of the date of completion of each merger and acquisition transaction, purchased loans were recorded at their estimated fair value, including our estimate of future expected cash flows until the ultimate resolution of these credits. The difference between the contractual loan balance and the fair value represents the purchased discount. The purchased discount is accreted into income over the estimated remaining life of the loan or pool of loans, based upon results of the quarterly cash flow re-estimation. The incremental accretion income represents the amount of income recorded on the purchased loans in excess of the contractual stated interest rate in the individual loan notes.
|
(2)
|
For additional information, see "Non-GAAP Financial Information."
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Service charges and other fees
|
$
|
4,485
|
|
|
$
|
4,543
|
|
|
$
|
(58
|
)
|
|
(1.3
|
)%
|
Gain on sale of investment securities, net
|
15
|
|
|
35
|
|
|
(20
|
)
|
|
(57.1
|
)
|
|||
Gain on sale of loans, net
|
252
|
|
|
874
|
|
|
(622
|
)
|
|
(71.2
|
)
|
|||
Interest rate swap fees
|
—
|
|
|
51
|
|
|
(51
|
)
|
|
(100.0
|
)
|
|||
Other income
|
2,656
|
|
|
2,045
|
|
|
611
|
|
|
29.9
|
|
|||
Total noninterest income
|
$
|
7,408
|
|
|
$
|
7,548
|
|
|
$
|
(140
|
)
|
|
(1.9
|
)%
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Gain on sale of mortgage loans, net
|
$
|
252
|
|
|
$
|
652
|
|
|
$
|
(400
|
)
|
|
(61.3
|
)%
|
Gain on sale of guaranteed portion of SBA loans, net
|
—
|
|
|
222
|
|
|
(222
|
)
|
|
(100.0
|
)
|
|||
Gain on sale of loans, net
|
$
|
252
|
|
|
$
|
874
|
|
|
$
|
(622
|
)
|
|
(71.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
Percentage Change
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Compensation and employee benefits
|
$
|
21,914
|
|
|
$
|
21,367
|
|
|
$
|
547
|
|
|
2.6
|
%
|
Occupancy and equipment
|
5,458
|
|
|
4,627
|
|
|
831
|
|
|
18.0
|
|
|||
Data processing
|
2,173
|
|
|
2,605
|
|
|
(432
|
)
|
|
(16.6
|
)
|
|||
Marketing
|
1,098
|
|
|
808
|
|
|
290
|
|
|
35.9
|
|
|||
Professional services
|
1,173
|
|
|
2,837
|
|
|
(1,664
|
)
|
|
(58.7
|
)
|
|||
State and local taxes
|
798
|
|
|
688
|
|
|
110
|
|
|
16.0
|
|
|||
Federal deposit insurance premium
|
285
|
|
|
355
|
|
|
(70
|
)
|
|
(19.7
|
)
|
|||
Other real estate owned, net
|
86
|
|
|
—
|
|
|
86
|
|
|
N/A
|
|
|||
Amortization of intangible assets
|
1,025
|
|
|
795
|
|
|
230
|
|
|
28.9
|
|
|||
Other expense
|
2,515
|
|
|
2,665
|
|
|
(150
|
)
|
|
(5.6
|
)
|
|||
Total noninterest expense
|
$
|
36,525
|
|
|
$
|
36,747
|
|
|
$
|
(222
|
)
|
|
(0.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
|
|
(Dollars in thousands)
|
||||||
Net interest income and interest and fees on loans:
|
||||||||
Net interest income (GAAP)
|
|
$
|
49,809
|
|
|
$
|
40,837
|
|
Exclude incremental accretion on purchased loans
|
|
1,373
|
|
|
1,632
|
|
||
Adjusted net interest income (non-GAAP)
|
|
$
|
48,436
|
|
|
$
|
39,205
|
|
|
|
|
|
|
||||
Average total interest earning assets, net
|
|
$
|
4,649,259
|
|
|
$
|
4,018,720
|
|
Net interest margin, annualized (GAAP)
|
|
4.34
|
%
|
|
4.12
|
%
|
||
Net interest margin, excluding incremental accretion on purchased loans, annualized (non-GAAP)
|
|
4.22
|
%
|
|
3.96
|
%
|
||
|
|
|
|
|
||||
Interest and fees on loans (GAAP)
|
|
$
|
46,699
|
|
|
$
|
38,159
|
|
Exclude incremental accretion on purchased loans
|
|
1,373
|
|
|
1,632
|
|
||
Adjusted interest and fees on loans (non-GAAP)
|
|
$
|
45,326
|
|
|
$
|
36,527
|
|
|
|
|
|
|
||||
Average total loans receivable, net
|
|
$
|
3,622,494
|
|
|
$
|
3,150,869
|
|
Loan yield, annualized (GAAP)
|
|
5.23
|
%
|
|
4.91
|
%
|
||
Loan yield, excluding incremental accretion on purchased loans, annualized (non-GAAP)
|
|
5.08
|
%
|
|
4.70
|
%
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
Change
|
|
% Change
|
|||||||
|
|
(Dollars in thousands)
|
|||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|||||||
Cash and cash equivalents
|
|
$
|
111,170
|
|
|
$
|
161,910
|
|
|
$
|
(50,740
|
)
|
|
(31.3
|
)%
|
Investment securities available for sale, at fair value
|
|
985,009
|
|
|
976,095
|
|
|
8,914
|
|
|
0.9
|
|
|||
Loans held for sale
|
|
2,956
|
|
|
1,555
|
|
|
1,401
|
|
|
90.1
|
|
|||
Total loans receivable, net
|
|
3,660,279
|
|
|
3,619,118
|
|
|
41,161
|
|
|
1.1
|
|
|||
Other real estate owned
|
|
1,904
|
|
|
1,983
|
|
|
(79
|
)
|
|
(4.0
|
)
|
|||
Premises and equipment, net
|
|
80,130
|
|
|
81,100
|
|
|
(970
|
)
|
|
(1.2
|
)
|
|||
Federal Home Loan Bank stock, at cost
|
|
7,377
|
|
|
6,076
|
|
|
1,301
|
|
|
21.4
|
|
|||
Bank owned life insurance
|
|
94,099
|
|
|
93,612
|
|
|
487
|
|
|
0.5
|
|
|||
Accrued interest receivable
|
|
15,621
|
|
|
15,403
|
|
|
218
|
|
|
1.4
|
|
|||
Prepaid expenses and other assets
|
|
123,026
|
|
|
98,522
|
|
|
24,504
|
|
|
24.9
|
|
|||
Other intangible assets, net
|
|
19,589
|
|
|
20,614
|
|
|
(1,025
|
)
|
|
(5.0
|
)
|
|||
Goodwill
|
|
240,939
|
|
|
240,939
|
|
|
—
|
|
|
—
|
|
|||
Total assets
|
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
|
$
|
25,172
|
|
|
0.5
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Liabilities
|
|
|
|
|
|
|
|
|
|||||||
Deposits
|
|
$
|
4,393,715
|
|
|
$
|
4,432,402
|
|
|
$
|
(38,687
|
)
|
|
(0.9
|
)%
|
Federal Home Loan Bank advances
|
|
25,000
|
|
|
—
|
|
|
25,000
|
|
|
100
|
|
|||
Junior subordinated debentures
|
|
20,375
|
|
|
20,302
|
|
|
73
|
|
|
0.4
|
|
|||
Securities sold under agreement to repurchase
|
|
24,923
|
|
|
31,487
|
|
|
(6,564
|
)
|
|
(20.8
|
)
|
|||
Accrued expenses and other liabilities
|
|
99,895
|
|
|
72,013
|
|
|
27,882
|
|
|
38.7
|
|
|||
Total liabilities
|
|
4,563,908
|
|
|
4,556,204
|
|
|
7,704
|
|
|
0.2
|
|
|||
Stockholders' equity
|
|
|
|
|
|
|
|
|
|||||||
Common stock
|
|
591,767
|
|
|
591,806
|
|
|
(39
|
)
|
|
—
|
|
|||
Retained earnings
|
|
185,863
|
|
|
176,372
|
|
|
9,491
|
|
|
5.4
|
|
|||
Accumulated other comprehensive gain (loss), net
|
|
561
|
|
|
(7,455
|
)
|
|
8,016
|
|
|
(107.5
|
)
|
|||
Total stockholders' equity
|
|
778,191
|
|
|
760,723
|
|
|
17,468
|
|
|
2.3
|
|
|||
Total liabilities and stockholders' equity
|
|
$
|
5,342,099
|
|
|
$
|
5,316,927
|
|
|
$
|
25,172
|
|
|
0.5
|
%
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|
|||||||||||||||
|
Balance
(1)
|
|
% of Total
(2)
|
|
Balance
(1)
|
|
% of Total
(2)
|
|
Change
|
|
%of Balance Change
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Commercial business:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial and industrial
|
$
|
838,403
|
|
|
22.7
|
%
|
|
$
|
853,606
|
|
|
23.4
|
%
|
|
$
|
(15,203
|
)
|
|
(1.8
|
)%
|
Owner-occupied commercial real estate
|
785,316
|
|
|
21.2
|
|
|
779,814
|
|
|
21.3
|
|
|
5,502
|
|
|
0.7
|
|
|||
Non-owner occupied commercial real estate
|
1,335,596
|
|
|
36.1
|
|
|
1,304,463
|
|
|
35.7
|
|
|
31,133
|
|
|
2.4
|
|
|||
Total commercial business
|
2,959,315
|
|
|
80.0
|
|
|
2,937,883
|
|
|
80.4
|
|
|
21,432
|
|
|
0.7
|
|
|||
One-to-four family residential
(3)
|
106,502
|
|
|
2.9
|
|
|
101,763
|
|
|
2.8
|
|
|
4,739
|
|
|
4.7
|
|
|||
Real estate construction and land development:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
One-to-four family residential
|
110,699
|
|
|
3.0
|
|
|
102,730
|
|
|
2.8
|
|
|
7,969
|
|
|
7.8
|
|
|||
Five or more family residential and commercial properties
|
126,379
|
|
|
3.4
|
|
|
112,730
|
|
|
3.1
|
|
|
13,649
|
|
|
12.1
|
|
|||
Total real estate construction and land development
(3)
|
237,078
|
|
|
6.4
|
|
|
215,460
|
|
|
5.9
|
|
|
21,618
|
|
|
10.0
|
|
|||
Consumer
|
390,303
|
|
|
10.6
|
|
|
395,545
|
|
|
10.8
|
|
|
(5,242
|
)
|
|
(1.3
|
)
|
|||
Gross loans receivable
|
3,693,198
|
|
|
99.9
|
|
|
3,650,651
|
|
|
99.9
|
|
|
42,547
|
|
|
1.2
|
|
|||
Net deferred loan costs
|
3,233
|
|
|
0.1
|
|
|
3,509
|
|
|
0.1
|
|
|
(276
|
)
|
|
(7.9
|
)
|
|||
Loans receivable, net
|
$
|
3,696,431
|
|
|
100.0
|
%
|
|
$
|
3,654,160
|
|
|
100.0
|
%
|
|
$
|
42,271
|
|
|
1.2
|
%
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(Dollars in thousands)
|
||||||
Nonaccrual loans:
|
|
|
|
||||
Commercial business
|
$
|
16,304
|
|
|
$
|
12,564
|
|
One-to-four family residential
|
68
|
|
|
71
|
|
||
Real estate construction and land development
|
923
|
|
|
899
|
|
||
Consumer
|
166
|
|
|
169
|
|
||
Total nonaccrual loans
(1)
|
17,461
|
|
|
13,703
|
|
||
Other real estate owned
|
1,904
|
|
|
1,983
|
|
||
Total nonperforming assets
|
$
|
19,365
|
|
|
$
|
15,686
|
|
|
|
|
|
||||
Allowance for loan losses
|
$
|
36,152
|
|
|
$
|
35,042
|
|
Nonperforming loans to loans receivable, net
|
0.47
|
%
|
|
0.37
|
%
|
||
Allowance for loan losses to loans receivable, net
|
0.98
|
%
|
|
0.96
|
%
|
||
Allowance for loan losses to nonperforming loans
|
207.04
|
%
|
|
255.73
|
%
|
||
Nonperforming assets to total assets
|
0.36
|
%
|
|
0.30
|
%
|
||
|
|
|
|
||||
Performing TDR loans:
|
|
|
|
||||
Commercial business
|
$
|
19,348
|
|
|
$
|
22,170
|
|
One-to-four family residential
|
206
|
|
|
208
|
|
||
Real estate construction and land development
|
—
|
|
|
—
|
|
||
Consumer
|
432
|
|
|
358
|
|
||
Total performing TDR loans
|
$
|
19,986
|
|
|
$
|
22,736
|
|
Accruing loans past due 90 days or more
|
$
|
—
|
|
|
$
|
—
|
|
Potential problem loans
|
94,116
|
|
|
101,349
|
|
(1)
|
At
March 31, 2019
and
December 31, 2018
,
$5.5 million
and
$6.9 million
of nonaccrual loans were considered TDR loans, respectively.
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Nonaccrual loans
|
|
|
|
||||
Balance, beginning of period
|
$
|
13,703
|
|
|
$
|
10,703
|
|
Addition of previously classified pass graded loans
|
—
|
|
|
4,066
|
|
||
Addition of previously classified potential problem loans
|
6,189
|
|
|
2,324
|
|
||
Net principal payments
|
(2,392
|
)
|
|
(1,365
|
)
|
||
Charge-offs
|
(39
|
)
|
|
—
|
|
||
Balance, end of period
|
$
|
17,461
|
|
|
$
|
15,728
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Performing TDR loans
|
|
|
|
||||
Balance, beginning of period
|
$
|
22,736
|
|
|
$
|
26,757
|
|
Addition of previously classified pass graded loans
|
244
|
|
|
—
|
|
||
Addition of previously classified potential problem loans
|
88
|
|
|
79
|
|
||
Net principal payments
|
(3,082
|
)
|
|
(649
|
)
|
||
Balance, end of period
|
$
|
19,986
|
|
|
$
|
26,187
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Potential problem loans
|
|
||||||
Balance, beginning of period
|
$
|
101,349
|
|
|
$
|
83,543
|
|
Addition of previously classified pass graded loans
|
9,766
|
|
|
25,126
|
|
||
Upgrades to pass graded loan status
|
—
|
|
|
(3,636
|
)
|
||
Net principal payments
|
(10,535
|
)
|
|
(9,232
|
)
|
||
Transfers of loans to nonaccrual and TDR status
|
(6,277
|
)
|
|
(2,403
|
)
|
||
Charge-offs
|
(187
|
)
|
|
(145
|
)
|
||
Balance, end of period
|
$
|
94,116
|
|
|
$
|
93,253
|
|
•
|
historical loss experience in the loan portfolio;
|
•
|
impact of environmental factors, including:
|
◦
|
levels of and trends in delinquencies, classified and impaired loans;
|
◦
|
levels of and trends in charge-offs and recoveries;
|
◦
|
trends in volume and terms of loans;
|
◦
|
effects of changes in risk selection and underwriting standards, and other changes in lending policies, procedures and practices;
|
◦
|
experience, ability, and depth of lending management and other relevant staff;
|
◦
|
national and local economic trends and conditions;
|
◦
|
other external factors such as competition, legal and regulatory;
|
◦
|
effects of changes in credit concentrations; and
|
◦
|
other factors
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Allowance for loan losses on loans at the beginning of the period
|
$
|
35,042
|
|
|
$
|
32,086
|
|
Provision for loan losses
|
920
|
|
|
1,152
|
|
||
Charge-offs:
|
|
|
|
||||
Commercial business
|
(103
|
)
|
|
(81
|
)
|
||
One-to-four family residential
|
(15
|
)
|
|
—
|
|
||
Consumer
|
(586
|
)
|
|
(485
|
)
|
||
Total charge-offs
|
(704
|
)
|
|
(566
|
)
|
||
Recoveries:
|
|
|
|
||||
Commercial business
|
159
|
|
|
501
|
|
||
Real estate construction and land development
|
618
|
|
|
—
|
|
||
Consumer
|
117
|
|
|
88
|
|
||
Total recoveries
|
894
|
|
|
589
|
|
||
Net recoveries
|
190
|
|
|
23
|
|
||
Allowance for loan losses at the end of the period
|
$
|
36,152
|
|
|
$
|
33,261
|
|
|
|
|
|
||||
Allowance for loan losses to loans receivable, net
|
0.98
|
%
|
|
1.01
|
%
|
||
Net recoveries on loans to average loans, annualized
|
(0.02
|
)%
|
|
—
|
%
|
||
|
|
|
|
||||
Loans receivable, net at the end of the period
(1)
|
$
|
3,696,431
|
|
|
$
|
3,281,915
|
|
Average loans receivable during the period
(1)
|
3,622,494
|
|
|
3,150,869
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(Dollars in thousands)
|
||||||
General Valuation Allowance:
|
|
|
|
||||
Allowance for loan losses
|
$
|
28,774
|
|
|
$
|
27,854
|
|
Gross loans, excluding PCI and impaired loans
|
$
|
3,632,578
|
|
|
$
|
3,589,305
|
|
Percentage
|
0.79
|
%
|
|
0.78
|
%
|
||
|
|
|
|
||||
PCI Allowance:
|
|
|
|
||||
Allowance for loan losses
|
$
|
2,798
|
|
|
$
|
3,018
|
|
Gross PCI loans
|
$
|
23,173
|
|
|
$
|
24,907
|
|
Percentage
|
12.07
|
%
|
|
12.12
|
%
|
||
|
|
|
|
||||
Specific Valuation Allowance:
|
|
|
|
||||
Allowance for loan losses
|
$
|
4,580
|
|
|
$
|
4,170
|
|
Gross impaired loans
|
$
|
37,447
|
|
|
$
|
36,439
|
|
Percentage
|
12.23
|
%
|
|
11.44
|
%
|
||
|
|
|
|
||||
Total Allowance for Loan Losses:
|
|
|
|
||||
Allowance for loan losses
|
$
|
36,152
|
|
|
$
|
35,042
|
|
Gross loans receivable
|
$
|
3,693,198
|
|
|
$
|
3,650,651
|
|
Percentage
|
0.98
|
%
|
|
0.96
|
%
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|
|
|
|||||||||||||
|
Balance
|
|
% of Total
|
|
Balance
|
|
% of Total
|
|
Change
|
|
%of Balance Change
|
|||||||||
|
(Dollars in thousands)
|
|
|
|||||||||||||||||
Noninterest demand deposits
|
$
|
1,338,675
|
|
|
30.5
|
%
|
|
$
|
1,362,268
|
|
|
30.7
|
%
|
|
$
|
(23,593
|
)
|
|
(1.7
|
)%
|
Interest bearing demand deposits
|
1,293,828
|
|
|
29.4
|
|
|
1,317,513
|
|
|
29.7
|
|
|
(23,685
|
)
|
|
(1.8
|
)
|
|||
Money market accounts
|
740,518
|
|
|
16.9
|
|
|
765,316
|
|
|
17.3
|
|
|
(24,798
|
)
|
|
(3.2
|
)
|
|||
Savings accounts
|
499,568
|
|
|
11.3
|
|
|
520,413
|
|
|
11.8
|
|
|
(20,845
|
)
|
|
(4.0
|
)
|
|||
Total non-maturity deposits
|
3,872,589
|
|
|
88.1
|
|
|
3,965,510
|
|
|
89.5
|
|
|
(92,921
|
)
|
|
(2.3
|
)
|
|||
Certificate of deposit accounts
|
521,126
|
|
|
11.9
|
|
|
466,892
|
|
|
10.5
|
|
|
54,234
|
|
|
11.6
|
|
|||
Total deposits
|
$
|
4,393,715
|
|
|
100.0
|
%
|
|
$
|
4,432,402
|
|
|
100.0
|
%
|
|
$
|
(38,687
|
)
|
|
(0.9
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In Thousands)
|
||||||
Balance, beginning of period
|
$
|
760,723
|
|
|
$
|
508,305
|
|
Common stock issued in the Premier and Puget Mergers
|
—
|
|
|
130,770
|
|
||
Net income
|
16,552
|
|
|
9,087
|
|
||
Dividends declared
|
(6,662
|
)
|
|
(5,117
|
)
|
||
Other comprehensive income (loss)
|
8,016
|
|
|
(7,543
|
)
|
||
Effects of implementation of accounting change related to operating leases
|
(399
|
)
|
|
—
|
|
||
Other
|
(39
|
)
|
|
(794
|
)
|
||
Balance, end of period
|
$
|
778,191
|
|
|
$
|
634,708
|
|
|
|
Minimum Requirements
|
|
Well-Capitalized Requirements
|
|
Actual
|
|||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
As of March 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
The Company consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Common equity Tier 1 capital to risk-weighted assets
|
|
$
|
199,483
|
|
|
4.5
|
%
|
|
N/A
|
|
|
N/A
|
|
|
$
|
521,095
|
|
|
11.8
|
%
|
|
Tier 1 leverage capital to average assets
|
|
202,081
|
|
|
4.0
|
|
|
N/A
|
|
|
N/A
|
|
|
541,470
|
|
|
10.7
|
|
|||
Tier 1 capital to risk-weighted assets
|
|
265,977
|
|
|
6.0
|
|
|
N/A
|
|
|
N/A
|
|
|
541,470
|
|
|
12.2
|
|
|||
Total capital to risk-weighted assets
|
|
354,636
|
|
|
8.0
|
|
|
N/A
|
|
|
N/A
|
|
|
577,928
|
|
|
13.0
|
|
|||
Heritage Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Common equity Tier 1 capital to risk-weighted assets
|
|
199,260
|
|
|
4.5
|
|
|
$
|
287,821
|
|
|
6.5
|
%
|
|
525,285
|
|
|
11.9
|
|
||
Tier 1 leverage capital to average assets
|
|
202,662
|
|
|
4.0
|
|
|
253,328
|
|
|
5.0
|
|
|
525,285
|
|
|
10.4
|
|
|||
Tier 1 capital to risk-weighted assets
|
|
265,681
|
|
|
6.0
|
|
|
354,241
|
|
|
8.0
|
|
|
525,285
|
|
|
11.9
|
|
|||
Total capital to risk-weighted assets
|
|
354,241
|
|
|
8.0
|
|
|
442,801
|
|
|
10.0
|
|
|
561,743
|
|
|
12.7
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
As of December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
The Company consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Common equity Tier 1 capital to risk-weighted assets
|
|
$
|
197,189
|
|
|
4.5
|
%
|
|
N/A
|
|
|
N/A
|
|
|
$
|
510,618
|
|
|
11.7
|
%
|
|
Tier 1 leverage capital to average assets
|
|
201,920
|
|
|
4.0
|
|
|
N/A
|
|
|
N/A
|
|
|
530,920
|
|
|
10.5
|
|
|||
Tier 1 capital to risk-weighted assets
|
|
262,918
|
|
|
6.0
|
|
|
N/A
|
|
|
N/A
|
|
|
530,920
|
|
|
12.1
|
|
|||
Total capital to risk-weighted assets
|
|
350,558
|
|
|
8.0
|
|
|
N/A
|
|
|
N/A
|
|
|
566,268
|
|
|
12.9
|
|
|||
Heritage Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Common equity Tier 1 capital to risk-weighted assets
|
|
197,004
|
|
|
4.5
|
|
|
$
|
284,561
|
|
|
6.5
|
%
|
|
513,993
|
|
|
11.7
|
|
||
Tier 1 leverage capital to average assets
|
|
203,339
|
|
|
4.0
|
|
|
254,174
|
|
|
5.0
|
|
|
513,993
|
|
|
10.1
|
|
|||
Tier 1 capital to risk-weighted assets
|
|
262,671
|
|
|
6.0
|
|
|
350,229
|
|
|
8.0
|
|
|
513,993
|
|
|
11.7
|
|
|||
Total capital to risk-weighted assets
|
|
350,229
|
|
|
8.0
|
|
|
437,786
|
|
|
10.0
|
|
|
549,341
|
|
|
12.5
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Repurchased shares to pay withholding taxes
(1)
|
25,854
|
|
|
45,426
|
|
||
Stock repurchase to pay withholding taxes average share price
|
$
|
31.01
|
|
|
$
|
31.66
|
|
Period
|
|
Total Number
of Shares
Purchased
(1)
|
|
Average Price
Paid Per
Share
(1)
|
|
Cumulative Total Number of Shares Purchased as
Part of Publicly
Announced Plans or Programs
|
|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans or
Programs
|
|||||
January 1, 2019— January 31, 2019
|
|
1,872
|
|
|
$
|
30.60
|
|
|
7,893,389
|
|
|
935,034
|
|
February 1, 2019— February 28, 2019
|
|
—
|
|
|
—
|
|
|
7,893,389
|
|
|
935,034
|
|
|
March 1, 2019— March 31, 2019
|
|
23,982
|
|
|
31.04
|
|
|
7,893,389
|
|
|
935,034
|
|
|
Total
|
|
25,854
|
|
|
$
|
31.01
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|||||
Exhibit No.
|
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date/Period End Date
|
|
|
|
|
|
|
|
|
|
|
|
2.5
|
|
|
|
8-K
|
|
2.1
|
|
7/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
2.6
|
|
|
|
8-K
|
|
2.1
|
|
3/9/2018
|
|
|
|
|
|
|
|
|
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10.34
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31.1
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31.2
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32.1
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101.INS
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XBRL Instance Document
(1)
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101.SCH
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XBRL Taxonomy Extension Schema Document
(1)
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
(1)
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
(1)
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
(1)
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
(1)
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HERITAGE FINANCIAL CORPORATION
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Date:
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May 9, 2019
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/S/ BRIAN L. VANCE
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Brian L. Vance
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Chief Executive Officer
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Date:
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May 9, 2019
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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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7.
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ACCELERATED BENEFIT IN THE EVENT OF TERMINAL OR CHRONIC ILLNESS (AS APPLICABLE) AND DIVISION OF CASH SURRENDER VALUE OF THE POLICY(IES).
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A.
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Employment Qualifications.
In order to have the right to request and receive an Accelerated Benefit under this Agreement, any one the following requirements must first be satisfied:
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(ii)
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Insured Separates From Service on or after attaining the age of Sixty-Two (62); or
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(iii)
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A Change in Control has occurred prior to Insured’s Separation From Service. For the purposes of this paragraph, a Change in Control shall be defined as any of the following:
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B.
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Contractual Qualifications.
In addition to the forgoing, the following requirements must also be satisfied in order for Insured to be entitled to request and receive an Accelerated Benefit:
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(i)
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Insured’s right to receive benefits under this Agreement has not terminated pursuant to the provisions of Paragraph 8 herein;
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(ii)
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The Policy(ies) provides for such option through an Accelerated Benefit rider; and
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(iii)
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Insured must qualify (physically and/or mentally) to receive an Accelerated Benefit as required under the Policy(ies).
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C.
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Provided Insured satisfies the requirements specified in 7A and B above, then Insured shall have the right to request (in writing) and to receive an amount equal to the following: the lesser of Five Hundred Thousand Dollars ($500,000) or an amount which would result in the minimum required death benefit being maintained, such that the Policy(ies) will not be disqualified for the purposes of acting as “life Insurance” under the Internal Revenue Code. Furthermore, all amounts referenced in this Paragraph 7 shall be subject to any further limitations imposed by the individual Policy(ies). (See Exhibit “A” attached hereto and incorporated by reference herein, an excerpt from the Penn Mutual Policy’s Accelerated Benefit rider, as an example of the limiting language that may apply). Finally, any Accelerated Benefit paid to the Insured hereunder shall be deducted from any amounts to which Insured or his Beneficiary(ies) is or may be entitled pursuant to the provisions of Paragraph 6 above should Insured not have Separated From Service at the time of his death.
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D.
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Subject to the forgoing, at all times prior to the Insured’s death, the Bank shall be entitled to an amount equal to the Policy(ies)’s cash value, as that term is defined in the Policy(ies) contract, less any Policy loans, accelerated benefits and unpaid interest or cash withdrawals previously incurred by the Bank and any applicable surrender charges. Such cash value shall be determined as of the date of surrender or death as the case may be.
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A.
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Right to receive Death Benefit.
Insured’s right to receive death benefit proceeds pursuant to the provisions of Paragraph 6 shall terminate upon Insured’s Separation From Service.
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B.
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Right to Receive an Accelerated Benefit.
If Insured either requests payment of an Accelerated Benefit before Separating From Service and receives payment of such amounts thereafter or, if Insured maintains the right to receive an Accelerated Benefit after Separation From Service by virtue of satisfying the requirements of Paragraph 7A, then this Agreement shall terminate in its entirety only upon (i) the mutual written agreement of the Bank and the Insured, or (ii) upon Insured requesting and receiving an Accelerated Benefit in the full amount he is (or may be) entitled to receive pursuant to the provisions of Paragraph 7 above.
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C.
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Termination By Operation.
Notwithstanding the forgoing, this Agreement shall immediately terminate in its entirety in the event Insured is Terminated For Cause at any time or in the event Insured is no longer entitled to a benefit as addressed in Paragraphs 8A and B above. The term “Termination For Cause” shall have the same meaning as is used in the Bank’s Employee Handbook or any Employment Agreement the parties have entered into. If there is no definition of a “For Cause” termination appearing in a Bank Employee Handbook, or in the event Insured has no Employment Agreement, then a Separation From Service which is initiated by the Bank and is due to any of the following shall be considered a “Termination For Cause”:
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(i)
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A conviction of, or a plea of
nolo contendere
by Insured to a felony or to fraud, embezzlement or misappropriation of funds;
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(ii)
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The commission of a fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse with regard to the Bank, that has had a material adverse effect on the Bank;
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(iii)
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A material violation by Insured
o
f
any applicable federal banking law or regulation that has had a material adverse effect on the Bank.
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Date: _______________________
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Date: ____________________
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1.
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I have reviewed this 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.
|
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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Chief Executive Officer
Principal Executive Officer
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1.
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I have reviewed this 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;
|
3.
|
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;
|
4.
|
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:
|
a.
|
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;
|
b.
|
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;
|
c.
|
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
|
d.
|
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
|
5.
|
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):
|
a.
|
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
|
b.
|
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.
|
|
/s/ Donald J. Hinson
|
Donald J. Hinson
|
Executive Vice President and Chief Financial Officer
Principal Financial and Accounting Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
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.
|
May 9, 2019
|
/s/ Brian L. Vance
|
|
Brian L. Vance
|
|
Chief Executive Officer
Principal Executive Officer
|
|
|
May 9, 2019
|
/s/ Donald J. Hinson
|
|
Donald J. Hinson
|
|
Executive Vice President and Chief Financial Officer
Principal Financial and Accounting Officer
|