Regulatory Capital Requirements

12 Months Ended

Dec. 31, 2019

Regulatory Capital Requirements [Abstract]

Regulatory Capital Requirements

Regulatory Capital Requirements

The Company is a bank holding company under the supervision of the Federal Reserve Bank. Bank holding companies are subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended, and the regulations of the Federal Reserve. Heritage Bank is a federally insured institution and thereby is subject to the capital requirements established by the FDIC. The Federal Reserve capital requirements generally parallel the FDIC requirements. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements and operations. Management believes as of December 31, 2019, the Company and the Bank meet all capital adequacy requirements to which they are subject.

As of December 31, 2019 and December 31, 2018, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's categories.

	Minimum Requirements				Well- Capitalized Requirements		Actual
	$		%		$	%	$		%
	(Dollars in thousands)
As of December 31, 2019:
The Company consolidated
Common equity Tier 1 capital to risk-weighted assets	$	211,110	4.5	%	N/A	N/A	$	541,154	11.5	%
Tier 1 leverage capital to average assets	212,578		4.0		N/A	N/A	561,749		10.6
Tier 1 capital to risk-weighted assets	281,479		6.0		N/A	N/A	561,749		12.0
Total capital to risk-weighted assets	375,306		8.0		N/A	N/A	598,226		12.8
Heritage Bank
Common equity Tier 1 capital to risk-weighted assets	211,017		4.5		304,803	6.5	538,560		11.5
Tier 1 leverage capital to average assets	211,187		4.0		263,984	5.0	538,560		10.2
Tier 1 capital to risk-weighted assets	281,356		6.0		375,142	8.0	538,560		11.5
Total capital to risk-weighted assets	375,142		8.0		468,927	10.0	575,037		12.3

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

Under applicable capital requirements both the Company and the Bank are required to have a common equity Tier 1 capital ratio of 4.5%, a Tier 1 leverage ratio of 4.0%, a Tier 1 risk-based ratio of 6.0% and a total risk-based ratio of 8.0%. Both the Company and the Bank are also required to maintain a capital conservation buffer consisting of common equity Tier 1 capital above 2.5% of minimum risk based capital ratios to avoid restrictions on certain activities including payment of dividends, stock repurchases and discretionary bonuses to executive officers. At December 31, 2019, the capital conservation buffer was 4.8% and 4.3% for the Company and the Bank, respectively.