10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021 or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from __________ to __________

Commission File Number 000-29480 

HERITAGE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter) 

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)

(360) 943-1500

(Registrant’s telephone number, including area code) 

 Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, no par value	HFWA	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date:

As of July 28, 2021, there were 35,970,660 shares of the registrant's common stock, no par value per share, outstanding.

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HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

FORM 10-Q

June 30, 2021

TABLE OF CONTENTS

				Page
GLOSSARY OF ACRONYMS, ABBREVIATIONS AND TERMS				3
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS				3
PART I.	FINANCIAL INFORMATION			5
ITEM 1.	FINANCIAL STATEMENTS			5
		CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) AS OF JUNE 30, 2021 AND DECEMBER 31, 2020		5
		CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020		6
		CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020		7
		CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020		8
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020		10
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		12
		NOTE 1.	DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	12
		NOTE 2.	INVESTMENT SECURITIES	13
		NOTE 3.	LOANS RECEIVABLE	15
		NOTE 4.	ALLOWANCE FOR CREDIT LOSSES ON LOANS	24
		NOTE 5.	GOODWILL AND OTHER INTANGIBLE ASSETS	27
		NOTE 6.	DERIVATIVE FINANCIAL INSTRUMENTS	27
		NOTE 7.	STOCKHOLDERS’ EQUITY	28
		NOTE 8.	FAIR VALUE MEASUREMENTS	30
		NOTE 9.	CASH RESTRICTION	34
		NOTE 10.	COMMITMENTS AND CONTINGENCIES	34
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			35
	OVERVIEW			35
	EARNINGS SUMMARY			36
	NET INTEREST INCOME AND NET INTEREST MARGIN OVERVIEW			36
	PROVISION FOR CREDIT LOSSES OVERVIEW			39
	NONINTEREST INCOME OVERVIEW			40
	NONINTEREST EXPENSE OVERVIEW			41
	INCOME TAX EXPENSE OVERVIEW			42
	CONSOLIDATED FINANCIAL CONDITION OVERVIEW			42
	LENDING ACTIVITIES OVERVIEW			43
	NONPERFORMING ASSETS AND CREDIT QUALITY METRICS			44
	ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES ON LOANS			45
	DEPOSITS AND OTHER BORROWINGS OVERVIEW			46
	LIQUIDITY AND CASH FLOWS			47
	STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS OVERVIEW			48
	RECONCILIATIONS OF NON-GAAP MEASURES			49
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			50
ITEM 4.	CONTROLS AND PROCEDURES			50
Part II.	OTHER INFORMATION			51
ITEM 1.	LEGAL PROCEEDINGS			51
ITEM 1A.	RISK FACTORS			51

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ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	51
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	51
ITEM 4.	MINE SAFETY DISCLOSURES	51
ITEM 5.	OTHER INFORMATION	51
ITEM 6.	EXHIBITS	51
	SIGNATURES	52

GLOSSARY OF ACRONYMS, ABBREVIATIONS, AND TERMS

The acronyms, abbreviations, and terms listed below are used in various sections of this Form 10-Q. As used throughout this report, the terms “we”, “our”, or “us” refer to Heritage Financial Corporation and its consolidated subsidiaries, unless the context otherwise requires.

2020 Annual Form 10-K	Company's Annual Report on Form 10-K for the year ended December 31, 2020
ACL	Allowance for credit losses
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
Bank	Heritage Bank
CA Act	Consolidated Appropriations Act of 2021
CARES Act	Coronavirus Aid, Relief, and Economic Security Act of 2020
CECL	Current Expected Credit Loss
CECL Adoption	Company's adoption on January 1, 2020 of FASB ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology
CMO	Collateralized Mortgage Obligation
Company	Heritage Financial Corporation
COVID Modifications	Loans with modifications made in compliance with the CARES Act, as amended, and related regulatory guidance
COVID-19 Pandemic	Coronavirus Disease of 2019 pandemic
CRE	Commercial real estate
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
Federal Reserve	Board of Governors of the Federal Reserve System
Federal Reserve Bank	Federal Reserve Bank of San Francisco
FHLB	Federal Home Loan Bank of Des Moines
GAAP	U.S. Generally Accepted Accounting Principles
Heritage	Heritage Financial Corporation
LIBOR	London Interbank Offering Rate
MBS	Mortgage-backed security
PPP	Paycheck Protection Program
PPPLF	Paycheck Protection Program Liquidity Facility
SBA	Small Business Administration
SEC	Securities and Exchange Commission
SM	Special Mention
SS	Substandard
TDR	Troubled debt restructured

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such

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as “may,” “will,” “should,” “would” and “could.” The Company cautions readers not to place undue reliance on any forward-looking statements. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for future periods to differ materially from those expressed in any forward-looking statements by, or on behalf of, us, and could negatively affect the Company’s operating results and stock price performance.

The COVID-19 pandemic is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Deterioration in general business and economic conditions, including increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to the COVID-19 pandemic, could affect us in substantial and unpredictable ways. Other factors that could cause or contribute to such differences include, but are not limited to:

•the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our ACL on loans and provision for credit losses on loans that may be effected by deterioration in the housing and CRE markets, which may lead to increased losses and nonperforming assets in our loan portfolio, and may result in our ACL on loans no longer being adequate to cover actual losses, and require us to increase our ACL on loans;

•changes in general economic conditions, either nationally or in our market areas;

•changes in the levels of general interest rates, and the relative differences between short-term and long-term interest rates, deposit interest rates, our net interest margin and funding sources;

•risks related to acquiring assets in or entering markets in which we have not previously operated and may not be familiar;

•fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas;

•results of examinations of us by the bank regulators, including the possibility that any such regulatory authority may, among other things, initiate an enforcement action against the Company or our bank subsidiary which could require us to increase our ACL on loans, write-down assets, change our regulatory capital position, affect our ability to borrow funds or maintain or increase deposits, or impose additional requirements on us, any of which could affect our ability to continue our growth through mergers, acquisitions or similar transactions and adversely affect our liquidity and earnings;

•legislative or regulatory changes that adversely affect our business;

•implementing regulations, changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules;

•our ability to control operating costs and expenses;

•increases in premiums for deposit insurance;

•the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation;

•difficulties in reducing risk associated with the loans on our Condensed Consolidated Statements of Financial Condition;

•staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges;

•disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions;

•our ability to retain key members of our senior management team;

•costs and effects of litigation, including settlements and judgments;

•our ability to implement our growth strategies;

•our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames or at all, and any goodwill charges related thereto and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, which might be greater than expected;

•increased competitive pressures among financial service companies;

•changes in consumer spending, borrowing and savings habits;

•the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions;

•adverse changes in the securities markets;

•inability of key third-party providers to perform their obligations to us;

•changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the FASB, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods and as a result of the CARES Act and the CA Act; and

•other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services, including as a result of the CARES Act, CA Act and recent COVID-19 pandemic vaccination efforts, and the other risks detailed from time to time in our filings with the SEC including our 2020 Annual Form 10-K.

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PART I.     FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(In thousands, except shares)

	June 30, 2021		December 31, 2020
ASSETS
Cash on hand and in banks	$	94,179	$	91,918
Interest earning deposits	1,170,754		651,404
Cash and cash equivalents	1,264,933		743,322
Investment securities available for sale, at fair value, net (amortized cost of $1,029,001 and $770,195, respectively)	1,049,524		802,163
Loans held for sale	2,739		4,932
Loans receivable	4,207,530		4,468,647
Allowance for credit losses on loans	(51,562)		(70,185)
Loans receivable, net	4,155,968		4,398,462
Other real estate owned	—		—
Premises and equipment, net	82,835		85,452
Federal Home Loan Bank stock, at cost	7,933		6,661
Bank owned life insurance	108,988		107,580
Accrued interest receivable	17,113		19,418
Prepaid expenses and other assets	163,206		193,301
Other intangible assets, net	11,494		13,088
Goodwill	240,939		240,939
Total assets	$	7,105,672	$	6,615,318
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits	$	6,061,706	$	5,597,990
Junior subordinated debentures	21,034		20,887
Securities sold under agreement to repurchase	46,429		35,683
Accrued expenses and other liabilities	120,519		140,319
Total liabilities	6,249,688		5,794,879
Stockholders’ equity:
Preferred stock, no par value, 2,500,000 shares authorized; no shares issued and outstanding, respectively	—		—
Common stock, no par value, 50,000,000 shares authorized; 36,006,560 and 35,912,243 shares issued and outstanding, respectively	572,060		571,021
Retained earnings	267,863		224,400
Accumulated other comprehensive income, net	16,061		25,018
Total stockholders’ equity	855,984		820,439
Total liabilities and stockholders’ equity	$	7,105,672	$	6,615,318

See accompanying Notes to Condensed Consolidated Financial Statements.

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HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except per share amounts and shares outstanding)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
INTEREST INCOME:
Interest and fees on loans	$	50,750	$	48,404	$	100,274	$	94,681
Taxable interest on investment securities	4,050		4,570		7,584		10,203
Nontaxable interest on investment securities	947		977		1,905		1,733
Interest on interest earning deposits	263		43		438		463
Total interest income	56,010		53,994		110,201		107,080
INTEREST EXPENSE:
Deposits	1,524		3,417		3,252		7,633
Junior subordinated debentures	186		218		373		503
Other borrowings	35		46		73		80
Total interest expense	1,745		3,681		3,698		8,216
Net interest income	54,265		50,313		106,503		98,864
(Reversal of) provision for credit losses	(13,987)		28,563		(21,186)		36,509
Net interest income after (reversal of) provision for credit losses	68,252		21,750		127,689		62,355
NONINTEREST INCOME:
Service charges and other fees	4,422		3,600		8,422		7,976
Gain on sale of investment securities, net	—		409		29		1,423
Gain on sale of loans, net	1,003		1,135		2,373		1,682
Interest rate swap fees	209		769		361		1,065
Bank owned life insurance income	717		645		1,373		1,530
Other income	1,946		1,690		3,990		4,058
Total noninterest income	8,297		8,248		16,548		17,734
NONINTEREST EXPENSE:
Compensation and employee benefits	22,088		21,927		44,549		44,433
Occupancy and equipment	4,091		4,335		8,545		8,899
Data processing	3,998		3,517		7,810		7,044
Marketing	892		696		1,561		1,562
Professional services	1,102		2,169		2,433		3,546
State/municipal business and use taxes	991		905		1,963		1,662
Federal deposit insurance premium	339		238		928		238
Other real estate owned, net	—		(170)		—		(145)
Amortization of intangible assets	797		903		1,594		1,806
Other expense	2,098		2,553		4,255		5,288
Total noninterest expense	36,396		37,073		73,638		74,333
Income (loss) before income taxes	40,153		(7,075)		70,599		5,756
Income tax expense (benefit)	7,451		(936)		12,553		(296)
Net income (loss)	$	32,702	$	(6,139)	$	58,046	$	6,052
Basic earnings (losses) per share	$	0.91	$	(0.17)	$	1.61	$	0.17
Diluted earnings (losses) per share	$	0.90	$	(0.17)	$	1.60	$	0.17
Dividends declared per share	$	0.20	$	0.20	$	0.40	$	0.40
Average number of basic shares outstanding	35,994,740		35,898,716		35,961,032		36,120,403
Average number of diluted shares outstanding	36,289,464		35,898,716		36,268,861		36,275,391

See accompanying Notes to Condensed Consolidated Financial Statements.

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HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income (loss)	$	32,702	$	(6,139)	$	58,046	$	6,052
Change in fair value of investment securities available for sale, net of tax of $722, $2,224, $(2,482) and $4,643, respectively	2,600		8,009		(8,934)		16,716
Reclassification adjustment for net gain from sale of investment securities available for sale included in income, net of tax of $0, $(89), $(6) and $(310) respectively	—		(320)		(23)		(1,113)
Other comprehensive income (loss)	2,600		7,689		(8,957)		15,603
Comprehensive income	$	35,302	$	1,550	$	49,089	$	21,655

See accompanying Notes to Condensed Consolidated Financial Statements.

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HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

(In thousands, except per share amounts)

	Three Months Ended June 30, 2021
	Number of common shares	Common stock		Retained earnings		Accumulated other comprehensive income, net		Total stockholders’ equity
Balance at March 31, 2021	35,981	$	571,204	$	242,486	$	13,461	$	827,151
Restricted stock units vested	28	—		—		—		—
Stock-based compensation expense	—	926		—		—		926
Common stock repurchased	(3)	(70)		—		—		(70)
Net income	—	—		32,702				32,702
Other comprehensive income, net of tax	—	—		—		2,600		2,600
Cash dividends declared on common stock ($0.20 per share)	—	—		(7,325)		—		(7,325)
Balance at June 30, 2021	36,006	$	572,060	$	267,863	$	16,061	$	855,984

	Six Months Ended June 30, 2021
	Number of common shares	Common stock		Retained earnings		Accumulated other comprehensive income (loss), net		Total stockholders’ equity
Balance at December 31, 2020	35,912	$	571,021	$	224,400	$	25,018	$	820,439
Restricted stock units vested	120	—		—		—		—
Stock-based compensation expense	—	1,796		—		—		1,796
Common stock repurchased	(26)	(757)		—		—		(757)
Net income	—	—		58,046		—		58,046
Other comprehensive loss, net of tax	—	—		—		(8,957)		(8,957)
Cash dividends declared on common stock ($0.40 per share)	—	—		(14,583)		—		(14,583)
Balance at June 30, 2021	36,006	$	572,060	$	267,863	$	16,061	$	855,984

	Three Months Ended June 30, 2020
	Number of common shares	Common stock		Retained earnings		Accumulated other comprehensive income, net		Total stockholders’ equity
Balance at March 31, 2020	35,889	$	568,439	$	211,707	$	18,292	$	798,438
Restricted stock units vested	19	—		—		—		—
Exercise of stock options	3	51		—		—		51
Stock-based compensation expense	—	877		—		—		877
Common stock repurchased	(2)	(38)		—		—		(38)
Net loss	—	—		(6,139)				(6,139)
Other comprehensive income, net of tax	—	—		—		7,689		7,689
Cash dividends declared on common stock ($0.20 per share)	—	—		(7,226)		—		(7,226)
Balance at June 30, 2020	35,909	$	569,329	$	198,342	$	25,981	$	793,652

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	Six Months Ended June 30, 2020
	Number of common shares	Common stock		Retained earnings		Accumulated other comprehensive income, net		Total stockholders’ equity
Balance at December 31, 2019	36,619	$	586,459	$	212,474	$	10,378	$	809,311
Cumulative effect from change in accounting policy (1)	—	—		(5,615)		—		(5,615)
Restricted stock units vested	106	—		—		—		—
Exercise of stock options	8	122		—		—		122
Stock-based compensation expense	—	1,846		—		—		1,846
Common stock repurchased	(824)	(19,098)		—		—		(19,098)
Net income	—	—		6,052		—		6,052
Other comprehensive income, net of tax	—	—		—		15,603		15,603
Cash dividends declared on common stock ($0.40 per share)	—	—		(14,569)		—		(14,569)
Balance at June 30, 2020	35,909	$	569,329	$	198,342	$	25,981	$	793,652

(1) Effective January 1, 2020, Company adopted ASU 2016-13, Financial Instruments - Credit Losses.

See accompanying Notes to Condensed Consolidated Financial Statements.

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HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net income	$	58,046	$	6,052
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	(13,901)		(2,974)
(Reversal of) provision for credit losses	(21,186)		36,509
Net change in accrued interest receivable, prepaid expenses and other assets, and accrued expenses and other liabilities	3,541		(3,096)
Stock-based compensation expense	1,796		1,846
Amortization of intangible assets	1,594		1,806
Origination of mortgage loans held for sale	(53,807)		(48,848)
Proceeds from sale of mortgage loans held for sale	58,373		52,280
Bank owned life insurance income	(1,373)		(1,530)
Valuation adjustment on interest rate swaps	(254)		—
Gain on sale of other real estate owned, net	—		(179)
Gain on sale of mortgage loans held for sale, net	(2,373)		(1,682)
Gain on sale of investment securities available for sale, net	(29)		(1,423)
Gain on sale of assets held for sale	(745)		(9)
Loss (gain) on sale or write-off of premises and equipment, net	88		(25)
Net cash provided by operating activities	29,770		38,727
Cash flows from investing activities:
Loans originated, net of principal payments	295,618		(895,251)
Maturities, calls and payments of investment securities available for sale	126,669		154,194
Purchase of investment securities available for sale	(388,636)		(103,079)
Proceeds from sales of investment securities available for sale	1,248		40,930
Purchase of premises and equipment	(1,748)		(1,739)
Proceeds from sales of other real estate owned	—		1,290
Proceeds from sales of assets held for sale	3,730		394
Proceeds from redemption of Federal Home Loan Bank stock	—		2,560
Purchases of Federal Home Loan Bank stock	(1,272)		(2,844)
Proceeds from sales of premises and equipment	10		53
Purchases of bank owned life insurance	(105)		(3,579)
Proceeds from bank owned life insurance death benefit	—		1,324
Cash received from return of New Market Tax Credit equity method investment	9,642		—
Capital contributions to low-income housing tax credit partnerships	(12,637)		(2,335)
Net cash provided (used) by investing activities	32,519		(808,082)
Cash flows from financing activities:
Net increase in deposits	463,716		985,057
Federal Home Loan Bank advances	10		19,000
Repayment of Federal Home Loan Bank advances	(10)		(19,000)
Common stock cash dividends paid	(14,383)		(14,494)
Net increase in securities sold under agreement to repurchase	10,746		4,275
Proceeds from exercise of stock options	—		122
Repurchase of common stock	(757)		(19,098)
Net cash provided by financing activities	459,322		955,862

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	Six Months Ended June 30,
	2021		2020
Net increase in cash and cash equivalents	521,611		186,507
Cash and cash equivalents at beginning of period	743,322		228,568
Cash and cash equivalents at end of period	$	1,264,933	$	415,075
Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,571	$	8,144
Cash paid for income taxes, net of refunds	7,967		118
Supplemental non-cash disclosures of cash flow information:
Transfers of loans receivable to other real estate owned	$	—	$	270
Loans received from return of New Market Tax Credit equity method investment	15,596		—
Transfers of properties classified as held for sale to prepaid expenses and other assets from premises and equipment, net	1,685		—
Investment in low-income housing tax credit partnership and related funding commitment	—		10,237
Cumulative effect from change in accounting policy (1)	—		7,175
Right of use assets obtained in exchange for new operating lease liabilities	8,393		591

(1) Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses.

See accompanying Notes to Condensed Consolidated Financial Statements.

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HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1)Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements

(a) Description of Business

The Company is primarily engaged in the business of planning, directing and coordinating the business activities of its wholly-owned subsidiary, Heritage Bank. The Bank is headquartered in Olympia, Washington and conducts business from its 53 branch offices as of June 30, 2021 located throughout Washington State and the greater Portland, Oregon area. The Bank’s business consists primarily of commercial lending and deposit relationships with small and medium-sized businesses and their owners in its market areas and attracting deposits from the general public. The Bank also makes real estate construction and land development loans, consumer loans and originates first mortgage loans on residential properties primarily located in its market areas. The Bank's deposits are insured by the FDIC.

The Company announced a plan in July 2021 to consolidate four branches during October 2021 to create a more efficient branch footprint. This will reduce the branch count from 53 to 49. The Company plans to integrate these locations into other branches within its network.

(b) Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. It is recommended that these unaudited Condensed Consolidated Financial Statements and accompanying Notes be read with the audited Consolidated Financial Statements and the accompanying Notes included in the 2020 Annual Form 10-K. In management's opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

To prepare unaudited Condensed Consolidated Financial Statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided. Management believes that the judgments, estimates, and assumptions used in the preparation of the Condensed Consolidated Financial Statements are appropriate based on the facts and circumstances at the time. Actual results, however, could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to management's estimate of ACL on loans, management's estimate of ACL on unfunded commitments, management's evaluation of goodwill impairment and management's estimate of the fair value of financial instruments.

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany balances and transactions among the Company and the Bank have been eliminated in consolidation.

Certain prior year amounts in the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current year’s presentation. Reclassifications had no effect on the prior years' net income or stockholders’ equity.

(c) Significant Accounting Policies

The significant accounting policies used in preparation of the Condensed Consolidated Financial Statements are disclosed in greater detail in the 2020 Annual Form 10-K. There have not been any material changes in the Company's significant accounting policies from those contained in the 2020 Annual Form 10-K during the six months ended June 30, 2021.

(d) Recently Issued or Adopted Accounting Pronouncements

FASB ASU 2016-13, Financial Instruments: Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended by ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11, and ASU 2020-02, was originally issued in June 2016. This ASU replaced the incurred loss methodology with an expected loss methodology, which is commonly referred to as the "CECL" methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans receivable. It also applies to off-balance sheet credit exposures such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments. In addition, CECL Adoption made changes to the accounting for credit losses on investment securities available for sale. This ASU requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years with early adoption permitted for fiscal years after December 15, 2018 and can be delayed under a provision of the CARES Act until the end of the official health emergency declaration. The Bank adopted ASU 2016-13 on January 1, 2020 using the modified retrospective method for all financial assets measured at amortized cost and unfunded commitments. At adoption, the Bank elected not to measure an ACL on accrued interest receivable on loans receivable or accrued interest receivable on

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investment securities available for sale as Bank policy is to reverse interest income for uncollectible accrued interest receivable balances in a timely manner.

The adoption of ASU 2016-13 included an increase to the ACL on loans of $3.4 million and an increase to the ACL on unfunded commitments of $3.7 million, resulting in a pretax cumulative-effect adjustment of $7.1 million. The impact of this adjustment to beginning retained earnings on January 1, 2020 was $5.6 million, net of tax.

FASB ASU 2020-04, Reference Rate Reform (Topic 848), as amended by ASU 2021-01, was issued in March 2020 and provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The amendments are elective, apply to all entities, and provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The Bank’s swap-related transactions are the majority of the Company's LIBOR exposure. Effective January 25, 2021, the Company adhered to the Interbank Offered Rate Fallbacks Protocol as published by the International Swaps and Derivatives Association, Inc. and recommended by the Alternative Reference Rates Committee. The Company does not expect this ASU to have a material impact on its business operations and the Condensed Consolidated Financial Statements.

(2)Investment Securities

The Company’s investment policy is designed primarily to provide and maintain liquidity, generate a favorable return on assets without incurring undue interest rate and credit risk, and complement the Bank’s lending activities.

There were no securities classified as trading or held to maturity at June 30, 2021 or December 31, 2020.

(a) Securities by Type and Maturity

The following tables present the amortized cost and fair value of investment securities available for sale at the dates indicated and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:

	June 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
U.S. government and agency securities	$	104,688	$	477	$	(1,518)	$	103,647
Municipal securities	219,174		10,341		(588)		228,927
Residential CMO and MBS	256,875		3,465		(846)		259,494
Commercial CMO and MBS	413,304		9,973		(1,337)		421,940
Corporate obligations	7,004		17		(3)		7,018
Other asset-backed securities	27,956		551		(9)		28,498
Total	$	1,029,001	$	24,824	$	(4,301)	$	1,049,524

	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
U.S. government and agency securities	$	44,713	$	947	$	—	$	45,660
Municipal securities	197,634		12,561		(227)		209,968
Residential CMO and MBS	196,956		5,125		(209)		201,872
Commercial CMO and MBS	290,638		13,198		(90)		303,746
Corporate obligations	10,971		125		—		11,096
Other asset-backed securities	29,283		565		(27)		29,821
Total	$	770,195	$	32,521	$	(553)	$	802,163

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The amortized cost and fair value of investment securities available for sale at June 30, 2021, by contractual maturity, are set forth below. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	33,741	$	33,967
Due after one year through five years	132,997		138,549
Due after five years through ten years	344,562		351,995
Due after ten years	517,701		525,013
Total	$	1,029,001	$	1,049,524

There were no holdings of investment securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity at June 30, 2021 and December 31, 2020.

(b) Unrealized Losses and ACL on Investment Securities Available for Sale

The following tables show the gross unrealized losses and fair value of the Company’s investment securities available for sale for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2021 and December 31, 2020:

	June 30, 2021
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
U.S. government and agency securities	$	50,213	$	(1,518)	$	—	$	—	$	50,213	$	(1,518)
Municipal securities	32,012		(484)		2,348		(104)		34,360		(588)
Residential CMO and MBS	42,784		(715)		22,901		(131)		65,685		(846)
Commercial CMO and MBS	84,771		(1,331)		2,595		(6)		87,366		(1,337)
Corporate obligations	4,990		(3)		—		—		4,990		(3)
Other asset-backed securities	—		—		1,262		(9)		1,262		(9)
Total	$	214,770	$	(4,051)	$	29,106	$	(250)	$	243,876	$	(4,301)

	December 31, 2020
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
Municipal securities	$	10,264	$	(227)	$	—	$	—	$	10,264	$	(227)
Residential CMO and MBS	—		—		25,293		(209)		25,293		(209)
Commercial CMO and MBS	11,404		(29)		7,499		(61)		18,903		(90)
Other asset-backed securities	—		—		4,570		(27)		4,570		(27)
Total	$	21,668	$	(256)	$	37,362	$	(297)	$	59,030	$	(553)

The Company evaluated investment securities available for sale as of June 30, 2021 and December 31, 2020 and determined that any declines in fair value were attributable to changes in interest rates relative to where these investments fall within the yield curve and individual characteristics. Management monitors published credit ratings for adverse changes for all rated investment securities and none of these securities had a below investment grade credit rating as of both June 30, 2021 and December 31, 2020. In addition, the Company does not intend to sell these securities nor does the Company consider it more likely than not that it will be required to sell these securities before the recovery of the amortized cost basis, which may be upon maturity. Therefore, no ACL on investment securities available for sale was recorded as of June 30, 2021 and December 31, 2020.

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(c) Realized Gains and Losses

The following table presents the gross realized gains and losses on the sale of investment securities available for sale for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Gross realized gains	$	—	$	414	$	29	$	1,442
Gross realized losses	—		(5)		—		(19)
Net realized gains	$	—	$	409	$	29	$	1,423

(d) Pledged Securities

The following table summarizes the amortized cost and fair value of investment securities available for sale that are pledged as collateral for the following obligations at June 30, 2021 and December 31, 2020:

	June 30, 2021				December 31, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Washington and Oregon state public deposits	$	124,649	$	128,591	$	119,652	$	124,228
Securities sold under agreement to repurchase	51,022		51,719		38,630		39,945
Other securities pledged	41,509		42,371		29,665		30,717
Total	$	217,180	$	222,681	$	187,947	$	194,890

(e) Accrued Interest Receivable

Accrued interest receivable excluded from amortized cost on investment securities available for sale totaled $4.2 million and $3.6 million at June 30, 2021 and December 31, 2020, respectively. No amounts of accrued interest receivable on investment securities available for sale were reversed against interest income on investment securities available for sale during the three and six months ended June 30, 2021 and June 30, 2020.

(3)Loans Receivable

(a) Loan Origination/Risk Management

The Bank originates loans in the ordinary course of business and has also acquired loans through mergers and acquisitions. Accrued interest receivable was excluded from disclosures presenting the Bank's amortized cost of loans receivable as it was deemed insignificant.

The Bank categorizes the individual loans in the total loan portfolio into four segments: commercial business; residential real estate; real estate construction and land development; and consumer. Within these segments are classes of loans for which management monitors and assesses credit risk in the loan portfolios. A detailed description of the portfolio segments and classes is contained in the 2020 Annual Form 10-K.

The amortized cost of loans receivable, net of ACL on loans at June 30, 2021 and December 31, 2020 consisted of the following portfolio segments and classes:

	June 30, 2021		December 31, 2020
	(In thousands)
Commercial business:
Commercial and industrial	$	651,915	$	733,098
SBA PPP	544,250		715,121
Owner-occupied CRE	865,662		856,684
Non-owner occupied CRE	1,425,238		1,410,303
Total commercial business	3,487,065		3,715,206
Residential real estate	120,148		122,756

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	June 30, 2021		December 31, 2020
	(In thousands)
Real estate construction and land development:
Residential	88,601		78,259
Commercial and multifamily	239,979		227,454
Total real estate construction and land development	328,580		305,713
Consumer	271,737		324,972
Loans receivable	4,207,530		4,468,647
Allowance for credit losses on loans	(51,562)		(70,185)
Loans receivable, net	$	4,155,968	$	4,398,462
Balances included in the amortized cost of Loans receivable:
Unamortized net discount on acquired loans	$	(5,006)	$	(6,575)
Unamortized net deferred fee	$	(17,994)	$	(15,458)

(b) Concentrations of Credit

Most of the Bank’s lending activity occurs within its primary market areas which are concentrated along the I-5 corridor from Whatcom County to Clark County in Washington State and Multnomah County and Washington County in Oregon, as well as other contiguous markets and represents a geographic concentration. Additionally, our loan portfolio is concentrated in commercial-type loans, including commercial business loans and commercial and multifamily real estate construction and land development loans.

(c) Credit Quality Indicators

As part of the on-going monitoring of the credit quality of the Bank’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk grade of the loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) nonperforming loans, (v) past due status, and (vi) the general economic conditions of the United States of America, and specifically the states of Washington and Oregon.

The Bank utilizes a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 10. Risk grades are aggregated to create the risk categories of Pass for grades 1 to 6, Special Mention or "SM" for grade 7, Substandard or "SS" for grade 8, Doubtful for grade 9 and Loss for grade 10. Descriptions of the general characteristics of the risk grades, including qualitative information on how the risk grades relate to the risk of loss, are contained in the 2020 Annual Form 10-K. Numerical loan grades for loans are established at the origination of the loan. Changes to loan grades are considered at the time new information about the performance of a loan becomes available, including the receipt of updated financial information from the borrower, results of annual term loan reviews and scheduled loan reviews. For consumer loans, the Bank follows the FDIC’s Uniform Retail Credit Classification and Account Management Policy for subsequent classification in the event of payment delinquencies or default. Typically, an individual loan grade will not be changed from the prior period unless there is a specific indication of credit deterioration or improvement. Credit deterioration is evidenced by delinquency, direct communications with the borrower, or other borrower information that becomes known to management. Credit improvements are evidenced by known facts regarding the borrower or the collateral property.

Loan grades relate to the likelihood of losses in that the higher the grade, the greater the loss potential. Loans with a pass grade may have some estimated inherent losses, but to a lesser extent than the other loan grades. The SM loan grade is transitory in that the Bank is waiting on additional information to determine the likelihood and extent of the potential loss. The likelihood of loss for SM graded loans, however, is greater than Watch graded loans because there has been measurable credit deterioration. Loans with a SS grade are generally loans with higher risk of loss if the deficiencies are not corrected. For Doubtful and Loss graded loans, the Bank is almost certain of the losses and the outstanding principal balances are generally charged off to the realizable value.

Regulatory agencies provided guidance regarding credit risk ratings, delinquency reporting and nonaccrual status for loans adversely impacted by COVID-19. The Bank has and will continue to exercise judgment in determining the risk rating for impacted borrowers and will not automatically adversely classify credits that are affected by COVID-19. The Bank also will not designate loans with payment deferrals granted due to COVID-19 as past due because of the deferral. Due to the short-term nature of the forbearance and other relief programs the Bank is offering as a result of the COVID-19 pandemic, management expects that borrowers granted relief under these programs will generally not be reported as nonaccrual during the deferral period.

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The following table presents the amortized cost of loans receivable by risk grade as of June 30, 2021 and December 31, 2020:

	June 30, 2021
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2021		2020		2019		2018		2017		Prior
	(In thousands)
Commercial business:
Commercial and industrial
Pass	$	51,172	$	112,717	$	111,892	$	59,450	$	36,904	$	112,403	$	102,256	$	989	$	587,783
SM	1,003		904		6,618		6,553		3,036		5,787		5,446		—		29,347
SS	1,133		1,422		6,101		1,669		4,376		7,888		11,453		743		34,785
Total	53,308		115,043		124,611		67,672		44,316		126,078		119,155		1,732		651,915
SBA PPP
Pass	347,813		196,437		—		—		—		—		—		—		544,250
Owner-occupied CRE
Pass	57,984		89,380		162,488		93,738		70,985		298,991		—		75		773,641
SM	—		5,219		5,257		12,922		10,472		17,373		—		—		51,243
SS	—		694		—		3,818		7,083		29,183		—		—		40,778
Total	57,984		95,293		167,745		110,478		88,540		345,547		—		75		865,662
Non-owner occupied CRE
Pass	67,602		184,174		189,439		144,247		167,605		598,127		—		—		1,351,194
SM	—		5,094		1,971		353		2,293		10,016		—		—		19,727
SS	—		—		—		3,623		—		50,694		—		—		54,317
Total	67,602		189,268		191,410		148,223		169,898		658,837		—		—		1,425,238
Total commercial business
Pass	524,571		582,708		463,819		297,435		275,494		1,009,521		102,256		1,064		3,256,868
SM	1,003		11,217		13,846		19,828		15,801		33,176		5,446		—		100,317
SS	1,133		2,116		6,101		9,110		11,459		87,765		11,453		743		129,880
Total	526,707		596,041		483,766		326,373		302,754		1,130,462		119,155		1,807		3,487,065
Residential real estate
Pass	24,279		26,181		31,274		8,876		9,210		19,557		—		—		119,377
SS	—		—		—		—		57		714		—		—		771
Total	24,279		26,181		31,274		8,876		9,267		20,271		—		—		120,148
Real estate construction and land development:
Residential
Pass	23,444		38,628		21,658		2,674		401		1,796		—		—		88,601
Commercial and multifamily
Pass	16,787		42,010		152,906		22,387		1,941		2,436		—		—		238,467
SS	—		636		443		—		—		433		—		—		1,512
Total	16,787		42,646		153,349		22,387		1,941		2,869		—		—		239,979
Total real estate construction and land development
Pass	40,231		80,638		174,564		25,061		2,342		4,232		—		—		327,068
SS	—		636		443		—		—		433		—		—		1,512
Total	40,231		81,274		175,007		25,061		2,342		4,665		—		—		328,580
Consumer
Pass	11,396		20,456		60,434		40,325		21,866		19,613		94,243		193		268,526
SS	—		147		712		652		608		1,055		33		4		3,211
Total	11,396		20,603		61,146		40,977		22,474		20,668		94,276		197		271,737

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	June 30, 2021
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2021		2020		2019		2018		2017		Prior
Loans receivable
Pass	600,477		709,983		730,091		371,697		308,912		1,052,923		196,499		1,257		3,971,839
SM	1,003		11,217		13,846		19,828		15,801		33,176		5,446		—		100,317
SS	1,133		2,899		7,256		9,762		12,124		89,967		11,486		747		135,374
Total	$	602,613	$	724,099	$	751,193	$	401,287	$	336,837	$	1,176,066	$	213,431	$	2,004	$	4,207,530

(1) Represents loans receivable balance at June 30, 2021 which was converted from a revolving loan to an amortizing loan during the six months ended June 30, 2021.

	December 31, 2020
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2020		2019		2018		2017		2016		Prior
	(In thousands)
Commercial business:
Commercial and industrial
Pass	$	118,971	$	127,919	$	70,766	$	44,231	$	37,658	$	95,958	$	121,440	$	819	$	617,762
SM	14,430		9,162		10,878		4,171		5,700		3,579		11,790		814		60,524
SS	2,199		11,835		3,416		9,348		1,052		7,651		15,484		3,827		54,812
Total	135,600		148,916		85,060		57,750		44,410		107,188		148,714		5,460		733,098
SBA PPP
Pass	715,121		—		—		—		—		—		—		—		715,121
Owner-occupied CRE
Pass	89,224		167,095		94,830		80,138		74,902		254,864		—		—		761,053
SM	6,146		4,540		16,386		11,231		5,464		12,105		—		—		55,872
SS	—		—		114		7,320		3,313		29,012		—		—		39,759
Total	95,370		171,635		111,330		98,689		83,679		295,981		—		—		856,684
Non-owner-occupied CRE
Pass	197,548		173,153		148,830		172,438		240,614		406,817		—		—		1,339,400
SM	—		1,979		357		2,448		6,210		3,539		—		—		14,533
SS	—		—		3,623		—		35,455		17,292		—		—		56,370
Total	197,548		175,132		152,810		174,886		282,279		427,648		—		—		1,410,303
Total commercial business
Pass	1,120,864		468,167		314,426		296,807		353,174		757,639		121,440		819		3,433,336
SM	20,576		15,681		27,621		17,850		17,374		19,223		11,790		814		130,929
SS	2,199		11,835		7,153		16,668		39,820		53,955		15,484		3,827		150,941
Total	1,143,639		495,683		349,200		331,325		410,368		830,817		148,714		5,460		3,715,206
Residential real estate
Pass	30,141		41,829		15,730		10,362		7,322		16,825		—		—		122,209
SS	—		—		—		59		—		488		—		—		547
Total	30,141		41,829		15,730		10,421		7,322		17,313		—		—		122,756
Real estate construction and land development:
Residential
Pass	33,801		36,697		2,725		1,097		971		1,042		—		—		76,333
SS	—		—		—		1,926		—		—		—		—		1,926
Total	33,801		36,697		2,725		3,023		971		1,042		—		—		78,259

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Commercial and multifamily
Pass	27,423		151,020		38,682		5,660		689		1,407		—		—		224,881
SM	67		1,011		—		—		—		29		—		—		1,107
SS	572		450		—		—		—		444		—		—		1,466
Total	28,062		152,481		38,682		5,660		689		1,880		—		—		227,454
Total real estate construction and land development
Pass	61,224		187,717		41,407		6,757		1,660		2,449		—		—		301,214
SM	67		1,011		—		—		—		29		—		—		1,107
SS	572		450		—		1,926		—		444		—		—		3,392
Total	61,863		189,178		41,407		8,683		1,660		2,922		—		—		305,713
Consumer
Pass	43,742		77,083		53,195		30,559		13,443		15,453		87,547		315		321,337
SS	34		404		684		648		420		1,319		78		48		3,635
Total	43,776		77,487		53,879		31,207		13,863		16,772		87,625		363		324,972
Loans receivable
Pass	1,255,971		774,796		424,758		344,485		375,599		792,366		208,987		1,134		4,178,096
SM	20,643		16,692		27,621		17,850		17,374		19,252		11,790		814		132,036
SS	2,805		12,689		7,837		19,301		40,240		56,206		15,562		3,875		158,515
Total	$	1,279,419	$	804,177	$	460,216	$	381,636	$	433,213	$	867,824	$	236,339	$	5,823	$	4,468,647

(1) Represents loans receivable balance at December 31, 2020 which was converted from a revolving loan to an amortizing loan during the year ended December 31, 2020.

(d) Nonaccrual Loans

The following table presents the amortized cost of nonaccrual loans for the dates indicated:

	June 30, 2021
	Nonaccrual without ACL		Nonaccrual with ACL		Total Nonaccrual
	(In thousands)
Commercial business:
Commercial and industrial	$	7,491	$	5,548	$	13,039
Owner-occupied CRE	3,784		12,400		16,184
Non-owner occupied CRE	1,363		3,623		4,986
Total commercial business	12,638		21,571		34,209
Residential real estate	—		60		60
Real estate construction and land development:
Commercial and multifamily	—		1,014		1,014
Consumer	—		58		58
Total	$	12,638	$	22,703	$	35,341

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	December 31, 2020
	Nonaccrual without ACL		Nonaccrual with ACL		Total Nonaccrual
	(In thousands)
Commercial business:
Commercial and industrial	$	22,039	$	9,208	$	31,247
Owner-occupied CRE	4,693		13,700		18,393
Non-owner occupied CRE	3,424		3,722		7,146
Total commercial business	30,156		26,630		56,786
Residential real estate	67		117		184
Real estate construction and land development:
Commercial and multifamily	572		450		1,022
Consumer	31		69		100
Total	$	30,826	$	27,266	$	58,092

The following table presents the reversal of interest income on loans due to the write-off of accrued interest receivable upon the initial classification of loans as nonaccrual loans and the interest income recognized due to payment in full of previously classified nonaccrual loans during the following periods:

	Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
	Interest Income Reversed		Interest Income Recognized		Interest Income Reversed		Interest Income Recognized
	(In thousands)
Commercial business:
Commercial and industrial	$	(5)	$	1,981	$	—	$	89
Owner-occupied CRE	—		3		—		14
Non-owner occupied CRE	—		—		—		22
Total commercial business	(5)		1,984		—		125
Consumer	—		—		—		37
Total	$	(5)	$	1,984	$	—	$	162

	Six Months Ended June 30, 2021				Six months ended June 30, 2020
	Interest Income Reversed		Interest Income Recognized		Interest Income Reversed		Interest Income Recognized
	(in thousands)
Commercial business:
Commercial and industrial	$	(10)	$	2,044	$	(16)	$	308
Owner-occupied CRE	—		117		—		60
Non-owner occupied CRE	—		313		—		67
Total commercial business	(10)		2,474		(16)		435
Real estate construction and land development:
Residential	—		73		—		—
Consumer	—		—		—		47
Total	$	(10)	$	2,547	$	(16)	$	482

For the three and six months ended June 30, 2021 and 2020, no interest income was recognized subsequent to a loan’s classification as nonaccrual, except as indicated in the tables above due to payment in full.

(e) Past due loans

The Bank performs an aging analysis of past due loans using policies consistent with regulatory reporting requirements with categories of 30-89 days past due and 90 or more days past due. The amortized cost of past due loans as of June 30, 2021

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and December 31, 2020 were as follows:

	June 30, 2021
	30-89 Days		90 Days or Greater		Total Past  Due		Current		Loans Receivable
	(In thousands)
Commercial business:
Commercial and industrial	$	489	$	7,525	$	8,014	$	643,901	$	651,915
SBA PPP	—		—		—		544,250		544,250
Owner-occupied CRE	—		—		—		865,662		865,662
Non-owner occupied CRE	4,038		—		4,038		1,421,200		1,425,238
Total commercial business	4,527		7,525		12,052		3,475,013		3,487,065
Residential real estate	—		30		30		120,118		120,148
Real estate construction and land development:
Residential	—		—		—		88,601		88,601
Commercial and multifamily	—		571		571		239,408		239,979
Total real estate construction and land development	—		571		571		328,009		328,580
Consumer	788		—		788		270,949		271,737
Total	$	5,315	$	8,126	$	13,441	$	4,194,089	$	4,207,530

	December 31, 2020
	30-89 Days		90 Days or Greater		Total Past  Due		Current		Loans Receivable
	(In thousands)
Commercial business:
Commercial and industrial	$	4,621	$	8,082	$	12,703	$	720,395	$	733,098
SBA PPP	—		—		—		715,121		715,121
Owner-occupied CRE	991		403		1,394		855,290		856,684
Non-owner occupied CRE	412		1,970		2,382		1,407,921		1,410,303
Total commercial business	6,024		10,455		16,479		3,698,727		3,715,206
Residential real estate	765		16		781		121,975		122,756
Real estate construction and land development:
Residential	—		—		—		78,259		78,259
Commercial and multifamily	2,225		—		2,225		225,229		227,454
Total real estate construction and land development	2,225		—		2,225		303,488		305,713
Consumer	1,407		30		1,437		323,535		324,972
Total	$	10,421	$	10,501	$	20,922	$	4,447,725	$	4,468,647

There was one commercial and industrial loan 90 days or more past due that was still accruing interest as of June 30, 2021 with an amortized cost of $286,000. There were no loans 90 days or more past due that were still accruing interest as of December 31, 2020.

(f) Collateral-dependent Loans

The type of collateral securing loans individually evaluated for credit losses and for which the repayment was expected to be provided substantially through the operation or sale of the collateral as of June 30, 2021 and December 31, 2020 were as

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follows:

	June 30, 2021
	CRE(1)		Farmland(1)		Residential Real Estate(1)		Other(1)		Total(1)
	(In thousands)
Commercial business:
Commercial and industrial	$	1,767	$	5,152	$	751	$	331	$	8,001
Owner-occupied CRE	4,346		—		—		—		4,346
Non-owner occupied CRE	1,363		—		—		—		1,363
Total commercial business	7,476		5,152		751		331		13,710
Real estate construction and land development:
Commercial and multifamily	571		—		—		—		571
Total	$	8,047	$	5,152	$	751	$	331	$	14,281

(1) Balances represent the amortized cost of the loan. If multiple collateral sources secure the loan, the entire balance is presented in the primary collateral category.

	December 31, 2020
	CRE(1)		Farmland(1)		Residential Real Estate(1)		Other(1)		Total(1)
	(In thousands)
Commercial business:
Commercial and industrial	$	1,893	$	18,738	$	584	$	1,405	$	22,620
Owner-occupied CRE	4,693		—		—		—		4,693
Non-owner occupied CRE	3,424		—		—		—		3,424
Total commercial business	10,010		18,738		584		1,405		30,737
Residential real estate	—		—		67		—		67
Real estate construction and land development:
Commercial and multifamily	572		—		—		—		572
Consumer	—		—		30		—		30
Total	$	10,582	$	18,738	$	681	$	1,405	$	31,406

(1) Balances represent the amortized cost of the loan. If multiple collateral sources secure the loan, the entire balance is presented in the primary collateral category.

There have been no significant changes to the collateral securing individually evaluated loans for credit losses and for which repayment was expected to be provided substantially through the operation or sale of the collateral during the six months ended June 30, 2021, except changes due to additions or deletions of loans into this classification.

(g) Troubled Debt Restructured Loans

A TDR is a restructuring in which the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that it would not otherwise consider. The TDR modifications or concessions are made to increase the likelihood that these borrowers with financial difficulties will be able to satisfy their debt obligations as amended.

The concessions granted in the restructurings largely consisted of maturity extensions. The Bank typically grants shorter extension periods to continually monitor these TDR loans despite the fact that the extended date might not be the date the Bank expects the scheduled cash flow from these borrowers. The Bank does not consider these modifications a subsequent default of a TDR as new loan terms, specifically new maturity dates, were granted.

The CARES Act, CA Act and regulatory agencies provided guidance around the modification of loans as a result of the COVID-19 pandemic, and outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined by the guidance are not TDRs. This includes short-term (e.g. six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers were considered current if they were less than 30 days past due on the contractual payments as of December 31, 2019 under the CARES Act and at the time a modification program is implemented under related regulatory guidance. The CA Act extended relief offered under the CARES Act through January 1, 2022 or 60 days after the end of the national emergency declared by the President, whichever is earlier. The Bank elected to apply the temporary relief under the applicable guidance to certain eligible short-term modifications and did not classify the modifications as TDRs for accounting or disclosure purposes. However, COVID

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Modifications whose payment deferral exceeded 180 days following the loans' initial modification were classified as TDRs based on the Bank's internal policy.

Loans that were modified as TDR loans are set forth in the following tables for the periods indicated:

	Three Months Ended June 30,
	2021			2020
	Number of Contracts	Amortized Cost (1) (2)		Number of Contracts	Amortized Cost (1) (2)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	18	$	5,673	31	$	11,849
Owner-occupied CRE	1	2,200		4	1,657
Non-owner occupied CRE	1	251		2	398
Total commercial business	20	8,124		37	13,904
Real estate construction and land development:
Residential	—	—		4	1,751
Commercial and multifamily	1	443		—	—
Total real estate construction and land development	1	443		4	1,751
Consumer	6	146		9	82
Total	27	$	8,713	50	$	15,737

	Six Months Ended June 30,
	2021			2020
	Number of Contracts	Amortized Cost (1) (2)		Number of Contracts	Amortized Cost (1) (2)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	31	$	8,713	35	$	12,652
Owner-occupied CRE	2	5,857		6	3,067
Non-owner occupied CRE	2	2,222		3	2,143
Total commercial business	35	16,792		44	17,862
Residential real estate	1	181		—	—
Real estate construction and land development:
Residential	—	—		4	1,751
Commercial and multifamily	1	443		—	—
Total real estate construction and land development	1	443		4	1,751
Consumer	21	511		14	173
Total TDR loans	58	$	17,927	62	$	19,786

(1) Number of contracts and amortized cost represent loans which have balances as of period end, net of subsequent payments after modifications. Certain modified loans may have been paid-down or charged-off during the three or six months ended June 30, 2021 and June 30, 2020.

(2) As the Bank did not forgive any principal or interest balance as part of the loan modifications, the Bank’s amortized cost in each loan at the date of modification (pre-modification) did not change as a result of the modification (post-modification).

The Bank had an ACL on loans of $1.7 million and $1.5 million at June 30, 2021 and June 30, 2020, respectively, related to these TDR loans which were restructured during the six months ended June 30, 2021 and June 30, 2020, respectively.

The unfunded commitment to borrowers related to TDR loans was $4.9 million and $2.6 million at June 30, 2021 and December 31, 2020, respectively.

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The following tables present loans that were modified in a troubled debt restructure and subsequently defaulted within twelve months from the modification date during the periods indicated:

	Three Months Ended June 30,
	2021			2020
	Number of Contracts (1)	Amortized Cost (1)		Number of Contracts (1)	Amortized Cost (1)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	1	$	46	2	$	302
Owner-occupied CRE	—	—		1	445
Non-owner occupied CRE	—	—		1	280
Total	1	$	46	4	$	1,027

	Six Months Ended June 30,
	2021			2020
	Number of Contracts (1)	Amortized Cost (1)		Number of Contracts (1)	Amortized Cost (1)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	2	$	789	4	$	2,155
Owner-occupied CRE	—	—		1	445
Non-owner occupied CRE	—	—		2	398
Total	2	$	789	7	$	2,998

(1) Number of contracts and amortized cost represent loans which have balances as of period end, net of subsequent payments after modifications. Certain modified loans may have been paid-down or charged-off during the six months ended June 30, 2021 and June 30, 2020.

During the three and six months ended June 30, 2021 and 2020 all of the TDR loans in the tables above defaulted because each was past its modified maturity date and the borrower had not subsequently repaid the credits. The Bank chose not to extend further the maturity date on these loans. The Bank had an ACL on loans of $7,000 and $494,000 at June 30, 2021 and June 30, 2020, respectively, related to these TDR loans which defaulted during the six months ended June 30, 2021 and 2020.

(h) Accrued interest receivable on loans receivable

Accrued interest receivable on loans receivable totaled $12.8 million and $15.8 million at June 30, 2021 and December 31, 2020, respectively. It is excluded from the calculation of the ACL on loans as interest accrued, but not received, is reversed timely.

(i) Foreclose proceedings in process

At June 30, 2021, there was one consumer mortgage loan secured by a residential real estate property (included in loans receivable on the Condensed Consolidated Statements of Financial Position) of $79,000 for which formal foreclosure proceedings were in process.

(4)Allowance for Credit Losses on Loans

Effective January 1, 2020, the Bank adopted ASU 2016-13. Risk characteristics by segment considered in the CECL model are the same as those disclosed in the 2020 Annual Form 10-K.

The baseline loss rates used to calculate the ACL on loans at June 30, 2021 utilized the Bank's average quarterly historical loss information from December 31, 2012 through the balance sheet date. There were no changes to this assumption during the six months ended June 30, 2021. The Bank believes the historic loss rates are viable inputs to the current CECL model as the Bank's lending practice and business has remained relatively stable throughout the periods. While the Bank's assets have grown, the credit culture has stayed relatively consistent.

Prepayments included in the CECL model at June 30, 2021 were based on the 48-month rolling historical averages for each segment, which management believes is an accurate representation of future prepayment activity. There were no changes to this assumption during the six months ended June 30, 2021.

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The reasonable and supportable period used in the CECL model as of June 30, 2021 was five quarters. There were no changes to this assumption during the six months ended June 30, 2021. Management believes that forecasts beyond this five quarter time period tend to diverge in economic assumptions and may be less comparable to actual future events. As the length of the reasonable and supportable period increases, the degree of judgment involved in estimating the allowance will likely increase.

The Bank used a two-quarter reversion period in calculating the ACL on loans as of June 30, 2021 as it believes the historical loss information is relevant to the expected credit losses and recognizes the declining precision and increasing uncertainty of estimating credit losses in those periods beyond which it can make reasonable and supportable forecasts. There were no changes to this assumption during the six months ended June 30, 2021.

During the six months ended June 30, 2021, the ACL on loans decreased $18.6 million, or 26.5%, due primarily to a reversal of provision for credit losses on loans of $19.0 million following improvements in the economic forecast at June 30, 2021 as compared to the forecast at December 31, 2020 and secondarily due to a decrease in total loans receivable, excluding SBA PPP loans which are fully guaranteed by the SBA and not provisioned for in the ACL on loans.

A summary of the changes in the ACL on loans during the six months ended June 30, 2021 and 2020 is as follows:

	Six Months Ended June 30,
	2021		2020
	(In thousands)
Balance at the beginning of the year	$	70,185	$	36,171
Impact of CECL Adoption	—		1,822
Balance at the beginning of the year, as adjusted	70,185		37,993
Charge-offs	(320)		(3,852)
Recoveries of loans previously charged-off	653		1,455
(Reversal of) provision for credit losses on loans	(18,956)		35,905
Balance at the end of the year	$	51,562	$	71,501

The following tables detail the activity in the ACL on loans disaggregated by segment and class for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30, 2021
	Beginning Balance		Charge-offs		Recoveries		Reversal of Provision for Credit Losses		Ending Balance
	(In thousands)
Commercial business:
Commercial and industrial	$	21,770	$	(13)	$	132	$	(4,404)	$	17,485
SBA PPP	—		—		—		—		—
Owner-occupied CRE	10,464		—		11		(1,913)		8,562
Non-owner occupied CRE	12,970		—		—		(2,340)		10,630
Total commercial business	45,204		(13)		143		(8,657)		36,677
Residential real estate	1,402		—		—		(249)		1,153
Real estate construction and land development:
Residential	2,048		—		4		(416)		1,636
Commercial and multifamily	11,223		—		—		(2,388)		8,835
Total real estate construction and land development	13,271		—		4		(2,804)		10,471
Consumer	4,348		(120)		144		(1,111)		3,261
Total	$	64,225	$	(133)	$	291	$	(12,821)	$	51,562

	Six Months Ended June 30, 2021
	Beginning Balance	Charge-offs	Recoveries	(Reversal of) Provision for Credit Losses	Ending Balance
	(In thousands)
Commercial business:

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	Six Months Ended June 30, 2021
	Beginning Balance		Charge-offs		Recoveries		(Reversal of) Provision for Credit Losses		Ending Balance
	(In thousands)
Commercial and industrial	$	30,010	$	(14)	$	337	$	(12,848)	$	17,485
SBA PPP	—		—		—		—		—
Owner-occupied CRE	9,486		—		13		(937)		8,562
Non-owner occupied CRE	10,112		—		—		518		10,630
Total commercial business	49,608		(14)		350		(13,267)		36,677
Residential real estate	1,591		—		—		(438)		1,153
Real estate construction and land development:
Residential	1,951		—		20		(335)		1,636
Commercial and multifamily	11,141		(1)		—		(2,305)		8,835
Total real estate construction and land development	13,092		(1)		20		(2,640)		10,471
Consumer	5,894		(305)		283		(2,611)		3,261
Total	$	70,185	$	(320)	$	653	$	(18,956)	$	51,562

	Three Months Ended June 30, 2020
	Beginning Balance		Charge-offs		Recoveries		Provision for (Reversal of Provision for) Credit Losses		Ending Balance
	(In thousands)
Commercial business:
Commercial and industrial	$	13,900	$	(1,824)	$	69	$	17,628	$	29,773
Owner-occupied CRE	6,216		—		2		3,785		10,003
Non-owner occupied CRE	7,750		—		—		2,916		10,666
Total commercial business	27,866		(1,824)		71		24,329		50,442
Residential real estate	3,026		—		—		(803)		2,223
Real estate construction and land development:
Residential	864		—		7		(304)		567
Commercial and multifamily	11,444		—		—		(2,887)		8,557
Total real estate construction and land development	12,308		—		7		(3,191)		9,124
Consumer	4,340		(431)		197		5,606		9,712
Total	$	47,540	$	(2,255)	$	275	$	25,941	$	71,501

	Six Months Ended June 30, 2020
	Beginning Balance		Impact of CECL Adoption		Beginning Balance, as Adjusted		Charge-offs		Recoveries		Provision for (Reversal of Provision for) Credit Losses		Ending Balance
	(In thousands)
Commercial business:
Commercial and industrial	$	11,739	$	(1,348)	$	10,391	$	(2,911)	$	1,126	$	21,167	$	29,773
Owner-occupied CRE	4,512		452		4,964		(135)		14		5,160		10,003
Non-owner occupied CRE	7,682		(2,039)		5,643		—		—		5,023		10,666
Total commercial business	23,933		(2,935)		20,998		(3,046)		1,140		31,350		50,442
Residential real estate	1,458		1,471		2,929		—		3		(709)		2,223

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	Six Months Ended June 30, 2020
	Beginning Balance		Impact of CECL Adoption		Beginning Balance, as Adjusted		Charge-offs		Recoveries		Provision for (Reversal of Provision for) Credit Losses		Ending Balance
	(In thousands)
Real estate construction and land development:
Residential	1,455		(571)		884		—		21		(338)		567
Commercial and multifamily	1,605		7,240		8,845		—		—		(288)		8,557
Total real estate construction and land development	3,060		6,669		9,729		—		21		(626)		9,124
Consumer	6,821		(2,484)		4,337		(806)		291		5,890		9,712
Unallocated	899		(899)		—		—		—		—		—
Total	$	36,171	$	1,822	$	37,993	$	(3,852)	$	1,455	$	35,905	$	71,501

(5)Goodwill and Other Intangible Assets

(a) Goodwill

The Company’s goodwill represents the excess of the purchase price over the fair value of net assets acquired in the following mergers: Premier Commercial Bancorp and Puget Sound Bancorp in 2018; Washington Banking Company in 2014; Valley Community Bancshares in 2013; Western Washington Bancorp in 2006 and North Pacific Bank in 1998. The Company’s goodwill is assigned to the Bank and is evaluated for impairment at the Bank level (reporting unit).

There were no additions to goodwill during the three and six months ended June 30, 2021 and 2020.

Management analyzes its goodwill on an annual basis on December 31 and between annual tests in certain circumstances such as material adverse changes in legal, business, regulatory and economic factors. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. The Company performed an annual impairment assessment as of December 31, 2020 and concluded that there was no impairment.

(b) Other Intangible Assets

Other intangible assets represent core deposit intangibles acquired in business combinations. The useful life of the core deposit intangibles was estimated to be ten years for the acquisitions of Premier Commercial Bancorp, Puget Sound Bancorp, Washington Banking Company, and Valley Community Bancshares.

The following table presents the change in other intangible assets for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Balance at the beginning of the period	$	12,291	$	15,710	$	13,088	$	16,613
Amortization	(797)		(903)		(1,594)		(1,806)
Balance at the end of the period	$	11,494	$	14,807	$	11,494	$	14,807

(6)Derivative Financial Instruments

The Company utilizes interest rate swap derivative contracts to facilitate the needs of its commercial customers whereby it enters into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. The transaction allows the Company’s customer to effectively convert a variable rate loan to a fixed rate and the Company recognizes immediate income based upon the difference in the bid/ask spread of the underlying transactions with its customers and the third-party. These interest rate swaps are not designated as hedging instruments.

The Company is exposed to interest rate risk as part of the transaction. However, the Company acts as an intermediary for its customer therefore changes in the fair value of the underlying derivative contracts for the most part offset each other and do not significantly impact the Company’s results of operations.

Fee income related to interest rate swap derivative contract transactions is recorded in Interest rate swap fees on the Consolidated Statements of Income. The fair value of derivative positions outstanding is included in Prepaid expenses and other

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assets and Accrued expenses and other liabilities in the Consolidated Statements of Financial Condition. The gains and losses due to changes in fair value and all cash flows are included in Other income in the Consolidated Statements of Income, but typically net to zero based on the identical back-to-back interest rate swaps unless a credit valuation adjustment is recorded to appropriately reflect nonperformance risk in the fair value measurement. Various factors impact changes in the credit valuation adjustments over time, including changes in the risk ratings of the parties to the contracts, as well as changes in market rates and volatilities, which affect the total expected exposure of the derivative instruments.

The following table presents the notional amounts and estimated fair values of interest rate derivative contracts outstanding at June 30, 2021 and December 31, 2020:

	June 30, 2021				December 31, 2020
	Notional Amounts		Estimated Fair Value		Notional Amounts		Estimated Fair Value
	(In thousands)
Non-hedging interest rate derivatives
Interest rate swap asset (1)	$	321,519	$	19,342	$	308,126	$	25,740
Interest rate swap liability (1)	321,519		(19,510)		308,126		(26,162)

 (1) The estimated fair value of derivatives with customers was $15.4 million and $25.4 million as of June 30, 2021 and December 31, 2020, respectively. The estimated fair value of derivatives with third parties was $(15.6) million and $(25.9) million as of June 30, 2021 and December 31, 2020, respectively.

The Company is exposed to credit-related losses in the event of nonperformance by the counterparty to these agreements. Credit risk with the customer is controlled through the credit approval, limits, and monitoring procedures and concentrated within our primary market areas. Credit risk for derivatives with third-parties is concentrated among four well-known broker dealers.

(7)Stockholders’ Equity

(a) Earnings Per Common Share

The following table illustrates the calculation of weighted average shares used for earnings per common share computations at June 30, 2021 and June 30, 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands, except shares)
Net income (loss):
Net income (loss)	$	32,702	$	(6,139)	$	58,046	$	6,052
Dividends and undistributed earnings allocated to participating securities (1)	—		—		—		(3)
Net income (loss) allocated to common shareholders	$	32,702	$	(6,139)	$	58,046	$	6,049
Basic:
Weighted average common shares outstanding	35,994,740		35,899,361		35,961,032		36,128,586
Restricted stock awards	—		(645)		—		(8,183)
Total basic weighted average common shares outstanding	35,994,740		35,898,716		35,961,032		36,120,403
Diluted:
Basic weighted average common shares outstanding	35,994,740		35,898,716		35,961,032		36,120,403
Effect of potentially dilutive common shares (2)	294,724		—		307,829		154,988
Total diluted weighted average common shares outstanding	36,289,464		35,898,716		36,268,861		36,275,391
Potentially dilutive shares that were excluded from the computation of diluted earnings per share because to do so would be anti-dilutive (3)	7,065		258,412		4,766		124,904

(1)Represents dividends paid and undistributed earnings allocated to unvested restricted stock awards.

(2)Represents the effect of the assumed exercise of stock options and vesting of restricted stock awards and units.

(3) Anti-dilution occurs when the exercise price of a stock option or the unrecognized compensation cost per share of a restricted stock award exceeds the market price of the Company’s stock.

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(b) Dividends

The timing and amount of cash dividends paid on the Company's common stock depends on the Company’s earnings, capital requirements, financial condition and other relevant factors. Dividends on common stock from the Company depend substantially upon receipt of dividends from the Bank, which is the Company’s predominant source of income.

The following table summarizes the dividend activity during the six months ended June 30, 2021 and the calendar year 2020:

Declared	Cash Dividend per Share	Record Date	Paid Date
January 22, 2020	$0.20	February 6, 2020	February 20, 2020
April 29, 2020	$0.20	May 13, 2020	May 27, 2020
July 22, 2020	$0.20	August 5, 2020	August 19, 2020
October 21, 2020	$0.20	November 4, 2020	November 18, 2020
January 27, 2021	$0.20	February 10, 2021	February 24, 2021
April 21, 2021	$0.20	May 5, 2021	May 19, 2021

The FDIC and the Washington State Department of Financial Institutions, Division of Banks have the authority under their supervisory powers to prohibit the payment of dividends by the Bank to the Company. Additionally, current guidance from the Federal Reserve provides, among other things, that dividends per share on the Company’s common stock generally should not exceed earnings per share, measured over the previous four fiscal quarters. Current regulations allow the Company and the Bank to pay dividends on their common stock if the Company’s or the Bank’s regulatory capital would not be reduced below the statutory capital requirements set by the Federal Reserve and the FDIC.

(c) Stock Repurchase Program

The Company has had various stock repurchase programs since March 1999. On October 23, 2014, the Company's Board of Directors authorized the repurchase of up to 5% of the Company's outstanding common shares, or 1,512,600 shares, under the eleventh stock repurchase plan. On March 12, 2020, the Company's Board of Directors authorized the repurchase of up to 5% of the Company's outstanding common shares, or 1,799,054 shares, under the twelfth stock repurchase plan after all shares under the eleventh stock repurchase plan had been repurchased. The number, timing and price of shares repurchased under the twelfth stock repurchase plan will depend on business and market conditions and other factors, including opportunities to deploy the Company's capital.

The following table provides total repurchased shares and average share prices under the applicable plans for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		Plan Total(1)
Eleventh Stock Repurchase Plan
Repurchased shares	—		—		—		639,922		1,512,600
Stock repurchase average share price	$	—	$	—	$	—	$	23.95	$	21.69
Twelfth Stock Repurchase Plan
Repurchased shares	—		—		—		155,778		155,778
Stock repurchase average share price	$	—	$	—	$	—	$	20.34	$	20.34

(1)Represents shares repurchased and average price per share paid during the duration of each plan.

In addition to the stock repurchases under a stock repurchase plan, the Company repurchases shares to pay withholding taxes on the vesting of restricted stock awards and units. The following table provides total shares repurchased to pay withholding taxes during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Repurchased shares to pay withholding taxes	2,557		2,046		25,803		27,928
Stock repurchase to pay withholding taxes average share price	$	27.47	$	18.62	$	29.33	$	21.56

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(8)Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Valuations for assets and liabilities traded in active exchange markets, or interest in open-end mutual funds that allow the Company to sell its ownership interest back to the fund at net asset value on a daily basis. Valuations are obtained from readily available pricing sources for market transactions involving identical assets, liabilities, or funds.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or valuations using methodologies with observable inputs.

Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, such as option pricing models, discounted cash flow models and similar techniques using unobservable inputs, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

(a) Recurring and Nonrecurring Basis

The Company used the following methods and significant assumptions to measure the fair value of certain assets on a recurring and nonrecurring basis:

Investment Securities Available for Sale:

The fair values of all investment securities are based upon the assumptions that market participants would use in pricing the security. If available, fair values of investment securities are determined by quoted market prices (Level 1). For investment securities where quoted market prices are not available, fair values are calculated based on market prices on similar securities (Level 2). For investment securities where quoted prices or market prices of similar securities are not available, fair values are calculated by using observable and unobservable inputs such as discounted cash flows or other market indicators (Level 3). Investment security valuations are obtained from third-party pricing services.

Collateral-Dependent Loans:

Collateral-dependent loans are identified for the calculation of the ACL on loans. The fair value used to measure credit loss for this type of loan is commonly based on recent real estate appraisals which are generally obtained at least every 18 months or earlier if there are changes to risk characteristics of the underlying loan. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. The Bank also incorporates an estimate of cost to sell the collateral when the sale is probable. Such adjustments may be significant and result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value based on the borrower’s financial statements or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation and management’s expertise and knowledge of the customer and customer’s business (Level 3). Individually evaluated loans are analyzed for credit loss on a quarterly basis and the ACL on loans is adjusted as required based on the results.

Appraisals on collateral-dependent loans are performed by certified general appraisers for commercial properties or certified residential appraisers for residential properties whose qualifications and licenses have been reviewed and verified by the Bank. Once received, the Bank reviews the assumptions and approaches utilized in the appraisal as well as the resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.

Derivative Financial Instruments:

The Bank obtains broker or dealer quotes to value its interest rate derivative contracts, which use valuation models using observable market data as of the measurement date (Level 2), and incorporates credit valuation adjustments to reflect nonperformance risk in the measurement of fair value (Level 3). Although the Bank has determined that the majority of the inputs used to value its interest rate swap derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as borrower risk ratings, to evaluate the likelihood of default by itself and its counterparties. As of June 30, 2021 and December 31, 2020, the Bank assessed the significance of the impact of the credit valuation adjustment on the overall valuation of its interest rate swap derivatives and determined that the credit valuation adjustment was not significant to the overall valuation of its interest rate swap derivatives. As a result, the Bank has classified its interest rate swap derivative valuations in Level 2 of the fair value hierarchy.

Branches held for sale:

Branches held for sale are recorded at fair value less costs to sell when transferred from Premises and equipment, net to Prepaid expenses and other assets on the Consolidated Statements of Financial Condition with any valuation adjustment recorded within Other noninterest expense on the Consolidated Statements of Income. The fair value of branches held for sale is determined based on a real estate appraisal or broker price opinion. Adjustments are routinely made in the appraisal and broker price opinion process by independent appraisers and commercial real estate brokers, respectively, to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in Level 3

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classification of the inputs for determining fair value.

Recurring Basis

The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis at the dates indicated:

	June 30, 2021
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Investment securities available for sale:
U.S. government and agency securities	$	103,647	$	—	$	103,647	$	—
Municipal securities	228,927		—		228,927		—
Residential CMO and MBS	259,494		—		259,494		—
Commercial CMO and MBS	421,940		—		421,940		—
Corporate obligations	7,018		—		7,018		—
Other asset-backed securities	28,498		—		28,498		—
Total investment securities available for sale	1,049,524		—		1,049,524		—
Equity security	181		181		—		—
Derivative assets - interest rate swaps	19,342		—		19,342		—
Liabilities
Derivative liabilities - interest rate swaps	$	19,510	$	—	19,510		$	—

	December 31, 2020
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Investment securities available for sale:
U.S. government and agency securities	$	45,660	$	—	$	45,660	$	—
Municipal securities	209,968		—		209,968		—
Residential CMO and MBS	201,872		—		201,872		—
Commercial CMO and MBS	303,746		—		303,746		—
Corporate obligations	11,096		—		11,096		—
Other asset-backed securities	29,821		—		29,821		—
Total investment securities available for sale	802,163		—		802,163		—
Equity security	131		131		—		—
Derivative assets - interest rate swaps	25,740		—		25,740		—
Liabilities
Derivative liabilities - interest rate swaps	$	26,162	$	—	$	26,162	$	—

Nonrecurring Basis

The Company may be required to measure certain financial assets and liabilities at fair value on a nonrecurring basis. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets.

The following tables below represent assets measured at fair value on a nonrecurring basis at the dates indicated:

			Fair Value at June 30, 2021
	Basis(1)		Total		Level 1		Level 2		Level 3
	(In thousands)
Collateral-dependent loans:
Commercial business:
Commercial and industrial	$	983	$	775	$	—	$	—	$	775

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			Fair Value at June 30, 2021
	Basis(1)		Total		Level 1		Level 2		Level 3
	(In thousands)
Owner-occupied CRE	622		486		—		—		486
Total commercial business	1,605		1,261		—		—		1,261
Real estate construction and land development:
Commercial and multifamily	991		534		—		—		534
Total assets measured at fair value on a nonrecurring basis	$	2,596	$	1,795	$	—	$	—	$	1,795

(1) Basis represents the outstanding principal balance of collateral-dependent loans.

			Fair Value at December 31, 2020
	Basis(1)		Total		Level 1		Level 2		Level 3
	(In thousands)
Collateral-dependent loans:
Commercial business:
Commercial and industrial	$	1,305	$	1,289	$	—	$	—	$	1,289
Prepaid expenses and other assets:
Branch held for sale (2)	1,330		1,330		—		—		1,330
Total assets measured at fair value on a nonrecurring basis	$	2,635	$	2,619	$	—	$	—	$	2,619

(1) Basis represents the outstanding principal balance of collateral-dependent loans and the carrying value of the branch held for sale.

(2) In October 2020, one branch was reclassified as held for sale in accordance with ASC 360-10. As part of the transfer, the branch was written down to its net realizable value at that time.

The following table represents the net (loss) gain recorded in earnings as a result of nonrecurring fair value adjustments recorded during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Collateral-dependent loans:
Commercial business:
Commercial and industrial	$	6	$	9	$	(28)	$	3
Owner-occupied CRE	(76)		—		(76)		—
Total commercial business	(70)		9		(104)		3
Real estate construction and land development:
Commercial and multifamily	(23)		—		(38)		—
Net (loss) gain from nonrecurring fair value adjustments	$	(93)	$	9	$	(142)	$	3

The following tables present quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at the dates indicated:

	June 30, 2021
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range of Inputs; Weighted Average
	(Dollars in thousands)
Collateral-dependent loans	$	1,795	Market approach	Adjustment for differences between the comparable sales	55.0% - (20.0)%; 18.3%

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	December 31, 2020
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range of Inputs; Weighted Average
	(Dollars in thousands)
Collateral-dependent loans	$	1,289	Market approach	Adjustment for differences between the comparable sales	0.6% - (40.1%); (24.1%)
Branch held for sale	$	1,330	Market approach	Adjustment for differences between the comparable sales	140.7% - (40.3%); 33.2%

(b) Fair Value of Financial Instruments

Broadly traded markets do not exist for most of the Company’s financial instruments; therefore, the fair value calculations attempt to incorporate the effect of current market conditions at a specific time. These determinations are subjective in nature, involve uncertainties and matters of significant judgment and do not include tax ramifications; therefore, the results cannot be determined with precision, substantiated by comparison to independent markets and may not be realized in an actual sale or immediate settlement of the instruments. There may be inherent weaknesses in any calculation technique and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results. For all of these reasons, the aggregation of the fair value calculations presented herein do not represent, and should not be construed to represent, the underlying value of the Company.

The following tables present the carrying value amount of the Company’s financial instruments and their corresponding estimated fair values at the dates indicated:

	June 30, 2021
	Carrying Value		Fair Value		Fair Value Measurements Using:
					Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	1,264,933	$	1,264,933	$	1,264,933	$	—	$	—
Investment securities available for sale	1,049,524		1,049,524		—		1,049,524		—
Loans held for sale	2,739		2,840		—		—		2,840
Loans receivable, net	4,155,968		4,271,615		—		—		4,271,615
Accrued interest receivable	17,113		17,113		65		4,244		12,804
Banked owned life insurance	108,988		108,988		108,988		—		—
Derivative assets - interest rate swaps	19,342		19,342		—		19,342		—
Equity security	181		181		181		—		—
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	$	5,686,807	$	5,686,807	$	5,686,807	$	—	$	—
Certificates of deposit	374,899		376,646		—		376,646		—
Securities sold under agreement to repurchase	46,429		46,429		46,429		—		—
Junior subordinated debentures	21,034		18,250		—		—		18,250
Accrued interest payable	74		74		31		25		18
Derivative liabilities - interest rate swaps	19,510		19,510		—		19,510		—

	December 31, 2020
	Carrying Value		Fair Value		Fair Value Measurements Using:
					Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	743,322	$	743,322	$	743,322	$	—	$	—
Investment securities available for sale	802,163		802,163		—		802,163		—
Loans held for sale	4,932		5,156		—		—		5,156

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	December 31, 2020
	Carrying Value		Fair Value		Fair Value Measurements Using:
					Level 1		Level 2		Level 3
	(In thousands)
Loans receivable, net	4,398,462		4,556,862		—		—		4,556,862
Accrued interest receivable	19,418		19,418		2		3,648		15,768
Bank owned life insurance	107,580		107,580		107,580		—		—
Derivative assets - interest rate swaps	25,740		25,740		—		25,740		—
Equity security	131		131		131		—		—
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	$	5,198,456	$	5,198,456	$	5,198,456	$	—	$	—
Certificates of deposit	399,534		402,701		—		402,701		—
Securities sold under agreement to repurchase	35,683		35,683		35,683		—		—
Junior subordinated debentures	20,887		18,500		—		—		18,500
Accrued interest payable	94		94		42		33		19
Derivative liabilities - interest rate swaps	26,162		26,162		—		26,162		—

(9)Cash Restriction

The Bank had restricted cash included in interest earning deposits on the Condensed Consolidated Statements of Financial Condition of $15.7 million and $25.9 million as of June 30, 2021 and December 31, 2020, respectively, relating to collateral required on interest rate swaps from third-parties as discussed in Note (6) Derivative Financial Instruments. The Bank does not have a collateral requirement with customers.

(10)Commitments and Contingencies

In the ordinary course of business, the Bank may enter into various types of transactions that include commitments to extend credit that are not included in its Condensed Consolidated Financial Statements. The Bank applies the same credit standards to these commitments as it uses in all its lending activities and has included these commitments in its lending risk evaluations. The majority of the commitments presented below are variable rate. Loan commitments can be either revolving or non-revolving. The Bank’s exposure to credit and market risk under commitments to extend credit is represented by the amount of these commitments.

The following table presents outstanding commitments to extend credit, including letters of credit, at the dates indicated:

	June 30, 2021		December 31, 2020
	(In thousands)
Commercial business:
Commercial and industrial	$	572,214	$	640,018
Owner-occupied CRE	2,515		3,488
Non-owner occupied CRE	7,811		18,396
Total commercial business	582,540		661,902
Real estate construction and land development:
Residential	57,983		52,453
Commercial and multifamily	135,028		127,821
Total real estate construction and land development	193,011		180,274
Consumer	267,272		263,249
Total outstanding commitments	$	1,042,823	$	1,105,425

Upon CECL adoption, as described in Note (1) Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements, the Bank recorded an increase in the beginning ACL on unfunded commitments of $3.7 million as of January 1, 2020, representing the change in methodology from an estimate of incurred losses

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at the balance sheet date, with an estimated probability of funding, to an estimate of credit losses on future utilization over the entire contractual period.

The following table details the activity in the ACL on unfunded commitments during the periods indicated:

	Three Months Ended				Six months ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	(In thousands)
Balance, beginning of period	$	3,617	$	1,990	$	4,681	$	306
Impact of CECL Adoption	—		—		—		3,702
Adjusted balance, beginning of period	3,617		1,990		4,681		4,008
(Reversal of) provision for credit losses on unfunded commitments	(1,166)		2,622		(2,230)		604
Balance, end of period	$	2,451	$	4,612	$	2,451	$	4,612

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to assist in understanding the financial condition and results of operations of the Company as of and for the three and six months ended June 30, 2021. The information contained in this section should be read with the unaudited Condensed Consolidated Financial Statements and the accompanying Notes included herein, the Forward Looking Statements included herein and the December 31, 2020 audited Consolidated Financial Statements and the accompanying Notes included in our 2020 Annual Form 10-K.

Overview

Heritage Financial Corporation is a bank holding company which primarily engages in the business activities of our wholly-owned financial institution subsidiary, Heritage Bank. We provide financial services to our local communities with an ongoing strategic focus on our commercial banking relationships, market expansion and asset quality. The Company’s business activities generally are limited to passive investment activities and oversight of its investment in the Bank. Accordingly, the information set forth in this report relates primarily to the Bank’s operations.

Our business consists primarily of commercial lending and deposit relationships with small to medium sized businesses and their owners in our market areas and attracting deposits from the general public. We also make real estate construction and land development loans and consumer loans. During the three months ended March 31, 2020, we ceased indirect auto loan originations, included in our consumer portfolio. We additionally originate for sale or for investment purposes residential real estate loans on single family properties located primarily in our markets.

Our core profitability depends primarily on our net interest income. Net interest income is the difference between interest income, which is the income that we earn on interest earning assets, comprised primarily of loans and investment securities, and interest expense, which is the amount we pay on our interest bearing liabilities, consisting primarily of deposits. Management manages the repricing characteristics of the Company's interest earning assets and interest bearing liabilities to protect net interest income from changes in market interest rates and changes in the shape of the yield curve. Like most financial institutions, our net interest income is significantly affected by general and local economic conditions, particularly changes in market interest rates, and by governmental policies and actions of regulatory agencies. Net interest income is additionally affected by changes on the volume and mix of interest earning assets, interest earned on these assets, the volume and mix of interest bearing liabilities and interest paid on these liabilities.

Our net income is affected by many factors, including the provision for credit losses on loans. The provision for credit losses on loans is dependent on changes in the loan portfolio and management’s assessment of the collectability of the loan portfolio as well as prevailing economic and market conditions. Management believes that the ACL on loans reflects the amount that is appropriate to provide for current expected credit losses in our loan portfolio based on our consistent methodology.

Net income is also affected by noninterest income and noninterest expense. Noninterest income primarily consists of service charges and other fees and other income. Noninterest expense consists primarily of compensation and employee benefits, occupancy and equipment, data processing and professional services. Compensation and employee benefits consist primarily of the salaries and wages paid to our employees, payroll taxes, expenses for retirement and other employee benefits. Occupancy and equipment expenses are the fixed and variable costs of buildings and equipment, and consists primarily of lease expenses, depreciation charges, maintenance and utilities. Data processing consists primarily of processing and network services related to the Bank’s core operating system, including the account processing system, electronic payments processing of products and services, and internet and mobile banking channels as well as software-as-a-service providers. Professional services consists primarily of third party service providers, such as auditors, consultants and legal fees.

Results of operations may also be significantly affected by general and local economic and competitive conditions, governmental policies and actions of regulatory authorities, especially changes resulting from the COVID-19 pandemic and the

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governmental actions taken to address it. Net income is also impacted by growth of operations through organic growth or acquisitions.

COVID-19 Pandemic Response

The Company maintains its commitment to supporting its community and customers during the COVID-19 pandemic and remains focused on keeping its employees safe and the Bank running effectively to serve its customers. The governors of Washington and Oregon, where our branches are located, recently announced the easing of restrictions which were implemented in response to the COVID-19 pandemic. Accordingly, all Bank branches were reopened with normal hours, remote employees commenced a phased-in return to the office over the summer and substantially all employees are expected to return to their go-forward working environments by Labor Day. The Bank will continue to monitor branch access and occupancy levels in relation to cases and close contact scenarios and follow governmental restrictions and public health authority guidelines.

Earnings Summary

Comparison of quarter ended June 30, 2021 to the comparable quarter in the prior year

Net income was $32.7 million, or $0.90 per diluted common share, for the three months ended June 30, 2021 compared to a net loss of $6.1 million, or $(0.17) per diluted common share, for the three months ended June 30, 2020. Net income increased $38.8 million, or 632.7%, for the three months ended June 30, 2021 compared to the same period in 2020 due primarily to a reversal of provision for credit losses of $14.0 million during the three months ended June 30, 2021 compared to a provision for credit losses of $28.6 million for the same period in 2020.

The efficiency ratio consists of noninterest expense divided by the sum of net interest income plus noninterest income. The Company’s efficiency ratio was 58.18% for the three months ended June 30, 2021 compared to 63.31% for the three months ended June 30, 2020. The change in the efficiency ratio was attributable primarily to the increase in net interest income.

Comparison of six months ended June 30, 2021 to the comparable period in the prior year.

Net income was $58.0 million, or $1.60 per diluted common share, for the six months ended June 30, 2021 compared to $6.1 million, or $0.17 per diluted common share, for the six months ended June 30, 2020. Net income increased $52.0 million, or 859.1%, for the six months ended June 30, 2021 compared to the same period in 2020 due primarily to a reversal of provision for credit losses of $21.2 million during the six months ended June 30, 2021 compared to a provision for credit losses of $36.5 million for the same period in 2020.

The Company’s efficiency ratio was 59.84% for the six months ended June 30, 2021 compared to 63.75% for the six months ended June 30, 2020. The change in the efficiency ratio was attributable primarily to the increase in net interest income.

Net Interest Income and Net Interest Margin Overview

One of the Company's key sources of earnings is net interest income. There are several factors that affect net interest income including, but not limited to, the volume, pricing, mix and maturity of interest earning assets and interest bearing liabilities; the volume of noninterest earning assets, noninterest bearing demand deposits, other noninterest bearing liabilities and stockholders' equity; market interest rate fluctuations; and asset quality.

Comparison of quarter ended June 30, 2021 to the comparable quarter in the prior year

Net interest income increased $4.0 million, or 7.9%, to $54.3 million for the three months ended June 30, 2021 compared to $50.3 million for the same period in 2020 due primarily to increases in loan yield and secondarily due to the Bank decreasing deposit rates following decreases in short-term market interest rates since the quarter ended March 31, 2020. Loan yield benefited from the impact of SBA PPP loan forgiveness, which prompted the recognition of the remaining net deferred fees outstanding for the underlying forgiven SBA PPP loans, and recoveries of $2.0 million of interest and fees on loans classified as nonaccrual, including $1.5 million related to the full payoff of an agricultural business relationship of $10.7 million which was initially classified as nonaccrual during the three months ended September 30, 2019.

The following table provides relevant net interest income information for the periods indicated:

	Three Months Ended June 30,
	2021						2020						Change
	Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate
	(Dollars in thousands)
Interest Earning Assets:
Loans receivable, net (2) (3)	$	4,402,868	$	50,750	4.62	%	$	4,442,108	$	48,404	4.38	%	$	(39,240)	$	2,346	0.24	%
Taxable securities	799,023		4,050		2.03		764,691		4,570		2.40		34,332		(520)		(0.37)
Nontaxable securities (3)	160,489		947		2.37		160,296		977		2.45		193		(30)		(0.08)
Interest earning deposits	964,791		263		0.11		185,399		43		0.09		779,392		220		0.02

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	Three Months Ended June 30,
	2021						2020						Change
	Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate
	(Dollars in thousands)
Total interest earning assets	6,327,171		56,010		3.55	%	5,552,494		53,994		3.91	%	774,677		2,016		(0.36)	%
Noninterest earning assets	752,034						757,530						(5,496)
Total assets	$	7,079,205					$	6,310,024					$	769,181
Interest Bearing Liabilities:
Certificates of Deposit	$	381,417	$	481	0.51	%	$	513,539	$	1,810	1.42	%	$	(132,122)	$	(1,329)	(0.91)	%
Savings accounts	591,616		89		0.06		476,312		115		0.10		115,304		(26)		(0.04)
Interest bearing demand and money market accounts	2,836,717		954		0.13		2,440,691		1,492		0.25		396,026		(538)		(0.12)
Total interest bearing deposits	3,809,750		1,524		0.16		3,430,542		3,417		0.40		379,208		(1,893)		(0.24)
Junior subordinated debentures	20,986		186		3.55		20,693		218		4.24		293		(32)		(0.69)
Securities sold under agreement to repurchase	43,259		35		0.32		23,702		39		0.66		19,557		(4)		(0.34)
FHLB advances and other borrowings	—		—		—		4,909		7		0.57		(4,909)		(7)		(0.57)
Total interest bearing liabilities	3,873,995		1,745		0.18	%	3,479,846		3,681		0.43	%	394,149		(1,936)		(0.25)	%
Noninterest bearing demand deposits	2,246,929						1,883,227						363,702
Other noninterest bearing liabilities	122,520						139,412						(16,892)
Stockholders’ equity	835,761						807,539						28,222
Total liabilities and stock-holders’ equity	$	7,079,205					$	6,310,024					$	769,181
Net interest income			$	54,265					$	50,313					$	3,952
Net interest spread					3.37	%					3.48	%					(0.11)	%
Net interest margin					3.44	%					3.64	%					(0.20)	%
Average interest earning assets to average interest bearing liabilities					163.32	%					159.56	%					3.76	%
Cost of total deposits					0.10	%					0.26	%					(0.16)	%

(1) Annualized

(2) The average loan balances are net of ACL on loans. Nonaccrual loans have been included as loans carrying a zero yield.

(3) Yields on tax-exempt securities and loans have not been stated on a tax-equivalent basis.

Net interest income as a percentage of average interest earning assets, or net interest margin, decreased due primarily to the change in the mix of total interest earning assets, including a significant increase in average interest earning deposits to 15.2% of total earning assets at June 30, 2021 compared to 3.3% at June 30, 2020, and decreases in yields on interest earning assets over the past year following decreases in short-term market rates during the quarter ended March 31, 2020. The decrease in net interest margin was offset partially by a decrease in the cost of total interest bearing deposits reflecting the decreases in short-term market rates.

The following table presents the loan yield and the impacts of SBA PPP loans and the incremental accretion on purchased loans on this financial measure for the periods presented below:

	Three Months Ended
	June 30, 2021		June 30, 2020
Non-GAAP reconciliation of loan yield: (1)
Loan yield (GAAP)	4.62	%	4.38	%
Exclude impact from SBA PPP loans	(0.12)		0.24
Exclude impact from incremental accretion on purchased loans (2)	(0.05)		(0.06)

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Loan yield, excluding SBA PPP loans and incremental accretion on purchased loans (non-GAAP) 4.45  % 4.56  %

(1) See Reconciliations of "Non-GAAP Financial Measures section."

(2)Represents the amount of interest income recorded on purchased loans in excess of the contractual stated interest rate in the individual loan notes due to incremental accretion of purchased discount or premium. Purchased discount or premium is the difference between the contractual loan balance and the fair value of acquired loans at the acquisition date, or as modified by CECL Adoption. The purchased discount is accreted into income over the remaining life of the loan. The impact of incremental accretion on loan yield will change during any period based on the volume of prepayments, but it is expected to decrease over time as the balance of the purchased loans decreases.

The impact to loan yield from recoveries of interest and fees on loans classified as nonaccrual was 18 basis points and one basis point, respectively, during the three months ended June 30, 2021 and 2020.

Comparison of six months ended June 30, 2021 to the comparable period in the prior year

Net interest income increased $7.6 million, or 7.7%, to $106.5 million for the six months ended June 30, 2021 compared to $98.9 million for the same period in 2020 due primarily to an increase in the average balance of loans receivable, net, predominately from SBA PPP loans and secondarily due to the Bank decreasing deposit rates following decreases in short-term market interest rates. The increase in net interest income was offset partially by decreases in the yield for all interest earning assets, reflecting the decreases in market interest rates.

The following table provides relevant net interest income information for the dates indicated:

	Six Months Ended June 30,
	2021						2020						Change
	Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate (1)		Average Balance		Interest Earned/ Paid		Average Yield/ Rate
	(Dollars in thousands)
Interest Earning Assets:
Loans receivable, net (2) (3)	$	4,446,442	$	100,274	4.55	%	$	4,095,340	$	94,681	4.65	%	$	351,102	$	5,593	(0.10)	%
Taxable securities	736,990		7,584		2.08		790,189		10,203		2.60		(53,199)		(2,619)		(0.52)
Nontaxable securities (3)	162,192		1,905		2.37		141,224		1,733		2.47		20,968		172		(0.10)
Interest earning deposits	840,030		438		0.11		155,379		463		0.60		684,651		(25)		(0.49)
Total interest earning assets	6,185,654		110,201		3.59	%	5,182,132		107,080		4.16	%	1,003,522		3,121		(0.57)	%
Noninterest earning assets	754,533						752,986						1,547
Total assets	$	6,940,187					$	5,935,118					$	1,005,069
Interest Bearing Liabilities:
Certificates of deposit	$	387,310	$	1,040	0.54	%	$	520,774	$	3,822	1.48	%	$	(133,464)	$	(2,782)	(0.94)	%
Savings accounts	575,942		184		0.06		455,386		303		0.13		120,556		(119)		(0.07)
Interest bearing demand and money market accounts	2,784,714		2,028		0.15		2,321,305		3,508		0.30		463,409		(1,480)		(0.15)
Total interest bearing deposits	3,747,966		3,252		0.17		3,297,465		7,633		0.47		450,501		(4,381)		(0.30)
Junior subordinated debentures	20,950		373		3.59		20,657		503		4.90		293		(130)		(1.31)
Securities sold under agreement to repurchase	41,676		73		0.35		21,474		72		0.67		20,202		1		(0.32)
FHLB advances and other borrowings	—		—		—		2,949		8		0.55		(2,949)		(8)		(0.55)
Total interest bearing liabilities	3,810,592		3,698		0.20	%	3,342,545		8,216		0.49	%	468,047		(4,518)		(0.29)	%
Noninterest bearing demand deposits	2,169,574						1,651,737						517,837
Other noninterest bearing liabilities	128,606						134,031						(5,425)
Stockholders’ equity	831,415						806,805						24,610
Total liabilities and stockholders’ equity	$	6,940,187					$	5,935,118					$	1,005,069
Net interest income			$	106,503					$	98,864					$	7,639
Net interest spread					3.39	%					3.67	%					(0.28)	%
Net interest margin					3.47	%					3.84	%					(0.37)	%

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	Six Months Ended June 30,
	2021				2020				Change
	Average Balance	Interest Earned/ Paid	Average Yield/ Rate (1)		Average Balance	Interest Earned/ Paid	Average Yield/ Rate (1)		Average Balance	Interest Earned/ Paid	Average Yield/ Rate
	(Dollars in thousands)
Average interest earning assets to average interest bearing liabilities			162.33	%			155.04	%			7.29	%
Cost of total deposits			0.11	%			0.31	%			(0.20)	%

(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.

Net interest margin decreased due primarily to a significant increase in average interest earning deposits to 13.6% of total earning assets at during the six months ended June 30, 2021 compared to 3.0% for the same period in the prior year.

The following table presents the loan yield and the impacts of SBA PPP loans and the incremental accretion on purchased loans on this financial measure for the periods presented below:

	Six Months Ended June 30,
	2021		2020
Non-GAAP reconciliation of loan yield: (1)
Loan yield (GAAP)	4.55	%	4.65	%
Exclude Impact on loan yield from SBA PPP loans	(0.05)		0.15
Exclude impact on loan yield from incremental accretion on purchased loans (2)	(0.09)		(0.09)
Loan yield excluding SBA PPP loans and incremental accretion on purchased loans (non-GAAP)	4.41	%	4.71	%

(1)    For additional information, see "Non-GAAP Financial Measures."

(2)    Represents the amount of interest income recorded on purchased loans in excess of the contractual stated interest rate in the individual loan notes due to incremental accretion of purchased discount or premium. Purchased discount or premium is the difference between the contractual loan balance and the fair value of acquired loans at the acquisition date, or as modified by CECL Adoption. The purchased discount is accreted into income over the remaining life of the loan. The impact of incremental accretion on loan yield will change during any period based on the volume of prepayments, but it is expected to decrease over time as the balance of the purchased loans decreases.

The impact to loan yield from recoveries of interest and fees on loans classified as nonaccrual was 12 basis points and two basis points, respectively, during the six months ended June 30, 2021 and 2020.

Provision for Credit Losses Overview

The aggregate of the provision for credit losses on loans and the provision for credit losses on unfunded commitments is presented on the Condensed Consolidated Statements of Income as the provision for credit losses. The ACL on unfunded commitments is included on the Condensed Consolidated Statements of Financial Condition within Accrued expenses and other liabilities. The methodology for determining the ACL on loans is disclosed in the Analysis of Allowance for Credit Losses on Loans section below. The methodology for determining the ACL on unfunded commitments uses loss rates calculated in the ACL on loans by segment and an estimate of the likelihood of utilization of the unfunded commitment, both applied to the outstanding balance of unfunded commitments by segment.

Comparison of quarter ended June 30, 2021 to the comparable quarter in the prior year

The following table presents the provision for credit losses for the periods indicated:

	Three Months Ended June 30,
	2021		2020		Change		Percentage Change
	(Dollars in thousands)
(Reversal of) provision for credit losses on loans	$	(12,821)	$	25,941	$	(38,762)	(149.4)	%
(Reversal of) provision for credit losses on unfunded commitments	(1,166)		2,622		(3,788)		(144.5)
(Reversal of) provision for credit losses	$	(13,987)	$	28,563	$	(42,550)	(149.0)	%

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The reversal of provision for credit losses recognized during the three months ended June 30, 2021 was primarily due to improvements in the economic forecast at June 30, 2021 compared to the forecast at March 31, 2021. The provision for credit losses on loans of $25.9 million for the three months ended June 30, 2020 was due primarily to the economic forecast at that time reflecting the worsening of economic conditions stemming from the onset of the COVID-19 pandemic.

Comparison of six months ended June 30, 2021 to the comparable period in the prior year

The following table presents the provision for credit losses for the periods indicated:

	Six Months Ended June 30,
	2021		2020		Change		Percentage Change
	(Dollars in thousands)
(Reversal of) provision for credit losses on loans	$	(18,956)	$	35,905	$	(54,861)	(152.8)	%
(Reversal of) provision for credit losses on unfunded commitments	(2,230)		604		(2,834)		(469.2)
(Reversal of) provision for credit losses	$	(21,186)	$	36,509	$	(57,695)	(158.0)	%

The reversal of provision for credit losses recognized during the six months ended June 30, 2021 was primarily due to improvements in the economic forecast during the six months ended June 30, 2021 compared to the worsening of economic conditions during the six months ended June 30, 2020 stemming from the onset of the COVID-19 pandemic.

Noninterest Income Overview

Comparison of quarter ended June 30, 2021 to the comparable quarter in the prior year

The following table presents the key components of noninterest income and the change for the periods noted:

	Three Months Ended June 30,
	2021		2020		Change		Percentage Change
	(Dollars in thousands)
Service charges and other fees	$	4,422	$	3,600	$	822	22.8	%
Gain on sale of investment securities, net	—		409		(409)		(100.0)
Gain on sale of loans, net	1,003		1,135		(132)		(11.6)
Interest rate swap fees	209		769		(560)		(72.8)
Bank owned life insurance income	717		645		72		11.2
Other income	1,946		1,690		256		15.1
Total noninterest income	$	8,297	$	8,248	$	49	0.6	%

Noninterest income increased due primarily to an increase in service charges and other fees also due mostly to higher interchange income and increased deposit fee income, offset partially by fewer executions of interest rate swap contracts and a reduced gain on sale of investment securities due to fewer sales.

Comparison of six months ended June 30, 2021 to the comparable period in the prior year

The following table presents the change in the key components of noninterest income for the periods noted:

	Six Months Ended June 30,
	2021		2020		Change		Percentage Change
	(Dollars in thousands)
Service charges and other fees	$	8,422	$	7,976	$	446	5.6	%
Gain on sale of investment securities, net	29		1,423		(1,394)		(98.0)
Gain on sale of loans, net	2,373		1,682		691		41.1
Interest rate swap fees	361		1,065		(704)		(66.1)
Bank owned life insurance income	1,373		1,530		(157)		(10.3)
Other income	3,990		4,058		(68)		(1.7)
Total noninterest income	$	16,548	$	17,734	$	(1,186)	(6.7)	%

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Noninterest income decreased due primarily to reduced gain on sale of investment securities due to fewer sales and a decline in interest rate swap fees due to fewer executions of interest rate swap contracts. Offsetting these decreases was an increase in the gain on sale of loans, net due to higher origination volume and sales margin, reflecting the low interest rate environment and an increase in service charges and other fees due primarily to higher interchange income.

Noninterest Expense Overview

Comparison of quarter ended June 30, 2021 to the comparable quarter in the prior year

The following table presents the key components of noninterest expense and the change for the periods noted:

	Three Months Ended June 30,
	2021		2020		Change		Percentage Change
	(Dollars in thousands)
Compensation and employee benefits	$	22,088	$	21,927	$	161	0.7	%
Occupancy and equipment	4,091		4,335		(244)		(5.6)
Data processing	3,998		3,517		481		13.7
Marketing	892		696		196		28.2
Professional services	1,102		2,169		(1,067)		(49.2)
State/municipal business and use tax	991		905		86		9.5
Federal deposit insurance premium	339		238		101		42.4
Other real estate owned, net	—		(170)		170		(100.0)
Amortization of intangible assets	797		903		(106)		(11.7)
Other expense	2,098		2,553		(455)		(17.8)
Total noninterest expense	$	36,396	$	37,073	$	(677)	(1.8)	%

Noninterest expense decreased due primarily to a decrease in professional services expense due to costs incurred during the three months ended June 30, 2020 related to the launch of the new mobile and online commercial banking platform, "Heritage Direct". The decrease in noninterest expense was offset partially by an increase in data processing as the Bank continues to invest in technology.

Comparison of six months ended June 30, 2021 to the comparable period in the prior year

The following table presents changes in the key components of noninterest expense for the periods noted:

	Six Months Ended June 30,
	2021		2020		Change		Percentage Change
	(Dollars in thousands)
Compensation and employee benefits	$	44,549	$	44,433	$	116	0.3	%
Occupancy and equipment	8,545		8,899		(354)		(4.0)
Data processing	7,810		7,044		766		10.9
Marketing	1,561		1,562		(1)		(0.1)
Professional services	2,433		3,546		(1,113)		(31.4)
State/municipal business and use tax	1,963		1,662		301		18.1
Federal deposit insurance premium	928		238		690		289.9
Other real estate owned, net	—		(145)		145		(100.0)
Amortization of intangible assets	1,594		1,806		(212)		(11.7)
Other expense	4,255		5,288		(1,033)		(19.5)
Total noninterest expense	$	73,638	$	74,333	$	(695)	(0.9)	%

Noninterest expense decreased due primarily to lower professional services expense discussed above and secondarily due to the decrease in other expense driven primarily by a reduction of discretionary expenses, including employee business travel as a result of the Company's suspension of non-essential travel due to COVID-19. The decrease in noninterest expense was offset partially by an increase in data processing expense as the Bank continues to invest in technology and an increase in the Federal deposit insurance premium expense as the Bank used its remaining FDIC's small bank credit assessments during the six months ended June 30, 2020.

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Income Tax Expense Overview

Comparison of quarter ended June 30, 2021 to the comparable quarter in the prior year

The following table presents the income tax expense (benefit) and related metrics and the change for the periods noted:

	Three Months Ended June 30,
	2021			2020			Change			Percentage Change
	(Dollars in thousands)
Income (loss) before income taxes	$	40,153		$	(7,075)		$	47,228		667.5	%
Income tax expense (benefit)	$	7,451		$	(936)		$	8,387		896.0	%
Effective income tax rate	18.6		%	13.2		%	5.4		%	(40.9)	%

Income tax expense (benefit) and the effective income tax rate both increased from the quarter ended June 30, 2020 due primarily to income before income taxes recognized during the quarter ended June 30, 2021 compared to a loss before income taxes recognized for the quarter ended June 30, 2020.

Comparison of six months ended June 30, 2021 to the comparable period in the prior year.

The following table presents the income tax expense (benefit) and related metrics and the change for the periods noted:

	Six Months Ended June 30,
	2021			2020			Change			Percentage Change
	(Dollars in thousands)
Income before income taxes	$	70,599		$	5,756		$	64,843		1,126.5	%
Income tax expense (benefit)	$	12,553		$	(296)		$	12,849		4,340.9	%
Effective income tax rate	17.8		%	(5.1)		%	22.9		%	449.0	%

Income tax expense (benefit) and the effective income tax rate both increased due primarily to higher pre-tax income and secondarily due to a provision in the CARES Act, which permitted the Company to recognize a $1.0 million benefit from net operating losses related to prior acquisitions during the six months ended June 30, 2020.

Consolidated Financial Condition Overview

The table below provides a comparison of the changes in the Company's financial condition from December 31, 2020 to June 30, 2021:

	June 30, 2021		December 31, 2020		Change		Percentage Change
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	1,264,933	$	743,322	$	521,611	70.2	%
Investment securities available for sale, at fair value, net	1,049,524		802,163		247,361		30.8
Loans held for sale	2,739		4,932		(2,193)		(44.5)
Loans receivable, net	4,155,968		4,398,462		(242,494)		(5.5)
Other real estate owned	—		—		—		—
Premises and equipment, net	82,835		85,452		(2,617)		(3.1)
Federal Home Loan Bank stock, at cost	7,933		6,661		1,272		19.1
Bank owned life insurance	108,988		107,580		1,408		1.3
Accrued interest receivable	17,113		19,418		(2,305)		(11.9)
Prepaid expenses and other assets	163,206		193,301		(30,095)		(15.6)
Other intangible assets, net	11,494		13,088		(1,594)		(12.2)
Goodwill	240,939		240,939		—		—
Total assets	$	7,105,672	$	6,615,318	$	490,354	7.4	%

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	June 30, 2021		December 31, 2020		Change		Percentage Change
	(Dollars in thousands)
Liabilities
Deposits	$	6,061,706	$	5,597,990	$	463,716	8.3	%
Junior subordinated debentures	21,034		20,887		147		0.7
Securities sold under agreement to repurchase	46,429		35,683		10,746		30.1
Accrued expenses and other liabilities	120,519		140,319		(19,800)		(14.1)
Total liabilities	6,249,688		5,794,879		454,809		7.8
Stockholders' equity
Common stock	572,060		571,021		1,039		0.2
Retained earnings	267,863		224,400		43,463		19.4
Accumulated other comprehensive income, net	16,061		25,018		(8,957)		(35.8)
Total stockholders' equity	855,984		820,439		35,545		4.3
Total liabilities and stockholders' equity	$	7,105,672	$	6,615,318	$	490,354	7.4	%

Total assets increased due primarily to increased cash and cash equivalents and investment securities available for sale primarily as a result of purchases of $388.6 million, reflecting in each case the significant increase in total deposits. The increase in total assets was offset partially by a decrease in loan receivable, net, which is discussed in more detail in the "Lending Activities Overview" section below, and a decrease in prepaid expenses and other assets due primarily to the return of the New Market Tax Credit equity method investment.

Total liabilities and stockholder's equity increased due primarily to an increase in deposits, which is discussed in more detail in the "Deposit Activities Overview" section below and net income.

Lending Activities Overview

Changes by loan type

The Bank is a full-service commercial bank which originates a wide variety of loans with a focus on commercial business loans. Loans receivable decreased $261.1 million compared to December 31, 2020 due primarily to a decrease in SBA PPP loans as a result of forgiveness payments received from the SBA in excess of originations, a decrease in demand for commercial and industrial loans and a decrease in consumer loans primarily from continued runoff of the indirect auto loan portfolio following the cessation of this business line during the three months ended March 31, 2020.

The following table provides a comparison of the changes in the Company's loan portfolio by type of loan from December 31, 2020 to June 30, 2021:

	June 30, 2021				December 31, 2020
	Balance (1)		% of Total (2)		Balance (1)		% of Total (2)		Change		Percentage Change
	(Dollars in thousands)
Commercial business:
Commercial and industrial	$	651,915	15.5	%	$	733,098	16.4	%	$	(81,183)	(11.1)	%
SBA PPP	544,250		12.9		715,121		16.0		(170,871)		(23.9)
Owner-occupied CRE	865,662		20.6		856,684		19.2		8,978		1.0
Non-owner occupied CRE	1,425,238		33.8		1,410,303		31.5		14,935		1.1
Total commercial business	3,487,065		82.8		3,715,206		83.1		(228,141)		(6.1)
Residential real estate (3)	120,148		2.9		122,756		2.7		(2,608)		(2.1)
Real estate construction and land development:
Residential	88,601		2.1		78,259		1.8		10,342		13.2
Commercial and multifamily	239,979		5.7		227,454		5.1		12,525		5.5
Total real estate construction and land development	328,580		7.8		305,713		6.9		22,867		7.5
Consumer	271,737		6.5		324,972		7.3		(53,235)		(16.4)
Total	$	4,207,530	100.0	%	$	4,468,647	100.0	%	$	(261,117)	(5.8)	%

(1) Balances do not include unfunded loan commitments.

(2) Percent of loans receivable.

(3) Excludes loans held for sale of $2.7 million and $4.9 million at June 30, 2021 and December 31, 2020, respectively.

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COVID Modifications

The Company continues to accommodate a variety of loan modifications under the CARES Act, CA Act and related regulatory guidance as a direct result of COVID-19 pandemic issues impacting these borrowers. At June 30, 2021, approximately 57 loans totaling $40.9 million were in payment deferral modification status compared to 177 loans totaling $92.5 million at December 31, 2020. The top three customer relationships in payment deferral modification status at June 30, 2021 represented $31.7 million, or 77.5% of all loans in payment deferral modification status. These three customer relationships are related to the travel and accommodations industry and will be in payment deferral modification status until December 31, 2021.

SBA Paycheck Protection Program

The Company has supported its community and customers during the COVID-19 pandemic through its participation in the SBA's PPP. The Company has identified its SBA PPP loans separately in two tranches based on the date of origination with the first tranche comprised of the SBA PPP loans originated in accordance with the CARES Act ("PPP1") and the second tranche comprised of SBA PPP loans originated under the SBA's PPP in accordance with the CA Act ("PPP2"). PPP1 and PPP2 ended on August 8, 2020 and May 31, 2021, respectively.

The Bank earns 1% interest on these loans as well as a fee from the SBA to cover processing costs, which is amortized over the life of the loan. The Bank began processing loan forgiveness applications and receiving SBA PPP forgiveness payments during the three months ended December 31, 2020.

The following are key statistics from inception of the SBA's PPP through June 30, 2021:

	As of June 30, 2021
	PPP1		PPP2		Total PPP
	(Dollars in thousands)
Total number of funded loans	4,642		2,542		7,184
Total amount funded	$	897,353	$	380,014	$	1,277,367
Average funded loan size	$	193	$	149	$	178
Total net fees deferred at funding	$	28,805	$	16,041	$	44,846

The following table summarizes key statistics of the SBA PPP loans as of and for the period indicated:

	As of or for the Three Months Ended
	June 30, 2021
	PPP1		PPP2		Total PPP
	(In thousands)
Net deferred fees recognized during the period	$	6,353	$	1,674	$	8,027
Net deferred fees unrecognized as of period end	2,555		13,810		16,365
Principal payments received during the period, including forgiveness payments from the SBA	357,257		18,392		375,649
Amortized cost as of period end	196,437		347,813		544,250

Nonperforming Assets and Credit Quality Metrics

The following table provides information about our nonaccrual loans, other real estate owned and performing TDR loans for the dates indicated:

	June 30, 2021		December 31, 2020
	(Dollars in thousands)
Nonaccrual loans:
Commercial business	$	34,209	$	56,786
Residential real estate	60		184
Real estate construction and land development	1,014		1,022
Consumer	58		100
Total nonaccrual loans	35,341		58,092
Other real estate owned	—		—
Total nonperforming assets	$	35,341	$	58,092

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	June 30, 2021			December 31, 2020
	(Dollars in thousands)
ACL on loans	$	51,562		$	70,185
Nonperforming loans to loans receivable	0.84		%	1.30		%
ACL on loans to nonperforming loans	145.90			120.82
Nonperforming assets to total assets	0.50			0.88
Performing TDR loans:
Commercial business	$	53,746		$	49,403
Residential real estate	364			188
Real estate construction and land development	—			1,926
Consumer	1,281			1,355
Total performing TDR loans	$	55,391		$	52,872
Accruing loans past due 90 days or more	$	286		$	—
Potential problem loans (1)	$	148,823		$	182,342

(1) Potential problem loans are risk rated SM or worse that are not classified as a performing TDR or nonaccrual loan and are not individually evaluated for credit loss, but which management is closely monitoring because the financial information of the borrower causes concern as to their ability to meet their loan repayment terms.

Nonaccrual Loans

Nonaccrual loans decreased $22.8 million to 0.84% of loans receivable and 0.50% of total assets at June 30, 2021 from 1.30% of loans receivable and 0.88% of total assets at December 31, 2020. The following table reflects the changes in nonaccrual loans during the periods indicated:

	Six Months Ended June 30,
	2021		2020
	(In thousands)
Nonaccrual loans
Balance, beginning of period	$	58,092	$	44,525
Additions to nonaccrual loan classification	869		3,827
Net principal payments and transfers to accruing status	(5,212)		(3,395)
Payoffs	(18,406)		(10,404)
Charge-offs	(2)		(655)
Transfer to OREO	—		(270)
Balance, end of period	$	35,341	$	33,628

The decrease in nonaccrual loans during the six months ended June 30, 2021 was due primarily to payoffs, including a payoff of an agricultural business relationship of $10.7 million which was initially classified as nonaccrual during the three months ended September 30, 2019. The Company also recovered $1.5 million of interest and fees on loans related to this payoff.

Analysis of Allowance for Credit Losses on Loans

We adopted CECL on January 1, 2020. Under this methodology, certain nonaccrual loans and certain performing TDR loans are not considered to have similar risk characteristics as other loans; therefore, they are evaluated for credit loss on an individual basis. The allowance for individually evaluated loans is calculated using either the collateral value method, which considers the likely source of repayment as the value of the collateral, less estimated costs to sell if applicable, or the net present value method, which considers the contractual principal and interest terms and estimated cash flows available from the borrower to satisfy the debt.

The remaining loans not individually evaluated are disaggregated based on similar risk characteristics into segments and collectively evaluated for ACL using baseline loss rates that are calculated using the Bank's average quarterly historical loss information for those segments. The baseline loss rates are applied to each loan's estimated cash flows over the life of the loan under the remaining life method, including prepayment estimates, to determine the baseline loss estimate for each loan. The CECL methodology also includes consideration of the forecasted direction of the economic and business environment and its likely impact to the estimated allowance as compared to the historical losses over the reasonable and supportable time frame. The impact of those macroeconomic factors to each segment, positive or negative, using the reasonable and supportable period,

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are added to the calculated baseline loss rate and are used to establish a macroeconomic allowance. After the reasonable and supportable period, the estimated credit losses revert back to historical baseline loss levels under a reversion period on a straight-lined, input reversion basis. Management can also consider other qualitative factors to adjust the ACL on loans if internal or external conditions suggest changes to the modeled ACL on loans are appropriate.

The following table provides information regarding changes in the ACL on loans at and for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	(Dollars in thousands)
ACL on loans at the beginning of the period	$	64,225		$	47,540		$	70,185		$	36,171
Impact of CECL Adoption	—			—			—			1,822
Adjusted ACL on loans, beginning of period	64,225			47,540			70,185			37,993
Charge-offs:
Commercial business	(13)			(1,824)			(14)			(3,046)
Real estate construction and land development	—			—			(1)			—
Consumer	(120)			(431)			(305)			(806)
Total charge-offs	(133)			(2,255)			(320)			(3,852)
Recoveries:
Commercial business	143			71			350			1,140
Residential real estate	—			—			—			3
Real estate construction and land development	4			7			20			21
Consumer	144			197			283			291
Total recoveries	291			275			653			1,455
Net recoveries (charge-offs)	158			(1,980)			333			(2,397)
(Reversal of) provision for credit losses on loans	(12,821)			25,941			(18,956)			35,905
ACL on loans at the end of period	$	51,562		$	71,501		$	51,562		$	71,501
Net recoveries (charge-offs) on loans to average loans receivable, net (1)	0.01		%	(0.18)		%	0.02		%	(0.12)		%
Loans receivable at the end of the period (2)	$	4,207,530		$	4,666,333		$	4,207,530		$	4,666,333
Average loans receivable, net during the period	4,402,868			4,442,108			4,446,442			4,095,340

(1) Annualized.

(2) Excludes loans held for sale.

The ACL on loans decreased $18.6 million, or 26.5%, to $51.6 million, or 1.23% of loans receivable, at June 30, 2021 from $70.2 million, or 1.57% of loans receivable, at December 31, 2020. The decrease in the ACL on loans was due primarily to a reversal of provision for credit losses on loans of $19.0 million recorded during the six months ended June 30, 2021 following improvements in the economic forecast used in the CECL model at June 30, 2021 as compared to the forecast at December 31, 2020. The ACL on loans does not include a reserve for SBA PPP loans as these loans are fully guaranteed by the SBA. The ACL on loans receivable, excluding SBA PPP loans was 1.41% and 1.87% at June 30, 2021 and December 31, 2020, respectively. See "Reconciliations of Non-GAAP Measures" for the calculation of the ACL on loans receivable, excluding SBA PPP.

Deposits and Other Borrowings Overview

The following table summarizes the Company's deposits at the dates indicated:

	June 30, 2021				December 31, 2020
	Balance		% of Total		Balance		% of Total		Change		Percentage Change
	(Dollars in thousands)
Noninterest demand deposits	$	2,256,341	37.2	%	$	1,980,531	35.4	%	$	275,810	13.9	%
Interest bearing demand deposits	1,807,033		29.8		1,716,123		30.7		90,910		5.3
Money market accounts	1,030,164		17.0		962,983		17.2		67,181		7.0
Savings accounts	593,269		9.8		538,819		9.6		54,450		10.1
Total non-maturity deposits	5,686,807		93.8		5,198,456		92.9		488,351		9.4

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Certificates of deposit	374,899		6.2		399,534		7.1		(24,635)		(6.2)
Total deposits	$	6,061,706	100.0	%	$	5,597,990	100.0	%	$	463,716	8.3	%

The increase in deposits is primarily due to proceeds from SBA PPP loans originated during the six months ended June 30, 2021 which were deposited directly into the customers' deposit accounts.

The Bank also utilizes securities sold under agreement to repurchase, which are secured by available for sale investment securities, as a supplement to its funding sources. As of June 30, 2021 and December 31, 2020, only three customers utilized this product with total balances of $46.4 million and $35.7 million, respectively.

In addition to deposits and securities sold under agreement to repurchase, borrowings may be used on a short-term basis to compensate for reductions in other sources of funds. Borrowings may also be used on a longer-term basis to support expanded lending activities and match the maturity of repricing intervals of assets.

The Company has junior subordinated debentures with a par value of $25.0 million which pay quarterly interest based on the three-month LIBOR plus 1.56% and mature in 2037. The balance of the junior subordinated debentures was $21.0 million at June 30, 2021, which reflects the fair value of the junior subordinated debentures established as part of the merger with Washington Banking Company on May 1, 2014, adjusted for the accretion of discount from purchase accounting fair value adjustment.

Additionally, the Bank maintained credit facilities with the FHLB for $1.01 billion and credit facilities with the Federal Reserve Bank for $49.5 million at June 30, 2021. There were no FHLB or Federal Reserve Bank advances outstanding under either facility at June 30, 2021 and these credit facilities were not utilized during the six months ended June 30, 2021. The average balance of FHLB advances was $2.9 million during the six months ended June 30, 2020. The credit facility with the Federal Reserve Bank was not utilized during the six months ended June 30, 2020.

The Bank also maintains lines of credit with five correspondent banks to purchase federal funds totaling $215.0 million as of June 30, 2021. These lines of credit were not utilized during both the six months ended June 30, 2021 and 2020.

The Bank was approved to utilize the PPPLF with the Federal Reserve Bank for $560.6 million, which is the principal balance of SBA PPP loans outstanding at June 30, 2021. We did not utilize the PPPLF during both the six months ended June 30, 2021 and 2020. On June 25, 2021, the Federal Reserve announced it will extend the PPPLF for a final time by an additional month to July 30, 2021.

Liquidity and Cash Flows

Our primary sources of funds are customer and local government deposits, loan principal and interest payments, loan sales and payments of interest earned on and proceeds from sales, and maturities of investment securities. These funds, together with retained earnings, equity and other borrowed funds, are used to make loans, acquire investment securities and other assets, and fund continuing operations. While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and loan prepayments are greatly influenced by the level of interest rates, economic conditions and competition.

Heritage Bank: The principal objective of the Bank’s liquidity management program is to maintain the ability to meet day-to-day cash flow requirements of its customers who either wish to withdraw funds or to draw upon credit facilities to meet their cash needs. The Bank monitors the sources and uses of funds on a daily basis to maintain an acceptable liquidity position. In addition to liquidity from core deposits and the repayment and maturities of loans and investment securities, the Bank can utilize established credit facilities and lines of credit totaling $1.84 billion as discussed in the Deposits and Other Borrowings Overview section above or may initiate the sale of investment securities.

Heritage Financial Corporation: The Company is a separate legal entity from the Bank and must provide for its own liquidity. Substantially all of the Company’s revenues are obtained from dividends declared and paid by the Bank. There are statutory and regulatory provisions that could limit the ability of the Bank to pay dividends to the Company. However, management believes that such restrictions will not have an adverse impact on the ability of the Company to meets its ongoing cash obligations. At June 30, 2021, the Company (on an unconsolidated basis) had cash and cash equivalents of $9.0 million.

We are required to maintain an adequate level of liquidity to ensure the availability of sufficient funds for loan originations and deposit withdrawals, satisfy other financial commitments and fund operations. We generally maintain sufficient cash and investments to meet short-term liquidity needs. At June 30, 2021, cash and cash equivalents totaled $1.26 billion, or 17.8% of total assets. Investment securities available for sale totaled $1.05 billion, of which $222.7 million were pledged to secure public deposits, borrowing arrangements or securities sold under agreement to repurchase. Management considers unpledged investment securities available for sale to be another source of liquidity. The fair value of investment securities available for sale that were unpledged totaled $826.8 million, or 11.6% of total assets, at June 30, 2021. The fair value of investment securities available for sale with maturities of one year or less totaled $34.0 million, or 0.5% of total assets, at June 30, 2021.

Consolidated Cash Flows: As disclosed in the Condensed Consolidated Statements of Cash Flows, net cash provided by operating activities was $29.8 million for the six months ended June 30, 2021, and primarily consisted of net income of $58.0 million, offset partially by non-cash adjustments, including reversal of provision for credit losses of $21.2 million and depreciation, amortization, and accretion of $13.9 million. During the six months ended June 30, 2021, net cash provided by investing activities was $32.5 million, which consisted primarily of net loan payments of $295.6 million (including SBA PPP loan principal reduction

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of $549.9 million compared to SBA PPP originations of $380.0 million) and net cash activity in investment securities available for sale of $260.7 million (including $388.6 million of purchases). Net cash provided by financing activities was $459.3 million for the six months ended June 30, 2021 and primarily consisted of a net increase in deposits of $463.7 million as discussed above.

Stockholders' Equity and Regulatory Capital Requirements Overview

The Company’s stockholders' equity to assets ratio was 12.0% and 12.4% at June 30, 2021 and December 31, 2020, respectively. The following table reflects the changes to stockholders' equity during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Balance, beginning of period	$	827,151	$	798,438	$	820,439	$	809,311
Cumulative effect from change in accounting policy(1)	—		—		—		(5,615)
Net income (loss)	32,702		(6,139)		58,046		6,052
Dividends declared	(7,325)		(7,226)		(14,583)		(14,569)
Other comprehensive (loss) income, net of tax	2,600		7,689		(8,957)		15,603
Repurchase of common stock	(70)		(38)		(757)		(19,098)
Other	926		928		1,796		1,968
Balance, end of period	$	855,984	$	793,652	$	855,984	$	793,652

(1) Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses.

No shares were repurchased under the Company's stock repurchase plans during the six months ended June 30, 2021. During the six months ended June 30, 2020, the Company repurchased the remaining 639,922 shares available under the eleventh stock repurchase plan at a weighted average price per share of $23.95 and repurchased 155,778 shares under the twelfth stock repurchase plan at a weighted average share price of $20.34, totaling 795,700 shares repurchased under both plans at a weighted average share price of $23.25. In addition to the stock repurchases under a plan, the Company repurchased shares to pay withholding taxes on the vesting of restricted stock awards and units.

The Company has historically paid cash dividends to its common shareholders. Payments of future cash dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including our business, operating results and financial condition, capital requirements, current and anticipated cash needs, plans for expansion, any legal or contractual limitation on our ability to pay dividends and other relevant factors. Dividends on common stock from the Company depend substantially upon receipt of dividends from the Bank, which is the Company’s predominant source of income. On July 21, 2021, the Company’s Board of Directors declared a regular quarterly dividend of $0.20 per common share which is payable on August 18, 2021 to shareholders of record on August 4, 2021.

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 Condensed Consolidated Financial Statements. Management believes that as of June 30, 2021, the Company and the Bank met all capital adequacy requirements to which they are subject.

As of June 30, 2021 and December 31, 2020, 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. The following table represents the minimum required ratios of the Company and the Bank and the actual capital ratios at the periods indicated:

	Minimum Requirements				Well-Capitalized Requirements		Actual
	(Dollars in thousands)
As of June 30, 2021:
The Company consolidated
Common equity Tier 1 capital to risk-weighted assets	$	198,052	4.5	%	N/A	N/A	$	596,527	13.6	%
Tier 1 leverage capital to average assets	272,704		4.0		N/A	N/A	617,561		9.1
Tier 1 capital to risk-weighted assets	264,070		6.0		N/A	N/A	617,561		14.0
Total capital to risk-weighted assets	352,093		8.0		N/A	N/A	662,956		15.1

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	Minimum Requirements				Well-Capitalized Requirements				Actual
	(Dollars in thousands)
Heritage Bank
Common equity Tier 1 capital to risk-weighted assets	197,783		4.5		$	285,686	6.5	%	604,545		13.8
Tier 1 leverage capital to average assets	272,470		4.0		340,588		5.0		604,545		8.9
Tier 1 capital to risk-weighted assets	263,711		6.0		351,614		8.0		604,545		13.8
Total capital to risk-weighted assets	351,614		8.0		439,518		10.0		649,940		14.8
As of December 31, 2020:
The Company consolidated
Common equity Tier 1 capital to risk-weighted assets	$	203,314	4.5	%	N/A		N/A		$	555,644	12.3	%
Tier 1 leverage capital to average assets	256,216		4.0		N/A		N/A		576,531		9.0
Tier 1 capital to risk-weighted assets	271,086		6.0		N/A		N/A		576,531		12.8
Total capital to risk-weighted assets	361,448		8.0		N/A		N/A		633,061		14.0
Heritage Bank
Common equity Tier 1 capital to risk-weighted assets	203,112		4.5		$	293,383	6.5	%	563,630		12.5
Tier 1 leverage capital to average assets	256,051		4.0		320,064		5.0		563,630		8.8
Tier 1 capital to risk-weighted assets	270,815		6.0		361,087		8.0		563,630		12.5
Total capital to risk-weighted assets	361,087		8.0		451,359		10.0		620,124		13.7

As of both June 30, 2021 and December 31, 2020, the capital measures reflect the revised CECL capital transition provisions adopted by the Federal Reserve and the FDIC that allow the Bank the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period.

Under applicable capital requirements both the Company and the Bank are required to maintain a capital conservation buffer of common equity Tier 1 capital above 2.5% to avoid restrictions on certain activities including payment of dividends, stock repurchases and discretionary bonuses to executive officers. At June 30, 2021, the capital conservation buffer was 7.1% and 6.8% for the Company and the Bank, respectively.

Reconciliations of Non-GAAP Measures

This Form 10-Q contains certain financial measures not presented in accordance with GAAP in addition to financial measures presented in accordance with GAAP. The Company has presented these non-GAAP financial measures in this Form 10-Q because it believes that they provide useful and comparative information to assess trends in the Company’s performance and asset quality reflected in the current quarter and comparable period results and facilitate comparison of its performance with the performance of its peers. These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for financial measures presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of the GAAP and non-GAAP financial measures are presented below.

The Company believes presenting loan yield, excluding the effect of discount accretion on purchased loans, is useful in assessing the impact of acquisition accounting on loan yield as the effect of loan discount accretion is expected to decrease as the acquired loans mature or roll off our balance sheet. Similarly, presenting loan yield, excluding the effect of SBA PPP loans, is useful in assessing the impact of these special program loans that are anticipated to substantially decrease upon forgiveness by the SBA within a short time frame.

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in thousands)
Loan yield, excluding SBA PPP loans and incremental accretion on purchased loans, annualized:
Interest and fees on loans (GAAP)	$	50,750	$	48,404	$	100,274	$	94,681
Exclude SBA PPP loan interest and fees	(10,003)		(4,923)		(19,139)		(4,923)
Exclude incremental accretion on purchased loans	(495)		(696)		(1,570)		(1,708)
Adjusted interest and fees on loans (non-GAAP)	$	40,252	$	42,785	$	79,565	$	88,050

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	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	(Dollars in thousands)
Average loans receivable, net (GAAP)	$	4,402,868		$	4,442,108		$	4,446,442		$	4,095,340
Exclude average SBA PPP loans	(777,156)			(667,390)			(804,500)			(333,695)
Adjusted average loans receivable, net (non-GAAP)	$	3,625,712		$	3,774,718		$	3,641,942		$	3,761,645
Loan yield, annualized (GAAP)	4.62		%	4.38		%	4.55		%	4.65		%
Loan yield, excluding SBA PPP loans and incremental accretion on purchased loans, annualized (non-GAAP)	4.45		%	4.56		%	4.41		%	4.71		%

The Company considers presenting the ratio of ACL on loans to loans receivable, excluding SBA PPP loans, to be a useful measurement in evaluating the adequacy of the Company's ACL on loans as the balance of SBA PPP loans is significant to the loan portfolio, and since SBA PPP loans are guaranteed by the SBA, the Company has not provided an ACL on loans for SBA PPP loans.

	June 30, 2021			December 31, 2020
	(Dollars in thousands)
ACL on loans to loans receivable, excluding SBA PPP loans:
Allowance for credit losses on loans (GAAP)	$	51,562		$	70,185
Loans receivable (GAAP)	$	4,207,530		$	4,468,647
Exclude SBA PPP loans	544,250			715,121
Loans receivable, excluding SBA PPP (non-GAAP)	$	3,663,280		$	3,753,526
ACL on loans to loans receivable (GAAP)	1.23		%	1.57		%
ACL on loans to loans receivable, excluding SBA PPP loans (non-GAAP)	1.41		%	1.87		%

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to interest rate risk through our lending and deposit gathering activities. Our results of operations are highly dependent upon our ability to manage interest rate risk. We consider interest rate risk to be a significant market risk that could have a material effect on our financial condition and results of operations. Interest rate risk is measured and assessed on a quarterly basis. In our opinion, there has not been a material change in our interest rate risk exposure since the information disclosed in our 2020 Annual Form 10-K.

Neither the Company nor the Bank maintains a trading account for any class of financial instrument or engages in hedging activities or purchases high risk derivative instruments. Moreover, neither the Company nor the Bank is subject to foreign currency exchange rate risk or commodity price risk.

ITEM 4.     CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

An evaluation of the Company’s disclosure controls and procedures (as defined in Section 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934 (the “Act”)) was carried out under the supervision and with the participation of the Company’s Chief Executive Officer, Chief Financial Officer and the Company’s Disclosure Committee as of the end of the period covered by this quarterly report. Based on their evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of June 30, 2021 are effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Act is (i) accumulated and communicated to the Company’s management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

50

Table of Contents

(b) Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II.    OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

Neither the Company nor the Bank is a party to any material pending legal proceedings other than ordinary routine litigation incidental to the business of the Bank.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors set forth in Part I. Item 1A of the Company’s 2020 Annual Form 10-K.

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Not applicable.

(b) Not applicable.

(c) Repurchase Plans

The following table provides information about repurchases of common stock by the Company during the three months ended June 30, 2021:

Period	Total Number  of Shares  Purchased (1)	Average Price Paid Per  Share (1)		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs (2)
April 1, 2021— April 30, 2021	—	$	—	8,981,801	1,643,276
May 1, 2021— May 31, 2021	444	28.42		8,981,801	1,643,276
June 1, 2021— June 30, 2021	2,113	27.27		8,981,801	1,643,276
Total	2,557	$	27.47

(1)Of the common shares repurchased by the Company between April 1, 2021 and June 30, 2021, all of the shares represented the cancellation of stock to pay withholding taxes on vested restricted stock awards or units.

(2)On March 12, 2020 the Company's Board of Directors authorized the repurchase of up to 5% of the Company's outstanding common shares, or 1,799,054 shares, under the twelfth stock repurchase plan.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.     MINE SAFETY DISCLOSURES

Not applicable

ITEM 5.    OTHER INFORMATION

None

ITEM 6.     EXHIBITS

		Incorporated by Reference
Exhibit No.	Description of Exhibit	Form	Exhibit	Filing Date/Period End Date
10.29*	Addendum to Employment Agreement - Bryan D. McDonald	8-K	10.1	07/06/2021
10.34*	Form of Split Dollar Agreement, dated May 3, 2021, by and between Heritage and Tony Chalfant	10-Q	10.34	05/05/2021
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)

51

Table of Contents

31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
101.INS	XBRL Instance Document (1)
101.SCH	XBRL Taxonomy Extension Schema Document (1)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (1)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (1)

*Indicates management contract or compensatory plan or arrangement.

(1) Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HERITAGE FINANCIAL CORPORATION
Date:
August 5, 2021	/S/ JEFFREY J. DEUEL
	Jeffrey J. Deuel
	President and Chief Executive Officer
Date:
August 5, 2021	/S/ DONALD J. HINSON
	Donald J. Hinson
	Executive Vice President and Chief Financial Officer

52

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer

I, Jeffrey J. Deuel, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Heritage Financial Corporation;

2.    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.

August 5, 2021

/s/ Jeffrey J. Deuel

Jeffrey J. Deuel

Chief Executive Officer
Principal Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Principal Financial Officer

I, Donald J. Hinson, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Heritage Financial Corporation;

2.    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.

August 5, 2021

/s/ Donald J. Hinson

Donald J. Hinson

Executive Vice President and Chief Financial Officer
Principal Financial and Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the quarterly report of Heritage Financial Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Jeffrey J. Deuel, Chief Executive Officer, and Donald J. Hinson, Executive Vice President and Chief Financial Officer of the Company, certify in our capacity as officers of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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.

August 5, 2021	/s/ Jeffrey J. Deuel
	Jeffrey J. Deuel
	Chief Executive Officer Principal Executive Officer
August 5, 2021	/s/ Donald J. Hinson
	Donald J. Hinson
	Executive Vice President and Chief Financial Officer Principal Financial and Accounting Officer

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2021	Jul. 28, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	000-29480
Entity Registrant Name	HERITAGE FINANCIAL CORP
Entity Central Index Key	0001046025
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	91-1857900
Entity Address, Address Line One	201 Fifth Avenue SW,
Entity Address, City or Town	Olympia
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98501
City Area Code	360
Local Phone Number	943-1500
Title of 12(b) Security	Common stock, no par value
Trading Symbol	HFWA
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		35,970,660

XML

Condensed Consolidated Statements of Financial Condition (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
ASSETS
Cash on hand and in banks	$ 94,179	$ 91,918
Interest earning deposits	1,170,754	651,404
Cash and cash equivalents	1,264,933	743,322
Investment securities available for sale, at fair value, net (amortized cost of $1,029,001 and $770,195, respectively)	1,049,524	802,163
Loans held for sale	2,739	4,932
Loans receivable	4,207,530	4,468,647
Allowance for credit losses on loans	(51,562)	(70,185)
Loans receivable, net	4,155,968	4,398,462
Other real estate owned	0	0
Premises and equipment, net	82,835	85,452
Federal Home Loan Bank stock, at cost	7,933	6,661
Bank owned life insurance	108,988	107,580
Accrued interest receivable	17,113	19,418
Prepaid expenses and other assets	163,206	193,301
Other intangible assets, net	11,494	13,088
Goodwill	240,939	240,939
Total assets	7,105,672	6,615,318
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits	6,061,706	5,597,990
Junior subordinated debentures	21,034	20,887
Securities sold under agreement to repurchase	46,429	35,683
Accrued expenses and other liabilities	120,519	140,319
Total liabilities	6,249,688	5,794,879
Stockholders’ equity:
Preferred stock, no par value, 2,500,000 shares authorized; no shares issued and outstanding, respectively	0	0
Common stock, no par value, 50,000,000 shares authorized; 36,006,560 and 35,912,243 shares issued and outstanding, respectively	572,060	571,021
Retained earnings	267,863	224,400
Accumulated other comprehensive income, net	16,061	25,018
Total stockholders’ equity	855,984	820,439
Total liabilities and stockholders’ equity	$ 7,105,672	$ 6,615,318

XML

Condensed Consolidated Statements of Financial Condition (Unaudited) (Parenthetical) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Amortized cost	$ 1,029,001,000	$ 770,195,000
Preferred Stock, No Par Value	$ 0	$ 0
Preferred stock, shares authorized (in shares)	2,500,000	2,500,000
Preferred Stock, Value, Outstanding	$ 0	$ 0
Common stock, no par value (in usd per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	36,006,560	35,912,243
Common stock, shares outstanding (in shares)	36,006,560	35,912,243

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
INTEREST INCOME:
Interest and fees on loans	$ 50,750	$ 48,404	$ 100,274	$ 94,681
Taxable interest on investment securities	4,050	4,570	7,584	10,203
Nontaxable interest on investment securities	947	977	1,905	1,733
Interest on interest earning deposits	263	43	438	463
Total interest income	56,010	53,994	110,201	107,080
INTEREST EXPENSE:
Deposits	1,524	3,417	3,252	7,633
Junior subordinated debentures	186	218	373	503
Other borrowings	35	46	73	80
Total interest expense	1,745	3,681	3,698	8,216
Net interest income	54,265	50,313	106,503	98,864
(Reversal of) provision for credit losses	(13,987)	28,563	(21,186)	36,509
Net interest income after (reversal of) provision for credit losses	68,252	21,750	127,689	62,355
NONINTEREST INCOME:
Service charges and other fees	4,422	3,600	8,422	7,976
Gain on sale of investment securities, net	0	409	29	1,423
Gain on sale of loans, net	1,003	1,135	2,373	1,682
Interest rate swap fees	209	769	361	1,065
Bank owned life insurance income	717	645	1,373	1,530
Other income	1,946	1,690	3,990	4,058
Total noninterest income	8,297	8,248	16,548	17,734
NONINTEREST EXPENSE:
Compensation and employee benefits	22,088	21,927	44,549	44,433
Occupancy and equipment	4,091	4,335	8,545	8,899
Data processing	3,998	3,517	7,810	7,044
Marketing	892	696	1,561	1,562
Professional services	1,102	2,169	2,433	3,546
State/municipal business and use taxes	991	905	1,963	1,662
Federal deposit insurance premium	339	238	928	238
Other real estate owned, net	0	(170)	0	(145)
Amortization of intangible assets	797	903	1,594	1,806
Other expense	2,098	2,553	4,255	5,288
Total noninterest expense	36,396	37,073	73,638	74,333
Income (loss) before income taxes	40,153	(7,075)	70,599	5,756
Income tax expense (benefit)	7,451	(936)	12,553	(296)
Net income (loss)	$ 32,702	$ (6,139)	$ 58,046	$ 6,052
Basic earnings per common share (in usd per share)	$ 0.91	$ (0.17)	$ 1.61	$ 0.17
Diluted earnings per common share (in usd per share)	0.90	(0.17)	1.60	0.17
Dividends declared per common share (in usd per share)	$ 0.20	$ 0.20	$ 0.40	$ 0.40
Basic weighted average common shares outstanding (in shares)	35,994,740	35,898,716	35,961,032	36,120,403
Weighted Average Number of Shares Outstanding, Diluted	36,289,464	35,898,716	36,268,861	36,275,391

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Net income (loss)	$ 32,702	$ (6,139)	$ 58,046	$ 6,052
Other comprehensive income (loss)	2,600	7,689	(8,957)	15,603
Comprehensive income	35,302	1,550	49,089	21,655
AOCI Attributable to Parent [Member]
Change in fair value of investment securities available for sale, net of tax of $722, $2,224, $(2,482) and $4,643, respectively	2,600	8,009	(8,934)	16,716
Reclassification adjustment for net gain from sale of investment securities available for sale included in income, net of tax of $0, $(89), $(6) and $(310) respectively	0	(320)	(23)	(1,113)
Other comprehensive income (loss)	$ 2,600	$ 7,689	$ (8,957)	$ 15,603

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Statement of Comprehensive Income [Abstract]
Change in fair value of securities available for sale, tax	$ 722	$ 2,224	$ (2,482)	$ 4,643
Reclassification adjustment of net gain from sale of investment securities included in income, tax	$ 0	$ (89)	$ (6)	$ (310)

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	[1]	Common stock	Retained earnings	Retained earnings Cumulative Effect, Period of Adoption, Adjustment	[1]	Accumulated other comprehensive income (loss), net
Beginning balance, shares at Dec. 31, 2019				36,619
Beginning balance at Dec. 31, 2019	$ 809,311	$ (5,615)		$ 586,459	$ 212,474	$ (5,615)		$ 10,378
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock awards forfeited, shares				106
Exercise of stock options, shares				8
Exercise of stock options	122			$ 122
Stock-based compensation expense	1,846			$ 1,846
Common stock repurchased, shares				(824)
Common stock repurchased	(19,098)			$ (19,098)
Net income	6,052				6,052
Other comprehensive income (loss), net of tax	15,603							15,603
Cash dividends declared on common stock	(14,569)				(14,569)
Ending balance, shares at Jun. 30, 2020				35,909
Ending balance at Jun. 30, 2020	793,652			$ 569,329	198,342			25,981
Beginning balance, shares at Mar. 31, 2020				35,889
Beginning balance at Mar. 31, 2020	798,438			$ 568,439	211,707			18,292
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock awards forfeited, shares				19
Exercise of stock options, shares				3
Exercise of stock options	51			$ 51
Stock-based compensation expense	877			$ 877
Common stock repurchased, shares				(2)
Common stock repurchased	(38)			$ (38)
Net income	(6,139)				(6,139)
Other comprehensive income (loss), net of tax	7,689							7,689
Cash dividends declared on common stock	(7,226)				(7,226)
Ending balance, shares at Jun. 30, 2020				35,909
Ending balance at Jun. 30, 2020	793,652			$ 569,329	198,342			25,981
Beginning balance, shares at Dec. 31, 2020				35,912
Beginning balance at Dec. 31, 2020	820,439			$ 571,021	224,400			25,018
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock awards forfeited, shares				120
Stock-based compensation expense	1,796			$ 1,796
Common stock repurchased, shares				(26)
Common stock repurchased	(757)			$ (757)
Net income	58,046				58,046
Other comprehensive income (loss), net of tax	(8,957)							(8,957)
Cash dividends declared on common stock	(14,583)				(14,583)
Ending balance, shares at Jun. 30, 2021				36,006
Ending balance at Jun. 30, 2021	855,984			$ 572,060	267,863			16,061
Beginning balance, shares at Mar. 31, 2021				35,981
Beginning balance at Mar. 31, 2021	827,151			$ 571,204	242,486			13,461
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock awards forfeited, shares				28
Stock-based compensation expense	926			$ 926
Common stock repurchased, shares				(3)
Common stock repurchased	(70)			$ (70)
Net income	32,702				32,702
Other comprehensive income (loss), net of tax	2,600							2,600
Cash dividends declared on common stock	(7,325)				(7,325)
Ending balance, shares at Jun. 30, 2021				36,006
Ending balance at Jun. 30, 2021	$ 855,984			$ 572,060	$ 267,863			$ 16,061

[1] Effective January 1, 2020, Company adopted ASU 2016-13, Financial Instruments - Credit Losses.

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares							3 Months Ended		6 Months Ended
	Apr. 21, 2021	Jan. 27, 2021	Oct. 21, 2020	Jul. 22, 2020	Apr. 29, 2020	Jan. 22, 2020	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Statement of Stockholders' Equity [Abstract]
Cash dividends declared on common stock (in usd per share)	$ 0.20	$ 0.20	$ 0.20	$ 0.20	$ 0.20	$ 0.20	$ 0.20	$ 0.20	$ 0.40	$ 0.40

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities:
Net income (loss)		$ 58,046	$ 6,052
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion		(13,901)	(2,974)
(Reversal of) provision for credit losses		(21,186)	36,509
Net change in accrued interest receivable, prepaid expenses and other assets, and accrued expenses and other liabilities		3,541	(3,096)
Stock-based compensation expense		1,796	1,846
Amortization of intangible assets		1,594	1,806
Origination of mortgage loans held for sale		(53,807)	(48,848)
Proceeds from sale of mortgage loans held for sale		58,373	52,280
Bank owned life insurance income		(1,373)	(1,530)
Valuation adjustment on interest rate swaps		(254)	0
Gain on sale of other real estate owned, net		0	(179)
Gain on sale of mortgage loans held for sale, net		(2,373)	(1,682)
Gain on sale of investment securities, net		(29)	(1,423)
Gain on sale of assets held for sale		(745)	(9)
Loss (gain) on sale or write-off of premises and equipment, net		88	(25)
Net cash provided by operating activities		29,770	38,727
Cash flows from investing activities:
Loans originated, net of principal payments		295,618	(895,251)
Maturities, calls and payments of investment securities available for sale		126,669	154,194
Purchase of investment securities available for sale		(388,636)	(103,079)
Proceeds from sales of investment securities available for sale		1,248	40,930
Purchase of premises and equipment		(1,748)	(1,739)
Proceeds from sales of other real estate owned		0	1,290
Proceeds from sales of assets held for sale		3,730	394
Proceeds from redemption of Federal Home Loan Bank stock		0	2,560
Purchases of Federal Home Loan Bank stock		(1,272)	(2,844)
Proceeds from sales of premises and equipment		10	53
Purchases of bank owned life insurance		(105)	(3,579)
Proceeds from bank owned life insurance death benefit		0	1,324
Cash received from return of New Market Tax Credit equity method investment		9,642	0
Capital contributions to low-income housing tax credit partnerships		(12,637)	(2,335)
Net cash provided (used) by investing activities		32,519	(808,082)
Cash flows from financing activities:
Net increase in deposits		463,716	985,057
Federal Home Loan Bank advances		10	19,000
Repayment of Federal Home Loan Bank advances		(10)	(19,000)
Common stock cash dividends paid		(14,383)	(14,494)
Net increase in securities sold under agreement to repurchase		10,746	4,275
Proceeds from exercise of stock options		0	122
Repurchase of common stock		(757)	(19,098)
Net cash provided by financing activities		459,322	955,862
Net increase in cash and cash equivalents		521,611	186,507
Cash and cash equivalents at beginning of period		743,322	228,568
Cash and cash equivalents at end of period		1,264,933	415,075
Supplemental disclosures of cash flow information:
Cash paid for interest		3,571	8,144
Cash paid for income taxes, net of refunds		7,967	118
Supplemental non-cash disclosures of cash flow information:
Transfers of loans receivable to other real estate owned		0	270
Loans received from return of New Market Tax Credit equity method investment		15,596	0
Transfer of Property and Equipment to Prepaid Expenses and Other Assets Held-for-sale		1,685	0
Investment in low income housing tax partnership		0	10,237
Cumulative effect from change in accounting policy	[1]	0	7,175
Right of use assets obtained in exchange for new operating lease liabilities		$ 8,393	$ 591

[1] Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses.

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Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements

Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements

(a) Description of Business

The Company is primarily engaged in the business of planning, directing and coordinating the business activities of its wholly-owned subsidiary, Heritage Bank. The Bank is headquartered in Olympia, Washington and conducts business from its 53 branch offices as of June 30, 2021 located throughout Washington State and the greater Portland, Oregon area. The Bank’s business consists primarily of commercial lending and deposit relationships with small and medium-sized businesses and their owners in its market areas and attracting deposits from the general public. The Bank also makes real estate construction and land development loans, consumer loans and originates first mortgage loans on residential properties primarily located in its market areas. The Bank's deposits are insured by the FDIC.

The Company announced a plan in July 2021 to consolidate four branches during October 2021 to create a more efficient branch footprint. This will reduce the branch count from 53 to 49. The Company plans to integrate these locations into other branches within its network.

(b) Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. It is recommended that these unaudited Condensed Consolidated Financial Statements and accompanying Notes be read with the audited Consolidated Financial Statements and the accompanying Notes included in the 2020 Annual Form 10-K. In management's opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

To prepare unaudited Condensed Consolidated Financial Statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided. Management believes that the judgments, estimates, and assumptions used in the preparation of the Condensed Consolidated Financial Statements are appropriate based on the facts and circumstances at the time. Actual results, however, could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to management's estimate of ACL on loans, management's estimate of ACL on unfunded commitments, management's evaluation of goodwill impairment and management's estimate of the fair value of financial instruments.

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany balances and transactions among the Company and the Bank have been eliminated in consolidation.

Certain prior year amounts in the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current year’s presentation. Reclassifications had no effect on the prior years' net income or stockholders’ equity.

(c) Significant Accounting Policies

The significant accounting policies used in preparation of the Condensed Consolidated Financial Statements are disclosed in greater detail in the 2020 Annual Form 10-K. There have not been any material changes in the Company's significant accounting policies from those contained in the 2020 Annual Form 10-K during the six months ended June 30, 2021.

(d) Recently Issued or Adopted Accounting Pronouncements

FASB ASU 2016-13, Financial Instruments: Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended by ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11, and ASU 2020-02, was originally issued in June 2016. This ASU replaced the incurred loss methodology with an expected loss methodology, which is commonly referred to as the "CECL" methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans receivable. It also applies to off-balance sheet credit exposures such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments. In addition, CECL Adoption made changes to the accounting for credit losses on investment securities available for sale. This ASU requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years with early adoption permitted for fiscal years after December 15, 2018 and can be delayed under a provision of the CARES Act until the end of the official health emergency declaration. The Bank adopted ASU 2016-13 on January 1, 2020 using the modified retrospective method for all financial assets measured at amortized cost and unfunded commitments. At adoption, the Bank elected not to measure an ACL on accrued interest receivable on loans receivable or accrued interest receivable on

investment securities available for sale as Bank policy is to reverse interest income for uncollectible accrued interest receivable balances in a timely manner.

The adoption of ASU 2016-13 included an increase to the ACL on loans of $3.4 million and an increase to the ACL on unfunded commitments of $3.7 million, resulting in a pretax cumulative-effect adjustment of $7.1 million. The impact of this adjustment to beginning retained earnings on January 1, 2020 was $5.6 million, net of tax.

FASB ASU 2020-04, Reference Rate Reform (Topic 848), as amended by ASU 2021-01, was issued in March 2020 and provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The amendments are elective, apply to all entities, and provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The Bank’s swap-related transactions are the majority of the Company's LIBOR exposure. Effective January 25, 2021, the Company adhered to the Interbank Offered Rate Fallbacks Protocol as published by the International Swaps and Derivatives Association, Inc. and recommended by the Alternative Reference Rates Committee. The Company does not expect this ASU to have a material impact on its business operations and the Condensed Consolidated Financial Statements.

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Investment Securities

6 Months Ended

Jun. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment Securities

The Company’s investment policy is designed primarily to provide and maintain liquidity, generate a favorable return on assets without incurring undue interest rate and credit risk, and complement the Bank’s lending activities.

There were no securities classified as trading or held to maturity at June 30, 2021 or December 31, 2020.

(a) Securities by Type and Maturity

The following tables present the amortized cost and fair value of investment securities available for sale at the dates indicated and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:

	June 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
U.S. government and agency securities	$	104,688	$	477	$	(1,518)	$	103,647
Municipal securities	219,174		10,341		(588)		228,927
Residential CMO and MBS	256,875		3,465		(846)		259,494
Commercial CMO and MBS	413,304		9,973		(1,337)		421,940
Corporate obligations	7,004		17		(3)		7,018
Other asset-backed securities	27,956		551		(9)		28,498
Total	$	1,029,001	$	24,824	$	(4,301)	$	1,049,524

	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
U.S. government and agency securities	$	44,713	$	947	$	—	$	45,660
Municipal securities	197,634		12,561		(227)		209,968
Residential CMO and MBS	196,956		5,125		(209)		201,872
Commercial CMO and MBS	290,638		13,198		(90)		303,746
Corporate obligations	10,971		125		—		11,096
Other asset-backed securities	29,283		565		(27)		29,821
Total	$	770,195	$	32,521	$	(553)	$	802,163

The amortized cost and fair value of investment securities available for sale at June 30, 2021, by contractual maturity, are set forth below. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	33,741	$	33,967
Due after one year through five years	132,997		138,549
Due after five years through ten years	344,562		351,995
Due after ten years	517,701		525,013
Total	$	1,029,001	$	1,049,524

There were no holdings of investment securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity at June 30, 2021 and December 31, 2020.

(b) Unrealized Losses and ACL on Investment Securities Available for Sale

The following tables show the gross unrealized losses and fair value of the Company’s investment securities available for sale for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2021 and December 31, 2020:

	June 30, 2021
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
U.S. government and agency securities	$	50,213	$	(1,518)	$	—	$	—	$	50,213	$	(1,518)
Municipal securities	32,012		(484)		2,348		(104)		34,360		(588)
Residential CMO and MBS	42,784		(715)		22,901		(131)		65,685		(846)
Commercial CMO and MBS	84,771		(1,331)		2,595		(6)		87,366		(1,337)
Corporate obligations	4,990		(3)		—		—		4,990		(3)
Other asset-backed securities	—		—		1,262		(9)		1,262		(9)
Total	$	214,770	$	(4,051)	$	29,106	$	(250)	$	243,876	$	(4,301)

	December 31, 2020
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
Municipal securities	$	10,264	$	(227)	$	—	$	—	$	10,264	$	(227)
Residential CMO and MBS	—		—		25,293		(209)		25,293		(209)
Commercial CMO and MBS	11,404		(29)		7,499		(61)		18,903		(90)
Other asset-backed securities	—		—		4,570		(27)		4,570		(27)
Total	$	21,668	$	(256)	$	37,362	$	(297)	$	59,030	$	(553)

The Company evaluated investment securities available for sale as of June 30, 2021 and December 31, 2020 and determined that any declines in fair value were attributable to changes in interest rates relative to where these investments fall within the yield curve and individual characteristics. Management monitors published credit ratings for adverse changes for all rated investment securities and none of these securities had a below investment grade credit rating as of both June 30, 2021 and December 31, 2020. In addition, the Company does not intend to sell these securities nor does the Company consider it more likely than not that it will be required to sell these securities before the recovery of the amortized cost basis, which may be upon maturity. Therefore, no ACL on investment securities available for sale was recorded as of June 30, 2021 and December 31, 2020.

(c) Realized Gains and Losses

The following table presents the gross realized gains and losses on the sale of investment securities available for sale for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Gross realized gains	$	—	$	414	$	29	$	1,442
Gross realized losses	—		(5)		—		(19)
Net realized gains	$	—	$	409	$	29	$	1,423

(d) Pledged Securities

The following table summarizes the amortized cost and fair value of investment securities available for sale that are pledged as collateral for the following obligations at June 30, 2021 and December 31, 2020:

	June 30, 2021				December 31, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Washington and Oregon state public deposits	$	124,649	$	128,591	$	119,652	$	124,228
Securities sold under agreement to repurchase	51,022		51,719		38,630		39,945
Other securities pledged	41,509		42,371		29,665		30,717
Total	$	217,180	$	222,681	$	187,947	$	194,890

(e) Accrued Interest Receivable

Accrued interest receivable excluded from amortized cost on investment securities available for sale totaled $4.2 million and $3.6 million at June 30, 2021 and December 31, 2020, respectively. No amounts of accrued interest receivable on investment securities available for sale were reversed against interest income on investment securities available for sale during the three and six months ended June 30, 2021 and June 30, 2020.

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Loans Receivable

6 Months Ended

Jun. 30, 2021

Loans and Leases Receivable Disclosure [Abstract]

Loans Receivable

Loans Receivable

(a) Loan Origination/Risk Management

The Bank originates loans in the ordinary course of business and has also acquired loans through mergers and acquisitions. Accrued interest receivable was excluded from disclosures presenting the Bank's amortized cost of loans receivable as it was deemed insignificant.

The Bank categorizes the individual loans in the total loan portfolio into four segments: commercial business; residential real estate; real estate construction and land development; and consumer. Within these segments are classes of loans for which management monitors and assesses credit risk in the loan portfolios. A detailed description of the portfolio segments and classes is contained in the 2020 Annual Form 10-K.

The amortized cost of loans receivable, net of ACL on loans at June 30, 2021 and December 31, 2020 consisted of the following portfolio segments and classes:

	June 30, 2021		December 31, 2020
	(In thousands)
Commercial business:
Commercial and industrial	$	651,915	$	733,098
SBA PPP	544,250		715,121
Owner-occupied CRE	865,662		856,684
Non-owner occupied CRE	1,425,238		1,410,303
Total commercial business	3,487,065		3,715,206
Residential real estate	120,148		122,756

	June 30, 2021		December 31, 2020
	(In thousands)
Real estate construction and land development:
Residential	88,601		78,259
Commercial and multifamily	239,979		227,454
Total real estate construction and land development	328,580		305,713
Consumer	271,737		324,972
Loans receivable	4,207,530		4,468,647
Allowance for credit losses on loans	(51,562)		(70,185)
Loans receivable, net	$	4,155,968	$	4,398,462
Balances included in the amortized cost of Loans receivable:
Unamortized net discount on acquired loans	$	(5,006)	$	(6,575)
Unamortized net deferred fee	$	(17,994)	$	(15,458)

(b) Concentrations of Credit

Most of the Bank’s lending activity occurs within its primary market areas which are concentrated along the I-5 corridor from Whatcom County to Clark County in Washington State and Multnomah County and Washington County in Oregon, as well as other contiguous markets and represents a geographic concentration. Additionally, our loan portfolio is concentrated in commercial-type loans, including commercial business loans and commercial and multifamily real estate construction and land development loans.

(c) Credit Quality Indicators

As part of the on-going monitoring of the credit quality of the Bank’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk grade of the loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) nonperforming loans, (v) past due status, and (vi) the general economic conditions of the United States of America, and specifically the states of Washington and Oregon.

The Bank utilizes a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 10. Risk grades are aggregated to create the risk categories of Pass for grades 1 to 6, Special Mention or "SM" for grade 7, Substandard or "SS" for grade 8, Doubtful for grade 9 and Loss for grade 10. Descriptions of the general characteristics of the risk grades, including qualitative information on how the risk grades relate to the risk of loss, are contained in the 2020 Annual Form 10-K. Numerical loan grades for loans are established at the origination of the loan. Changes to loan grades are considered at the time new information about the performance of a loan becomes available, including the receipt of updated financial information from the borrower, results of annual term loan reviews and scheduled loan reviews. For consumer loans, the Bank follows the FDIC’s Uniform Retail Credit Classification and Account Management Policy for subsequent classification in the event of payment delinquencies or default. Typically, an individual loan grade will not be changed from the prior period unless there is a specific indication of credit deterioration or improvement. Credit deterioration is evidenced by delinquency, direct communications with the borrower, or other borrower information that becomes known to management. Credit improvements are evidenced by known facts regarding the borrower or the collateral property.

Loan grades relate to the likelihood of losses in that the higher the grade, the greater the loss potential. Loans with a pass grade may have some estimated inherent losses, but to a lesser extent than the other loan grades. The SM loan grade is transitory in that the Bank is waiting on additional information to determine the likelihood and extent of the potential loss. The likelihood of loss for SM graded loans, however, is greater than Watch graded loans because there has been measurable credit deterioration. Loans with a SS grade are generally loans with higher risk of loss if the deficiencies are not corrected. For Doubtful and Loss graded loans, the Bank is almost certain of the losses and the outstanding principal balances are generally charged off to the realizable value.

Regulatory agencies provided guidance regarding credit risk ratings, delinquency reporting and nonaccrual status for loans adversely impacted by COVID-19. The Bank has and will continue to exercise judgment in determining the risk rating for impacted borrowers and will not automatically adversely classify credits that are affected by COVID-19. The Bank also will not designate loans with payment deferrals granted due to COVID-19 as past due because of the deferral. Due to the short-term nature of the forbearance and other relief programs the Bank is offering as a result of the COVID-19 pandemic, management expects that borrowers granted relief under these programs will generally not be reported as nonaccrual during the deferral period.

The following table presents the amortized cost of loans receivable by risk grade as of June 30, 2021 and December 31, 2020:

	June 30, 2021
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2021		2020		2019		2018		2017		Prior
	(In thousands)
Commercial business:
Commercial and industrial
Pass	$	51,172	$	112,717	$	111,892	$	59,450	$	36,904	$	112,403	$	102,256	$	989	$	587,783
SM	1,003		904		6,618		6,553		3,036		5,787		5,446		—		29,347
SS	1,133		1,422		6,101		1,669		4,376		7,888		11,453		743		34,785
Total	53,308		115,043		124,611		67,672		44,316		126,078		119,155		1,732		651,915
SBA PPP
Pass	347,813		196,437		—		—		—		—		—		—		544,250
Owner-occupied CRE
Pass	57,984		89,380		162,488		93,738		70,985		298,991		—		75		773,641
SM	—		5,219		5,257		12,922		10,472		17,373		—		—		51,243
SS	—		694		—		3,818		7,083		29,183		—		—		40,778
Total	57,984		95,293		167,745		110,478		88,540		345,547		—		75		865,662
Non-owner occupied CRE
Pass	67,602		184,174		189,439		144,247		167,605		598,127		—		—		1,351,194
SM	—		5,094		1,971		353		2,293		10,016		—		—		19,727
SS	—		—		—		3,623		—		50,694		—		—		54,317
Total	67,602		189,268		191,410		148,223		169,898		658,837		—		—		1,425,238
Total commercial business
Pass	524,571		582,708		463,819		297,435		275,494		1,009,521		102,256		1,064		3,256,868
SM	1,003		11,217		13,846		19,828		15,801		33,176		5,446		—		100,317
SS	1,133		2,116		6,101		9,110		11,459		87,765		11,453		743		129,880
Total	526,707		596,041		483,766		326,373		302,754		1,130,462		119,155		1,807		3,487,065
Residential real estate
Pass	24,279		26,181		31,274		8,876		9,210		19,557		—		—		119,377
SS	—		—		—		—		57		714		—		—		771
Total	24,279		26,181		31,274		8,876		9,267		20,271		—		—		120,148
Real estate construction and land development:
Residential
Pass	23,444		38,628		21,658		2,674		401		1,796		—		—		88,601
Commercial and multifamily
Pass	16,787		42,010		152,906		22,387		1,941		2,436		—		—		238,467
SS	—		636		443		—		—		433		—		—		1,512
Total	16,787		42,646		153,349		22,387		1,941		2,869		—		—		239,979
Total real estate construction and land development
Pass	40,231		80,638		174,564		25,061		2,342		4,232		—		—		327,068
SS	—		636		443		—		—		433		—		—		1,512
Total	40,231		81,274		175,007		25,061		2,342		4,665		—		—		328,580
Consumer
Pass	11,396		20,456		60,434		40,325		21,866		19,613		94,243		193		268,526
SS	—		147		712		652		608		1,055		33		4		3,211
Total	11,396		20,603		61,146		40,977		22,474		20,668		94,276		197		271,737

	June 30, 2021
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2021		2020		2019		2018		2017		Prior
Loans receivable
Pass	600,477		709,983		730,091		371,697		308,912		1,052,923		196,499		1,257		3,971,839
SM	1,003		11,217		13,846		19,828		15,801		33,176		5,446		—		100,317
SS	1,133		2,899		7,256		9,762		12,124		89,967		11,486		747		135,374
Total	$	602,613	$	724,099	$	751,193	$	401,287	$	336,837	$	1,176,066	$	213,431	$	2,004	$	4,207,530

(1) Represents loans receivable balance at June 30, 2021 which was converted from a revolving loan to an amortizing loan during the six months ended June 30, 2021.

	December 31, 2020
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2020		2019		2018		2017		2016		Prior
	(In thousands)
Commercial business:
Commercial and industrial
Pass	$	118,971	$	127,919	$	70,766	$	44,231	$	37,658	$	95,958	$	121,440	$	819	$	617,762
SM	14,430		9,162		10,878		4,171		5,700		3,579		11,790		814		60,524
SS	2,199		11,835		3,416		9,348		1,052		7,651		15,484		3,827		54,812
Total	135,600		148,916		85,060		57,750		44,410		107,188		148,714		5,460		733,098
SBA PPP
Pass	715,121		—		—		—		—		—		—		—		715,121
Owner-occupied CRE
Pass	89,224		167,095		94,830		80,138		74,902		254,864		—		—		761,053
SM	6,146		4,540		16,386		11,231		5,464		12,105		—		—		55,872
SS	—		—		114		7,320		3,313		29,012		—		—		39,759
Total	95,370		171,635		111,330		98,689		83,679		295,981		—		—		856,684
Non-owner-occupied CRE
Pass	197,548		173,153		148,830		172,438		240,614		406,817		—		—		1,339,400
SM	—		1,979		357		2,448		6,210		3,539		—		—		14,533
SS	—		—		3,623		—		35,455		17,292		—		—		56,370
Total	197,548		175,132		152,810		174,886		282,279		427,648		—		—		1,410,303
Total commercial business
Pass	1,120,864		468,167		314,426		296,807		353,174		757,639		121,440		819		3,433,336
SM	20,576		15,681		27,621		17,850		17,374		19,223		11,790		814		130,929
SS	2,199		11,835		7,153		16,668		39,820		53,955		15,484		3,827		150,941
Total	1,143,639		495,683		349,200		331,325		410,368		830,817		148,714		5,460		3,715,206
Residential real estate
Pass	30,141		41,829		15,730		10,362		7,322		16,825		—		—		122,209
SS	—		—		—		59		—		488		—		—		547
Total	30,141		41,829		15,730		10,421		7,322		17,313		—		—		122,756
Real estate construction and land development:
Residential
Pass	33,801		36,697		2,725		1,097		971		1,042		—		—		76,333
SS	—		—		—		1,926		—		—		—		—		1,926
Total	33,801		36,697		2,725		3,023		971		1,042		—		—		78,259

Commercial and multifamily
Pass	27,423		151,020		38,682		5,660		689		1,407		—		—		224,881
SM	67		1,011		—		—		—		29		—		—		1,107
SS	572		450		—		—		—		444		—		—		1,466
Total	28,062		152,481		38,682		5,660		689		1,880		—		—		227,454
Total real estate construction and land development
Pass	61,224		187,717		41,407		6,757		1,660		2,449		—		—		301,214
SM	67		1,011		—		—		—		29		—		—		1,107
SS	572		450		—		1,926		—		444		—		—		3,392
Total	61,863		189,178		41,407		8,683		1,660		2,922		—		—		305,713
Consumer
Pass	43,742		77,083		53,195		30,559		13,443		15,453		87,547		315		321,337
SS	34		404		684		648		420		1,319		78		48		3,635
Total	43,776		77,487		53,879		31,207		13,863		16,772		87,625		363		324,972
Loans receivable
Pass	1,255,971		774,796		424,758		344,485		375,599		792,366		208,987		1,134		4,178,096
SM	20,643		16,692		27,621		17,850		17,374		19,252		11,790		814		132,036
SS	2,805		12,689		7,837		19,301		40,240		56,206		15,562		3,875		158,515
Total	$	1,279,419	$	804,177	$	460,216	$	381,636	$	433,213	$	867,824	$	236,339	$	5,823	$	4,468,647

(1) Represents loans receivable balance at December 31, 2020 which was converted from a revolving loan to an amortizing loan during the year ended December 31, 2020.

(d) Nonaccrual Loans

The following table presents the amortized cost of nonaccrual loans for the dates indicated:

	June 30, 2021
	Nonaccrual without ACL		Nonaccrual with ACL		Total Nonaccrual
	(In thousands)
Commercial business:
Commercial and industrial	$	7,491	$	5,548	$	13,039
Owner-occupied CRE	3,784		12,400		16,184
Non-owner occupied CRE	1,363		3,623		4,986
Total commercial business	12,638		21,571		34,209
Residential real estate	—		60		60
Real estate construction and land development:
Commercial and multifamily	—		1,014		1,014
Consumer	—		58		58
Total	$	12,638	$	22,703	$	35,341

	December 31, 2020
	Nonaccrual without ACL		Nonaccrual with ACL		Total Nonaccrual
	(In thousands)
Commercial business:
Commercial and industrial	$	22,039	$	9,208	$	31,247
Owner-occupied CRE	4,693		13,700		18,393
Non-owner occupied CRE	3,424		3,722		7,146
Total commercial business	30,156		26,630		56,786
Residential real estate	67		117		184
Real estate construction and land development:
Commercial and multifamily	572		450		1,022
Consumer	31		69		100
Total	$	30,826	$	27,266	$	58,092

The following table presents the reversal of interest income on loans due to the write-off of accrued interest receivable upon the initial classification of loans as nonaccrual loans and the interest income recognized due to payment in full of previously classified nonaccrual loans during the following periods:

	Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
	Interest Income Reversed		Interest Income Recognized		Interest Income Reversed		Interest Income Recognized
	(In thousands)
Commercial business:
Commercial and industrial	$	(5)	$	1,981	$	—	$	89
Owner-occupied CRE	—		3		—		14
Non-owner occupied CRE	—		—		—		22
Total commercial business	(5)		1,984		—		125
Consumer	—		—		—		37
Total	$	(5)	$	1,984	$	—	$	162

	Six Months Ended June 30, 2021				Six months ended June 30, 2020
	Interest Income Reversed		Interest Income Recognized		Interest Income Reversed		Interest Income Recognized
	(in thousands)
Commercial business:
Commercial and industrial	$	(10)	$	2,044	$	(16)	$	308
Owner-occupied CRE	—		117		—		60
Non-owner occupied CRE	—		313		—		67
Total commercial business	(10)		2,474		(16)		435
Real estate construction and land development:
Residential	—		73		—		—
Consumer	—		—		—		47
Total	$	(10)	$	2,547	$	(16)	$	482

For the three and six months ended June 30, 2021 and 2020, no interest income was recognized subsequent to a loan’s classification as nonaccrual, except as indicated in the tables above due to payment in full.

(e) Past due loans

The Bank performs an aging analysis of past due loans using policies consistent with regulatory reporting requirements with categories of 30-89 days past due and 90 or more days past due. The amortized cost of past due loans as of June 30, 2021

and December 31, 2020 were as follows:

	June 30, 2021
	30-89 Days		90 Days or Greater		Total Past  Due		Current		Loans Receivable
	(In thousands)
Commercial business:
Commercial and industrial	$	489	$	7,525	$	8,014	$	643,901	$	651,915
SBA PPP	—		—		—		544,250		544,250
Owner-occupied CRE	—		—		—		865,662		865,662
Non-owner occupied CRE	4,038		—		4,038		1,421,200		1,425,238
Total commercial business	4,527		7,525		12,052		3,475,013		3,487,065
Residential real estate	—		30		30		120,118		120,148
Real estate construction and land development:
Residential	—		—		—		88,601		88,601
Commercial and multifamily	—		571		571		239,408		239,979
Total real estate construction and land development	—		571		571		328,009		328,580
Consumer	788		—		788		270,949		271,737
Total	$	5,315	$	8,126	$	13,441	$	4,194,089	$	4,207,530

	December 31, 2020
	30-89 Days		90 Days or Greater		Total Past  Due		Current		Loans Receivable
	(In thousands)
Commercial business:
Commercial and industrial	$	4,621	$	8,082	$	12,703	$	720,395	$	733,098
SBA PPP	—		—		—		715,121		715,121
Owner-occupied CRE	991		403		1,394		855,290		856,684
Non-owner occupied CRE	412		1,970		2,382		1,407,921		1,410,303
Total commercial business	6,024		10,455		16,479		3,698,727		3,715,206
Residential real estate	765		16		781		121,975		122,756
Real estate construction and land development:
Residential	—		—		—		78,259		78,259
Commercial and multifamily	2,225		—		2,225		225,229		227,454
Total real estate construction and land development	2,225		—		2,225		303,488		305,713
Consumer	1,407		30		1,437		323,535		324,972
Total	$	10,421	$	10,501	$	20,922	$	4,447,725	$	4,468,647

There was one commercial and industrial loan 90 days or more past due that was still accruing interest as of June 30, 2021 with an amortized cost of $286,000. There were no loans 90 days or more past due that were still accruing interest as of December 31, 2020.

(f) Collateral-dependent Loans

The type of collateral securing loans individually evaluated for credit losses and for which the repayment was expected to be provided substantially through the operation or sale of the collateral as of June 30, 2021 and December 31, 2020 were as

follows:

	June 30, 2021
	CRE(1)		Farmland(1)		Residential Real Estate(1)		Other(1)		Total(1)
	(In thousands)
Commercial business:
Commercial and industrial	$	1,767	$	5,152	$	751	$	331	$	8,001
Owner-occupied CRE	4,346		—		—		—		4,346
Non-owner occupied CRE	1,363		—		—		—		1,363
Total commercial business	7,476		5,152		751		331		13,710
Real estate construction and land development:
Commercial and multifamily	571		—		—		—		571
Total	$	8,047	$	5,152	$	751	$	331	$	14,281

(1) Balances represent the amortized cost of the loan. If multiple collateral sources secure the loan, the entire balance is presented in the primary collateral category.

	December 31, 2020
	CRE(1)		Farmland(1)		Residential Real Estate(1)		Other(1)		Total(1)
	(In thousands)
Commercial business:
Commercial and industrial	$	1,893	$	18,738	$	584	$	1,405	$	22,620
Owner-occupied CRE	4,693		—		—		—		4,693
Non-owner occupied CRE	3,424		—		—		—		3,424
Total commercial business	10,010		18,738		584		1,405		30,737
Residential real estate	—		—		67		—		67
Real estate construction and land development:
Commercial and multifamily	572		—		—		—		572
Consumer	—		—		30		—		30
Total	$	10,582	$	18,738	$	681	$	1,405	$	31,406

(1) Balances represent the amortized cost of the loan. If multiple collateral sources secure the loan, the entire balance is presented in the primary collateral category.

There have been no significant changes to the collateral securing individually evaluated loans for credit losses and for which repayment was expected to be provided substantially through the operation or sale of the collateral during the six months ended June 30, 2021, except changes due to additions or deletions of loans into this classification.

(g) Troubled Debt Restructured Loans

A TDR is a restructuring in which the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that it would not otherwise consider. The TDR modifications or concessions are made to increase the likelihood that these borrowers with financial difficulties will be able to satisfy their debt obligations as amended.

The concessions granted in the restructurings largely consisted of maturity extensions. The Bank typically grants shorter extension periods to continually monitor these TDR loans despite the fact that the extended date might not be the date the Bank expects the scheduled cash flow from these borrowers. The Bank does not consider these modifications a subsequent default of a TDR as new loan terms, specifically new maturity dates, were granted.

The CARES Act, CA Act and regulatory agencies provided guidance around the modification of loans as a result of the COVID-19 pandemic, and outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined by the guidance are not TDRs. This includes short-term (e.g. six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers were considered current if they were less than 30 days past due on the contractual payments as of December 31, 2019 under the CARES Act and at the time a modification program is implemented under related regulatory guidance. The CA Act extended relief offered under the CARES Act through January 1, 2022 or 60 days after the end of the national emergency declared by the President, whichever is earlier. The Bank elected to apply the temporary relief under the applicable guidance to certain eligible short-term modifications and did not classify the modifications as TDRs for accounting or disclosure purposes. However, COVID

Modifications whose payment deferral exceeded 180 days following the loans' initial modification were classified as TDRs based on the Bank's internal policy.

Loans that were modified as TDR loans are set forth in the following tables for the periods indicated:

	Three Months Ended June 30,
	2021			2020
	Number of Contracts	Amortized Cost (1) (2)		Number of Contracts	Amortized Cost (1) (2)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	18	$	5,673	31	$	11,849
Owner-occupied CRE	1	2,200		4	1,657
Non-owner occupied CRE	1	251		2	398
Total commercial business	20	8,124		37	13,904
Real estate construction and land development:
Residential	—	—		4	1,751
Commercial and multifamily	1	443		—	—
Total real estate construction and land development	1	443		4	1,751
Consumer	6	146		9	82
Total	27	$	8,713	50	$	15,737

	Six Months Ended June 30,
	2021			2020
	Number of Contracts	Amortized Cost (1) (2)		Number of Contracts	Amortized Cost (1) (2)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	31	$	8,713	35	$	12,652
Owner-occupied CRE	2	5,857		6	3,067
Non-owner occupied CRE	2	2,222		3	2,143
Total commercial business	35	16,792		44	17,862
Residential real estate	1	181		—	—
Real estate construction and land development:
Residential	—	—		4	1,751
Commercial and multifamily	1	443		—	—
Total real estate construction and land development	1	443		4	1,751
Consumer	21	511		14	173
Total TDR loans	58	$	17,927	62	$	19,786

(1) Number of contracts and amortized cost represent loans which have balances as of period end, net of subsequent payments after modifications. Certain modified loans may have been paid-down or charged-off during the three or six months ended June 30, 2021 and June 30, 2020.

(2) As the Bank did not forgive any principal or interest balance as part of the loan modifications, the Bank’s amortized cost in each loan at the date of modification (pre-modification) did not change as a result of the modification (post-modification).

The Bank had an ACL on loans of $1.7 million and $1.5 million at June 30, 2021 and June 30, 2020, respectively, related to these TDR loans which were restructured during the six months ended June 30, 2021 and June 30, 2020, respectively.

The unfunded commitment to borrowers related to TDR loans was $4.9 million and $2.6 million at June 30, 2021 and December 31, 2020, respectively.

The following tables present loans that were modified in a troubled debt restructure and subsequently defaulted within twelve months from the modification date during the periods indicated:

	Three Months Ended June 30,
	2021			2020
	Number of Contracts (1)	Amortized Cost (1)		Number of Contracts (1)	Amortized Cost (1)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	1	$	46	2	$	302
Owner-occupied CRE	—	—		1	445
Non-owner occupied CRE	—	—		1	280
Total	1	$	46	4	$	1,027

	Six Months Ended June 30,
	2021			2020
	Number of Contracts (1)	Amortized Cost (1)		Number of Contracts (1)	Amortized Cost (1)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	2	$	789	4	$	2,155
Owner-occupied CRE	—	—		1	445
Non-owner occupied CRE	—	—		2	398
Total	2	$	789	7	$	2,998

(1) Number of contracts and amortized cost represent loans which have balances as of period end, net of subsequent payments after modifications. Certain modified loans may have been paid-down or charged-off during the six months ended June 30, 2021 and June 30, 2020.

During the three and six months ended June 30, 2021 and 2020 all of the TDR loans in the tables above defaulted because each was past its modified maturity date and the borrower had not subsequently repaid the credits. The Bank chose not to extend further the maturity date on these loans. The Bank had an ACL on loans of $7,000 and $494,000 at June 30, 2021 and June 30, 2020, respectively, related to these TDR loans which defaulted during the six months ended June 30, 2021 and 2020.

(h) Accrued interest receivable on loans receivable

Accrued interest receivable on loans receivable totaled $12.8 million and $15.8 million at June 30, 2021 and December 31, 2020, respectively. It is excluded from the calculation of the ACL on loans as interest accrued, but not received, is reversed timely.

(i) Foreclose proceedings in process

At June 30, 2021, there was one consumer mortgage loan secured by a residential real estate property (included in loans receivable on the Condensed Consolidated Statements of Financial Position) of $79,000 for which formal foreclosure proceedings were in process.

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Allowance for Credit Losses on Loans

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Allowance for Credit Losses on Loans

Allowance for Credit Losses on Loans

Effective January 1, 2020, the Bank adopted ASU 2016-13. Risk characteristics by segment considered in the CECL model are the same as those disclosed in the 2020 Annual Form 10-K.

The baseline loss rates used to calculate the ACL on loans at June 30, 2021 utilized the Bank's average quarterly historical loss information from December 31, 2012 through the balance sheet date. There were no changes to this assumption during the six months ended June 30, 2021. The Bank believes the historic loss rates are viable inputs to the current CECL model as the Bank's lending practice and business has remained relatively stable throughout the periods. While the Bank's assets have grown, the credit culture has stayed relatively consistent.

Prepayments included in the CECL model at June 30, 2021 were based on the 48-month rolling historical averages for each segment, which management believes is an accurate representation of future prepayment activity. There were no changes to this assumption during the six months ended June 30, 2021.

The reasonable and supportable period used in the CECL model as of June 30, 2021 was five quarters. There were no changes to this assumption during the six months ended June 30, 2021. Management believes that forecasts beyond this five quarter time period tend to diverge in economic assumptions and may be less comparable to actual future events. As the length of the reasonable and supportable period increases, the degree of judgment involved in estimating the allowance will likely increase.

The Bank used a two-quarter reversion period in calculating the ACL on loans as of June 30, 2021 as it believes the historical loss information is relevant to the expected credit losses and recognizes the declining precision and increasing uncertainty of estimating credit losses in those periods beyond which it can make reasonable and supportable forecasts. There were no changes to this assumption during the six months ended June 30, 2021.

During the six months ended June 30, 2021, the ACL on loans decreased $18.6 million, or 26.5%, due primarily to a reversal of provision for credit losses on loans of $19.0 million following improvements in the economic forecast at June 30, 2021 as compared to the forecast at December 31, 2020 and secondarily due to a decrease in total loans receivable, excluding SBA PPP loans which are fully guaranteed by the SBA and not provisioned for in the ACL on loans.

A summary of the changes in the ACL on loans during the six months ended June 30, 2021 and 2020 is as follows:

	Six Months Ended June 30,
	2021		2020
	(In thousands)
Balance at the beginning of the year	$	70,185	$	36,171
Impact of CECL Adoption	—		1,822
Balance at the beginning of the year, as adjusted	70,185		37,993
Charge-offs	(320)		(3,852)
Recoveries of loans previously charged-off	653		1,455
(Reversal of) provision for credit losses on loans	(18,956)		35,905
Balance at the end of the year	$	51,562	$	71,501

The following tables detail the activity in the ACL on loans disaggregated by segment and class for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30, 2021
	Beginning Balance		Charge-offs		Recoveries		Reversal of Provision for Credit Losses		Ending Balance
	(In thousands)
Commercial business:
Commercial and industrial	$	21,770	$	(13)	$	132	$	(4,404)	$	17,485
SBA PPP	—		—		—		—		—
Owner-occupied CRE	10,464		—		11		(1,913)		8,562
Non-owner occupied CRE	12,970		—		—		(2,340)		10,630
Total commercial business	45,204		(13)		143		(8,657)		36,677
Residential real estate	1,402		—		—		(249)		1,153
Real estate construction and land development:
Residential	2,048		—		4		(416)		1,636
Commercial and multifamily	11,223		—		—		(2,388)		8,835
Total real estate construction and land development	13,271		—		4		(2,804)		10,471
Consumer	4,348		(120)		144		(1,111)		3,261
Total	$	64,225	$	(133)	$	291	$	(12,821)	$	51,562

	Six Months Ended June 30, 2021
	Beginning Balance	Charge-offs	Recoveries	(Reversal of) Provision for Credit Losses	Ending Balance
	(In thousands)
Commercial business:

	Six Months Ended June 30, 2021
	Beginning Balance		Charge-offs		Recoveries		(Reversal of) Provision for Credit Losses		Ending Balance
	(In thousands)
Commercial and industrial	$	30,010	$	(14)	$	337	$	(12,848)	$	17,485
SBA PPP	—		—		—		—		—
Owner-occupied CRE	9,486		—		13		(937)		8,562
Non-owner occupied CRE	10,112		—		—		518		10,630
Total commercial business	49,608		(14)		350		(13,267)		36,677
Residential real estate	1,591		—		—		(438)		1,153
Real estate construction and land development:
Residential	1,951		—		20		(335)		1,636
Commercial and multifamily	11,141		(1)		—		(2,305)		8,835
Total real estate construction and land development	13,092		(1)		20		(2,640)		10,471
Consumer	5,894		(305)		283		(2,611)		3,261
Total	$	70,185	$	(320)	$	653	$	(18,956)	$	51,562

	Three Months Ended June 30, 2020
	Beginning Balance		Charge-offs		Recoveries		Provision for (Reversal of Provision for) Credit Losses		Ending Balance
	(In thousands)
Commercial business:
Commercial and industrial	$	13,900	$	(1,824)	$	69	$	17,628	$	29,773
Owner-occupied CRE	6,216		—		2		3,785		10,003
Non-owner occupied CRE	7,750		—		—		2,916		10,666
Total commercial business	27,866		(1,824)		71		24,329		50,442
Residential real estate	3,026		—		—		(803)		2,223
Real estate construction and land development:
Residential	864		—		7		(304)		567
Commercial and multifamily	11,444		—		—		(2,887)		8,557
Total real estate construction and land development	12,308		—		7		(3,191)		9,124
Consumer	4,340		(431)		197		5,606		9,712
Total	$	47,540	$	(2,255)	$	275	$	25,941	$	71,501

	Six Months Ended June 30, 2020
	Beginning Balance		Impact of CECL Adoption		Beginning Balance, as Adjusted		Charge-offs		Recoveries		Provision for (Reversal of Provision for) Credit Losses		Ending Balance
	(In thousands)
Commercial business:
Commercial and industrial	$	11,739	$	(1,348)	$	10,391	$	(2,911)	$	1,126	$	21,167	$	29,773
Owner-occupied CRE	4,512		452		4,964		(135)		14		5,160		10,003
Non-owner occupied CRE	7,682		(2,039)		5,643		—		—		5,023		10,666
Total commercial business	23,933		(2,935)		20,998		(3,046)		1,140		31,350		50,442
Residential real estate	1,458		1,471		2,929		—		3		(709)		2,223

	Six Months Ended June 30, 2020
	Beginning Balance		Impact of CECL Adoption		Beginning Balance, as Adjusted		Charge-offs		Recoveries		Provision for (Reversal of Provision for) Credit Losses		Ending Balance
	(In thousands)
Real estate construction and land development:
Residential	1,455		(571)		884		—		21		(338)		567
Commercial and multifamily	1,605		7,240		8,845		—		—		(288)		8,557
Total real estate construction and land development	3,060		6,669		9,729		—		21		(626)		9,124
Consumer	6,821		(2,484)		4,337		(806)		291		5,890		9,712
Unallocated	899		(899)		—		—		—		—		—
Total	$	36,171	$	1,822	$	37,993	$	(3,852)	$	1,455	$	35,905	$	71,501

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

(a) Goodwill

The Company’s goodwill represents the excess of the purchase price over the fair value of net assets acquired in the following mergers: Premier Commercial Bancorp and Puget Sound Bancorp in 2018; Washington Banking Company in 2014; Valley Community Bancshares in 2013; Western Washington Bancorp in 2006 and North Pacific Bank in 1998. The Company’s goodwill is assigned to the Bank and is evaluated for impairment at the Bank level (reporting unit).

There were no additions to goodwill during the three and six months ended June 30, 2021 and 2020.

Management analyzes its goodwill on an annual basis on December 31 and between annual tests in certain circumstances such as material adverse changes in legal, business, regulatory and economic factors. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. The Company performed an annual impairment assessment as of December 31, 2020 and concluded that there was no impairment.

(b) Other Intangible Assets

Other intangible assets represent core deposit intangibles acquired in business combinations. The useful life of the core deposit intangibles was estimated to be ten years for the acquisitions of Premier Commercial Bancorp, Puget Sound Bancorp, Washington Banking Company, and Valley Community Bancshares.

The following table presents the change in other intangible assets for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Balance at the beginning of the period	$	12,291	$	15,710	$	13,088	$	16,613
Amortization	(797)		(903)		(1,594)		(1,806)
Balance at the end of the period	$	11,494	$	14,807	$	11,494	$	14,807

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Company utilizes interest rate swap derivative contracts to facilitate the needs of its commercial customers whereby it enters into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. The transaction allows the Company’s customer to effectively convert a variable rate loan to a fixed rate and the Company recognizes immediate income based upon the difference in the bid/ask spread of the underlying transactions with its customers and the third-party. These interest rate swaps are not designated as hedging instruments.

The Company is exposed to interest rate risk as part of the transaction. However, the Company acts as an intermediary for its customer therefore changes in the fair value of the underlying derivative contracts for the most part offset each other and do not significantly impact the Company’s results of operations.

Fee income related to interest rate swap derivative contract transactions is recorded in Interest rate swap fees on the Consolidated Statements of Income. The fair value of derivative positions outstanding is included in Prepaid expenses and other

assets and Accrued expenses and other liabilities in the Consolidated Statements of Financial Condition. The gains and losses due to changes in fair value and all cash flows are included in Other income in the Consolidated Statements of Income, but typically net to zero based on the identical back-to-back interest rate swaps unless a credit valuation adjustment is recorded to appropriately reflect nonperformance risk in the fair value measurement. Various factors impact changes in the credit valuation adjustments over time, including changes in the risk ratings of the parties to the contracts, as well as changes in market rates and volatilities, which affect the total expected exposure of the derivative instruments.

The following table presents the notional amounts and estimated fair values of interest rate derivative contracts outstanding at June 30, 2021 and December 31, 2020:

	June 30, 2021				December 31, 2020
	Notional Amounts		Estimated Fair Value		Notional Amounts		Estimated Fair Value
	(In thousands)
Non-hedging interest rate derivatives
Interest rate swap asset (1)	$	321,519	$	19,342	$	308,126	$	25,740
Interest rate swap liability (1)	321,519		(19,510)		308,126		(26,162)

 (1) The estimated fair value of derivatives with customers was $15.4 million and $25.4 million as of June 30, 2021 and December 31, 2020, respectively. The estimated fair value of derivatives with third parties was $(15.6) million and $(25.9) million as of June 30, 2021 and December 31, 2020, respectively.

The Company is exposed to credit-related losses in the event of nonperformance by the counterparty to these agreements. Credit risk with the customer is controlled through the credit approval, limits, and monitoring procedures and concentrated within our primary market areas. Credit risk for derivatives with third-parties is concentrated among four well-known broker dealers.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2021

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

(a) Earnings Per Common Share

The following table illustrates the calculation of weighted average shares used for earnings per common share computations at June 30, 2021 and June 30, 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands, except shares)
Net income (loss):
Net income (loss)	$	32,702	$	(6,139)	$	58,046	$	6,052
Dividends and undistributed earnings allocated to participating securities (1)	—		—		—		(3)
Net income (loss) allocated to common shareholders	$	32,702	$	(6,139)	$	58,046	$	6,049
Basic:
Weighted average common shares outstanding	35,994,740		35,899,361		35,961,032		36,128,586
Restricted stock awards	—		(645)		—		(8,183)
Total basic weighted average common shares outstanding	35,994,740		35,898,716		35,961,032		36,120,403
Diluted:
Basic weighted average common shares outstanding	35,994,740		35,898,716		35,961,032		36,120,403
Effect of potentially dilutive common shares (2)	294,724		—		307,829		154,988
Total diluted weighted average common shares outstanding	36,289,464		35,898,716		36,268,861		36,275,391
Potentially dilutive shares that were excluded from the computation of diluted earnings per share because to do so would be anti-dilutive (3)	7,065		258,412		4,766		124,904

(1)Represents dividends paid and undistributed earnings allocated to unvested restricted stock awards.

(2)Represents the effect of the assumed exercise of stock options and vesting of restricted stock awards and units.

(3) Anti-dilution occurs when the exercise price of a stock option or the unrecognized compensation cost per share of a restricted stock award exceeds the market price of the Company’s stock.

(b) Dividends

The timing and amount of cash dividends paid on the Company's common stock depends on the Company’s earnings, capital requirements, financial condition and other relevant factors. Dividends on common stock from the Company depend substantially upon receipt of dividends from the Bank, which is the Company’s predominant source of income.

The following table summarizes the dividend activity during the six months ended June 30, 2021 and the calendar year 2020:

Declared	Cash Dividend per Share	Record Date	Paid Date
January 22, 2020	$0.20	February 6, 2020	February 20, 2020
April 29, 2020	$0.20	May 13, 2020	May 27, 2020
July 22, 2020	$0.20	August 5, 2020	August 19, 2020
October 21, 2020	$0.20	November 4, 2020	November 18, 2020
January 27, 2021	$0.20	February 10, 2021	February 24, 2021
April 21, 2021	$0.20	May 5, 2021	May 19, 2021

The FDIC and the Washington State Department of Financial Institutions, Division of Banks have the authority under their supervisory powers to prohibit the payment of dividends by the Bank to the Company. Additionally, current guidance from the Federal Reserve provides, among other things, that dividends per share on the Company’s common stock generally should not exceed earnings per share, measured over the previous four fiscal quarters. Current regulations allow the Company and the Bank to pay dividends on their common stock if the Company’s or the Bank’s regulatory capital would not be reduced below the statutory capital requirements set by the Federal Reserve and the FDIC.

(c) Stock Repurchase Program

The Company has had various stock repurchase programs since March 1999. On October 23, 2014, the Company's Board of Directors authorized the repurchase of up to 5% of the Company's outstanding common shares, or 1,512,600 shares, under the eleventh stock repurchase plan. On March 12, 2020, the Company's Board of Directors authorized the repurchase of up to 5% of the Company's outstanding common shares, or 1,799,054 shares, under the twelfth stock repurchase plan after all shares under the eleventh stock repurchase plan had been repurchased. The number, timing and price of shares repurchased under the twelfth stock repurchase plan will depend on business and market conditions and other factors, including opportunities to deploy the Company's capital.

The following table provides total repurchased shares and average share prices under the applicable plans for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		Plan Total(1)
Eleventh Stock Repurchase Plan
Repurchased shares	—		—		—		639,922		1,512,600
Stock repurchase average share price	$	—	$	—	$	—	$	23.95	$	21.69
Twelfth Stock Repurchase Plan
Repurchased shares	—		—		—		155,778		155,778
Stock repurchase average share price	$	—	$	—	$	—	$	20.34	$	20.34

(1)Represents shares repurchased and average price per share paid during the duration of each plan.

In addition to the stock repurchases under a stock repurchase plan, the Company repurchases shares to pay withholding taxes on the vesting of restricted stock awards and units. The following table provides total shares repurchased to pay withholding taxes during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Repurchased shares to pay withholding taxes	2,557		2,046		25,803		27,928
Stock repurchase to pay withholding taxes average share price	$	27.47	$	18.62	$	29.33	$	21.56

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Fair Value Measurements

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Valuations for assets and liabilities traded in active exchange markets, or interest in open-end mutual funds that allow the Company to sell its ownership interest back to the fund at net asset value on a daily basis. Valuations are obtained from readily available pricing sources for market transactions involving identical assets, liabilities, or funds.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or valuations using methodologies with observable inputs.

Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, such as option pricing models, discounted cash flow models and similar techniques using unobservable inputs, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

(a) Recurring and Nonrecurring Basis

The Company used the following methods and significant assumptions to measure the fair value of certain assets on a recurring and nonrecurring basis:

Investment Securities Available for Sale:

The fair values of all investment securities are based upon the assumptions that market participants would use in pricing the security. If available, fair values of investment securities are determined by quoted market prices (Level 1). For investment securities where quoted market prices are not available, fair values are calculated based on market prices on similar securities (Level 2). For investment securities where quoted prices or market prices of similar securities are not available, fair values are calculated by using observable and unobservable inputs such as discounted cash flows or other market indicators (Level 3). Investment security valuations are obtained from third-party pricing services.

Collateral-Dependent Loans:

Collateral-dependent loans are identified for the calculation of the ACL on loans. The fair value used to measure credit loss for this type of loan is commonly based on recent real estate appraisals which are generally obtained at least every 18 months or earlier if there are changes to risk characteristics of the underlying loan. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. The Bank also incorporates an estimate of cost to sell the collateral when the sale is probable. Such adjustments may be significant and result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value based on the borrower’s financial statements or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation and management’s expertise and knowledge of the customer and customer’s business (Level 3). Individually evaluated loans are analyzed for credit loss on a quarterly basis and the ACL on loans is adjusted as required based on the results.

Appraisals on collateral-dependent loans are performed by certified general appraisers for commercial properties or certified residential appraisers for residential properties whose qualifications and licenses have been reviewed and verified by the Bank. Once received, the Bank reviews the assumptions and approaches utilized in the appraisal as well as the resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.

Derivative Financial Instruments:

The Bank obtains broker or dealer quotes to value its interest rate derivative contracts, which use valuation models using observable market data as of the measurement date (Level 2), and incorporates credit valuation adjustments to reflect nonperformance risk in the measurement of fair value (Level 3). Although the Bank has determined that the majority of the inputs used to value its interest rate swap derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as borrower risk ratings, to evaluate the likelihood of default by itself and its counterparties. As of June 30, 2021 and December 31, 2020, the Bank assessed the significance of the impact of the credit valuation adjustment on the overall valuation of its interest rate swap derivatives and determined that the credit valuation adjustment was not significant to the overall valuation of its interest rate swap derivatives. As a result, the Bank has classified its interest rate swap derivative valuations in Level 2 of the fair value hierarchy.

Branches held for sale:

Branches held for sale are recorded at fair value less costs to sell when transferred from Premises and equipment, net to Prepaid expenses and other assets on the Consolidated Statements of Financial Condition with any valuation adjustment recorded within Other noninterest expense on the Consolidated Statements of Income. The fair value of branches held for sale is determined based on a real estate appraisal or broker price opinion. Adjustments are routinely made in the appraisal and broker price opinion process by independent appraisers and commercial real estate brokers, respectively, to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in Level 3

classification of the inputs for determining fair value.

Recurring Basis

The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis at the dates indicated:

	June 30, 2021
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Investment securities available for sale:
U.S. government and agency securities	$	103,647	$	—	$	103,647	$	—
Municipal securities	228,927		—		228,927		—
Residential CMO and MBS	259,494		—		259,494		—
Commercial CMO and MBS	421,940		—		421,940		—
Corporate obligations	7,018		—		7,018		—
Other asset-backed securities	28,498		—		28,498		—
Total investment securities available for sale	1,049,524		—		1,049,524		—
Equity security	181		181		—		—
Derivative assets - interest rate swaps	19,342		—		19,342		—
Liabilities
Derivative liabilities - interest rate swaps	$	19,510	$	—	19,510		$	—

	December 31, 2020
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Investment securities available for sale:
U.S. government and agency securities	$	45,660	$	—	$	45,660	$	—
Municipal securities	209,968		—		209,968		—
Residential CMO and MBS	201,872		—		201,872		—
Commercial CMO and MBS	303,746		—		303,746		—
Corporate obligations	11,096		—		11,096		—
Other asset-backed securities	29,821		—		29,821		—
Total investment securities available for sale	802,163		—		802,163		—
Equity security	131		131		—		—
Derivative assets - interest rate swaps	25,740		—		25,740		—
Liabilities
Derivative liabilities - interest rate swaps	$	26,162	$	—	$	26,162	$	—

Nonrecurring Basis

The Company may be required to measure certain financial assets and liabilities at fair value on a nonrecurring basis. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets.

The following tables below represent assets measured at fair value on a nonrecurring basis at the dates indicated:

			Fair Value at June 30, 2021
	Basis(1)		Total		Level 1		Level 2		Level 3
	(In thousands)
Collateral-dependent loans:
Commercial business:
Commercial and industrial	$	983	$	775	$	—	$	—	$	775

			Fair Value at June 30, 2021
	Basis(1)		Total		Level 1		Level 2		Level 3
	(In thousands)
Owner-occupied CRE	622		486		—		—		486
Total commercial business	1,605		1,261		—		—		1,261
Real estate construction and land development:
Commercial and multifamily	991		534		—		—		534
Total assets measured at fair value on a nonrecurring basis	$	2,596	$	1,795	$	—	$	—	$	1,795

(1) Basis represents the outstanding principal balance of collateral-dependent loans.

			Fair Value at December 31, 2020
	Basis(1)		Total		Level 1		Level 2		Level 3
	(In thousands)
Collateral-dependent loans:
Commercial business:
Commercial and industrial	$	1,305	$	1,289	$	—	$	—	$	1,289
Prepaid expenses and other assets:
Branch held for sale (2)	1,330		1,330		—		—		1,330
Total assets measured at fair value on a nonrecurring basis	$	2,635	$	2,619	$	—	$	—	$	2,619

(1) Basis represents the outstanding principal balance of collateral-dependent loans and the carrying value of the branch held for sale.

(2) In October 2020, one branch was reclassified as held for sale in accordance with ASC 360-10. As part of the transfer, the branch was written down to its net realizable value at that time.

The following table represents the net (loss) gain recorded in earnings as a result of nonrecurring fair value adjustments recorded during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Collateral-dependent loans:
Commercial business:
Commercial and industrial	$	6	$	9	$	(28)	$	3
Owner-occupied CRE	(76)		—		(76)		—
Total commercial business	(70)		9		(104)		3
Real estate construction and land development:
Commercial and multifamily	(23)		—		(38)		—
Net (loss) gain from nonrecurring fair value adjustments	$	(93)	$	9	$	(142)	$	3

The following tables present quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at the dates indicated:

	June 30, 2021
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range of Inputs; Weighted Average
	(Dollars in thousands)
Collateral-dependent loans	$	1,795	Market approach	Adjustment for differences between the comparable sales	55.0% - (20.0)%; 18.3%

	December 31, 2020
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range of Inputs; Weighted Average
	(Dollars in thousands)
Collateral-dependent loans	$	1,289	Market approach	Adjustment for differences between the comparable sales	0.6% - (40.1%); (24.1%)
Branch held for sale	$	1,330	Market approach	Adjustment for differences between the comparable sales	140.7% - (40.3%); 33.2%

(b) Fair Value of Financial Instruments

Broadly traded markets do not exist for most of the Company’s financial instruments; therefore, the fair value calculations attempt to incorporate the effect of current market conditions at a specific time. These determinations are subjective in nature, involve uncertainties and matters of significant judgment and do not include tax ramifications; therefore, the results cannot be determined with precision, substantiated by comparison to independent markets and may not be realized in an actual sale or immediate settlement of the instruments. There may be inherent weaknesses in any calculation technique and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results. For all of these reasons, the aggregation of the fair value calculations presented herein do not represent, and should not be construed to represent, the underlying value of the Company.

The following tables present the carrying value amount of the Company’s financial instruments and their corresponding estimated fair values at the dates indicated:

	June 30, 2021
	Carrying Value		Fair Value		Fair Value Measurements Using:
					Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	1,264,933	$	1,264,933	$	1,264,933	$	—	$	—
Investment securities available for sale	1,049,524		1,049,524		—		1,049,524		—
Loans held for sale	2,739		2,840		—		—		2,840
Loans receivable, net	4,155,968		4,271,615		—		—		4,271,615
Accrued interest receivable	17,113		17,113		65		4,244		12,804
Banked owned life insurance	108,988		108,988		108,988		—		—
Derivative assets - interest rate swaps	19,342		19,342		—		19,342		—
Equity security	181		181		181		—		—
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	$	5,686,807	$	5,686,807	$	5,686,807	$	—	$	—
Certificates of deposit	374,899		376,646		—		376,646		—
Securities sold under agreement to repurchase	46,429		46,429		46,429		—		—
Junior subordinated debentures	21,034		18,250		—		—		18,250
Accrued interest payable	74		74		31		25		18
Derivative liabilities - interest rate swaps	19,510		19,510		—		19,510		—

	December 31, 2020
	Carrying Value		Fair Value		Fair Value Measurements Using:
					Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	743,322	$	743,322	$	743,322	$	—	$	—
Investment securities available for sale	802,163		802,163		—		802,163		—
Loans held for sale	4,932		5,156		—		—		5,156

	December 31, 2020
	Carrying Value		Fair Value		Fair Value Measurements Using:
					Level 1		Level 2		Level 3
	(In thousands)
Loans receivable, net	4,398,462		4,556,862		—		—		4,556,862
Accrued interest receivable	19,418		19,418		2		3,648		15,768
Bank owned life insurance	107,580		107,580		107,580		—		—
Derivative assets - interest rate swaps	25,740		25,740		—		25,740		—
Equity security	131		131		131		—		—
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	$	5,198,456	$	5,198,456	$	5,198,456	$	—	$	—
Certificates of deposit	399,534		402,701		—		402,701		—
Securities sold under agreement to repurchase	35,683		35,683		35,683		—		—
Junior subordinated debentures	20,887		18,500		—		—		18,500
Accrued interest payable	94		94		42		33		19
Derivative liabilities - interest rate swaps	26,162		26,162		—		26,162		—

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Cash Restriction	6 Months Ended
	Jun. 30, 2021
Banking and Thrift, Other Disclosures [Abstract]
Cash Restriction	Cash Restriction The Bank had restricted cash included in interest earning deposits on the Condensed Consolidated Statements of Financial Condition of $15.7 million and $25.9 million as of June 30, 2021 and December 31, 2020, respectively, relating to collateral required on interest rate swaps from third-parties as discussed in Note (6) Derivative Financial Instruments. The Bank does not have a collateral requirement with customers.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

In the ordinary course of business, the Bank may enter into various types of transactions that include commitments to extend credit that are not included in its Condensed Consolidated Financial Statements. The Bank applies the same credit standards to these commitments as it uses in all its lending activities and has included these commitments in its lending risk evaluations. The majority of the commitments presented below are variable rate. Loan commitments can be either revolving or non-revolving. The Bank’s exposure to credit and market risk under commitments to extend credit is represented by the amount of these commitments.

The following table presents outstanding commitments to extend credit, including letters of credit, at the dates indicated:

	June 30, 2021		December 31, 2020
	(In thousands)
Commercial business:
Commercial and industrial	$	572,214	$	640,018
Owner-occupied CRE	2,515		3,488
Non-owner occupied CRE	7,811		18,396
Total commercial business	582,540		661,902
Real estate construction and land development:
Residential	57,983		52,453
Commercial and multifamily	135,028		127,821
Total real estate construction and land development	193,011		180,274
Consumer	267,272		263,249
Total outstanding commitments	$	1,042,823	$	1,105,425

Upon CECL adoption, as described in Note (1) Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements, the Bank recorded an increase in the beginning ACL on unfunded commitments of $3.7 million as of January 1, 2020, representing the change in methodology from an estimate of incurred losses

at the balance sheet date, with an estimated probability of funding, to an estimate of credit losses on future utilization over the entire contractual period.

The following table details the activity in the ACL on unfunded commitments during the periods indicated:

	Three Months Ended				Six months ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	(In thousands)
Balance, beginning of period	$	3,617	$	1,990	$	4,681	$	306
Impact of CECL Adoption	—		—		—		3,702
Adjusted balance, beginning of period	3,617		1,990		4,681		4,008
(Reversal of) provision for credit losses on unfunded commitments	(1,166)		2,622		(2,230)		604
Balance, end of period	$	2,451	$	4,612	$	2,451	$	4,612

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Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

Description of Business

The Company is primarily engaged in the business of planning, directing and coordinating the business activities of its wholly-owned subsidiary, Heritage Bank. The Bank is headquartered in Olympia, Washington and conducts business from its 53 branch offices as of June 30, 2021 located throughout Washington State and the greater Portland, Oregon area. The Bank’s business consists primarily of commercial lending and deposit relationships with small and medium-sized businesses and their owners in its market areas and attracting deposits from the general public. The Bank also makes real estate construction and land development loans, consumer loans and originates first mortgage loans on residential properties primarily located in its market areas. The Bank's deposits are insured by the FDIC.

The Company announced a plan in July 2021 to consolidate four branches during October 2021 to create a more efficient branch footprint. This will reduce the branch count from 53 to 49. The Company plans to integrate these locations into other branches within its network.

Basis of Presentation

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. It is recommended that these unaudited Condensed Consolidated Financial Statements and accompanying Notes be read with the audited Consolidated Financial Statements and the accompanying Notes included in the 2020 Annual Form 10-K. In management's opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

To prepare unaudited Condensed Consolidated Financial Statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided. Management believes that the judgments, estimates, and assumptions used in the preparation of the Condensed Consolidated Financial Statements are appropriate based on the facts and circumstances at the time. Actual results, however, could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to management's estimate of ACL on loans, management's estimate of ACL on unfunded commitments, management's evaluation of goodwill impairment and management's estimate of the fair value of financial instruments.

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany balances and transactions among the Company and the Bank have been eliminated in consolidation.

Certain prior year amounts in the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current year’s presentation. Reclassifications had no effect on the prior years' net income or stockholders’ equity.

Recently Issued Accounting Pronouncements

Recently Issued or Adopted Accounting PronouncementsFASB ASU 2016-13, Financial Instruments: Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended by ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11, and ASU 2020-02, was originally issued in June 2016. This ASU replaced the incurred loss methodology with an expected loss methodology, which is commonly referred to as the "CECL" methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans receivable. It also applies to off-balance sheet credit exposures such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments. In addition, CECL Adoption made changes to the accounting for credit losses on investment securities available for sale. This ASU requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years with early adoption permitted for fiscal years after December 15, 2018 and can be delayed under a provision of the CARES Act until the end of the official health emergency declaration. The Bank adopted ASU 2016-13 on January 1, 2020 using the modified retrospective method for all financial assets measured at amortized cost and unfunded commitments. At adoption, the Bank elected not to measure an ACL on accrued interest receivable on loans receivable or accrued interest receivable on

investment securities available for sale as Bank policy is to reverse interest income for uncollectible accrued interest receivable balances in a timely manner.

The adoption of ASU 2016-13 included an increase to the ACL on loans of $3.4 million and an increase to the ACL on unfunded commitments of $3.7 million, resulting in a pretax cumulative-effect adjustment of $7.1 million. The impact of this adjustment to beginning retained earnings on January 1, 2020 was $5.6 million, net of tax.

FASB ASU 2020-04, Reference Rate Reform (Topic 848), as amended by ASU 2021-01, was issued in March 2020 and provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The amendments are elective, apply to all entities, and provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The Bank’s swap-related transactions are the majority of the Company's LIBOR exposure. Effective January 25, 2021, the Company adhered to the Interbank Offered Rate Fallbacks Protocol as published by the International Swaps and Derivatives Association, Inc. and recommended by the Alternative Reference Rates Committee. The Company does not expect this ASU to have a material impact on its business operations and the Condensed Consolidated Financial Statements.

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Investment Securities (Tables)

6 Months Ended

Jun. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Schedule of securities available for sale

The following tables present the amortized cost and fair value of investment securities available for sale at the dates indicated and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:

	June 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
U.S. government and agency securities	$	104,688	$	477	$	(1,518)	$	103,647
Municipal securities	219,174		10,341		(588)		228,927
Residential CMO and MBS	256,875		3,465		(846)		259,494
Commercial CMO and MBS	413,304		9,973		(1,337)		421,940
Corporate obligations	7,004		17		(3)		7,018
Other asset-backed securities	27,956		551		(9)		28,498
Total	$	1,029,001	$	24,824	$	(4,301)	$	1,049,524

	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
U.S. government and agency securities	$	44,713	$	947	$	—	$	45,660
Municipal securities	197,634		12,561		(227)		209,968
Residential CMO and MBS	196,956		5,125		(209)		201,872
Commercial CMO and MBS	290,638		13,198		(90)		303,746
Corporate obligations	10,971		125		—		11,096
Other asset-backed securities	29,283		565		(27)		29,821
Total	$	770,195	$	32,521	$	(553)	$	802,163

Schedule of maturities of investment securities

The amortized cost and fair value of investment securities available for sale at June 30, 2021, by contractual maturity, are set forth below. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	33,741	$	33,967
Due after one year through five years	132,997		138,549
Due after five years through ten years	344,562		351,995
Due after ten years	517,701		525,013
Total	$	1,029,001	$	1,049,524

Schedule of fair value and unrealized losses of available for sale investment securities

The following tables show the gross unrealized losses and fair value of the Company’s investment securities available for sale for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2021 and December 31, 2020:

	June 30, 2021
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
U.S. government and agency securities	$	50,213	$	(1,518)	$	—	$	—	$	50,213	$	(1,518)
Municipal securities	32,012		(484)		2,348		(104)		34,360		(588)
Residential CMO and MBS	42,784		(715)		22,901		(131)		65,685		(846)
Commercial CMO and MBS	84,771		(1,331)		2,595		(6)		87,366		(1,337)
Corporate obligations	4,990		(3)		—		—		4,990		(3)
Other asset-backed securities	—		—		1,262		(9)		1,262		(9)
Total	$	214,770	$	(4,051)	$	29,106	$	(250)	$	243,876	$	(4,301)

	December 31, 2020
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
Municipal securities	$	10,264	$	(227)	$	—	$	—	$	10,264	$	(227)
Residential CMO and MBS	—		—		25,293		(209)		25,293		(209)
Commercial CMO and MBS	11,404		(29)		7,499		(61)		18,903		(90)
Other asset-backed securities	—		—		4,570		(27)		4,570		(27)
Total	$	21,668	$	(256)	$	37,362	$	(297)	$	59,030	$	(553)

Schedule of realized gains and losses on sale of securities available for sale

The following table presents the gross realized gains and losses on the sale of investment securities available for sale for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Gross realized gains	$	—	$	414	$	29	$	1,442
Gross realized losses	—		(5)		—		(19)
Net realized gains	$	—	$	409	$	29	$	1,423

Scheduled of amortized cost and fair value of securities pledged as collateral

The following table summarizes the amortized cost and fair value of investment securities available for sale that are pledged as collateral for the following obligations at June 30, 2021 and December 31, 2020:

	June 30, 2021				December 31, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Washington and Oregon state public deposits	$	124,649	$	128,591	$	119,652	$	124,228
Securities sold under agreement to repurchase	51,022		51,719		38,630		39,945
Other securities pledged	41,509		42,371		29,665		30,717
Total	$	217,180	$	222,681	$	187,947	$	194,890

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Loans Receivable (Tables)

6 Months Ended

Jun. 30, 2021

Loans and Leases Receivable Disclosure [Abstract]

Schedule of loan origination and risk management

The amortized cost of loans receivable, net of ACL on loans at June 30, 2021 and December 31, 2020 consisted of the following portfolio segments and classes:

	June 30, 2021		December 31, 2020
	(In thousands)
Commercial business:
Commercial and industrial	$	651,915	$	733,098
SBA PPP	544,250		715,121
Owner-occupied CRE	865,662		856,684
Non-owner occupied CRE	1,425,238		1,410,303
Total commercial business	3,487,065		3,715,206
Residential real estate	120,148		122,756

	June 30, 2021		December 31, 2020
	(In thousands)
Real estate construction and land development:
Residential	88,601		78,259
Commercial and multifamily	239,979		227,454
Total real estate construction and land development	328,580		305,713
Consumer	271,737		324,972
Loans receivable	4,207,530		4,468,647
Allowance for credit losses on loans	(51,562)		(70,185)
Loans receivable, net	$	4,155,968	$	4,398,462
Balances included in the amortized cost of Loans receivable:
Unamortized net discount on acquired loans	$	(5,006)	$	(6,575)
Unamortized net deferred fee	$	(17,994)	$	(15,458)

The following table presents the amortized cost of loans receivable by risk grade as of June 30, 2021 and December 31, 2020:

	June 30, 2021
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2021		2020		2019		2018		2017		Prior
	(In thousands)
Commercial business:
Commercial and industrial
Pass	$	51,172	$	112,717	$	111,892	$	59,450	$	36,904	$	112,403	$	102,256	$	989	$	587,783
SM	1,003		904		6,618		6,553		3,036		5,787		5,446		—		29,347
SS	1,133		1,422		6,101		1,669		4,376		7,888		11,453		743		34,785
Total	53,308		115,043		124,611		67,672		44,316		126,078		119,155		1,732		651,915
SBA PPP
Pass	347,813		196,437		—		—		—		—		—		—		544,250
Owner-occupied CRE
Pass	57,984		89,380		162,488		93,738		70,985		298,991		—		75		773,641
SM	—		5,219		5,257		12,922		10,472		17,373		—		—		51,243
SS	—		694		—		3,818		7,083		29,183		—		—		40,778
Total	57,984		95,293		167,745		110,478		88,540		345,547		—		75		865,662
Non-owner occupied CRE
Pass	67,602		184,174		189,439		144,247		167,605		598,127		—		—		1,351,194
SM	—		5,094		1,971		353		2,293		10,016		—		—		19,727
SS	—		—		—		3,623		—		50,694		—		—		54,317
Total	67,602		189,268		191,410		148,223		169,898		658,837		—		—		1,425,238
Total commercial business
Pass	524,571		582,708		463,819		297,435		275,494		1,009,521		102,256		1,064		3,256,868
SM	1,003		11,217		13,846		19,828		15,801		33,176		5,446		—		100,317
SS	1,133		2,116		6,101		9,110		11,459		87,765		11,453		743		129,880
Total	526,707		596,041		483,766		326,373		302,754		1,130,462		119,155		1,807		3,487,065
Residential real estate
Pass	24,279		26,181		31,274		8,876		9,210		19,557		—		—		119,377
SS	—		—		—		—		57		714		—		—		771
Total	24,279		26,181		31,274		8,876		9,267		20,271		—		—		120,148
Real estate construction and land development:
Residential
Pass	23,444		38,628		21,658		2,674		401		1,796		—		—		88,601
Commercial and multifamily
Pass	16,787		42,010		152,906		22,387		1,941		2,436		—		—		238,467
SS	—		636		443		—		—		433		—		—		1,512
Total	16,787		42,646		153,349		22,387		1,941		2,869		—		—		239,979
Total real estate construction and land development
Pass	40,231		80,638		174,564		25,061		2,342		4,232		—		—		327,068
SS	—		636		443		—		—		433		—		—		1,512
Total	40,231		81,274		175,007		25,061		2,342		4,665		—		—		328,580
Consumer
Pass	11,396		20,456		60,434		40,325		21,866		19,613		94,243		193		268,526
SS	—		147		712		652		608		1,055		33		4		3,211
Total	11,396		20,603		61,146		40,977		22,474		20,668		94,276		197		271,737

	June 30, 2021
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2021		2020		2019		2018		2017		Prior
Loans receivable
Pass	600,477		709,983		730,091		371,697		308,912		1,052,923		196,499		1,257		3,971,839
SM	1,003		11,217		13,846		19,828		15,801		33,176		5,446		—		100,317
SS	1,133		2,899		7,256		9,762		12,124		89,967		11,486		747		135,374
Total	$	602,613	$	724,099	$	751,193	$	401,287	$	336,837	$	1,176,066	$	213,431	$	2,004	$	4,207,530

(1) Represents loans receivable balance at June 30, 2021 which was converted from a revolving loan to an amortizing loan during the six months ended June 30, 2021.

	December 31, 2020
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2020		2019		2018		2017		2016		Prior
	(In thousands)
Commercial business:
Commercial and industrial
Pass	$	118,971	$	127,919	$	70,766	$	44,231	$	37,658	$	95,958	$	121,440	$	819	$	617,762
SM	14,430		9,162		10,878		4,171		5,700		3,579		11,790		814		60,524
SS	2,199		11,835		3,416		9,348		1,052		7,651		15,484		3,827		54,812
Total	135,600		148,916		85,060		57,750		44,410		107,188		148,714		5,460		733,098
SBA PPP
Pass	715,121		—		—		—		—		—		—		—		715,121
Owner-occupied CRE
Pass	89,224		167,095		94,830		80,138		74,902		254,864		—		—		761,053
SM	6,146		4,540		16,386		11,231		5,464		12,105		—		—		55,872
SS	—		—		114		7,320		3,313		29,012		—		—		39,759
Total	95,370		171,635		111,330		98,689		83,679		295,981		—		—		856,684
Non-owner-occupied CRE
Pass	197,548		173,153		148,830		172,438		240,614		406,817		—		—		1,339,400
SM	—		1,979		357		2,448		6,210		3,539		—		—		14,533
SS	—		—		3,623		—		35,455		17,292		—		—		56,370
Total	197,548		175,132		152,810		174,886		282,279		427,648		—		—		1,410,303
Total commercial business
Pass	1,120,864		468,167		314,426		296,807		353,174		757,639		121,440		819		3,433,336
SM	20,576		15,681		27,621		17,850		17,374		19,223		11,790		814		130,929
SS	2,199		11,835		7,153		16,668		39,820		53,955		15,484		3,827		150,941
Total	1,143,639		495,683		349,200		331,325		410,368		830,817		148,714		5,460		3,715,206
Residential real estate
Pass	30,141		41,829		15,730		10,362		7,322		16,825		—		—		122,209
SS	—		—		—		59		—		488		—		—		547
Total	30,141		41,829		15,730		10,421		7,322		17,313		—		—		122,756
Real estate construction and land development:
Residential
Pass	33,801		36,697		2,725		1,097		971		1,042		—		—		76,333
SS	—		—		—		1,926		—		—		—		—		1,926
Total	33,801		36,697		2,725		3,023		971		1,042		—		—		78,259

Commercial and multifamily
Pass	27,423		151,020		38,682		5,660		689		1,407		—		—		224,881
SM	67		1,011		—		—		—		29		—		—		1,107
SS	572		450		—		—		—		444		—		—		1,466
Total	28,062		152,481		38,682		5,660		689		1,880		—		—		227,454
Total real estate construction and land development
Pass	61,224		187,717		41,407		6,757		1,660		2,449		—		—		301,214
SM	67		1,011		—		—		—		29		—		—		1,107
SS	572		450		—		1,926		—		444		—		—		3,392
Total	61,863		189,178		41,407		8,683		1,660		2,922		—		—		305,713
Consumer
Pass	43,742		77,083		53,195		30,559		13,443		15,453		87,547		315		321,337
SS	34		404		684		648		420		1,319		78		48		3,635
Total	43,776		77,487		53,879		31,207		13,863		16,772		87,625		363		324,972
Loans receivable
Pass	1,255,971		774,796		424,758		344,485		375,599		792,366		208,987		1,134		4,178,096
SM	20,643		16,692		27,621		17,850		17,374		19,252		11,790		814		132,036
SS	2,805		12,689		7,837		19,301		40,240		56,206		15,562		3,875		158,515
Total	$	1,279,419	$	804,177	$	460,216	$	381,636	$	433,213	$	867,824	$	236,339	$	5,823	$	4,468,647

(1) Represents loans receivable balance at December 31, 2020 which was converted from a revolving loan to an amortizing loan during the year ended December 31, 2020.

Schedule of nonaccrual loans

The following table presents the amortized cost of nonaccrual loans for the dates indicated:

	June 30, 2021
	Nonaccrual without ACL		Nonaccrual with ACL		Total Nonaccrual
	(In thousands)
Commercial business:
Commercial and industrial	$	7,491	$	5,548	$	13,039
Owner-occupied CRE	3,784		12,400		16,184
Non-owner occupied CRE	1,363		3,623		4,986
Total commercial business	12,638		21,571		34,209
Residential real estate	—		60		60
Real estate construction and land development:
Commercial and multifamily	—		1,014		1,014
Consumer	—		58		58
Total	$	12,638	$	22,703	$	35,341

	December 31, 2020
	Nonaccrual without ACL		Nonaccrual with ACL		Total Nonaccrual
	(In thousands)
Commercial business:
Commercial and industrial	$	22,039	$	9,208	$	31,247
Owner-occupied CRE	4,693		13,700		18,393
Non-owner occupied CRE	3,424		3,722		7,146
Total commercial business	30,156		26,630		56,786
Residential real estate	67		117		184
Real estate construction and land development:
Commercial and multifamily	572		450		1,022
Consumer	31		69		100
Total	$	30,826	$	27,266	$	58,092

The following table presents the reversal of interest income on loans due to the write-off of accrued interest receivable upon the initial classification of loans as nonaccrual loans and the interest income recognized due to payment in full of previously classified nonaccrual loans during the following periods:

	Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
	Interest Income Reversed		Interest Income Recognized		Interest Income Reversed		Interest Income Recognized
	(In thousands)
Commercial business:
Commercial and industrial	$	(5)	$	1,981	$	—	$	89
Owner-occupied CRE	—		3		—		14
Non-owner occupied CRE	—		—		—		22
Total commercial business	(5)		1,984		—		125
Consumer	—		—		—		37
Total	$	(5)	$	1,984	$	—	$	162

	Six Months Ended June 30, 2021				Six months ended June 30, 2020
	Interest Income Reversed		Interest Income Recognized		Interest Income Reversed		Interest Income Recognized
	(in thousands)
Commercial business:
Commercial and industrial	$	(10)	$	2,044	$	(16)	$	308
Owner-occupied CRE	—		117		—		60
Non-owner occupied CRE	—		313		—		67
Total commercial business	(10)		2,474		(16)		435
Real estate construction and land development:
Residential	—		73		—		—
Consumer	—		—		—		47
Total	$	(10)	$	2,547	$	(16)	$	482

Schedule of amortized cost of past due loans

The amortized cost of past due loans as of June 30, 2021

and December 31, 2020 were as follows:

	June 30, 2021
	30-89 Days		90 Days or Greater		Total Past  Due		Current		Loans Receivable
	(In thousands)
Commercial business:
Commercial and industrial	$	489	$	7,525	$	8,014	$	643,901	$	651,915
SBA PPP	—		—		—		544,250		544,250
Owner-occupied CRE	—		—		—		865,662		865,662
Non-owner occupied CRE	4,038		—		4,038		1,421,200		1,425,238
Total commercial business	4,527		7,525		12,052		3,475,013		3,487,065
Residential real estate	—		30		30		120,118		120,148
Real estate construction and land development:
Residential	—		—		—		88,601		88,601
Commercial and multifamily	—		571		571		239,408		239,979
Total real estate construction and land development	—		571		571		328,009		328,580
Consumer	788		—		788		270,949		271,737
Total	$	5,315	$	8,126	$	13,441	$	4,194,089	$	4,207,530

	December 31, 2020
	30-89 Days		90 Days or Greater		Total Past  Due		Current		Loans Receivable
	(In thousands)
Commercial business:
Commercial and industrial	$	4,621	$	8,082	$	12,703	$	720,395	$	733,098
SBA PPP	—		—		—		715,121		715,121
Owner-occupied CRE	991		403		1,394		855,290		856,684
Non-owner occupied CRE	412		1,970		2,382		1,407,921		1,410,303
Total commercial business	6,024		10,455		16,479		3,698,727		3,715,206
Residential real estate	765		16		781		121,975		122,756
Real estate construction and land development:
Residential	—		—		—		78,259		78,259
Commercial and multifamily	2,225		—		2,225		225,229		227,454
Total real estate construction and land development	2,225		—		2,225		303,488		305,713
Consumer	1,407		30		1,437		323,535		324,972
Total	$	10,421	$	10,501	$	20,922	$	4,447,725	$	4,468,647

Schedule of collateral-dependent loans

The type of collateral securing loans individually evaluated for credit losses and for which the repayment was expected to be provided substantially through the operation or sale of the collateral as of June 30, 2021 and December 31, 2020 were as

follows:

	June 30, 2021
	CRE(1)		Farmland(1)		Residential Real Estate(1)		Other(1)		Total(1)
	(In thousands)
Commercial business:
Commercial and industrial	$	1,767	$	5,152	$	751	$	331	$	8,001
Owner-occupied CRE	4,346		—		—		—		4,346
Non-owner occupied CRE	1,363		—		—		—		1,363
Total commercial business	7,476		5,152		751		331		13,710
Real estate construction and land development:
Commercial and multifamily	571		—		—		—		571
Total	$	8,047	$	5,152	$	751	$	331	$	14,281

(1) Balances represent the amortized cost of the loan. If multiple collateral sources secure the loan, the entire balance is presented in the primary collateral category.

	December 31, 2020
	CRE(1)		Farmland(1)		Residential Real Estate(1)		Other(1)		Total(1)
	(In thousands)
Commercial business:
Commercial and industrial	$	1,893	$	18,738	$	584	$	1,405	$	22,620
Owner-occupied CRE	4,693		—		—		—		4,693
Non-owner occupied CRE	3,424		—		—		—		3,424
Total commercial business	10,010		18,738		584		1,405		30,737
Residential real estate	—		—		67		—		67
Real estate construction and land development:
Commercial and multifamily	572		—		—		—		572
Consumer	—		—		30		—		30
Total	$	10,582	$	18,738	$	681	$	1,405	$	31,406

(1) Balances represent the amortized cost of the loan. If multiple collateral sources secure the loan, the entire balance is presented in the primary collateral category.

Schedule of loans receivable

Loans that were modified as TDR loans are set forth in the following tables for the periods indicated:

	Three Months Ended June 30,
	2021			2020
	Number of Contracts	Amortized Cost (1) (2)		Number of Contracts	Amortized Cost (1) (2)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	18	$	5,673	31	$	11,849
Owner-occupied CRE	1	2,200		4	1,657
Non-owner occupied CRE	1	251		2	398
Total commercial business	20	8,124		37	13,904
Real estate construction and land development:
Residential	—	—		4	1,751
Commercial and multifamily	1	443		—	—
Total real estate construction and land development	1	443		4	1,751
Consumer	6	146		9	82
Total	27	$	8,713	50	$	15,737

	Six Months Ended June 30,
	2021			2020
	Number of Contracts	Amortized Cost (1) (2)		Number of Contracts	Amortized Cost (1) (2)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	31	$	8,713	35	$	12,652
Owner-occupied CRE	2	5,857		6	3,067
Non-owner occupied CRE	2	2,222		3	2,143
Total commercial business	35	16,792		44	17,862
Residential real estate	1	181		—	—
Real estate construction and land development:
Residential	—	—		4	1,751
Commercial and multifamily	1	443		—	—
Total real estate construction and land development	1	443		4	1,751
Consumer	21	511		14	173
Total TDR loans	58	$	17,927	62	$	19,786

(1) Number of contracts and amortized cost represent loans which have balances as of period end, net of subsequent payments after modifications. Certain modified loans may have been paid-down or charged-off during the three or six months ended June 30, 2021 and June 30, 2020.

(2) As the Bank did not forgive any principal or interest balance as part of the loan modifications, the Bank’s amortized cost in each loan at the date of modification (pre-modification) did not change as a result of the modification (post-modification).

Troubled debt restructuring loans, subsequently defaulted

The following tables present loans that were modified in a troubled debt restructure and subsequently defaulted within twelve months from the modification date during the periods indicated:

	Three Months Ended June 30,
	2021			2020
	Number of Contracts (1)	Amortized Cost (1)		Number of Contracts (1)	Amortized Cost (1)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	1	$	46	2	$	302
Owner-occupied CRE	—	—		1	445
Non-owner occupied CRE	—	—		1	280
Total	1	$	46	4	$	1,027

	Six Months Ended June 30,
	2021			2020
	Number of Contracts (1)	Amortized Cost (1)		Number of Contracts (1)	Amortized Cost (1)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	2	$	789	4	$	2,155
Owner-occupied CRE	—	—		1	445
Non-owner occupied CRE	—	—		2	398
Total	2	$	789	7	$	2,998

(1) Number of contracts and amortized cost represent loans which have balances as of period end, net of subsequent payments after modifications. Certain modified loans may have been paid-down or charged-off during the six months ended June 30, 2021 and June 30, 2020.

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Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Schedule of changes in allowance for loan losses

A summary of the changes in the ACL on loans during the six months ended June 30, 2021 and 2020 is as follows:

	Six Months Ended June 30,
	2021		2020
	(In thousands)
Balance at the beginning of the year	$	70,185	$	36,171
Impact of CECL Adoption	—		1,822
Balance at the beginning of the year, as adjusted	70,185		37,993
Charge-offs	(320)		(3,852)
Recoveries of loans previously charged-off	653		1,455
(Reversal of) provision for credit losses on loans	(18,956)		35,905
Balance at the end of the year	$	51,562	$	71,501

The following tables detail the activity in the ACL on loans disaggregated by segment and class for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30, 2021
	Beginning Balance		Charge-offs		Recoveries		Reversal of Provision for Credit Losses		Ending Balance
	(In thousands)
Commercial business:
Commercial and industrial	$	21,770	$	(13)	$	132	$	(4,404)	$	17,485
SBA PPP	—		—		—		—		—
Owner-occupied CRE	10,464		—		11		(1,913)		8,562
Non-owner occupied CRE	12,970		—		—		(2,340)		10,630
Total commercial business	45,204		(13)		143		(8,657)		36,677
Residential real estate	1,402		—		—		(249)		1,153
Real estate construction and land development:
Residential	2,048		—		4		(416)		1,636
Commercial and multifamily	11,223		—		—		(2,388)		8,835
Total real estate construction and land development	13,271		—		4		(2,804)		10,471
Consumer	4,348		(120)		144		(1,111)		3,261
Total	$	64,225	$	(133)	$	291	$	(12,821)	$	51,562

	Six Months Ended June 30, 2021
	Beginning Balance	Charge-offs	Recoveries	(Reversal of) Provision for Credit Losses	Ending Balance
	(In thousands)
Commercial business:

	Six Months Ended June 30, 2021
	Beginning Balance		Charge-offs		Recoveries		(Reversal of) Provision for Credit Losses		Ending Balance
	(In thousands)
Commercial and industrial	$	30,010	$	(14)	$	337	$	(12,848)	$	17,485
SBA PPP	—		—		—		—		—
Owner-occupied CRE	9,486		—		13		(937)		8,562
Non-owner occupied CRE	10,112		—		—		518		10,630
Total commercial business	49,608		(14)		350		(13,267)		36,677
Residential real estate	1,591		—		—		(438)		1,153
Real estate construction and land development:
Residential	1,951		—		20		(335)		1,636
Commercial and multifamily	11,141		(1)		—		(2,305)		8,835
Total real estate construction and land development	13,092		(1)		20		(2,640)		10,471
Consumer	5,894		(305)		283		(2,611)		3,261
Total	$	70,185	$	(320)	$	653	$	(18,956)	$	51,562

	Three Months Ended June 30, 2020
	Beginning Balance		Charge-offs		Recoveries		Provision for (Reversal of Provision for) Credit Losses		Ending Balance
	(In thousands)
Commercial business:
Commercial and industrial	$	13,900	$	(1,824)	$	69	$	17,628	$	29,773
Owner-occupied CRE	6,216		—		2		3,785		10,003
Non-owner occupied CRE	7,750		—		—		2,916		10,666
Total commercial business	27,866		(1,824)		71		24,329		50,442
Residential real estate	3,026		—		—		(803)		2,223
Real estate construction and land development:
Residential	864		—		7		(304)		567
Commercial and multifamily	11,444		—		—		(2,887)		8,557
Total real estate construction and land development	12,308		—		7		(3,191)		9,124
Consumer	4,340		(431)		197		5,606		9,712
Total	$	47,540	$	(2,255)	$	275	$	25,941	$	71,501

	Six Months Ended June 30, 2020
	Beginning Balance		Impact of CECL Adoption		Beginning Balance, as Adjusted		Charge-offs		Recoveries		Provision for (Reversal of Provision for) Credit Losses		Ending Balance
	(In thousands)
Commercial business:
Commercial and industrial	$	11,739	$	(1,348)	$	10,391	$	(2,911)	$	1,126	$	21,167	$	29,773
Owner-occupied CRE	4,512		452		4,964		(135)		14		5,160		10,003
Non-owner occupied CRE	7,682		(2,039)		5,643		—		—		5,023		10,666
Total commercial business	23,933		(2,935)		20,998		(3,046)		1,140		31,350		50,442
Residential real estate	1,458		1,471		2,929		—		3		(709)		2,223

	Six Months Ended June 30, 2020
	Beginning Balance		Impact of CECL Adoption		Beginning Balance, as Adjusted		Charge-offs		Recoveries		Provision for (Reversal of Provision for) Credit Losses		Ending Balance
	(In thousands)
Real estate construction and land development:
Residential	1,455		(571)		884		—		21		(338)		567
Commercial and multifamily	1,605		7,240		8,845		—		—		(288)		8,557
Total real estate construction and land development	3,060		6,669		9,729		—		21		(626)		9,124
Consumer	6,821		(2,484)		4,337		(806)		291		5,890		9,712
Unallocated	899		(899)		—		—		—		—		—
Total	$	36,171	$	1,822	$	37,993	$	(3,852)	$	1,455	$	35,905	$	71,501

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Change in other intangible assets

The following table presents the change in other intangible assets for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Balance at the beginning of the period	$	12,291	$	15,710	$	13,088	$	16,613
Amortization	(797)		(903)		(1,594)		(1,806)
Balance at the end of the period	$	11,494	$	14,807	$	11,494	$	14,807

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of notional amounts and estimated fair values of interest rate derivative contracts

The following table presents the notional amounts and estimated fair values of interest rate derivative contracts outstanding at June 30, 2021 and December 31, 2020:

	June 30, 2021				December 31, 2020
	Notional Amounts		Estimated Fair Value		Notional Amounts		Estimated Fair Value
	(In thousands)
Non-hedging interest rate derivatives
Interest rate swap asset (1)	$	321,519	$	19,342	$	308,126	$	25,740
Interest rate swap liability (1)	321,519		(19,510)		308,126		(26,162)

 (1) The estimated fair value of derivatives with customers was $15.4 million and $25.4 million as of June 30, 2021 and December 31, 2020, respectively. The estimated fair value of derivatives with third parties was $(15.6) million and $(25.9) million as of June 30, 2021 and December 31, 2020, respectively.

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2021

Stockholders' Equity Note [Abstract]

Schedule of earnings per share reconciliation

The following table illustrates the calculation of weighted average shares used for earnings per common share computations at June 30, 2021 and June 30, 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands, except shares)
Net income (loss):
Net income (loss)	$	32,702	$	(6,139)	$	58,046	$	6,052
Dividends and undistributed earnings allocated to participating securities (1)	—		—		—		(3)
Net income (loss) allocated to common shareholders	$	32,702	$	(6,139)	$	58,046	$	6,049
Basic:
Weighted average common shares outstanding	35,994,740		35,899,361		35,961,032		36,128,586
Restricted stock awards	—		(645)		—		(8,183)
Total basic weighted average common shares outstanding	35,994,740		35,898,716		35,961,032		36,120,403
Diluted:
Basic weighted average common shares outstanding	35,994,740		35,898,716		35,961,032		36,120,403
Effect of potentially dilutive common shares (2)	294,724		—		307,829		154,988
Total diluted weighted average common shares outstanding	36,289,464		35,898,716		36,268,861		36,275,391
Potentially dilutive shares that were excluded from the computation of diluted earnings per share because to do so would be anti-dilutive (3)	7,065		258,412		4,766		124,904

(1)Represents dividends paid and undistributed earnings allocated to unvested restricted stock awards.

(2)Represents the effect of the assumed exercise of stock options and vesting of restricted stock awards and units.

(3) Anti-dilution occurs when the exercise price of a stock option or the unrecognized compensation cost per share of a restricted stock award exceeds the market price of the Company’s stock.

Schedule of dividends activity

The following table summarizes the dividend activity during the six months ended June 30, 2021 and the calendar year 2020:

Declared	Cash Dividend per Share	Record Date	Paid Date
January 22, 2020	$0.20	February 6, 2020	February 20, 2020
April 29, 2020	$0.20	May 13, 2020	May 27, 2020
July 22, 2020	$0.20	August 5, 2020	August 19, 2020
October 21, 2020	$0.20	November 4, 2020	November 18, 2020
January 27, 2021	$0.20	February 10, 2021	February 24, 2021
April 21, 2021	$0.20	May 5, 2021	May 19, 2021

Schedule of stock repurchased during period

The following table provides total repurchased shares and average share prices under the applicable plans for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		Plan Total(1)
Eleventh Stock Repurchase Plan
Repurchased shares	—		—		—		639,922		1,512,600
Stock repurchase average share price	$	—	$	—	$	—	$	23.95	$	21.69
Twelfth Stock Repurchase Plan
Repurchased shares	—		—		—		155,778		155,778
Stock repurchase average share price	$	—	$	—	$	—	$	20.34	$	20.34

(1)Represents shares repurchased and average price per share paid during the duration of each plan.

Schedule of repurchased shares

The following table provides total shares repurchased to pay withholding taxes during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Repurchased shares to pay withholding taxes	2,557		2,046		25,803		27,928
Stock repurchase to pay withholding taxes average share price	$	27.47	$	18.62	$	29.33	$	21.56

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Fair value measurements of assets on a recurring basis

The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis at the dates indicated:

	June 30, 2021
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Investment securities available for sale:
U.S. government and agency securities	$	103,647	$	—	$	103,647	$	—
Municipal securities	228,927		—		228,927		—
Residential CMO and MBS	259,494		—		259,494		—
Commercial CMO and MBS	421,940		—		421,940		—
Corporate obligations	7,018		—		7,018		—
Other asset-backed securities	28,498		—		28,498		—
Total investment securities available for sale	1,049,524		—		1,049,524		—
Equity security	181		181		—		—
Derivative assets - interest rate swaps	19,342		—		19,342		—
Liabilities
Derivative liabilities - interest rate swaps	$	19,510	$	—	19,510		$	—

	December 31, 2020
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Investment securities available for sale:
U.S. government and agency securities	$	45,660	$	—	$	45,660	$	—
Municipal securities	209,968		—		209,968		—
Residential CMO and MBS	201,872		—		201,872		—
Commercial CMO and MBS	303,746		—		303,746		—
Corporate obligations	11,096		—		11,096		—
Other asset-backed securities	29,821		—		29,821		—
Total investment securities available for sale	802,163		—		802,163		—
Equity security	131		131		—		—
Derivative assets - interest rate swaps	25,740		—		25,740		—
Liabilities
Derivative liabilities - interest rate swaps	$	26,162	$	—	$	26,162	$	—

Fair value measurements of assets on a nonrecurring basis

The following tables below represent assets measured at fair value on a nonrecurring basis at the dates indicated:

			Fair Value at June 30, 2021
	Basis(1)		Total		Level 1		Level 2		Level 3
	(In thousands)
Collateral-dependent loans:
Commercial business:
Commercial and industrial	$	983	$	775	$	—	$	—	$	775

			Fair Value at June 30, 2021
	Basis(1)		Total		Level 1		Level 2		Level 3
	(In thousands)
Owner-occupied CRE	622		486		—		—		486
Total commercial business	1,605		1,261		—		—		1,261
Real estate construction and land development:
Commercial and multifamily	991		534		—		—		534
Total assets measured at fair value on a nonrecurring basis	$	2,596	$	1,795	$	—	$	—	$	1,795

(1) Basis represents the outstanding principal balance of collateral-dependent loans.

			Fair Value at December 31, 2020
	Basis(1)		Total		Level 1		Level 2		Level 3
	(In thousands)
Collateral-dependent loans:
Commercial business:
Commercial and industrial	$	1,305	$	1,289	$	—	$	—	$	1,289
Prepaid expenses and other assets:
Branch held for sale (2)	1,330		1,330		—		—		1,330
Total assets measured at fair value on a nonrecurring basis	$	2,635	$	2,619	$	—	$	—	$	2,619

(1) Basis represents the outstanding principal balance of collateral-dependent loans and the carrying value of the branch held for sale.

(2) In October 2020, one branch was reclassified as held for sale in accordance with ASC 360-10. As part of the transfer, the branch was written down to its net realizable value at that time.

The following table represents the net (loss) gain recorded in earnings as a result of nonrecurring fair value adjustments recorded during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Collateral-dependent loans:
Commercial business:
Commercial and industrial	$	6	$	9	$	(28)	$	3
Owner-occupied CRE	(76)		—		(76)		—
Total commercial business	(70)		9		(104)		3
Real estate construction and land development:
Commercial and multifamily	(23)		—		(38)		—
Net (loss) gain from nonrecurring fair value adjustments	$	(93)	$	9	$	(142)	$	3

Fair value measurements for financial instruments measured at fair value on a non-recurring basis

The following tables present quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at the dates indicated:

	June 30, 2021
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range of Inputs; Weighted Average
	(Dollars in thousands)
Collateral-dependent loans	$	1,795	Market approach	Adjustment for differences between the comparable sales	55.0% - (20.0)%; 18.3%

	December 31, 2020
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range of Inputs; Weighted Average
	(Dollars in thousands)
Collateral-dependent loans	$	1,289	Market approach	Adjustment for differences between the comparable sales	0.6% - (40.1%); (24.1%)
Branch held for sale	$	1,330	Market approach	Adjustment for differences between the comparable sales	140.7% - (40.3%); 33.2%

Schedule of carrying value and fair value of financial instruments

The following tables present the carrying value amount of the Company’s financial instruments and their corresponding estimated fair values at the dates indicated:

	June 30, 2021
	Carrying Value		Fair Value		Fair Value Measurements Using:
					Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	1,264,933	$	1,264,933	$	1,264,933	$	—	$	—
Investment securities available for sale	1,049,524		1,049,524		—		1,049,524		—
Loans held for sale	2,739		2,840		—		—		2,840
Loans receivable, net	4,155,968		4,271,615		—		—		4,271,615
Accrued interest receivable	17,113		17,113		65		4,244		12,804
Banked owned life insurance	108,988		108,988		108,988		—		—
Derivative assets - interest rate swaps	19,342		19,342		—		19,342		—
Equity security	181		181		181		—		—
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	$	5,686,807	$	5,686,807	$	5,686,807	$	—	$	—
Certificates of deposit	374,899		376,646		—		376,646		—
Securities sold under agreement to repurchase	46,429		46,429		46,429		—		—
Junior subordinated debentures	21,034		18,250		—		—		18,250
Accrued interest payable	74		74		31		25		18
Derivative liabilities - interest rate swaps	19,510		19,510		—		19,510		—

	December 31, 2020
	Carrying Value		Fair Value		Fair Value Measurements Using:
					Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	743,322	$	743,322	$	743,322	$	—	$	—
Investment securities available for sale	802,163		802,163		—		802,163		—
Loans held for sale	4,932		5,156		—		—		5,156

	December 31, 2020
	Carrying Value		Fair Value		Fair Value Measurements Using:
					Level 1		Level 2		Level 3
	(In thousands)
Loans receivable, net	4,398,462		4,556,862		—		—		4,556,862
Accrued interest receivable	19,418		19,418		2		3,648		15,768
Bank owned life insurance	107,580		107,580		107,580		—		—
Derivative assets - interest rate swaps	25,740		25,740		—		25,740		—
Equity security	131		131		131		—		—
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	$	5,198,456	$	5,198,456	$	5,198,456	$	—	$	—
Certificates of deposit	399,534		402,701		—		402,701		—
Securities sold under agreement to repurchase	35,683		35,683		35,683		—		—
Junior subordinated debentures	20,887		18,500		—		—		18,500
Accrued interest payable	94		94		42		33		19
Derivative liabilities - interest rate swaps	26,162		26,162		—		26,162		—

XML

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2021

Schedule of outstanding commitments to extend credit

The following table presents outstanding commitments to extend credit, including letters of credit, at the dates indicated:

	June 30, 2021		December 31, 2020
	(In thousands)
Commercial business:
Commercial and industrial	$	572,214	$	640,018
Owner-occupied CRE	2,515		3,488
Non-owner occupied CRE	7,811		18,396
Total commercial business	582,540		661,902
Real estate construction and land development:
Residential	57,983		52,453
Commercial and multifamily	135,028		127,821
Total real estate construction and land development	193,011		180,274
Consumer	267,272		263,249
Total outstanding commitments	$	1,042,823	$	1,105,425

Unused Commitments to Extend Credit [Member]

Schedule of details in the ACL on unfunded commitments

The following table details the activity in the ACL on unfunded commitments during the periods indicated:

	Three Months Ended				Six months ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	(In thousands)
Balance, beginning of period	$	3,617	$	1,990	$	4,681	$	306
Impact of CECL Adoption	—		—		—		3,702
Adjusted balance, beginning of period	3,617		1,990		4,681		4,008
(Reversal of) provision for credit losses on unfunded commitments	(1,166)		2,622		(2,230)		604
Balance, end of period	$	2,451	$	4,612	$	2,451	$	4,612

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Description of Business, Basis of Presentation and Significant Accounting Policies and Recently Issued Accounting Pronouncements (Details) $ in Thousands	1 Months Ended
	Jul. 31, 2021 Branch branch	Jun. 30, 2021 branch	Jan. 01, 2020 USD ($)
Subsequent Event
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of Branches Consolidated | Branch	4
Heritage Bank [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of Branches Operating | branch		53
Heritage Bank [Member] | Subsequent Event
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of Branches Operating | branch	49
Accounting Standards Update 2016-13 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption			$ 5,600
Cumulative Effect Of New Accounting Principle In Period Of Adoption PreTax			7,100
Unused Commitments to Extend Credit [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption			3,700
Total Allowance for Credit Losses [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption			$ 3,400

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Investment Securities - Amortized Cost, Gross Unrealized Gains and Losses and Fair Values (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Investment Holdings [Line Items]
Debt Securities, Trading, and Equity Securities, FV-NI	$ 0	$ 0
Amortized Cost	1,029,001,000	770,195,000
Gross Unrealized Gains	24,824,000	32,521,000
Gross Unrealized Losses	(4,301,000)	(553,000)
Fair Value	1,049,524,000	802,163,000
U.S. government and agency securities
Investment Holdings [Line Items]
Amortized Cost	104,688,000	44,713,000
Gross Unrealized Gains	477,000	947,000
Gross Unrealized Losses	(1,518,000)	0
Fair Value	103,647,000	45,660,000
Municipal securities
Investment Holdings [Line Items]
Amortized Cost	219,174,000	197,634,000
Gross Unrealized Gains	10,341,000	12,561,000
Gross Unrealized Losses	(588,000)	(227,000)
Fair Value	228,927,000	209,968,000
Residential CMO and MBS
Investment Holdings [Line Items]
Amortized Cost	256,875,000	196,956,000
Gross Unrealized Gains	3,465,000	5,125,000
Gross Unrealized Losses	(846,000)	(209,000)
Fair Value		201,872,000
Commercial CMO and MBS
Investment Holdings [Line Items]
Amortized Cost	413,304,000	290,638,000
Gross Unrealized Gains	9,973,000	13,198,000
Gross Unrealized Losses	(1,337,000)	(90,000)
Fair Value		303,746,000
Corporate obligations
Investment Holdings [Line Items]
Amortized Cost	7,004,000	10,971,000
Gross Unrealized Gains	17,000	125,000
Gross Unrealized Losses	(3,000)	0
Fair Value		11,096,000
Other asset-backed securities
Investment Holdings [Line Items]
Amortized Cost	27,956,000	29,283,000
Gross Unrealized Gains	551,000	565,000
Gross Unrealized Losses	$ (9,000)	(27,000)
Fair Value		$ 29,821,000

XML

Investment Securities - Textual (Details) - USD ($)	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Jan. 01, 2020	Dec. 31, 2019
Allowance for credit losses on loans	$ 51,562,000	$ 64,225,000	$ 70,185,000	$ 71,501,000	$ 47,540,000	$ 37,993,000	$ 36,171,000
Accrued Investment Income Receivable	4,200,000		3,600,000
Available-for-sale Securities [Member]
Allowance for credit losses on loans	$ 0		$ 0

XML

Investment Securities - Contractual Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Amortized Cost
Due in one year or less	$ 33,741
Due after one year through five years	132,997
Due after five years through ten years	344,562
Due after ten years	517,701
Amortized Cost	1,029,001	$ 770,195
Fair Value
Due in one year or less	33,967
Due after one year through five years	138,549
Due after five years through ten years	351,995
Due after ten years	525,013
Fair Value	$ 1,049,524	$ 802,163

XML

Investment Securities - Unrealized Losses (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Fair Value
Less than 12 Months	$ 214,770	$ 21,668
12 Months or Longer	29,106	37,362
Total	243,876	59,030
Unrealized Losses
Less than 12 Months	(4,051)	(256)
12 Months or Longer	(250)	(297)
Total	(4,301)	(553)
U.S. government and agency securities
Fair Value
Less than 12 Months	50,213
12 Months or Longer	0
Total	50,213
Unrealized Losses
Less than 12 Months	(1,518)
12 Months or Longer	0
Total	(1,518)
Municipal securities
Fair Value
Less than 12 Months	32,012	10,264
12 Months or Longer	2,348	0
Total	34,360	10,264
Unrealized Losses
Less than 12 Months	(484)	(227)
12 Months or Longer	(104)	0
Total	(588)	(227)
Residential CMO and MBS
Fair Value
Less than 12 Months	42,784	0
12 Months or Longer	22,901	25,293
Total	65,685	25,293
Unrealized Losses
Less than 12 Months	(715)	0
12 Months or Longer	(131)	(209)
Total	(846)	(209)
Commercial CMO and MBS
Fair Value
Less than 12 Months	84,771	11,404
12 Months or Longer	2,595	7,499
Total	87,366	18,903
Unrealized Losses
Less than 12 Months	(1,331)	(29)
12 Months or Longer	(6)	(61)
Total	(1,337)	(90)
Corporate obligations
Fair Value
Less than 12 Months	4,990
12 Months or Longer	0
Total	4,990
Unrealized Losses
Less than 12 Months	(3)
12 Months or Longer	0
Total	(3)
Other asset-backed securities
Fair Value
Less than 12 Months	0	0
12 Months or Longer	1,262	4,570
Total	1,262	4,570
Unrealized Losses
Less than 12 Months	0	0
12 Months or Longer	(9)	(27)
Total	$ (9)	$ (27)

XML

Investment Securities - Realized Gains and Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Investments, Debt and Equity Securities [Abstract]
Gross realized gains	$ 0	$ 414	$ 29	$ 1,442
Gross realized losses	0	(5)	0	(19)
Net realized gains	$ 0	$ 409	$ 29	$ 1,423

XML

Investment Securities - Amortized Cost and Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Scheduled of amortized cost and fair value of securities pledged as collateral
Amortized Cost	$ 217,180	$ 187,947
Fair Value	222,681	194,890
Washington and Oregon State to Secure Public Deposits [Member]
Scheduled of amortized cost and fair value of securities pledged as collateral
Amortized Cost	124,649	119,652
Fair Value	128,591	124,228
Repurchase Agreements [Member]
Scheduled of amortized cost and fair value of securities pledged as collateral
Amortized Cost	51,022	38,630
Fair Value	51,719	39,945
Other securities pledged
Scheduled of amortized cost and fair value of securities pledged as collateral
Amortized Cost	41,509	29,665
Fair Value	$ 42,371	$ 30,717

XML

Loans Receivable - Loan Origination/Risk Management (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2021 USD ($) segment	Mar. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Jan. 01, 2020 USD ($)	Dec. 31, 2019 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loan segments | segment	4
Loans receivable	$ 4,207,530		$ 4,468,647
Allowance for credit losses on loans	51,562	$ 64,225	70,185	$ 71,501	$ 47,540	$ 37,993	$ 36,171
Loans and Leases Receivable, Net Amount	4,155,968		4,398,462
Financing Receivable, Unamortized Purchase Premium (Discount)	(5,006)		(6,575)
Financing Receivable, Unamortized Loan Fee (Cost) and Purchase Premium (Discount)	(17,994)		(15,458)
Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	3,487,065		3,715,206
Allowance for credit losses on loans	36,677	45,204	49,608	50,442	27,866	20,998
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	651,915		733,098
Allowance for credit losses on loans	17,485	21,770	30,010	29,773	13,900	10,391
Commercial Portfolio Segment [Member] | Paycheck Protection Program
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	544,250		715,121
Allowance for credit losses on loans	0	0	0
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	865,662		856,684
Allowance for credit losses on loans	8,562	10,464	9,486	10,003	6,216	4,964
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	1,425,238		1,410,303
Allowance for credit losses on loans	10,630	12,970	10,112	10,666	7,750	5,643
Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	120,148		122,756
Allowance for credit losses on loans	1,153	1,402	1,591	2,223	3,026	2,929
Real Estate Construction and Land Development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	328,580		305,713
Allowance for credit losses on loans	10,471	13,271	13,092	9,124	12,308	9,729
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	88,601		78,259
Allowance for credit losses on loans	1,636	2,048	1,951	567	864	884
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	239,979		227,454
Allowance for credit losses on loans	8,835	11,223	11,141	8,557	11,444	8,845
Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	271,737		324,972
Allowance for credit losses on loans	$ 3,261	$ 4,348	$ 5,894	$ 9,712	$ 4,340	$ 4,337

XML

Loans Receivable - Credit Quality Indicators (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	$ 602,613	$ 1,279,419
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	724,099	804,177
Financing Receivable, Originated Two Years before Latest Fiscal Year	751,193	460,216
Financing Receivable, Originated Three Years before Latest Fiscal Year	401,287	381,636
Financing Receivable, Originated Four Years before Latest Fiscal Year	336,837	433,213
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	1,176,066	867,824
Financing Receivable, Revolving	213,431	236,339
Financing Receivable revolving converted to Term Loans	2,004	5,823
Financing Receivable, before Allowance for Credit Loss	4,207,530	4,468,647
Commercial Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	526,707	1,143,639
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	596,041	495,683
Financing Receivable, Originated Two Years before Latest Fiscal Year	483,766	349,200
Financing Receivable, Originated Three Years before Latest Fiscal Year	326,373	331,325
Financing Receivable, Originated Four Years before Latest Fiscal Year	302,754	410,368
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	1,130,462	830,817
Financing Receivable, Revolving	119,155	148,714
Financing Receivable revolving converted to Term Loans	1,807	5,460
Financing Receivable, before Allowance for Credit Loss	3,487,065	3,715,206
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	53,308	135,600
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	115,043	148,916
Financing Receivable, Originated Two Years before Latest Fiscal Year	124,611	85,060
Financing Receivable, Originated Three Years before Latest Fiscal Year	67,672	57,750
Financing Receivable, Originated Four Years before Latest Fiscal Year	44,316	44,410
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	126,078	107,188
Financing Receivable, Revolving	119,155	148,714
Financing Receivable revolving converted to Term Loans	1,732	5,460
Financing Receivable, before Allowance for Credit Loss	651,915	733,098
Commercial Portfolio Segment [Member] | Paycheck Protection Program
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, before Allowance for Credit Loss	544,250	715,121
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	57,984	95,370
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	95,293	171,635
Financing Receivable, Originated Two Years before Latest Fiscal Year	167,745	111,330
Financing Receivable, Originated Three Years before Latest Fiscal Year	110,478	98,689
Financing Receivable, Originated Four Years before Latest Fiscal Year	88,540	83,679
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	345,547	295,981
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	75	0
Financing Receivable, before Allowance for Credit Loss	865,662	856,684
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	67,602	197,548
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	189,268	175,132
Financing Receivable, Originated Two Years before Latest Fiscal Year	191,410	152,810
Financing Receivable, Originated Three Years before Latest Fiscal Year	148,223	174,886
Financing Receivable, Originated Four Years before Latest Fiscal Year	169,898	282,279
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	658,837	427,648
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	1,425,238	1,410,303
Residential Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	24,279	30,141
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	26,181	41,829
Financing Receivable, Originated Two Years before Latest Fiscal Year	31,274	15,730
Financing Receivable, Originated Three Years before Latest Fiscal Year	8,876	10,421
Financing Receivable, Originated Four Years before Latest Fiscal Year	9,267	7,322
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	20,271	17,313
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	120,148	122,756
Consumer Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	11,396	43,776
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	20,603	77,487
Financing Receivable, Originated Two Years before Latest Fiscal Year	61,146	53,879
Financing Receivable, Originated Three Years before Latest Fiscal Year	40,977	31,207
Financing Receivable, Originated Four Years before Latest Fiscal Year	22,474	13,863
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	20,668	16,772
Financing Receivable, Revolving	94,276	87,625
Financing Receivable revolving converted to Term Loans	197	363
Financing Receivable, before Allowance for Credit Loss	271,737	324,972
Real Estate Construction and Land Development [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	40,231	61,863
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	81,274	189,178
Financing Receivable, Originated Two Years before Latest Fiscal Year	175,007	41,407
Financing Receivable, Originated Three Years before Latest Fiscal Year	25,061	8,683
Financing Receivable, Originated Four Years before Latest Fiscal Year	2,342	1,660
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	4,665	2,922
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	328,580	305,713
Real Estate Construction and Land Development [Member] | One to Four Family Real Estate Construction [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year		33,801
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year		36,697
Financing Receivable, Originated Two Years before Latest Fiscal Year		2,725
Financing Receivable, Originated Three Years before Latest Fiscal Year		3,023
Financing Receivable, Originated Four Years before Latest Fiscal Year		971
Financing Receivable, Originated Five or More Years before Latest Fiscal Year		1,042
Financing Receivable, Revolving		0
Financing Receivable revolving converted to Term Loans		0
Financing Receivable, before Allowance for Credit Loss	88,601	78,259
Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	16,787	28,062
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	42,646	152,481
Financing Receivable, Originated Two Years before Latest Fiscal Year	153,349	38,682
Financing Receivable, Originated Three Years before Latest Fiscal Year	22,387	5,660
Financing Receivable, Originated Four Years before Latest Fiscal Year	1,941	689
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	2,869	1,880
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	239,979	227,454
Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	600,477	1,255,971
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	709,983	774,796
Financing Receivable, Originated Two Years before Latest Fiscal Year	730,091	424,758
Financing Receivable, Originated Three Years before Latest Fiscal Year	371,697	344,485
Financing Receivable, Originated Four Years before Latest Fiscal Year	308,912	375,599
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	1,052,923	792,366
Financing Receivable, Revolving	196,499	208,987
Financing Receivable revolving converted to Term Loans	1,257	1,134
Financing Receivable, before Allowance for Credit Loss	3,971,839	4,178,096
Pass [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	524,571	1,120,864
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	582,708	468,167
Financing Receivable, Originated Two Years before Latest Fiscal Year	463,819	314,426
Financing Receivable, Originated Three Years before Latest Fiscal Year	297,435	296,807
Financing Receivable, Originated Four Years before Latest Fiscal Year	275,494	353,174
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	1,009,521	757,639
Financing Receivable, Revolving	102,256	121,440
Financing Receivable revolving converted to Term Loans	1,064	819
Financing Receivable, before Allowance for Credit Loss	3,256,868	3,433,336
Pass [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	51,172	118,971
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	112,717	127,919
Financing Receivable, Originated Two Years before Latest Fiscal Year	111,892	70,766
Financing Receivable, Originated Three Years before Latest Fiscal Year	59,450	44,231
Financing Receivable, Originated Four Years before Latest Fiscal Year	36,904	37,658
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	112,403	95,958
Financing Receivable, Revolving	102,256	121,440
Financing Receivable revolving converted to Term Loans	989	819
Financing Receivable, before Allowance for Credit Loss	587,783	617,762
Pass [Member] | Commercial Portfolio Segment [Member] | Paycheck Protection Program
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	347,813	715,121
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	196,437	0
Financing Receivable, Originated Two Years before Latest Fiscal Year	0	0
Financing Receivable, Originated Three Years before Latest Fiscal Year	0	0
Financing Receivable, Originated Four Years before Latest Fiscal Year	0	0
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	0	0
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	544,250	715,121
Pass [Member] | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	57,984	89,224
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	89,380	167,095
Financing Receivable, Originated Two Years before Latest Fiscal Year	162,488	94,830
Financing Receivable, Originated Three Years before Latest Fiscal Year	93,738	80,138
Financing Receivable, Originated Four Years before Latest Fiscal Year	70,985	74,902
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	298,991	254,864
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	75	0
Financing Receivable, before Allowance for Credit Loss	773,641	761,053
Pass [Member] | Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	67,602	197,548
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	184,174	173,153
Financing Receivable, Originated Two Years before Latest Fiscal Year	189,439	148,830
Financing Receivable, Originated Three Years before Latest Fiscal Year	144,247	172,438
Financing Receivable, Originated Four Years before Latest Fiscal Year	167,605	240,614
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	598,127	406,817
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	1,351,194	1,339,400
Pass [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	24,279	30,141
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	26,181	41,829
Financing Receivable, Originated Two Years before Latest Fiscal Year	31,274	15,730
Financing Receivable, Originated Three Years before Latest Fiscal Year	8,876	10,362
Financing Receivable, Originated Four Years before Latest Fiscal Year	9,210	7,322
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	19,557	16,825
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	119,377	122,209
Pass [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	11,396	43,742
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	20,456	77,083
Financing Receivable, Originated Two Years before Latest Fiscal Year	60,434	53,195
Financing Receivable, Originated Three Years before Latest Fiscal Year	40,325	30,559
Financing Receivable, Originated Four Years before Latest Fiscal Year	21,866	13,443
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	19,613	15,453
Financing Receivable, Revolving	94,243	87,547
Financing Receivable revolving converted to Term Loans	193	315
Financing Receivable, before Allowance for Credit Loss	268,526	321,337
Pass [Member] | Real Estate Construction and Land Development [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	40,231	61,224
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	80,638	187,717
Financing Receivable, Originated Two Years before Latest Fiscal Year	174,564	41,407
Financing Receivable, Originated Three Years before Latest Fiscal Year	25,061	6,757
Financing Receivable, Originated Four Years before Latest Fiscal Year	2,342	1,660
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	4,232	2,449
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	327,068	301,214
Pass [Member] | Real Estate Construction and Land Development [Member] | One to Four Family Real Estate Construction [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	23,444	33,801
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	38,628	36,697
Financing Receivable, Originated Two Years before Latest Fiscal Year	21,658	2,725
Financing Receivable, Originated Three Years before Latest Fiscal Year	2,674	1,097
Financing Receivable, Originated Four Years before Latest Fiscal Year	401	971
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	1,796	1,042
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	88,601	76,333
Pass [Member] | Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	16,787	27,423
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	42,010	151,020
Financing Receivable, Originated Two Years before Latest Fiscal Year	152,906	38,682
Financing Receivable, Originated Three Years before Latest Fiscal Year	22,387	5,660
Financing Receivable, Originated Four Years before Latest Fiscal Year	1,941	689
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	2,436	1,407
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	238,467	224,881
Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	1,003	20,643
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	11,217	16,692
Financing Receivable, Originated Two Years before Latest Fiscal Year	13,846	27,621
Financing Receivable, Originated Three Years before Latest Fiscal Year	19,828	17,850
Financing Receivable, Originated Four Years before Latest Fiscal Year	15,801	17,374
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	33,176	19,252
Financing Receivable, Revolving	5,446	11,790
Financing Receivable revolving converted to Term Loans	0	814
Financing Receivable, before Allowance for Credit Loss	100,317	132,036
Special Mention [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	1,003	20,576
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	11,217	15,681
Financing Receivable, Originated Two Years before Latest Fiscal Year	13,846	27,621
Financing Receivable, Originated Three Years before Latest Fiscal Year	19,828	17,850
Financing Receivable, Originated Four Years before Latest Fiscal Year	15,801	17,374
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	33,176	19,223
Financing Receivable, Revolving	5,446	11,790
Financing Receivable revolving converted to Term Loans	0	814
Financing Receivable, before Allowance for Credit Loss	100,317	130,929
Special Mention [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	1,003	14,430
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	904	9,162
Financing Receivable, Originated Two Years before Latest Fiscal Year	6,618	10,878
Financing Receivable, Originated Three Years before Latest Fiscal Year	6,553	4,171
Financing Receivable, Originated Four Years before Latest Fiscal Year	3,036	5,700
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	5,787	3,579
Financing Receivable, Revolving	5,446	11,790
Financing Receivable revolving converted to Term Loans	0	814
Financing Receivable, before Allowance for Credit Loss	29,347	60,524
Special Mention [Member] | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	0	6,146
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	5,219	4,540
Financing Receivable, Originated Two Years before Latest Fiscal Year	5,257	16,386
Financing Receivable, Originated Three Years before Latest Fiscal Year	12,922	11,231
Financing Receivable, Originated Four Years before Latest Fiscal Year	10,472	5,464
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	17,373	12,105
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	51,243	55,872
Special Mention [Member] | Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	0	0
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	5,094	1,979
Financing Receivable, Originated Two Years before Latest Fiscal Year	1,971	357
Financing Receivable, Originated Three Years before Latest Fiscal Year	353	2,448
Financing Receivable, Originated Four Years before Latest Fiscal Year	2,293	6,210
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	10,016	3,539
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	19,727	14,533
Special Mention [Member] | Real Estate Construction and Land Development [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year		67
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year		1,011
Financing Receivable, Originated Two Years before Latest Fiscal Year		0
Financing Receivable, Originated Three Years before Latest Fiscal Year		0
Financing Receivable, Originated Four Years before Latest Fiscal Year		0
Financing Receivable, Originated Five or More Years before Latest Fiscal Year		29
Financing Receivable, Revolving		0
Financing Receivable revolving converted to Term Loans		0
Financing Receivable, before Allowance for Credit Loss		1,107
Special Mention [Member] | Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year		67
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year		1,011
Financing Receivable, Originated Two Years before Latest Fiscal Year		0
Financing Receivable, Originated Three Years before Latest Fiscal Year		0
Financing Receivable, Originated Four Years before Latest Fiscal Year		0
Financing Receivable, Originated Five or More Years before Latest Fiscal Year		29
Financing Receivable, Revolving		0
Financing Receivable revolving converted to Term Loans		0
Financing Receivable, before Allowance for Credit Loss		1,107
Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	1,133	2,805
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	2,899	12,689
Financing Receivable, Originated Two Years before Latest Fiscal Year	7,256	7,837
Financing Receivable, Originated Three Years before Latest Fiscal Year	9,762	19,301
Financing Receivable, Originated Four Years before Latest Fiscal Year	12,124	40,240
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	89,967	56,206
Financing Receivable, Revolving	11,486	15,562
Financing Receivable revolving converted to Term Loans	747	3,875
Financing Receivable, before Allowance for Credit Loss	135,374	158,515
Substandard [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	1,133	2,199
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	2,116	11,835
Financing Receivable, Originated Two Years before Latest Fiscal Year	6,101	7,153
Financing Receivable, Originated Three Years before Latest Fiscal Year	9,110	16,668
Financing Receivable, Originated Four Years before Latest Fiscal Year	11,459	39,820
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	87,765	53,955
Financing Receivable, Revolving	11,453	15,484
Financing Receivable revolving converted to Term Loans	743	3,827
Financing Receivable, before Allowance for Credit Loss	129,880	150,941
Substandard [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	1,133	2,199
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	1,422	11,835
Financing Receivable, Originated Two Years before Latest Fiscal Year	6,101	3,416
Financing Receivable, Originated Three Years before Latest Fiscal Year	1,669	9,348
Financing Receivable, Originated Four Years before Latest Fiscal Year	4,376	1,052
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	7,888	7,651
Financing Receivable, Revolving	11,453	15,484
Financing Receivable revolving converted to Term Loans	743	3,827
Financing Receivable, before Allowance for Credit Loss	34,785	54,812
Substandard [Member] | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	0	0
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	694	0
Financing Receivable, Originated Two Years before Latest Fiscal Year	0	114
Financing Receivable, Originated Three Years before Latest Fiscal Year	3,818	7,320
Financing Receivable, Originated Four Years before Latest Fiscal Year	7,083	3,313
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	29,183	29,012
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	40,778	39,759
Substandard [Member] | Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	0	0
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	0	0
Financing Receivable, Originated Two Years before Latest Fiscal Year	0	3,623
Financing Receivable, Originated Three Years before Latest Fiscal Year	3,623	0
Financing Receivable, Originated Four Years before Latest Fiscal Year	0	35,455
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	50,694	17,292
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	54,317	56,370
Substandard [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	0	0
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	0	0
Financing Receivable, Originated Two Years before Latest Fiscal Year	0	0
Financing Receivable, Originated Three Years before Latest Fiscal Year	0	59
Financing Receivable, Originated Four Years before Latest Fiscal Year	57	0
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	714	488
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	771	547
Substandard [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	0	34
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	147	404
Financing Receivable, Originated Two Years before Latest Fiscal Year	712	684
Financing Receivable, Originated Three Years before Latest Fiscal Year	652	648
Financing Receivable, Originated Four Years before Latest Fiscal Year	608	420
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	1,055	1,319
Financing Receivable, Revolving	33	78
Financing Receivable revolving converted to Term Loans	4	48
Financing Receivable, before Allowance for Credit Loss	3,211	3,635
Substandard [Member] | Real Estate Construction and Land Development [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	0	572
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	636	450
Financing Receivable, Originated Two Years before Latest Fiscal Year	443	0
Financing Receivable, Originated Three Years before Latest Fiscal Year	0	1,926
Financing Receivable, Originated Four Years before Latest Fiscal Year	0	0
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	433	444
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	1,512	3,392
Substandard [Member] | Real Estate Construction and Land Development [Member] | One to Four Family Real Estate Construction [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year		0
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year		0
Financing Receivable, Originated Two Years before Latest Fiscal Year		0
Financing Receivable, Originated Three Years before Latest Fiscal Year		1,926
Financing Receivable, Originated Four Years before Latest Fiscal Year		0
Financing Receivable, Originated Five or More Years before Latest Fiscal Year		0
Financing Receivable, Revolving		0
Financing Receivable revolving converted to Term Loans		0
Financing Receivable, before Allowance for Credit Loss		1,926
Substandard [Member] | Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Originated in Current Fiscal Year	0	572
Financing Receivable, Originated in Fiscal Year before Latest Fiscal Year	636	450
Financing Receivable, Originated Two Years before Latest Fiscal Year	443	0
Financing Receivable, Originated Three Years before Latest Fiscal Year	0	0
Financing Receivable, Originated Four Years before Latest Fiscal Year	0	0
Financing Receivable, Originated Five or More Years before Latest Fiscal Year	433	444
Financing Receivable, Revolving	0	0
Financing Receivable revolving converted to Term Loans	0	0
Financing Receivable, before Allowance for Credit Loss	$ 1,512	$ 1,466

XML

Loans Receivable - Nonaccrual Loans (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Nonaccrual, No Allowance	$ 12,638,000		$ 12,638,000		$ 30,826,000
Financing Receivable, Nonaccrual, with Allowance	22,703,000		22,703,000		27,266,000
Gross nonaccrual loans	35,341,000		35,341,000		58,092,000
Interest and Fee Income, Loans and Leases	50,750,000	$ 48,404,000	100,274,000	$ 94,681,000
Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Nonaccrual, No Allowance	12,638,000		12,638,000		30,156,000
Financing Receivable, Nonaccrual, with Allowance	21,571,000		21,571,000		26,630,000
Gross nonaccrual loans	34,209,000		34,209,000		56,786,000
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Nonaccrual, No Allowance	7,491,000		7,491,000		22,039,000
Financing Receivable, Nonaccrual, with Allowance	5,548,000		5,548,000		9,208,000
Gross nonaccrual loans	13,039,000		13,039,000		31,247,000
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Nonaccrual, No Allowance	3,784,000		3,784,000		4,693,000
Financing Receivable, Nonaccrual, with Allowance	12,400,000		12,400,000		13,700,000
Gross nonaccrual loans	16,184,000		16,184,000		18,393,000
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Nonaccrual, No Allowance	0		0		572,000
Financing Receivable, Nonaccrual, with Allowance	1,014,000		1,014,000		450,000
Gross nonaccrual loans	1,014,000		1,014,000		1,022,000
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Nonaccrual, No Allowance	1,363,000		1,363,000		3,424,000
Financing Receivable, Nonaccrual, with Allowance	3,623,000		3,623,000		3,722,000
Gross nonaccrual loans	4,986,000		4,986,000		7,146,000
Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Nonaccrual, No Allowance	0		0		67,000
Financing Receivable, Nonaccrual, with Allowance	60,000		60,000		117,000
Gross nonaccrual loans	60,000		60,000		184,000
Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Nonaccrual, No Allowance	0		0		31,000
Financing Receivable, Nonaccrual, with Allowance	58,000		58,000		69,000
Gross nonaccrual loans	58,000		58,000		$ 100,000
Nonaccrual [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable Interest Income Reversal Accrual Method	(5,000)	0	(10,000)	(16,000)
Impaired Financing Receivable, Interest Income, Accrual Method	1,984,000	162,000	2,547,000	482,000
Interest and Fee Income, Loans and Leases	0	0	0	0
Nonaccrual [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable Interest Income Reversal Accrual Method	(5,000)	0	(10,000)	(16,000)
Impaired Financing Receivable, Interest Income, Accrual Method	1,984,000	125,000	2,474,000	435,000
Nonaccrual [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable Interest Income Reversal Accrual Method	(5,000)	0	(10,000)	(16,000)
Impaired Financing Receivable, Interest Income, Accrual Method	1,981,000	89,000	2,044,000	308,000
Nonaccrual [Member] | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable Interest Income Reversal Accrual Method	0	0	0	0
Impaired Financing Receivable, Interest Income, Accrual Method	3,000	14,000	117,000	60,000
Nonaccrual [Member] | Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable Interest Income Reversal Accrual Method	0	0	0	0
Impaired Financing Receivable, Interest Income, Accrual Method	0	22,000	313,000	67,000
Nonaccrual [Member] | Real Estate Construction and Land Development | One-to-four Family Real Estate Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable Interest Income Reversal Accrual Method			0	0
Impaired Financing Receivable, Interest Income, Accrual Method			73,000	0
Nonaccrual [Member] | Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable Interest Income Reversal Accrual Method	0	0	0	0
Impaired Financing Receivable, Interest Income, Accrual Method	$ 0	$ 37,000	$ 0	$ 47,000

XML

Loans Receivable - Past Due Loans (Details)	Jun. 30, 2021 USD ($) Loan	Dec. 31, 2020 USD ($)
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 4,207,530,000	$ 4,468,647,000
Number of commercial and industrial loans 90 days or more past due | Loan	1
90 days or more and still accruing	$ 286,000	0
Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	5,315,000	10,421,000
90 Days or Greater
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	8,126,000	10,501,000
Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	13,441,000	20,922,000
Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	4,194,089,000	4,447,725,000
Commercial Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	3,487,065,000	3,715,206,000
Commercial Portfolio Segment [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	4,527,000	6,024,000
Commercial Portfolio Segment [Member] | 90 Days or Greater
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	7,525,000	10,455,000
Commercial Portfolio Segment [Member] | Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	12,052,000	16,479,000
Commercial Portfolio Segment [Member] | Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	3,475,013,000	3,698,727,000
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	651,915,000	733,098,000
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	489,000	4,621,000
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | 90 Days or Greater
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	7,525,000	8,082,000
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	8,014,000	12,703,000
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	643,901,000	720,395,000
Commercial Portfolio Segment [Member] | SBA PPP Loans [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	544,250,000	715,121,000
Commercial Portfolio Segment [Member] | SBA PPP Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
Commercial Portfolio Segment [Member] | SBA PPP Loans [Member] | 90 Days or Greater
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
Commercial Portfolio Segment [Member] | SBA PPP Loans [Member] | Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
Commercial Portfolio Segment [Member] | SBA PPP Loans [Member] | Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	544,250,000	715,121,000
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	865,662,000	856,684,000
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	991,000
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member] | 90 Days or Greater
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	403,000
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member] | Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	1,394,000
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member] | Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	865,662,000	855,290,000
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,425,238,000	1,410,303,000
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	4,038,000	412,000
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member] | 90 Days or Greater
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	1,970,000
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member] | Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	4,038,000	2,382,000
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member] | Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,421,200,000	1,407,921,000
Residential Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	120,148,000	122,756,000
Residential Portfolio Segment [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	765,000
Residential Portfolio Segment [Member] | 90 Days or Greater
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	30,000	16,000
Residential Portfolio Segment [Member] | Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	30,000	781,000
Residential Portfolio Segment [Member] | Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	120,118,000	121,975,000
Real Estate Construction and Land Development
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	328,580,000	305,713,000
Real Estate Construction and Land Development | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	2,225,000
Real Estate Construction and Land Development | 90 Days or Greater
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	571,000	0
Real Estate Construction and Land Development | Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	571,000	2,225,000
Real Estate Construction and Land Development | Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	328,009,000	303,488,000
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	88,601,000	78,259,000
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | 90 Days or Greater
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction | Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	88,601,000	78,259,000
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	239,979,000	227,454,000
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	2,225,000
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties [Member] | 90 Days or Greater
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	571,000	0
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties [Member] | Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	571,000	2,225,000
Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties [Member] | Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	239,408,000	225,229,000
Consumer Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	271,737,000	324,972,000
Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	788,000	1,407,000
Consumer Portfolio Segment [Member] | 90 Days or Greater
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	30,000
Consumer Portfolio Segment [Member] | Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	788,000	1,437,000
Consumer Portfolio Segment [Member] | Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 270,949,000	$ 323,535,000

XML

Loans Receivable - Collateral Dependent (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	$ 14,281	$ 31,406
Commercial Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	13,710	30,737
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	8,001	22,620
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	4,346	4,693
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	1,363	3,424
Residential Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings		67
Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	571	572
Consumer Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings		30
Commercial Real Estate
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	8,047	10,582
Commercial Real Estate | Commercial Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	7,476	10,010
Commercial Real Estate | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	1,767	1,893
Commercial Real Estate | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	4,346	4,693
Commercial Real Estate | Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	1,363	3,424
Commercial Real Estate | Residential Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings		0
Commercial Real Estate | Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	571	572
Commercial Real Estate | Consumer Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings		0
Farmland [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	5,152	18,738
Farmland [Member] | Commercial Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	5,152	18,738
Farmland [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	5,152	18,738
Farmland [Member] | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	0	0
Farmland [Member] | Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	0	0
Farmland [Member] | Residential Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings		0
Farmland [Member] | Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	0	0
Farmland [Member] | Consumer Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings		0
Real Estate [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	751	681
Real Estate [Member] | Commercial Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	751	584
Real Estate [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	751	584
Real Estate [Member] | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	0	0
Real Estate [Member] | Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	0	0
Real Estate [Member] | Residential Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings		67
Real Estate [Member] | Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	0	0
Real Estate [Member] | Consumer Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings		30
Other [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	331
Other [Member] | Commercial Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	331	1,405
Other [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	331	1,405
Other [Member] | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	0	0
Other [Member] | Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	0	0
Other [Member] | Residential Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings		0
Other [Member] | Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	$ 0	0
Other [Member] | Consumer Portfolio Segment [Member]
Financial Instruments Owned and Pledged as Collateral [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings		$ 0

XML

Loans Receivable - Modified TDRs (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($) contract	Jun. 30, 2020 USD ($) contract	Jun. 30, 2021 USD ($) contract	Jun. 30, 2020 USD ($) contract	Dec. 31, 2020 USD ($)
Loans Modified as Troubled Debt Restructurings [Abstract]
Financing Receivable, Troubled Debt Restructuring, Commitment to Lend	$ 4,900		$ 4,900		$ 2,600
Commercial Portfolio Segment [Member]
Loans Modified as Troubled Debt Restructurings [Abstract]
Number of Contracts | contract	20	37	35	44
Outstanding Principal Balance	$ 8,124	$ 13,904	$ 16,792	$ 17,862
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Loans Modified as Troubled Debt Restructurings [Abstract]
Number of Contracts | contract	18	31	31	35
Outstanding Principal Balance	$ 5,673	$ 11,849	$ 8,713	$ 12,652
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Loans Modified as Troubled Debt Restructurings [Abstract]
Number of Contracts | contract	1	4	2	6
Outstanding Principal Balance	$ 2,200	$ 1,657	$ 5,857	$ 3,067
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Loans Modified as Troubled Debt Restructurings [Abstract]
Number of Contracts | contract	1	2	2	3
Outstanding Principal Balance	$ 251	$ 398	$ 2,222	$ 2,143
Real Estate Construction and Land Development | One-to-four Family Real Estate Construction
Loans Modified as Troubled Debt Restructurings [Abstract]
Number of Contracts | contract	0	4	0	4
Outstanding Principal Balance	$ 0	$ 1,751	$ 0	$ 1,751
One-to-four Family Real Estate Construction
Loans Modified as Troubled Debt Restructurings [Abstract]
Number of Contracts | contract			1	0
Outstanding Principal Balance			$ 181	$ 0
Troubled Debt Restructured Loans
Loans Modified as Troubled Debt Restructurings [Abstract]
Number of Contracts | contract	27	50	58	62
Outstanding Principal Balance	$ 8,713	$ 15,737	$ 17,927	$ 19,786
Troubled Debt Restructured Loans | Modified during the quarter [Member]
Loans Modified as Troubled Debt Restructurings [Abstract]
Related Specific Valuation Allowance	$ 1,700	$ 1,500	$ 1,700	$ 1,500
Troubled Debt Restructured Loans | Real Estate Construction and Land Development
Loans Modified as Troubled Debt Restructurings [Abstract]
Number of Contracts | contract	1	4	1	4
Outstanding Principal Balance	$ 443	$ 1,751	$ 443	$ 1,751
Troubled Debt Restructured Loans | Real Estate Construction and Land Development | Five or More Family Residential and Commercial Properties [Member]
Loans Modified as Troubled Debt Restructurings [Abstract]
Number of Contracts | contract	1	0	1	0
Outstanding Principal Balance	$ 443	$ 0	$ 443	$ 0
Troubled Debt Restructured Loans | Consumer Portfolio Segment [Member]
Loans Modified as Troubled Debt Restructurings [Abstract]
Number of Contracts | contract	6	9	21	14
Outstanding Principal Balance	$ 146	$ 82	$ 511	$ 173

XML

Loans Receivable - TDRs Subsequently Defaulted (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($) contract	Jun. 30, 2020 USD ($) Contract contract	Jun. 30, 2021 USD ($) contract	Jun. 30, 2020 USD ($) contract Contract	Dec. 31, 2020 USD ($)
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts (1) | contract	1	4	2	7
Amortized Cost (1)	$ 46,000	$ 1,027,000	$ 789,000	$ 2,998,000
Accrued interest receivable	17,113,000		17,113,000		$ 19,418,000
Other Real Estate, Foreclosed Assets, and Repossessed Assets	79,000		79,000
Loans Receivable [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Accrued interest receivable	$ 12,800,000		$ 12,800,000		$ 15,800,000
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts (1) | contract	1	2	2	4
Amortized Cost (1)	$ 46,000	$ 302,000	$ 789,000	$ 2,155,000
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts (1)	0	1	0	1
Amortized Cost (1)	$ 0	$ 445,000	$ 0	$ 445,000
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts (1) | contract	0	1	0	2
Amortized Cost (1)	$ 0	$ 280,000	$ 0	$ 398,000
Finance Receivable Modified Subsequent Default | Troubled Debt Restructured Loans
Financing Receivable, Troubled Debt Restructuring [Line Items]
Related Specific Valuation Allowance	$ 7,000	$ 494,000	$ 7,000	$ 494,000

XML

Allowance for Credit Losses on Loans (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jan. 01, 2020	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Loan and Lease Losses, Period Increase (Decrease)				$ (18,600)
Allowance for Loan and Lease Losses, Period Increase (Decrease), Percent				(26.50%)
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	$ 36,171	$ 64,225	$ 47,540	$ 70,185	$ 36,171
Financing Receivable, Allowance for Credit Loss, Writeoff		(133)	(2,255)	(320)	(3,852)
Financing Receivable, Allowance for Credit Loss, Recovery		291	275	653	1,455
Provision for credit losses		(12,821)	25,941	(18,956)	35,905
Ending Balance	37,993	51,562	71,501	51,562	71,501
Total Allowance for Credit Losses						$ 36,171
Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption	5,600
Financing Receivable, Allowance for Credit Losses, Effect of Change in Method	1,822
Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		45,204	27,866	49,608
Financing Receivable, Allowance for Credit Loss, Writeoff		(13)	(1,824)	(14)	(3,046)
Financing Receivable, Allowance for Credit Loss, Recovery		143	71	350	1,140
Provision for credit losses		(8,657)	24,329	(13,267)	31,350
Ending Balance	20,998	36,677	50,442	36,677	50,442
Total Allowance for Credit Losses						23,933
Commercial Portfolio Segment [Member] | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption	(2,935)
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		21,770	13,900	30,010
Financing Receivable, Allowance for Credit Loss, Writeoff		(13)	(1,824)	(14)	(2,911)
Financing Receivable, Allowance for Credit Loss, Recovery		132	69	337	1,126
Provision for credit losses		(4,404)	17,628	(12,848)	21,167
Ending Balance	10,391	17,485	29,773	17,485	29,773
Total Allowance for Credit Losses						11,739
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption	(1,348)
Commercial Portfolio Segment [Member] | Paycheck Protection Program
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		0		0
Financing Receivable, Allowance for Credit Loss, Writeoff		0		0
Financing Receivable, Allowance for Credit Loss, Recovery		0		0
Provision for credit losses		0		0
Ending Balance		0		0
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		10,464	6,216	9,486
Financing Receivable, Allowance for Credit Loss, Writeoff		0	0	0	(135)
Financing Receivable, Allowance for Credit Loss, Recovery		11	2	13	14
Provision for credit losses		(1,913)	3,785	(937)	5,160
Ending Balance	4,964	8,562	10,003	8,562	10,003
Total Allowance for Credit Losses						4,512
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member] | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption	452
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		12,970	7,750	10,112
Financing Receivable, Allowance for Credit Loss, Writeoff		0	0	0	0
Financing Receivable, Allowance for Credit Loss, Recovery		0	0	0	0
Provision for credit losses		(2,340)	2,916	518	5,023
Ending Balance	5,643	10,630	10,666	10,630	10,666
Total Allowance for Credit Losses						7,682
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member] | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption	(2,039)
Residential Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		1,402	3,026	1,591
Financing Receivable, Allowance for Credit Loss, Writeoff		0	0	0	0
Financing Receivable, Allowance for Credit Loss, Recovery		0	0	0	3
Provision for credit losses		(249)	(803)	(438)	(709)
Ending Balance	2,929	1,153	2,223	1,153	2,223
Total Allowance for Credit Losses						1,458
Residential Portfolio Segment [Member] | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption	1,471
Real Estate Construction and Land Development [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		13,271	12,308	13,092
Financing Receivable, Allowance for Credit Loss, Writeoff		0	0	(1)	0
Financing Receivable, Allowance for Credit Loss, Recovery		4	7	20	21
Provision for credit losses		(2,804)	(3,191)	(2,640)	(626)
Ending Balance	9,729	10,471	9,124	10,471	9,124
Total Allowance for Credit Losses						3,060
Real Estate Construction and Land Development [Member] | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption	6,669
Real Estate Construction and Land Development [Member] | One to Four Family Real Estate Construction [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		2,048	864	1,951
Financing Receivable, Allowance for Credit Loss, Writeoff		0	0	0	0
Financing Receivable, Allowance for Credit Loss, Recovery		4	7	20	21
Provision for credit losses		(416)	(304)	(335)	(338)
Ending Balance	884	1,636	567	1,636	567
Total Allowance for Credit Losses						1,455
Real Estate Construction and Land Development [Member] | One to Four Family Real Estate Construction [Member] | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption	(571)
Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		11,223	11,444	11,141
Financing Receivable, Allowance for Credit Loss, Writeoff		0	0	(1)	0
Financing Receivable, Allowance for Credit Loss, Recovery		0	0	0	0
Provision for credit losses		(2,388)	(2,887)	(2,305)	(288)
Ending Balance	8,845	8,835	8,557	8,835	8,557
Total Allowance for Credit Losses						1,605
Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member] | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption	7,240
Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		4,348	4,340	5,894
Financing Receivable, Allowance for Credit Loss, Writeoff		(120)	(431)	(305)	(806)
Financing Receivable, Allowance for Credit Loss, Recovery		144	197	283	291
Provision for credit losses		(1,111)	5,606	(2,611)	5,890
Ending Balance	4,337	$ 3,261	9,712	3,261	9,712
Total Allowance for Credit Losses						6,821
Consumer Portfolio Segment [Member] | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption	(2,484)
Unallocated
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Financing Receivable, Allowance for Credit Loss, Writeoff					0
Financing Receivable, Allowance for Credit Loss, Recovery					0
Provision for credit losses					0
Ending Balance	0		$ 0		0
Total Allowance for Credit Losses						$ 899
Unallocated | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption	(899)
Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	1,822			0	1,822
Cumulative Effect, Period of Adoption, Adjusted Balance
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	$ 37,993			$ 70,185	$ 37,993

XML

Goodwill and Other Intangible Assets - Other Intangible Assets, Textual (Details) - Core Deposits	6 Months Ended
	Jun. 30, 2021
Premier Commercial Bancorp
Finite-Lived Intangible Assets [Line Items]
Useful life	10 years
Puget Sound Bancorp
Finite-Lived Intangible Assets [Line Items]
Useful life	10 years
Washington Banking Company
Finite-Lived Intangible Assets [Line Items]
Useful life	10 years
Valley Community Bancshares
Finite-Lived Intangible Assets [Line Items]
Useful life	10 years

XML

Goodwill and Other Intangible Assets - Change in Other Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Finite-lived Intangible Assets [Roll Forward]
Balance at the beginning of the period	$ 12,291	$ 15,710	$ 13,088	$ 16,613
Amortization	(797)	(903)	(1,594)	(1,806)
Balance at the end of the period	$ 11,494	$ 14,807	$ 11,494	$ 14,807

XML

Derivative Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Customers
Derivative Asset
Estimated Fair Value	$ 15,400	$ 25,400
Third Parties
Derivative Asset
Estimated Fair Value		(25,900)
Derivative Liability
Estimated Fair Value	(15,600)
Interest rate swap
Derivative Asset
Estimated Fair Value	19,342
Derivative Liability
Estimated Fair Value	(19,510)
Interest rate swap | Non-hedging interest rate derivatives
Derivative Asset
Notional Amounts	321,519	308,126
Estimated Fair Value		25,740
Derivative Liability
Notional Amounts	$ 321,519	308,126
Estimated Fair Value		$ (26,162)

XML

Stockholders' Equity - Reconciliation of Weighted Average Shares (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Net income (loss):
Net income (loss)	$ 32,702	$ (6,139)	$ 58,046	$ 6,052
Dividends and undistributed earnings allocated to participating securities (1)	0	0	0	(3)
Net income (loss) allocated to common shareholders	$ 32,702	$ (6,139)	$ 58,046	$ 6,049
Basic:
Weighted average common shares outstanding (in shares)	35,994,740	35,899,361	35,961,032	36,128,586
Less: Restricted stock awards (in shares)	0	(645)	0	(8,183)
Total basic weighted average common shares outstanding (in shares)	35,994,740	35,898,716	35,961,032	36,120,403
Diluted:
Basic weighted average common shares outstanding (in shares)	35,994,740	35,898,716	35,961,032	36,120,403
Effect of potentially dilutive common shares (in shares)	294,724	0	307,829	154,988
Total diluted weighted average common shares outstanding (in shares)	36,289,464	35,898,716	36,268,861	36,275,391
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	7,065	258,412	4,766	124,904

XML

Stockholders' Equity - Dividends (Details) - $ / shares							3 Months Ended		6 Months Ended
	Apr. 21, 2021	Jan. 27, 2021	Oct. 21, 2020	Jul. 22, 2020	Apr. 29, 2020	Jan. 22, 2020	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Stockholders' Equity Note [Abstract]
Declared	Apr. 21, 2021	Jan. 27, 2021	Oct. 21, 2020	Jul. 22, 2020	Apr. 29, 2020	Jan. 22, 2020
Cash Dividend per Share (in usd per share)	$ 0.20	$ 0.20	$ 0.20	$ 0.20	$ 0.20	$ 0.20	$ 0.20	$ 0.20	$ 0.40	$ 0.40
Record Date	May 05, 2021	Feb. 10, 2021	Nov. 04, 2020	Aug. 05, 2020	May 13, 2020	Feb. 06, 2020
Paid Date	May 19, 2021	Feb. 24, 2021	Nov. 18, 2020	Aug. 19, 2020	May 27, 2020	Feb. 20, 2020

XML

Stockholders' Equity - Stock Repurchase Program (Details) - USD ($)			3 Months Ended		6 Months Ended
	Mar. 12, 2020	Oct. 23, 2014	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Shares Related to Withholding Taxes on the Vesting of Restricted Stock
Stockholders Equity (Textual) [Abstract]
Number of shares repurchased (in shares)			2,557	2,046	25,803	27,928
Eleventh Stock Repurchase Plan
Stockholders Equity (Textual) [Abstract]
Outstanding share percent		5.00%
Outstanding common shares in the plan (in shares)		1,512,600
Twelfth Stock Repurchase Plan [Member] [Member] [Domain]
Stockholders Equity (Textual) [Abstract]
Outstanding share percent	5.00%
Outstanding common shares in the plan (in shares)	1,799,054
Eleventh Stock Repurchase Plan
Stockholders Equity (Textual) [Abstract]
Number of shares repurchased (in shares)			0	0	0	639,922
Stock Repurchased During Period, Value			$ 0	$ 0	$ 0	$ 23.95
Net Total Stock Repurchased During Periods Presented, Shares					1,512,600
Net Stock Repurchased During Periods Presented, Value Per Share					$ 21.69
Twelfth Stock Repurchase Plan [Member] [Member] [Domain]
Stockholders Equity (Textual) [Abstract]
Number of shares repurchased (in shares)			0	0	0	155,778
Stock Repurchased During Period, Value			$ 0	$ 0	$ 0	$ 20.34
Net Total Stock Repurchased During Periods Presented, Shares					155,778
Net Stock Repurchased During Periods Presented, Value Per Share					$ 20.34

XML

Stockholders' Equity - Shares Repurchased (Details) - Shares Related to Withholding Taxes on the Vesting of Restricted Stock - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Equity, Class of Treasury Stock [Line Items]
Repurchased shares to pay withholding taxes (in shares)	2,557	2,046	25,803	27,928
Withholding taxes average price per share (in usd per share)	$ 27.47	$ 18.62	$ 29.33	$ 21.56

XML

Fair Value Measurements - Fair Value Measurement on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	$ 1,049,524	$ 802,163
U.S. government and agency securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	103,647	45,660
Municipal securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	228,927	209,968
Residential CMO and MBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale		201,872
Commercial CMO and MBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale		303,746
Corporate obligations
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale		11,096
Other asset-backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale		29,821
Level 1
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0
Recurring
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale		802,163
Equity security	181	131
Recurring | U.S. government and agency securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	103,647	45,660
Recurring | Municipal securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	228,927	209,968
Recurring | Residential CMO and MBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	259,494	201,872
Recurring | Commercial CMO and MBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	421,940	303,746
Recurring | Corporate obligations
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	7,018	11,096
Recurring | Other asset-backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	28,498	29,821
Recurring | Interest rate swap
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative assets - interest rate swaps	19,342	25,740
Derivative liabilities - interest rate swaps	19,510	26,162
Recurring | Level 1
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale		0
Equity security	181	131
Recurring | Level 1 | U.S. government and agency securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 1 | Municipal securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 1 | Residential CMO and MBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 1 | Commercial CMO and MBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 1 | Corporate obligations
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 1 | Other asset-backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 1 | Interest rate swap
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative assets - interest rate swaps	0	0
Derivative liabilities - interest rate swaps	0	0
Recurring | Level 2
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	1,049,524	802,163
Equity security	0	0
Recurring | Level 2 | U.S. government and agency securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	103,647	45,660
Recurring | Level 2 | Municipal securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	228,927	209,968
Recurring | Level 2 | Residential CMO and MBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale		201,872
Recurring | Level 2 | Commercial CMO and MBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale		303,746
Recurring | Level 2 | Corporate obligations
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale		11,096
Recurring | Level 2 | Other asset-backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale		29,821
Recurring | Level 2 | Interest rate swap
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative assets - interest rate swaps	19,342	25,740
Derivative liabilities - interest rate swaps	19,510	26,162
Recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Equity security	0	0
Recurring | Level 3 | U.S. government and agency securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 3 | Municipal securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 3 | Residential CMO and MBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 3 | Commercial CMO and MBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 3 | Corporate obligations
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 3 | Other asset-backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total investment securities available for sale	0	0
Recurring | Level 3 | Interest rate swap
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative assets - interest rate swaps	0	0
Derivative liabilities - interest rate swaps	$ 0	$ 0

XML

Fair Value Measurements - Fair Value Measurement on Nonrecurring Basis (Details) - Nonrecurring - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Fair value measurements of assets on a nonrecurring basis
Basis					$ 2,635
Fair Value					2,619
Fair Value, Option, Changes in Fair Value, Gain (Loss)	$ (93)	$ 9	$ (142)	$ 3
Level 1
Fair value measurements of assets on a nonrecurring basis
Fair Value					0
Level 2
Fair value measurements of assets on a nonrecurring basis
Fair Value					0
Level 3
Fair value measurements of assets on a nonrecurring basis
Fair Value					2,619
Impaired Loans
Fair value measurements of assets on a nonrecurring basis
Basis	2,596		2,596
Fair Value	1,795		1,795
Impaired Loans | Level 1
Fair value measurements of assets on a nonrecurring basis
Fair Value	0		0
Impaired Loans | Level 2
Fair value measurements of assets on a nonrecurring basis
Fair Value	0		0
Impaired Loans | Level 3
Fair value measurements of assets on a nonrecurring basis
Fair Value	1,795		1,795		1,289
Impaired Loans | Commercial Portfolio Segment [Member]
Fair value measurements of assets on a nonrecurring basis
Basis	1,605		1,605
Fair Value	1,261		1,261
Net Losses (Gains) Recorded in Earnings	(70)	9	(104)	3
Impaired Loans | Commercial Portfolio Segment [Member] | Level 1
Fair value measurements of assets on a nonrecurring basis
Fair Value	0		0
Impaired Loans | Commercial Portfolio Segment [Member] | Level 2
Fair value measurements of assets on a nonrecurring basis
Fair Value	0		0
Impaired Loans | Commercial Portfolio Segment [Member] | Level 3
Fair value measurements of assets on a nonrecurring basis
Fair Value	1,261		1,261
Impaired Loans | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Fair value measurements of assets on a nonrecurring basis
Basis	983		983		1,305
Fair Value	775		775		1,289
Net Losses (Gains) Recorded in Earnings	6	9	(28)	3
Impaired Loans | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Level 1
Fair value measurements of assets on a nonrecurring basis
Fair Value	0		0		0
Impaired Loans | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Level 2
Fair value measurements of assets on a nonrecurring basis
Fair Value	0		0		0
Impaired Loans | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Level 3
Fair value measurements of assets on a nonrecurring basis
Fair Value	775		775		1,289
Impaired Loans | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Fair value measurements of assets on a nonrecurring basis
Basis	622		622
Fair Value	486		486
Net Losses (Gains) Recorded in Earnings	(76)	0	(76)	0
Impaired Loans | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member] | Level 1
Fair value measurements of assets on a nonrecurring basis
Fair Value	0		0
Impaired Loans | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member] | Level 2
Fair value measurements of assets on a nonrecurring basis
Fair Value	0		0
Impaired Loans | Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member] | Level 3
Fair value measurements of assets on a nonrecurring basis
Fair Value	486		486
Impaired Loans | Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Fair value measurements of assets on a nonrecurring basis
Basis	991		991
Fair Value	534		534
Net Losses (Gains) Recorded in Earnings	(23)	$ 0	(38)	$ 0
Impaired Loans | Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member] | Level 1
Fair value measurements of assets on a nonrecurring basis
Fair Value	0		0
Impaired Loans | Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member] | Level 2
Fair value measurements of assets on a nonrecurring basis
Fair Value	0		0
Impaired Loans | Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member] | Level 3
Fair value measurements of assets on a nonrecurring basis
Fair Value	$ 534		$ 534
Branch held for sale
Fair value measurements of assets on a nonrecurring basis
Basis					1,330
Fair Value					1,330
Branch held for sale | Level 1
Fair value measurements of assets on a nonrecurring basis
Fair Value					0
Branch held for sale | Level 2
Fair value measurements of assets on a nonrecurring basis
Fair Value					0
Branch held for sale | Level 3
Fair value measurements of assets on a nonrecurring basis
Fair Value					$ 1,330

XML

Fair Value Measurements - Quantitative Information, Level 3 (Details) - Nonrecurring $ in Thousands	Jun. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Collateral-dependent loans		$ 2,619
Impaired Loans
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Collateral-dependent loans	$ 1,795
Branch held for sale
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Collateral-dependent loans		1,330
Level 3
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Collateral-dependent loans		2,619
Level 3 | Impaired Loans
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Collateral-dependent loans	$ 1,795	$ 1,289
Level 3 | Impaired Loans | Minimum | Comparability Adjustment
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Range of Inputs	(0.200)	(40.1)
Level 3 | Impaired Loans | Maximum | Comparability Adjustment
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Range of Inputs	0.550	0.6
Level 3 | Impaired Loans | Weighted Average | Comparability Adjustment
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Range of Inputs	0.183	(24.1)
Level 3 | Branch held for sale
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Collateral-dependent loans		$ 1,330
Level 3 | Branch held for sale | Minimum | Comparability Adjustment
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Range of Inputs		40.3
Level 3 | Branch held for sale | Maximum | Comparability Adjustment
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Range of Inputs		140.7
Level 3 | Branch held for sale | Weighted Average | Comparability Adjustment
Fair value measurements for financial instruments measured at fair value on a non-recurring basis
Range of Inputs		33.2

XML

Fair Value Measurements - Carrying Value and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financial Assets:
Bank owned life insurance	$ 108,988	$ 107,580
Carrying Value
Financial Assets:
Cash and cash equivalents	1,264,933	743,322
Investment securities available for sale	1,049,524	802,163
Loans held for sale	2,739	4,932
Loans receivable, net	4,155,968	4,398,462
Accrued interest receivable	17,113	19,418
Bank owned life insurance	108,988	107,580
Derivative assets - interest rate swaps	19,342	25,740
Equity security	181	131
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts		5,198,456
Certificates of deposit		399,534
Securities sold under agreement to repurchase	46,429	35,683
Junior subordinated debentures	21,034	20,887
Accrued interest payable	74	94
Derivative liabilities - interest rate swaps	19,510	26,162
Carrying Value | Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	5,686,807
Carrying Value | Bank Time Deposits
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	374,899
Fair Value
Financial Assets:
Cash and cash equivalents	1,264,933	743,322
Investment securities available for sale		802,163
Loans held for sale	2,840	5,156
Loans receivable, net	4,271,615	4,556,862
Accrued interest receivable	17,113	19,418
Bank owned life insurance	108,988	107,580
Derivative assets - interest rate swaps	19,342	25,740
Equity security	181	131
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts		5,198,456
Certificates of deposit		402,701
Securities sold under agreement to repurchase	46,429	35,683
Junior subordinated debentures	18,250	18,500
Accrued interest payable	74	94
Derivative liabilities - interest rate swaps	19,510	26,162
Fair Value | Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	5,686,807
Fair Value | Bank Time Deposits
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	376,646
Fair Value | Level 1
Financial Assets:
Cash and cash equivalents	1,264,933	743,322
Investment securities available for sale		0
Loans held for sale	0	0
Loans receivable, net	0	0
Accrued interest receivable	65	2
Bank owned life insurance	108,988	107,580
Derivative assets - interest rate swaps	0	0
Equity security		131
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts		5,198,456
Certificates of deposit		0
Securities sold under agreement to repurchase	46,429	35,683
Junior subordinated debentures	0	0
Accrued interest payable	31	42
Derivative liabilities - interest rate swaps	0	0
Fair Value | Level 1 | Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	5,686,807
Fair Value | Level 1 | Bank Time Deposits
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	0
Fair Value | Level 2
Financial Assets:
Cash and cash equivalents	0	0
Investment securities available for sale		802,163
Loans held for sale	0	0
Loans receivable, net	0	0
Accrued interest receivable	4,244	3,648
Bank owned life insurance	0	0
Derivative assets - interest rate swaps	19,342	25,740
Equity security	0	0
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts		0
Certificates of deposit		402,701
Securities sold under agreement to repurchase	0	0
Junior subordinated debentures	0	0
Accrued interest payable	25	33
Derivative liabilities - interest rate swaps	19,510	26,162
Fair Value | Level 2 | Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	0
Fair Value | Level 2 | Bank Time Deposits
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	376,646
Fair Value | Level 3
Financial Assets:
Cash and cash equivalents	0	0
Investment securities available for sale	0	0
Loans held for sale	2,840	5,156
Loans receivable, net	4,271,615	4,556,862
Accrued interest receivable	12,804	15,768
Bank owned life insurance	0	0
Derivative assets - interest rate swaps	0	0
Equity security	0	0
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts		0
Certificates of deposit		0
Securities sold under agreement to repurchase	0	0
Junior subordinated debentures	18,250	18,500
Accrued interest payable	18	19
Derivative liabilities - interest rate swaps	0	$ 0
Fair Value | Level 3 | Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	0
Fair Value | Level 3 | Bank Time Deposits
Financial Liabilities:
Noninterest deposits, interest bearing demand deposits, money market accounts and savings accounts	$ 0

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Cash Restriction (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Banking and Thrift, Other Disclosures [Abstract]
Restricted Cash	$ 15,700	$ 25,900

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Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Jan. 01, 2020	Dec. 31, 2019
Other Commitments [Line Items]
Unused Commitments to Extend Credit	$ 1,042,823		$ 1,042,823			$ 1,105,425
Allowance for credit losses on loans	51,562	$ 71,501	51,562	$ 71,501	$ 64,225	70,185	$ 47,540	$ 37,993	$ 36,171
Cumulative Effect, Period of Adoption, Adjustment
Other Commitments [Line Items]
Allowance for credit losses on loans						0			1,822
Cumulative Effect, Period of Adoption, Adjusted Balance
Other Commitments [Line Items]
Allowance for credit losses on loans						70,185			37,993
Commercial Portfolio Segment [Member]
Other Commitments [Line Items]
Unused Commitments to Extend Credit	582,540		582,540			661,902
Allowance for credit losses on loans	36,677	50,442	36,677	50,442	45,204	49,608	27,866	20,998
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Other Commitments [Line Items]
Unused Commitments to Extend Credit	572,214		572,214			640,018
Allowance for credit losses on loans	17,485	29,773	17,485	29,773	21,770	30,010	13,900	10,391
Commercial Portfolio Segment [Member] | Owner Occupied Commercial Real Estate [Member]
Other Commitments [Line Items]
Unused Commitments to Extend Credit	2,515		2,515			3,488
Allowance for credit losses on loans	8,562	10,003	8,562	10,003	10,464	9,486	6,216	4,964
Commercial Portfolio Segment [Member] | Non Owner Occupied Commercial Real Estate [Member]
Other Commitments [Line Items]
Unused Commitments to Extend Credit	7,811		7,811			18,396
Allowance for credit losses on loans	10,630	10,666	10,630	10,666	12,970	10,112	7,750	5,643
Real Estate Construction and Land Development [Member]
Other Commitments [Line Items]
Unused Commitments to Extend Credit	193,011		193,011			180,274
Allowance for credit losses on loans	10,471	9,124	10,471	9,124	13,271	13,092	12,308	9,729
Real Estate Construction and Land Development [Member] | One to Four Family Real Estate Construction [Member]
Other Commitments [Line Items]
Unused Commitments to Extend Credit	57,983		57,983			52,453
Allowance for credit losses on loans	1,636	567	1,636	567	2,048	1,951	864	884
Real Estate Construction and Land Development [Member] | Five or More Family Residential and Commercial Properties [Member]
Other Commitments [Line Items]
Unused Commitments to Extend Credit	135,028		135,028			127,821
Allowance for credit losses on loans	8,835	8,557	8,835	8,557	11,223	11,141	11,444	8,845
Consumer Portfolio Segment [Member]
Other Commitments [Line Items]
Unused Commitments to Extend Credit	267,272		267,272			263,249
Allowance for credit losses on loans	3,261	9,712	3,261	9,712	4,348	5,894	4,340	4,337
Unused Commitments to Extend Credit [Member]
Other Commitments [Line Items]
Provision for Other Credit Losses	(1,166)	2,622	(2,230)	604
Allowance for credit losses on loans	$ 2,451	$ 4,612	$ 2,451	$ 4,612	3,617	4,681	1,990		306
Unused Commitments to Extend Credit [Member] | Accounting Standards Update 2016-13 [Member]
Other Commitments [Line Items]
Allowance for credit losses on loans								$ 3,700
Unused Commitments to Extend Credit [Member] | Cumulative Effect, Period of Adoption, Adjustment
Other Commitments [Line Items]
Allowance for credit losses on loans					0	0	0		3,702
Unused Commitments to Extend Credit [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance
Other Commitments [Line Items]
Allowance for credit losses on loans					$ 3,617	$ 4,681	$ 1,990		$ 4,008