SEC Info - Heritage Financial Corp./WA

Page	(sequential)		(alphabetic)	↑Top
		Alternative Formats (Word, et al.) Allowance for Credit Losses on Loans Allowance for Credit Losses on Loans Overview Average Balances, Yields and Rates Paid Cash Restriction Cautionary Note Regarding Forward-Looking Statements Commitments and Contingencies Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2022 and 2021 Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021 Condensed Consolidated Statements of Financial Condition (Unaudited) as of September 30, 2022 and December 31, 2021 Condensed Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021 Condensed Consolidated Statements of Stockholders' Equity (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021 Controls and Procedures Critical Accounting Policies Defaults Upon Senior Securities Deposits Overview Derivative Financial Instruments Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements Exhibits Fair Value Measurements Financial Condition Overview Financial Information Financial Statements Glossary of Acronyms, Abbreviations and Terms Goodwill and Other Intangible Assets Income Tax Expense Overview Investment Activities Overview Investment Securities Legal Proceedings Liquidity and Capital Resources Loan Portfolio Overview Loans Receivable Management's Discussion and Analysis of Financial Condition and Results of Operations Mine Safety Disclosures Net Interest Income and Margin Overview Noninterest Expense Overview Noninterest Income Overview Notes to Condensed Consolidated Financial Statements (Unaudited) Other Information Overview Provision for Credit Losses Overview Quantitative and Qualitative Disclosures About Market Risk Reconciliations of Non-Gaap Measures Regulatory Requirements Overview Results of Operations Risk Factors Signatures Stockholders' Equity Stockholders' Equity Overview Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds
1	1st Page – Filing Submission
"	Table of Contents
"	Glossary of Acronyms, Abbreviations and Terms
"	Cautionary Note Regarding Forward-Looking Statements
"	Financial Information
"	Financial Statements
"	Condensed Consolidated Statements of Financial Condition (Unaudited) as of September 30, 2022 and December 31, 2021
"	Condensed Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021
"	Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021
"	Condensed Consolidated Statements of Stockholders' Equity (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021
"	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2022 and 2021
"	Notes to Condensed Consolidated Financial Statements (Unaudited)
"	Description of Business, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Pronouncements
"	Investment Securities
"	Loans Receivable
"	Allowance for Credit Losses on Loans
"	Goodwill and Other Intangible Assets
"	Derivative Financial Instruments
"	Stockholders' Equity
"	Fair Value Measurements
"	Cash Restriction
"	Commitments and Contingencies
"	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Overview
"	Results of Operations
"	Average Balances, Yields and Rates Paid
"	Net Interest Income and Margin Overview
"	Provision for Credit Losses Overview
"	Noninterest Income Overview
"	Noninterest Expense Overview
"	Income Tax Expense Overview
"	Financial Condition Overview
"	Investment Activities Overview
"	Loan Portfolio Overview
"	Allowance for Credit Losses on Loans Overview
"	Deposits Overview
"	Stockholders' Equity Overview
"	Regulatory Requirements Overview
"	Liquidity and Capital Resources
"	Critical Accounting Policies
"	Reconciliations of Non-Gaap Measures
"	Quantitative and Qualitative Disclosures About Market Risk
"	Controls and Procedures
"	Legal Proceedings
"	Risk Factors
"	Unregistered Sales of Equity Securities and Use of Proceeds
"	Defaults Upon Senior Securities
"	Mine Safety Disclosures
"	Other Information
"	Exhibits
"	Signatures

i 0001046025 i false i 2022 i Q3 i 12/31 i — i — i — i — i 2900010460252022-01-012022-09-3000010460252022-10-31xbrli:shares00010460252022-09-30iso4217:USD00010460252021-12-310001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-31iso4217:USDxbrli:shares00010460252022-07-012022-09-3000010460252021-07-012021-09-3000010460252021-01-012021-09-300001046025us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001046025us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001046025us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300001046025us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300001046025us-gaap:CommonStockMember2022-06-300001046025us-gaap:RetainedEarningsMember2022-06-300001046025us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-3000010460252022-06-300001046025us-gaap:CommonStockMember2022-07-012022-09-300001046025us-gaap:RetainedEarningsMember2022-07-012022-09-300001046025us-gaap:CommonStockMember2022-09-300001046025us-gaap:RetainedEarningsMember2022-09-300001046025us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001046025us-gaap:CommonStockMember2021-12-310001046025us-gaap:RetainedEarningsMember2021-12-310001046025us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001046025us-gaap:CommonStockMember2022-01-012022-09-300001046025us-gaap:RetainedEarningsMember2022-01-012022-09-300001046025us-gaap:CommonStockMember2021-06-300001046025us-gaap:RetainedEarningsMember2021-06-300001046025us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-3000010460252021-06-300001046025us-gaap:CommonStockMember2021-07-012021-09-300001046025us-gaap:RetainedEarningsMember2021-07-012021-09-300001046025us-gaap:CommonStockMember2021-09-300001046025us-gaap:RetainedEarningsMember2021-09-300001046025us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-3000010460252021-09-300001046025us-gaap:CommonStockMember2020-12-310001046025us-gaap:RetainedEarningsMember2020-12-310001046025us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-3100010460252020-12-310001046025us-gaap:CommonStockMember2021-01-012021-09-300001046025us-gaap:RetainedEarningsMember2021-01-012021-09-300001046025hfwa:HeritageBankMember2022-09-30hfwa:branch0001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2022-09-300001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MunicipalBondsMember2022-09-300001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2022-09-300001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2022-09-300001046025us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAggregatedInvestmentsMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMember2022-09-300001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2021-12-310001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MunicipalBondsMember2021-12-310001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2021-12-310001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2021-12-310001046025us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAggregatedInvestmentsMember2021-12-31xbrli:pure0001046025us-gaap:USTreasuryAndGovernmentMember2022-09-300001046025us-gaap:MunicipalBondsMember2022-09-300001046025us-gaap:ResidentialMortgageBackedSecuritiesMember2022-09-300001046025us-gaap:CommercialMortgageBackedSecuritiesMember2022-09-300001046025us-gaap:CorporateDebtSecuritiesMember2022-09-300001046025us-gaap:OtherAggregatedInvestmentsMember2022-09-300001046025us-gaap:USTreasuryAndGovernmentMember2021-12-310001046025us-gaap:MunicipalBondsMember2021-12-310001046025us-gaap:ResidentialMortgageBackedSecuritiesMember2021-12-310001046025us-gaap:CommercialMortgageBackedSecuritiesMember2021-12-310001046025us-gaap:OtherAggregatedInvestmentsMember2021-12-310001046025hfwa:WashingtonAndOregonStateToSecurePublicDepositsMemberus-gaap:AssetPledgedAsCollateralMember2022-09-300001046025hfwa:WashingtonAndOregonStateToSecurePublicDepositsMemberus-gaap:AssetPledgedAsCollateralMember2021-12-310001046025us-gaap:AssetPledgedAsCollateralMemberus-gaap:FederalReserveBankAdvancesMember2022-09-300001046025us-gaap:AssetPledgedAsCollateralMemberus-gaap:FederalReserveBankAdvancesMember2021-12-310001046025us-gaap:RepurchaseAgreementsMemberus-gaap:AssetPledgedAsCollateralMember2022-09-300001046025us-gaap:RepurchaseAgreementsMemberus-gaap:AssetPledgedAsCollateralMember2021-12-310001046025us-gaap:AssetPledgedAsCollateralMemberhfwa:OtherSecuritiesPledgedMember2022-09-300001046025us-gaap:AssetPledgedAsCollateralMemberhfwa:OtherSecuritiesPledgedMember2021-12-310001046025us-gaap:AssetPledgedAsCollateralMember2022-09-300001046025us-gaap:AssetPledgedAsCollateralMember2021-12-310001046025us-gaap:AvailableforsaleSecuritiesMember2022-09-300001046025us-gaap:AvailableforsaleSecuritiesMember2021-12-310001046025us-gaap:HeldtomaturitySecuritiesMember2022-09-300001046025us-gaap:HeldtomaturitySecuritiesMember2021-12-31hfwa:segment0001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-09-300001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-12-310001046025hfwa:PaycheckProtectionProgramMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:PaycheckProtectionProgramMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMember2022-09-300001046025us-gaap:CommercialPortfolioSegmentMember2021-12-310001046025us-gaap:ResidentialPortfolioSegmentMember2022-09-300001046025us-gaap:ResidentialPortfolioSegmentMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMember2021-12-310001046025us-gaap:ConsumerPortfolioSegmentMember2022-09-300001046025us-gaap:ConsumerPortfolioSegmentMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberus-gaap:PassMember2022-09-300001046025us-gaap:SpecialMentionMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-09-300001046025us-gaap:SubstandardMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-09-300001046025hfwa:PaycheckProtectionProgramMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:SpecialMentionMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:SubstandardMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2022-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:SpecialMentionMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:SubstandardMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025us-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2022-09-300001046025us-gaap:CommercialPortfolioSegmentMemberus-gaap:SpecialMentionMember2022-09-300001046025us-gaap:CommercialPortfolioSegmentMemberus-gaap:SubstandardMember2022-09-300001046025us-gaap:ResidentialPortfolioSegmentMemberus-gaap:PassMember2022-09-300001046025us-gaap:ResidentialPortfolioSegmentMemberus-gaap:SubstandardMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:PassMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:PassMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:SpecialMentionMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:SubstandardMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:PassMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:SpecialMentionMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:SubstandardMember2022-09-300001046025us-gaap:ConsumerPortfolioSegmentMemberus-gaap:PassMember2022-09-300001046025us-gaap:ConsumerPortfolioSegmentMemberus-gaap:SubstandardMember2022-09-300001046025us-gaap:PassMember2022-09-300001046025us-gaap:SpecialMentionMember2022-09-300001046025us-gaap:SubstandardMember2022-09-300001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberus-gaap:PassMember2021-12-310001046025us-gaap:SpecialMentionMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-12-310001046025us-gaap:SubstandardMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-12-310001046025hfwa:PaycheckProtectionProgramMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:SpecialMentionMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:SubstandardMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2021-12-310001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:SpecialMentionMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:SubstandardMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberus-gaap:SpecialMentionMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberus-gaap:SubstandardMember2021-12-310001046025us-gaap:ResidentialPortfolioSegmentMemberus-gaap:PassMember2021-12-310001046025us-gaap:ResidentialPortfolioSegmentMemberus-gaap:SubstandardMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:PassMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:PassMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:SpecialMentionMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:SubstandardMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:PassMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:SpecialMentionMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:SubstandardMember2021-12-310001046025us-gaap:ConsumerPortfolioSegmentMemberus-gaap:PassMember2021-12-310001046025us-gaap:ConsumerPortfolioSegmentMemberus-gaap:SubstandardMember2021-12-310001046025us-gaap:PassMember2021-12-310001046025us-gaap:SpecialMentionMember2021-12-310001046025us-gaap:SubstandardMember2021-12-310001046025hfwa:NonaccrualMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-07-012022-09-300001046025hfwa:NonaccrualMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-07-012021-09-300001046025hfwa:NonaccrualMemberus-gaap:ConsumerPortfolioSegmentMember2022-07-012022-09-300001046025hfwa:NonaccrualMemberus-gaap:ConsumerPortfolioSegmentMember2021-07-012021-09-300001046025hfwa:NonaccrualMember2022-07-012022-09-300001046025hfwa:NonaccrualMember2021-07-012021-09-300001046025hfwa:NonaccrualMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-01-012022-09-300001046025hfwa:NonaccrualMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-01-012021-09-300001046025hfwa:NonaccrualMemberhfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-01-012022-09-300001046025hfwa:NonaccrualMemberhfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-01-012021-09-300001046025hfwa:NonaccrualMemberhfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-01-012022-09-300001046025hfwa:NonaccrualMemberhfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-01-012021-09-300001046025hfwa:NonaccrualMemberus-gaap:CommercialPortfolioSegmentMember2022-01-012022-09-300001046025hfwa:NonaccrualMemberus-gaap:CommercialPortfolioSegmentMember2021-01-012021-09-300001046025hfwa:NonaccrualMemberus-gaap:ResidentialPortfolioSegmentMember2022-01-012022-09-300001046025hfwa:NonaccrualMemberus-gaap:ResidentialPortfolioSegmentMember2021-01-012021-09-300001046025hfwa:NonaccrualMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2022-01-012022-09-300001046025hfwa:NonaccrualMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2021-01-012021-09-300001046025hfwa:NonaccrualMemberus-gaap:ConsumerPortfolioSegmentMember2022-01-012022-09-300001046025hfwa:NonaccrualMemberus-gaap:ConsumerPortfolioSegmentMember2021-01-012021-09-300001046025hfwa:NonaccrualMember2022-01-012022-09-300001046025hfwa:NonaccrualMember2021-01-012021-09-300001046025hfwa:FinancingReceivables30to89DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-09-300001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-09-300001046025us-gaap:FinancialAssetPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-09-300001046025us-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-09-300001046025hfwa:FinancingReceivables30to89DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:SBAPPPLoansMember2022-09-300001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:SBAPPPLoansMember2022-09-300001046025us-gaap:FinancialAssetPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:SBAPPPLoansMember2022-09-300001046025us-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:SBAPPPLoansMember2022-09-300001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:SBAPPPLoansMember2022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberhfwa:FinancingReceivables30to89DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025us-gaap:FinancialAssetPastDueMemberhfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberhfwa:FinancingReceivables30to89DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025us-gaap:FinancialAssetPastDueMemberhfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:FinancingReceivables30to89DaysPastDueMember2022-09-300001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025us-gaap:FinancialAssetPastDueMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025us-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025us-gaap:ResidentialPortfolioSegmentMemberhfwa:FinancingReceivables30to89DaysPastDueMember2022-09-300001046025us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-09-300001046025us-gaap:FinancialAssetPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2022-09-300001046025us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FinancingReceivables30to89DaysPastDueMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2022-09-300001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2022-09-300001046025us-gaap:FinancialAssetPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2022-09-300001046025us-gaap:FinancialAssetNotPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FinancingReceivables30to89DaysPastDueMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-09-300001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-09-300001046025us-gaap:FinancialAssetPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-09-300001046025us-gaap:FinancialAssetNotPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FinancingReceivables30to89DaysPastDueMember2022-09-300001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMember2022-09-300001046025us-gaap:FinancialAssetPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMember2022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:FinancialAssetNotPastDueMember2022-09-300001046025us-gaap:ConsumerPortfolioSegmentMemberhfwa:FinancingReceivables30to89DaysPastDueMember2022-09-300001046025us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-09-300001046025us-gaap:FinancialAssetPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2022-09-300001046025us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-09-300001046025hfwa:FinancingReceivables30to89DaysPastDueMember2022-09-300001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-09-300001046025us-gaap:FinancialAssetPastDueMember2022-09-300001046025us-gaap:FinancialAssetNotPastDueMember2022-09-300001046025hfwa:FinancingReceivables30to89DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-12-310001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-12-310001046025us-gaap:FinancialAssetPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-12-310001046025us-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-12-310001046025hfwa:FinancingReceivables30to89DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:SBAPPPLoansMember2021-12-310001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:SBAPPPLoansMember2021-12-310001046025us-gaap:FinancialAssetPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:SBAPPPLoansMember2021-12-310001046025us-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:SBAPPPLoansMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:SBAPPPLoansMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberhfwa:FinancingReceivables30to89DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025us-gaap:FinancialAssetPastDueMemberhfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberhfwa:FinancingReceivables30to89DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025us-gaap:FinancialAssetPastDueMemberhfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:FinancingReceivables30to89DaysPastDueMember2021-12-310001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025us-gaap:FinancialAssetPastDueMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025us-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025us-gaap:ResidentialPortfolioSegmentMemberhfwa:FinancingReceivables30to89DaysPastDueMember2021-12-310001046025us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-310001046025us-gaap:FinancialAssetPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2021-12-310001046025us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FinancingReceivables30to89DaysPastDueMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2021-12-310001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2021-12-310001046025us-gaap:FinancialAssetPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2021-12-310001046025us-gaap:FinancialAssetNotPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FinancingReceivables30to89DaysPastDueMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025us-gaap:FinancialAssetPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025us-gaap:FinancialAssetNotPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FinancingReceivables30to89DaysPastDueMember2021-12-310001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMember2021-12-310001046025us-gaap:FinancialAssetPastDueMemberhfwa:RealEstateConstructionAndLandDevelopmentMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:FinancialAssetNotPastDueMember2021-12-310001046025us-gaap:ConsumerPortfolioSegmentMemberhfwa:FinancingReceivables30to89DaysPastDueMember2021-12-310001046025us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-310001046025us-gaap:FinancialAssetPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2021-12-310001046025us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2021-12-310001046025hfwa:FinancingReceivables30to89DaysPastDueMember2021-12-310001046025us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-310001046025us-gaap:FinancialAssetPastDueMember2021-12-310001046025us-gaap:FinancialAssetNotPastDueMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberus-gaap:CommercialRealEstateMember2022-09-300001046025hfwa:FarmlandMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-09-300001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:SingleFamilyResidenceMemberhfwa:CommercialAndIndustrialMember2022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:CommercialRealEstateMember2022-09-300001046025hfwa:FarmlandMemberhfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:SingleFamilyResidenceMember2022-09-300001046025us-gaap:CommercialRealEstateMember2022-09-300001046025hfwa:FarmlandMember2022-09-300001046025hfwa:SingleFamilyResidenceMember2022-09-300001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberus-gaap:CommercialRealEstateMember2021-12-310001046025hfwa:FarmlandMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:SingleFamilyResidenceMemberhfwa:CommercialAndIndustrialMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:OtherMemberhfwa:CommercialAndIndustrialMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:CommercialRealEstateMember2021-12-310001046025hfwa:FarmlandMemberhfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:SingleFamilyResidenceMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:OtherMember2021-12-310001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:CommercialRealEstateMember2021-12-310001046025hfwa:FarmlandMemberhfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:SingleFamilyResidenceMember2021-12-310001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:OtherMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberus-gaap:CommercialRealEstateMember2021-12-310001046025hfwa:FarmlandMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:SingleFamilyResidenceMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:OtherMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:RealEstateMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025hfwa:FarmlandMemberhfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMembersrt:SingleFamilyMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OtherMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025us-gaap:CommercialRealEstateMember2021-12-310001046025hfwa:FarmlandMember2021-12-310001046025hfwa:SingleFamilyResidenceMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-07-012022-09-30hfwa:contract 0001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-07-012021-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-07-012022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-07-012021-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-07-012022-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-07-012021-09-300001046025us-gaap:CommercialPortfolioSegmentMember2022-07-012022-09-300001046025us-gaap:CommercialPortfolioSegmentMember2021-07-012021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:TroubledDebtRestructuredLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-07-012022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:TroubledDebtRestructuredLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-07-012021-09-300001046025us-gaap:ConsumerPortfolioSegmentMember2022-07-012022-09-300001046025us-gaap:ConsumerPortfolioSegmentMember2021-07-012021-09-300001046025hfwa:TroubledDebtRestructuredLoansMember2022-07-012022-09-300001046025hfwa:TroubledDebtRestructuredLoansMember2021-07-012021-09-300001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-01-012022-09-300001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-01-012021-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-01-012022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-01-012021-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-01-012022-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-01-012021-09-300001046025us-gaap:CommercialPortfolioSegmentMember2022-01-012022-09-300001046025us-gaap:CommercialPortfolioSegmentMember2021-01-012021-09-300001046025hfwa:OnetoFourFamilyRealEstateConstructionMember2022-01-012022-09-300001046025hfwa:OnetoFourFamilyRealEstateConstructionMember2021-01-012021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:TroubledDebtRestructuredLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-01-012022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:TroubledDebtRestructuredLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-01-012021-09-300001046025us-gaap:ConsumerPortfolioSegmentMember2022-01-012022-09-300001046025us-gaap:ConsumerPortfolioSegmentMember2021-01-012021-09-300001046025hfwa:TroubledDebtRestructuredLoansMember2022-01-012022-09-300001046025hfwa:TroubledDebtRestructuredLoansMember2021-01-012021-09-300001046025hfwa:ModifiedduringthequarterMemberhfwa:TroubledDebtRestructuredLoansMember2022-09-300001046025hfwa:ModifiedduringthequarterMemberhfwa:TroubledDebtRestructuredLoansMember2021-09-30hfwa:Contract 0001046025hfwa:FinanceReceivableModifiedSubsequentDefaultMemberhfwa:TroubledDebtRestructuredLoansMember2022-09-300001046025hfwa:FinanceReceivableModifiedSubsequentDefaultMemberhfwa:TroubledDebtRestructuredLoansMember2021-09-300001046025us-gaap:LoansReceivableMember2022-09-300001046025us-gaap:LoansReceivableMember2021-12-310001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2022-06-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-06-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2022-06-300001046025us-gaap:CommercialPortfolioSegmentMember2022-06-300001046025us-gaap:ResidentialPortfolioSegmentMember2022-06-300001046025us-gaap:ResidentialPortfolioSegmentMember2022-07-012022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2022-06-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2022-07-012022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-06-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-07-012022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMember2022-06-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMember2022-07-012022-09-300001046025us-gaap:ConsumerPortfolioSegmentMember2022-06-300001046025us-gaap:ResidentialPortfolioSegmentMember2022-01-012022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2022-01-012022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-01-012022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMember2022-01-012022-09-300001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-06-300001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2021-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-06-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-09-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-06-300001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-09-300001046025us-gaap:CommercialPortfolioSegmentMember2021-06-300001046025us-gaap:CommercialPortfolioSegmentMember2021-09-300001046025us-gaap:ResidentialPortfolioSegmentMember2021-06-300001046025us-gaap:ResidentialPortfolioSegmentMember2021-07-012021-09-300001046025us-gaap:ResidentialPortfolioSegmentMember2021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2021-06-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2021-07-012021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-06-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-07-012021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMember2021-06-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMember2021-07-012021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMember2021-09-300001046025us-gaap:ConsumerPortfolioSegmentMember2021-06-300001046025us-gaap:ConsumerPortfolioSegmentMember2021-09-300001046025us-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMember2020-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2020-12-310001046025hfwa:NonOwnerOccupiedCommercialRealEstateMemberus-gaap:CommercialPortfolioSegmentMember2020-12-310001046025us-gaap:CommercialPortfolioSegmentMember2020-12-310001046025us-gaap:ResidentialPortfolioSegmentMember2020-12-310001046025us-gaap:ResidentialPortfolioSegmentMember2021-01-012021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2020-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:OnetoFourFamilyRealEstateConstructionMember2021-01-012021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2020-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-01-012021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMember2020-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMember2021-01-012021-09-300001046025us-gaap:ConsumerPortfolioSegmentMember2020-12-310001046025hfwa:PremierCommercialBancorpMemberus-gaap:CoreDepositsMember2022-01-012022-09-300001046025hfwa:WashingtonBankingMemberus-gaap:CoreDepositsMember2022-01-012022-09-300001046025hfwa:ValleyCommunityBancsharesMemberus-gaap:CoreDepositsMember2022-01-012022-09-300001046025hfwa:PugetSoundMergerMemberus-gaap:CoreDepositsMember2022-01-012022-09-300001046025us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2022-09-300001046025us-gaap:InterestRateSwapMember2022-09-300001046025us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2021-12-310001046025us-gaap:InterestRateSwapMember2021-12-310001046025hfwa:CustomersMember2022-09-300001046025hfwa:CustomersMember2021-12-310001046025hfwa:ThirdPartiesMember2022-09-300001046025hfwa:ThirdPartiesMember2021-12-3100010460252021-01-272021-01-2700010460252021-04-212021-04-2100010460252021-07-212021-07-2100010460252021-10-202021-10-2000010460252022-01-262022-01-2600010460252022-04-202022-04-2000010460252022-07-202022-07-200001046025hfwa:TwelfthStockRepurchasePlanMember2020-03-122020-03-120001046025hfwa:TwelfthStockRepurchasePlanMember2020-03-120001046025hfwa:TwelfthStockRepurchasePlanMember2022-07-012022-09-300001046025hfwa:TwelfthStockRepurchasePlanMember2021-07-012021-09-300001046025hfwa:TwelfthStockRepurchasePlanMember2022-01-012022-09-300001046025hfwa:TwelfthStockRepurchasePlanMember2021-01-012021-09-300001046025hfwa:TwelfthStockRepurchasePlanMember2020-03-122022-06-300001046025hfwa:TwelfthStockRepurchasePlanMember2020-03-122022-03-310001046025hfwa:SharesRelatedtoWithholdingTaxesontheVestingofRestrictedStockMember2022-07-012022-09-300001046025hfwa:SharesRelatedtoWithholdingTaxesontheVestingofRestrictedStockMember2021-07-012021-09-300001046025hfwa:SharesRelatedtoWithholdingTaxesontheVestingofRestrictedStockMember2022-01-012022-09-300001046025hfwa:SharesRelatedtoWithholdingTaxesontheVestingofRestrictedStockMember2021-01-012021-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MunicipalBondsMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MunicipalBondsMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MunicipalBondsMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommercialMortgageBackedSecuritiesMember2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2022-09-300001046025us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001046025us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAggregatedInvestmentsMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAggregatedInvestmentsMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAggregatedInvestmentsMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:FairValueInputsLevel3Member2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2022-09-300001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MunicipalBondsMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MunicipalBondsMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MunicipalBondsMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommercialMortgageBackedSecuritiesMember2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2021-12-310001046025us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001046025us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAggregatedInvestmentsMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAggregatedInvestmentsMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:OtherAggregatedInvestmentsMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2021-12-310001046025us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FairValueInputsLevel12And3Memberhfwa:ImpairedLoansMember2022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:FairValueInputsLevel2Memberhfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2022-09-300001046025us-gaap:FairValueInputsLevel3Memberhfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMember2022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel12And3Member2022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberus-gaap:FairValueInputsLevel12And3Memberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberhfwa:ImpairedLoansMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberhfwa:ImpairedLoansMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FairValueInputsLevel12And3Memberhfwa:ImpairedLoansMember2021-12-310001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel2Memberhfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:FairValueInputsLevel3Memberhfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FairValueInputsLevel12And3Memberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel12And3Memberhfwa:ImpairedLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMemberus-gaap:FairValueInputsLevel1Memberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025us-gaap:FairValueInputsLevel2Memberhfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025us-gaap:FairValueInputsLevel3Memberhfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel12And3Memberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMember2021-12-310001046025hfwa:BranchHeldForSaleMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001046025hfwa:BranchHeldForSaleMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel12And3Member2021-12-310001046025hfwa:BranchHeldForSaleMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025hfwa:BranchHeldForSaleMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001046025hfwa:BranchHeldForSaleMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel12And3Member2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberhfwa:ImpairedLoansMember2022-07-012022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberhfwa:ImpairedLoansMember2021-07-012021-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberhfwa:ImpairedLoansMember2022-01-012022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:CommercialAndIndustrialMemberhfwa:ImpairedLoansMember2021-01-012021-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2022-07-012022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2021-07-012021-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2022-01-012022-09-300001046025hfwa:OwnerOccupiedCommercialRealEstateMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2021-01-012021-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2022-07-012022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2021-07-012021-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2022-01-012022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CommercialPortfolioSegmentMemberhfwa:ImpairedLoansMember2021-01-012021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-07-012022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-07-012021-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2022-01-012022-09-300001046025hfwa:RealEstateConstructionAndLandDevelopmentMemberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMemberhfwa:FiveOrMoreFamilyResidentialAndCommercialPropertiesMember2021-01-012021-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMember2022-07-012022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMember2021-07-012021-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMember2022-01-012022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMember2021-01-012021-09-300001046025hfwa:BranchHeldForSaleMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-07-012022-09-300001046025hfwa:BranchHeldForSaleMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-07-012021-09-300001046025hfwa:BranchHeldForSaleMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-01-012022-09-300001046025hfwa:BranchHeldForSaleMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-01-012021-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMember2022-07-012022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMember2021-07-012021-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMember2022-01-012022-09-300001046025us-gaap:FairValueMeasurementsNonrecurringMember2021-01-012021-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMember2022-09-300001046025us-gaap:MeasurementInputComparabilityAdjustmentMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMembersrt:MaximumMemberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:MeasurementInputComparabilityAdjustmentMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMembersrt:MinimumMember2021-12-310001046025us-gaap:MeasurementInputComparabilityAdjustmentMemberus-gaap:FairValueInputsLevel3Membersrt:WeightedAverageMemberus-gaap:FairValueMeasurementsNonrecurringMemberhfwa:ImpairedLoansMember2021-12-310001046025us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-09-300001046025us-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:InterestRateSwapMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:InterestRateSwapMember2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:InterestRateSwapMember2022-09-300001046025hfwa:NoninterestDepositsInterestBearingDemandDepositsMoneyMarketAccountsAndSavingsAccountsMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberhfwa:NoninterestDepositsInterestBearingDemandDepositsMoneyMarketAccountsAndSavingsAccountsMember2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberhfwa:NoninterestDepositsInterestBearingDemandDepositsMoneyMarketAccountsAndSavingsAccountsMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberhfwa:NoninterestDepositsInterestBearingDemandDepositsMoneyMarketAccountsAndSavingsAccountsMember2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberhfwa:NoninterestDepositsInterestBearingDemandDepositsMoneyMarketAccountsAndSavingsAccountsMember2022-09-300001046025us-gaap:BankTimeDepositsMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:BankTimeDepositsMember2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:BankTimeDepositsMemberus-gaap:FairValueInputsLevel1Member2022-09-300001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberus-gaap:BankTimeDepositsMember2022-09-300001046025us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:BankTimeDepositsMember2022-09-300001046025us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310001046025us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001046025us-gaap:InterestRateSwapMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:InterestRateSwapMember2021-12-310001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2021-12-310001046025us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2021-12-310001046025us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:InterestRateSwapMember2021-12-310001046025us-gaap:InterestRateSwapMember2021-12-310001046025hfwa:UnusedCommitmentstoExtendCreditMember2022-06-300001046025hfwa:UnusedCommitmentstoExtendCreditMember2021-06-300001046025hfwa:UnusedCommitmentstoExtendCreditMember2021-12-310001046025hfwa:UnusedCommitmentstoExtendCreditMember2020-12-310001046025hfwa:UnusedCommitmentstoExtendCreditMember2022-07-012022-09-300001046025hfwa:UnusedCommitmentstoExtendCreditMember2021-07-012021-09-300001046025hfwa:UnusedCommitmentstoExtendCreditMember2022-01-012022-09-300001046025hfwa:UnusedCommitmentstoExtendCreditMember2021-01-012021-09-300001046025hfwa:UnusedCommitmentstoExtendCreditMember2022-09-300001046025hfwa:UnusedCommitmentstoExtendCreditMember2021-09-30

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

For the quarterly period ended i September 30, 2022 or

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

For the transition period from __________ to __________

i HERITAGE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

i Washington

i 91-1857900

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

i 201 Fifth Avenue SW,

i Olympia

i WA

i 98501

(Address of principal executive offices)

(Zip Code)

(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
i Common stock, no par value	i HFWA	i 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. i 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). i 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.

i Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

i ☐

Emerging growth company

i ☐

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 i ☐ 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 October 31, 2022, there were i 35,104,248 shares of the registrant's common stock, no par value per share, outstanding.

HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

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.


2021 Annual Form 10-K			Company's Annual Report on Form 10-K for the year ended December 31, 2021
ACL			Allowance for credit losses
AOCI			Accumulated other comprehensive income (loss), net

ASU			Accounting Standards Update
Bank			Heritage Bank
CECL			Current Expected Credit Loss
CMO			Collateralized Mortgage Obligation
Company			Heritage Financial Corporation
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

GAAP			U.S. Generally Accepted Accounting Principles
LIBOR			London Interbank Offering Rate
LIHTC			Low-Income Housing Tax Credit
MBS			Mortgage-backed security
PPP			Paycheck Protection Program
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 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 including, but not limited to:

•potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth caused by increasing political instability from acts of war including Russia’s invasion of Ukraine, as well as increasing oil prices and supply chain disruptions, and any governmental or societal responses to the COVID-19 pandemic, including the possibility of new COVID-19 variants

•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 affected 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 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;

•the impact of repricing and competitors' pricing initiatives on loan and deposit products;

•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, including as a result of the COVID-19 Pandemic;

•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;

•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 our loans;

•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;

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

•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;

•the quality and composition of our securities portfolio and the impact of any 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;

•the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business; and

•other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services, and the other risks detailed from time to time in our filings with the SEC including our 2021 Annual Form 10-K.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(In thousands, except shares)


	September 30, 2022		December 31, 2021
ASSETS
Cash on hand and in banks	$	i 100,428	$	i 61,377
Interest earning deposits	i 306,896		i 1,661,915
Cash and cash equivalents	i 407,324		i 1,723,292
Investment securities available for sale, at fair value, net (amortized cost of $ i 1,491,440 and $ i 883,832, respectively)	i 1,356,142		i 894,335
Investment securities held to maturity, at amortized cost, net (fair value of $ i 677,335 and $ i 376,331, respectively)	i 773,319		i 383,393
Total investment securities	i 2,129,461		i 1,277,728
Loans held for sale	i —		i 1,476
Loans receivable	i 4,001,295		i 3,815,662
Allowance for credit losses on loans	( i 42,089)		( i 42,361)
Loans receivable, net	i 3,959,206		i 3,773,301

Premises and equipment, net	i 76,683		i 79,370
Federal Home Loan Bank stock, at cost	i 8,916		i 7,933
Bank owned life insurance	i 121,369		i 120,196
Accrued interest receivable	i 17,812		i 14,657
Prepaid expenses and other assets	i 230,704		i 183,543
Other intangible assets, net	i 7,898		i 9,977
Goodwill	i 240,939		i 240,939
Total assets	$	i 7,200,312	$	i 7,432,412
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits	$	i 6,214,964	$	i 6,394,290
Deposits held for sale	i 22,771		i —
Total deposits	i 6,237,735		i 6,394,290
Federal Home Loan Bank advances	i —		i —
Junior subordinated debentures	i 21,399		i 21,180
Securities sold under agreement to repurchase	i 40,449		i 50,839
Accrued expenses and other liabilities	i 124,027		i 111,671
Total liabilities	i 6,423,610		i 6,577,980
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, i i no / par value, i i 2,500,000 / shares authorized; i i no / shares issued and outstanding, respectively	i —		i —
Common stock, i i no / par value, i i 50,000,000 / shares authorized; i i 35,104,248 / and i i 35,105,779 / shares issued and outstanding, respectively	i 551,419		i 551,798
Retained earnings	i 330,284		i 293,238
Accumulated other comprehensive (loss) income, net	( i 105,001)		i 9,396
Total stockholders’ equity	i 776,702		i 854,432
Total liabilities and stockholders’ equity	$	i 7,200,312	$	i 7,432,412

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

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

Three Months Ended
September 30,

Nine Months Ended
September 30,

2022

2021

2022

2021

INTEREST INCOME:

Interest and fees on loans

i 43,847

i 46,863

i 125,762

i 147,137

Taxable interest on investment securities

i 12,362

i 4,711

i 25,972

i 12,295

Nontaxable interest on investment securities

i 892

i 931

i 2,645

i 2,836

Interest on interest earning deposits

i 4,009

i 537

i 7,057

i 975

Total interest income

i 61,110

i 53,042

i 161,436

i 163,243

INTEREST EXPENSE:

Deposits

i 1,478

i 1,444

i 4,315

i 4,696

Junior subordinated debentures

i 312

i 184

i 745

i 557

Other borrowings

i 34

i 36

i 98

i 109

Total interest expense

i 1,824

i 1,664

i 5,158

i 5,362

Net interest income

i 59,286

i 51,378

i 156,278

i 157,881

Provision for (reversal of) credit losses

i 1,945

( i 3,149)

( i 2,836)

( i 24,335)

Net interest income after provision for (reversal of) credit losses

i 57,341

i 54,527

i 159,114

i 182,216

NONINTEREST INCOME:

Service charges and other fees

i 2,688

i 2,400

i 7,739

i 6,728

Card revenue

i 2,365

i 2,150

i 6,774

i 6,216

Gain on sale of investment securities, net

i —

i 29

Gain on sale of loans, net

i 133

i 765

i 593

i 3,138

Interest rate swap fees

i 78

i 126

i 383

i 487

Bank owned life insurance income

i 723

i 647

i 3,182

i 2,020

Gain on sale of other assets, net

i 265

i 942

i 469

i 1,688

Other income

i 1,201

i 1,198

i 3,867

i 4,470

Total noninterest income

i 7,453

i 8,228

i 23,007

i 24,776

NONINTEREST EXPENSE:

Compensation and employee benefits

i 24,206

i 21,963

i 67,236

i 65,967

Occupancy and equipment

i 4,422

i 4,373

i 12,924

i 12,918

Data processing

i 4,185

i 4,029

i 12,431

i 11,839

Marketing

i 358

i 486

i 968

i 1,566

Professional services

i 639

i 776

i 1,867

i 3,083

State/municipal business and use taxes

i 963

i 1,071

i 2,626

i 3,034

Federal deposit insurance premium

i 500

i 550

i 1,525

i 1,478

Amortization of intangible assets

i 671

i 758

i 2,079

i 2,352

Other expense

i 3,203

i 3,160

i 8,918

i 8,567

Total noninterest expense

i 39,147

i 37,166

i 110,574

i 110,804

Income before income taxes

i 25,647

i 25,589

i 71,547

i 96,188

Income tax expense

i 4,657

i 4,997

i 12,216

i 17,550

Net income

i 20,990

i 20,592

i 59,331

i 78,638

Basic earnings per share

i 0.60

i 0.58

i 1.69

i 2.19

Diluted earnings per share

i 0.59

i 0.58

i 1.67

i 2.18

Dividends declared per share

i 0.21

i 0.20

i 0.63

i 0.60

Average number of basic shares outstanding

i 35,103,984

i 35,644,192

i 35,103,048

i 35,854,258

Average number of diluted shares outstanding

i 35,468,890

i 35,929,518

i 35,438,672

i 36,152,052

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2022

2021

2022

2021

Net Income

i 20,990

i 20,592

i 59,331

i 78,638

Change in fair value of investment securities available for sale, net of tax of $( i 12,027), $( i 362), $( i 31,778) and $( i 2,844), respectively

( i 43,143)

( i 1,305)

( i 114,022)

( i 10,239)

Amortization of net unrealized gain for the reclassification of investment securities available for sale to held to maturity, net of tax of $( i 20), $( i 6), $( i 103) and $( i 6), respectively

( i 75)

( i 22)

( i 375)

( i 22)

Reclassification adjustment for net gain from sale of investment securities available for sale included in income, net of tax of $ i 0, $ i 0, $ i 0 and $( i 6), respectively

i —

( i 23)

Other comprehensive loss

( i 43,218)

( i 1,327)

( i 114,397)

( i 10,284)

Comprehensive (loss) income

( i 22,228)

i 19,265

( i 55,066)

i 68,354

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

(In thousands, except shares and per share amounts)

Three Months Ended September 30, 2022

Number of
common
shares

Common
stock

Retained
earnings

AOCI

Total
stockholders’
equity

Balance at June 30, 2022

i 35,103,929

i 550,417

i 316,732

( i 61,783)

i 805,366

Restricted stock units vested

i 419

—

Stock-based compensation expense

—

i 1,004

—

i 1,004

Common stock repurchased

( i 100)

( i 2)

—

( i 2)

Net income

—

i 20,990

—

i 20,990

Other comprehensive loss, net of tax

—

( i 43,218)

Cash dividends declared on common stock ($ i 0.21 per share)

—

( i 7,438)

—

( i 7,438)

Balance at September 30, 2022

i 35,104,248

i 551,419

i 330,284

( i 105,001)

i 776,702

Nine Months Ended September 30, 2022

Number of
common
shares

Common
stock

Retained
earnings

AOCI

Total
stockholders’
equity

Balance at December 31, 2021

i 35,105,779

i 551,798

i 293,238

i 9,396

i 854,432

Restricted stock units vested

i 124,839

—

Stock-based compensation expense

—

i 2,797

—

i 2,797

Common stock repurchased

( i 126,370)

( i 3,176)

—

( i 3,176)

Net income

—

i 59,331

—

i 59,331

Other comprehensive loss, net of tax

—

( i 114,397)

Cash dividends declared on common stock ($ i 0.63 per share)

—

( i 22,285)

—

( i 22,285)

Balance at September 30, 2022

i 35,104,248

i 551,419

i 330,284

( i 105,001)

i 776,702

Three Months Ended September 30, 2021

Number of
common
shares

Common
stock

Retained
earnings

AOCI

Total
stockholders’
equity

Balance at June 30, 2021

i 36,006,560

i 572,060

i 267,863

i 16,061

i 855,984

Restricted stock units vested

i 1,347

—

Stock-based compensation expense

—

i 966

—

i 966

Common stock repurchased

( i 841,308)

( i 20,641)

—

( i 20,641)

Net income

—

i 20,592

—

i 20,592

Other comprehensive loss, net of tax

—

( i 1,327)

Cash dividends declared on common stock ($ i 0.20 per share)

—

( i 7,170)

—

( i 7,170)

Balance at September 30, 2021

i 35,166,599

i 552,385

i 281,285

i 14,734

i 848,404

Nine Months Ended September 30, 2021

Number of
common
shares

Common
stock

Retained
earnings

AOCI

Total
stockholders’
equity

Balance at December 31, 2020

i 35,912,243

i 571,021

i 224,400

i 25,018

i 820,439

Restricted stock units vested

i 121,467

—

Stock-based compensation expense

—

i 2,762

—

i 2,762

Common stock repurchased

( i 867,111)

( i 21,398)

—

( i 21,398)

Net income

—

i 78,638

—

i 78,638

Other comprehensive loss, net of tax

—

( i 10,284)

Cash dividends declared on common stock ($ i 0.60 per share)

—

( i 21,753)

—

( i 21,753)

Balance at September 30, 2021

i 35,166,599

i 552,385

i 281,285

i 14,734

i 848,404

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net income	$	i 59,331	$	i 78,638
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	( i 620)		( i 18,356)
Reversal of provision for credit losses	( i 2,836)		( i 24,335)
Stock-based compensation expense	i 2,797		i 2,762
Amortization of intangible assets	i 2,079		i 2,352
Origination of mortgage loans held for sale	( i 15,190)		( i 74,325)
Proceeds from sale of mortgage loans held for sale	i 17,259		i 79,759
Bank owned life insurance income	( i 3,182)		( i 2,020)

Valuation adjustment on interest rate swaps	( i 67)		( i 296)
Gain on sale of mortgage loans held for sale, net	( i 593)		( i 3,138)
Gain on sale of investment securities available for sale, net	i —		( i 29)

Gain on sale of assets held for sale	( i 403)		( i 1,691)
Other	i 3,865		i 11,332
Net cash provided by operating activities	i 62,440		i 50,653
Cash flows from investing activities:
Loan originations and purchases, net of payments	( i 176,700)		i 555,784
Maturities and repayments of investment securities available for sale	i 132,854		i 200,242
Maturities and repayments of investment securities held to maturity	i 21,620		i 423
Purchase of investment securities available for sale	( i 742,801)		( i 421,566)
Purchase of investment securities held to maturity	( i 412,835)		( i 66,821)
Purchase of premises and equipment	( i 2,295)		( i 2,148)
Purchases of bank owned life insurance	( i 105)		( i 104)
Proceeds from bank owned life insurance death benefit	i 2,114		i —
Purchases of Federal Home Loan Bank stock	( i 985)		( i 1,272)


Proceeds from sales of investment securities available for sale	i —		i 1,248
Proceeds from redemption of Federal Home Loan Bank stock	i 2		i —
Proceeds from sales of assets held for sale	i 2,102		i 5,642
Proceeds from sales of premises and equipment	i 106		i 12
Capital contributions to low-income housing tax credit partnerships	( i 9,245)		( i 23,349)
Cash received from return of New Market Tax Credit equity method investment	i —		i 9,642


Net cash (used) provided by investing activities	( i 1,186,168)		i 257,733
Cash flows from financing activities:
Net (decrease) increase in deposits	( i 156,555)		i 617,568
Federal Home Loan Bank advances	i 50		i 10
Repayment of Federal Home Loan Bank advances	( i 50)		( i 10)
Common stock cash dividends paid	( i 22,119)		( i 21,552)
Net (decrease) increase in securities sold under agreement to repurchase	( i 10,390)		i 8,413
Repurchase of common stock	( i 3,176)		( i 21,398)
Net cash (used) provided by financing activities	( i 192,240)		i 583,031
Net (decrease) increase in cash and cash equivalents	( i 1,315,968)		i 891,417
Cash and cash equivalents at beginning of period	i 1,723,292		i 743,322
Cash and cash equivalents at end of period	$	i 407,324	$	i 1,634,739


	Nine Months Ended September 30,
	2022		2021

Supplemental disclosures of cash flow information:
Cash paid for interest	$	i 4,939	$	i 5,162
Cash paid for income taxes, net of refunds	i 1,987		i 10,944

Supplemental non-cash disclosures of cash flow information:

Transfer of investment securities available for sale to held to maturity	i —		i 244,778
Investment in LIHTC partnership and related funding commitment	i 10,728		i 17,458
Right of use assets obtained in exchange for new operating lease liabilities	i 2,869		i 12,134

Transfers of premises and equipment classified as held for sale to prepaid expenses and other assets from premises and equipment, net	i 910		i 3,556
Loans received from return of New Market Tax Credit equity method investment	i —		i 15,596


Transfer of deposits to deposits held for sale	i 22,771		i —

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

HERITAGE FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

(a) i Description of Business

The Company is primarily engaged in the business of planning, directing and coordinating the business activities of its wholly-owned subsidiary, the Bank. The Bank is headquartered in Olympia, Washington and conducts business from its i 50 branch offices located throughout Washington State, the greater Portland, Oregon area, and Eugene, Oregon. 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.

(b) i 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 these unaudited Condensed Consolidated Financial Statements and accompanying Notes be read with the audited Consolidated Financial Statements and the accompanying Notes included in the 2021 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 nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

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 the judgments, estimates and assumptions used in the preparation of the unaudited 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 the ACL on investment securities, management's estimate of the ACL on loans, management's estimate of the ACL on unfunded commitments, management's evaluation of goodwill impairment and management's estimate of the fair value of financial instruments.

The accompanying unaudited 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.

There have been reclassifications in certain prior year amounts in the unaudited Condensed Consolidated Statements of Financial Condition, the unaudited Condensed Consolidated Statements of Income and the unaudited Condensed Consolidated Statements of Cash Flows. Reclassifications had no effect on the prior year's net income or stockholders’ equity.

The significant accounting policies used in preparation of the unaudited Condensed Consolidated Financial Statements are disclosed in greater detail in the 2021 Annual Form 10-K. There have not been any material changes in the Company's significant accounting policies from those contained in the 2021 Annual Form 10-K during the nine months ended September 30, 2022.

(d) i Recently Issued or Adopted Accounting Pronouncements

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 interest rate 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. Additionally, effective January 1, 2022, the Bank is no longer initiating or renewing loans using LIBOR as an index. The Company does not expect this ASU to have a material impact on its business operations and the Consolidated Financial Statements.

FASB ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, was issued in March 2022. The ASU eliminates the accounting guidance for TDR loans by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Additionally, the ASU requires public business entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. These amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, since Heritage previously adopted the amendments in ASU 2016-13, which is commonly referred to as the current expected credit loss methodology, on January 1, 2020. Early adoption is permitted and should be applied prospectively; however, the transition method related to the recognition and

measurement of TDR loans may be applied under a modified retrospective transition method. The Company is evaluating the effect this ASU will have on its Consolidated Financial Statements and related disclosures.

(2) i 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 i i no / investment securities classified as trading at September 30, 2022 or December 31, 2021.

(a) Investment Securities by Classification, Type and Maturity

The following tables present the amortized cost and fair value of investment securities at the dates indicated and the corresponding amounts of gross unrealized gains and losses, including the corresponding amounts of gross unrealized gains and losses on investment securities available for sale recognized in AOCI:

September 30, 2022

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

(In thousands)

Investment securities available for sale:

U.S. government and agency securities

i 68,912

i —

( i 5,163)

i 63,749

Municipal securities

i 206,767

i 51

( i 21,105)

i 185,713

Residential CMO and MBS

i 494,330

i 6

( i 55,966)

i 438,370

Commercial CMO and MBS

i 691,836

i 29

( i 52,424)

i 639,441

Corporate obligations

i 6,001

i —

( i 167)

i 5,834

Other asset-backed securities

i 23,594

i 19

( i 578)

i 23,035

Total

i 1,491,440

i 105

( i 135,403)

i 1,356,142

Investment securities held to maturity:

U.S. government and agency securities

i 150,948

i —

( i 32,916)

i 118,032

Residential CMO and MBS

i 296,432

i —

( i 19,168)

i 277,264

Commercial CMO and MBS

i 325,939

i —

( i 43,900)

i 282,039

Total

i 773,319

i —

( i 95,984)

i 677,335

December 31, 2021

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

(In thousands)

Investment securities available for sale:

U.S. government and agency securities

i 21,494

i 55

( i 176)

i 21,373

Municipal securities

i 213,158

i 8,908

( i 854)

i 221,212

Residential CMO and MBS

i 307,366

i 2,111

( i 2,593)

i 306,884

Commercial CMO and MBS

i 313,169

i 3,891

( i 1,199)

i 315,861

Corporate obligations

i 2,007

i 7

i —

i 2,014

Other asset-backed securities

i 26,638

i 369

( i 16)

i 26,991

Total

i 883,832

i 15,341

( i 4,838)

i 894,335

Investment securities held to maturity:

U.S. government and agency securities

i 141,011

i 120

( i 1,768)

i 139,363

Residential CMO and MBS

i 24,529

i —

( i 153)

i 24,376

Commercial CMO and MBS

i 217,853

i —

( i 5,261)

i 212,592

Total

i 383,393

i 120

( i 7,182)

i 376,331

The amortized cost and fair value of investment securities at September 30, 2022, 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.

Securities Available for Sale

Securities Held to Maturity

Amortized Cost

Fair Value

Amortized Cost

Fair Value

(In thousands)

Due in one year or less

i 26,280

i 25,952

i —

Due after one year through five years

i 63,151

i 60,858

i —

Due after five years through ten years

i 67,834

i 63,738

i 83,219

i 68,150

Due after ten years

i 124,415

i 104,748

i 67,729

i 49,882

Total investment securities due at a single maturity date

i 281,680

i 255,296

i 150,948

i 118,032

Mortgage-backed securities (1)

i 1,209,760

i 1,100,846

i 622,371

i 559,303

Total investment securities

i 1,491,440

i 1,356,142

i 773,319

i 677,335

(1) Mortgage-backed securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their payment speed.

There were i i 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 September 30, 2022 and December 31, 2021.

(b) Unrealized Losses 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 ACL on investment securities available for sale has not been recorded, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position at the dates indicated:

September 30, 2022

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

i 58,025

( i 4,176)

i 5,724

( i 987)

i 63,749

( i 5,163)

Municipal securities

i 148,054

( i 12,031)

i 27,731

( i 9,074)

i 175,785

( i 21,105)

Residential CMO and MBS

i 308,142

( i 28,668)

i 128,304

( i 27,298)

i 436,446

( i 55,966)

Commercial CMO and MBS

i 611,399

( i 49,077)

i 18,636

( i 3,347)

i 630,035

( i 52,424)

Corporate obligations

i 5,834

( i 167)

i —

i 5,834

( i 167)

Other asset-backed securities

i 17,410

( i 563)

i 834

( i 15)

i 18,244

( i 578)

Total

i 1,148,864

( i 94,682)

i 181,229

( i 40,721)

i 1,330,093

( i 135,403)

December 31, 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

i 14,828

( i 176)

i —

i 14,828

( i 176)

Municipal securities

i 29,774

( i 619)

i 9,351

( i 235)

i 39,125

( i 854)

Residential CMO and MBS

i 204,039

( i 2,470)

i 19,862

( i 123)

i 223,901

( i 2,593)

Commercial CMO and MBS

i 83,283

( i 1,161)

i 1,936

( i 38)

i 85,219

( i 1,199)

Other asset-backed securities

i 2,763

( i 9)

i 1,118

( i 7)

i 3,881

( i 16)

Total

i 334,687

( i 4,435)

i 32,267

( i 403)

i 366,954

( i 4,838)

The Company evaluated investment securities available for sale as of September 30, 2022 and December 31, 2021 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 September 30, 2022 and December 31, 2021. 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, i i no / ACL on investment securities available for sale was recorded as of September 30, 2022 and December 31, 2021.

The Company also evaluated investment securities held to maturity for current expected credit losses as of September 30, 2022 and December 31, 2021. There were i i i i no / / / investment securities held to maturity classified as nonaccrual or past due as of September 30, 2022 and December 31, 2021 and all were issued by the U.S. government and its agencies and either explicitly or implicitly guaranteed by the U.S. government, highly rated by major credit rating agencies and had a long history of no credit losses. Accordingly, the Company did not measure expected credit losses on investment securities held to maturity since the historical credit loss information adjusted for current conditions and reasonable and supportable forecasts results in an expectation that nonpayment of the amortized cost basis is zero. Therefore, i no ACL on investment securities held to maturity was recorded as of September 30, 2022 and December 31, 2021.

(d) Realized Gains and Losses

i i i i No / / / realized gains or losses on the sale of investment securities available for sale were recognized during the three months ended September 30, 2022 and 2021. i i i No / / realized gains or losses and $ i 29,000 in gross realized gains on the sale of investment securities available for sale were recognized during the nine months ended September 30, 2022 and 2021, respectively.

(e) Pledged Securities

The following table summarizes the amortized cost and fair value of investment securities that are pledged as collateral for the following obligations at the dates indicated:

September 30, 2022

December 31, 2021

Amortized
Cost

Fair
Value

Amortized
Cost

Fair
Value

(In thousands)

Washington and Oregon state public deposits

i 158,082

i 138,003

i 128,216

i 130,217

Federal Reserve Bank credit facility

i 60,763

i 49,037

i 61,057

i 59,674

Securities sold under agreement to repurchase

i 64,087

i 55,825

i 59,887

i 59,655

Other securities pledged

i 55,600

i 48,785

i 56,419

i 55,633

Total

i 338,532

i 291,650

i 305,579

i 305,179

(f) Accrued Interest Receivable

Accrued interest receivable excluded from the amortized cost of investment securities available for sale totaled $ i 4.7 million and $ i 3.5 million at September 30, 2022 and December 31, 2021, respectively. Accrued interest receivable excluded from the amortized cost on investment securities held to maturity totaled $ i 2.3 million and $ i 1.1 million at September 30, 2022 and December 31, 2021, respectively.

i i i i No / / / amounts of accrued interest receivable on investment securities available for sale or held to maturity were reversed against interest income on investment securities during the three or nine months ended September 30, 2022 and 2021.

(3) i Loans Receivable

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.

(a) Loan Origination/Risk Management

The Bank categorizes the individual loans in the total loan portfolio into i 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 2021 Annual Form 10-K.

The Bank has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming and criticized loans. The Bank also conducts internal loan reviews and validates the credit risk assessment on a periodic basis and presents the results of these reviews to management. The loan review process complements and reinforces the risk identification and assessment decisions made by loan officers and credit personnel.

The amortized cost of loans receivable, net of ACL on loans, consisted of the following portfolio segments and classes at the dates indicated:


	September 30, 2022		December 31, 2021
	(In thousands)
Commercial business:
Commercial and industrial	$	i 735,028	$	i 621,567
SBA PPP	i 3,593		i 145,840
Owner-occupied CRE	i 959,486		i 931,150
Non-owner occupied CRE	i 1,547,114		i 1,493,099
Total commercial business	i 3,245,221		i 3,191,656
Residential real estate	i 296,019		i 164,582
Real estate construction and land development:
Residential	i 92,297		i 85,547
Commercial and multifamily	i 160,723		i 141,336
Total real estate construction and land development	i 253,020		i 226,883
Consumer	i 207,035		i 232,541
Loans receivable	i 4,001,295		i 3,815,662
Allowance for credit losses on loans	( i 42,089)		( i 42,361)
Loans receivable, net	$	i 3,959,206	$	i 3,773,301

Balances included in the amortized cost of loans receivable:
Unamortized net discount on acquired loans	$	i 2,686	$	i 3,938
Unamortized net deferred fee	$	i 5,479	$	i 7,954

(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, Multnomah County and Washington County in Oregon, as well as other contiguous markets and represents a geographic concentration. Additionally, the Bank's loan portfolio is concentrated in commercial loans, including commercial business loans and commercial and multifamily real estate construction and land development loans. Commercial loans are generally considered as having more inherent risk of default than residential real estate loans or other consumer loans. Also, the commercial loan balance per borrower is typically larger than that for residential real estate loans and consumer loans, implying higher potential losses on an individual loan basis.

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 2021 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 any 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 accrual loans at risk of being classified as nonaccrual loans and includes all of

our loans classified as nonaccrual. 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.

The following table presents the amortized cost of loans receivable by risk grade at the dates indicated:

September 30, 2022

Term Loans
Amortized Cost Basis by Origination Year

Revolving Loans

Revolving Loans Converted (1)

Loans Receivable

2022

2021

2020

2019

2018

Prior

(In thousands)

Commercial business:

Commercial and industrial

Pass

i 133,352

i 97,240

i 89,078

i 68,237

i 36,505

i 83,371

i 193,558

i 108

i 701,449

i 223

i —

i 715

i 4,759

i 1,898

i 5,311

i 6,678

i —

i 19,584

i 764

i 275

i 1,057

i 3,141

i 687

i 5,381

i 2,322

i 368

i 13,995

Total

i 134,339

i 97,515

i 90,850

i 76,137

i 39,090

i 94,063

i 202,558

i 476

i 735,028

SBA PPP

Pass

i —

i 3,455

i 138

i —

i 3,593

Owner-occupied CRE

Pass

i 111,751

i 168,437

i 93,272

i 172,494

i 71,795

i 302,107

i —

i 919,856

i —

i 1,009

i —

i 1,237

i 2,558

i 16,313

i —

i 21,117

i —

i 259

i 675

i —

i 3,739

i 13,840

i —

i 18,513

Total

i 111,751

i 169,705

i 93,947

i 173,731

i 78,092

i 332,260

i —

i 959,486

Non-owner occupied CRE

Pass

i 182,804

i 189,307

i 162,954

i 240,088

i 133,478

i 571,457

i —

i 1,480,088

i —

i 8,392

i —

i 3,619

i —

i 24,127

i —

i 36,138

i —

i 3,627

i 27,261

i —

i 30,888

Total

i 182,804

i 197,699

i 162,954

i 243,707

i 137,105

i 622,845

i —

i 1,547,114

Total commercial business

Pass

i 427,907

i 458,439

i 345,442

i 480,819

i 241,778

i 956,935

i 193,558

i 108

i 3,104,986

i 223

i 9,401

i 715

i 9,615

i 4,456

i 45,751

i 6,678

i —

i 76,839

i 764

i 534

i 1,732

i 3,141

i 8,053

i 46,482

i 2,322

i 368

i 63,396

Total

i 428,894

i 468,374

i 347,889

i 493,575

i 254,287

i 1,049,168

i 202,558

i 476

i 3,245,221

Residential real estate

Pass(1)

i 94,144

i 140,093

i 24,191

i 17,030

i 4,501

i 15,885

i —

i 295,844

i —

i 175

i —

i 175

Total

i 94,144

i 140,093

i 24,191

i 17,030

i 4,501

i 16,060

i —

i 296,019

Real estate construction and land development:

Residential

Pass

i 33,244

i 37,666

i 7,617

i 11,810

i 885

i 1,075

i —

i 92,297

Commercial and multifamily

Pass

i 36,362

i 103,541

i 7,601

i 1,096

i 2,565

i 1,513

i —

i 152,678

i —

i 1,913

i 5,687

i —

i 7,600

i —

i 45

i —

i 400

i —

i 445

Total

i 36,362

i 103,541

i 9,514

i 6,828

i 2,565

i 1,913

i —

i 160,723

Total real estate construction and land development

Pass

i 69,606

i 141,207

i 15,218

i 12,906

i 3,450

i 2,588

i —

i 244,975

i —

i 1,913

i 5,687

i —

i 7,600

i —

i 45

i —

i 400

i —

i 445

Total

i 69,606

i 141,207

i 17,131

i 18,638

i 3,450

i 2,988

i —

i 253,020

Consumer

Pass

i 3,266

i 616

i 11,078

i 31,077

i 18,201

i 22,828

i 117,070

i 539

i 204,675

September 30, 2022

Term Loans
Amortized Cost Basis by Origination Year

Revolving Loans

Revolving Loans Converted (1)

Loans Receivable

2022

2021

2020

2019

2018

Prior

i —

i 164

i 582

i 361

i 1,241

i 11

i 1

i 2,360

Total

i 3,266

i 616

i 11,242

i 31,659

i 18,562

i 24,069

i 117,081

i 540

i 207,035

Loans receivable

Pass

i 594,923

i 740,355

i 395,929

i 541,832

i 267,930

i 998,236

i 310,628

i 647

i 3,850,480

i 223

i 9,401

i 2,628

i 15,302

i 4,456

i 45,751

i 6,678

i —

i 84,439

i 764

i 534

i 1,896

i 3,768

i 8,414

i 48,298

i 2,333

i 369

i 66,376

Total

i 595,910

i 750,290

i 400,453

i 560,902

i 280,800

i 1,092,285

i 319,639

i 1,016

i 4,001,295

(1) Represents the loans receivable balance at September 30, 2022 which was converted from a revolving loan to an amortizing loan during the nine months ended September 30, 2022.

December 31, 2021

Term Loans
Amortized Cost Basis by Origination Year

Revolving Loans

Revolving Loans Converted (1)

Loans Receivable

2021

2020

2019

2018

2017

Prior

(In thousands)

Commercial business:

Commercial and industrial

Pass

i 95,960

i 100,193

i 94,657

i 54,707

i 28,558

i 77,294

i 127,651

i 1,035

i 580,055

i 326

i 884

i 5,998

i 1,425

i 2,223

i 2,401

i 2,048

i 353

i 15,658

i 1,443

i 1,287

i 5,912

i 2,809

i 2,526

i 6,907

i 4,402

i 568

i 25,854

Total

i 97,729

i 102,364

i 106,567

i 58,941

i 33,307

i 86,602

i 134,101

i 1,956

i 621,567

SBA PPP

Pass

i 139,253

i 6,587

i —

i 145,840

Owner-occupied CRE

Pass

i 182,742

i 90,609

i 188,380

i 73,714

i 66,039

i 273,518

i —

i 72

i 875,074

i 264

i —

i 3,079

i 7,521

i 3,937

i 16,724

i —

i 31,525

i —

i 1,332

i —

i 3,787

i 3,014

i 16,418

i —

i 24,551

Total

i 183,006

i 91,941

i 191,459

i 85,022

i 72,990

i 306,660

i —

i 72

i 931,150

Non-owner-occupied CRE

Pass

i 187,860

i 185,650

i 244,863

i 149,090

i 144,896

i 499,486

i —

i 1,411,845

i —

i 5,674

i —

i 15,482

i 2,400

i —

i 23,556

i —

i 3,379

i —

i 54,319

i —

i 57,698

Total

i 187,860

i 185,650

i 250,537

i 152,469

i 160,378

i 556,205

i —

i 1,493,099

Total commercial business

Pass

i 605,815

i 383,039

i 527,900

i 277,511

i 239,493

i 850,298

i 127,651

i 1,107

i 3,012,814

i 590

i 884

i 14,751

i 8,946

i 21,642

i 21,525

i 2,048

i 353

i 70,739

i 1,443

i 2,619

i 5,912

i 9,975

i 5,540

i 77,644

i 4,402

i 568

i 108,103

Total

i 607,848

i 386,542

i 548,563

i 296,432

i 266,675

i 949,467

i 134,101

i 2,028

i 3,191,656

Residential real estate

Pass

i 85,089

i 27,090

i 23,295

i 5,672

i 6,141

i 16,891

i —

i 164,178

i —

i 404

i —

i 404

Total

i 85,089

i 27,090

i 23,295

i 5,672

i 6,141

i 17,295

i —

i 164,582

Real estate construction and land development:

Residential

Pass

i 44,892

i 23,728

i 12,266

i 2,921

i 389

i 1,351

i —

i 85,547

December 31, 2021

Term Loans
Amortized Cost Basis by Origination Year

Revolving Loans

Revolving Loans Converted (1)

Loans Receivable

2021

2020

2019

2018

2017

Prior

(In thousands)

Commercial and multifamily

Pass

i 56,448

i 41,616

i 34,117

i 5,794

i 710

i 1,379

i —

i 140,064

i —

i 68

i —

i 213

i —

i 281

i —

i 571

i —

i 420

i —

i 991

Total

i 56,448

i 42,187

i 34,185

i 5,794

i 710

i 2,012

i —

i 141,336

Total real estate construction and land development

Pass

i 101,340

i 65,344

i 46,383

i 8,715

i 1,099

i 2,730

i —

i 225,611

i —

i 68

i —

i 213

i —

i 281

i —

i 571

i —

i 420

i —

i 991

Total

i 101,340

i 65,915

i 46,451

i 8,715

i 1,099

i 3,363

i —

i 226,883

Consumer

Pass

i 1,286

i 15,737

i 46,041

i 29,819

i 15,068

i 13,026

i 108,492

i 120

i 229,589

i —

i 181

i 657

i 476

i 542

i 1,043

i 36

i 17

i 2,952

Total

i 1,286

i 15,918

i 46,698

i 30,295

i 15,610

i 14,069

i 108,528

i 137

i 232,541

Loans receivable

Pass

i 793,530

i 491,210

i 643,619

i 321,717

i 261,801

i 882,945

i 236,143

i 1,227

i 3,632,192

i 590

i 884

i 14,819

i 8,946

i 21,642

i 21,738

i 2,048

i 353

i 71,020

i 1,443

i 3,371

i 6,569

i 10,451

i 6,082

i 79,511

i 4,438

i 585

i 112,450

Total

i 795,563

i 495,465

i 665,007

i 341,114

i 289,525

i 984,194

i 242,629

i 2,165

i 3,815,662

(1) Represents the loans receivable balance at December 31, 2021 which was converted from a revolving loan to an amortizing loan during the year ended December 31, 2021.

(d) Nonaccrual Loans

The following tables present the amortized cost of nonaccrual loans for the dates indicated:

September 30, 2022

Nonaccrual without ACL

Nonaccrual with ACL

Total Nonaccrual

(In thousands)

Commercial business:

Commercial and industrial

i 5,060

i 299

i 5,359

Owner-occupied CRE

i —

i 875

Total

i 5,060

i 1,174

i 6,234

December 31, 2021

Nonaccrual without ACL

Nonaccrual with ACL

Total Nonaccrual

(In thousands)

Commercial business:

Commercial and industrial

i 6,454

i 3,827

i 10,281

Owner-occupied CRE

i 3,036

i 5,138

i 8,174

Non-owner occupied CRE

i 1,273

i 3,379

i 4,652

Total commercial business

i 10,763

i 12,344

i 23,107

Residential real estate

i —

i 47

Real estate construction and land development:

Commercial and multifamily

i —

i 571

Consumer

i —

i 29

Total

i 10,763

i 12,991

i 23,754

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 or sale of previously classified nonaccrual loans during the following periods:

Three Months Ended
September 30, 2022

Three Months Ended
September 30, 2021

Interest Income Reversed

Interest Income Recognized

Interest Income Reversed

Interest Income Recognized

(In thousands)

Commercial business:

Commercial and industrial

i —

i 31

( i 1)

i 184

Consumer

i —

i 32

Total

i —

i 31

( i 1)

i 216

Nine Months Ended
September 30, 2022

Nine Months Ended
September 30, 2021

Interest Income Reversed

Interest Income Recognized

Interest Income Reversed

Interest Income Recognized

(in thousands)

Commercial business:

Commercial and industrial

( i 14)

i 260

( i 11)

i 2,228

Owner-occupied CRE

i —

i 53

i —

i 117

Non-owner occupied CRE

i —

i 774

i —

i 313

Total commercial business

( i 14)

i 1,087

( i 11)

i 2,658

Residential real estate

i —

i 19

i —

Real estate construction and land development:

Residential

i —

i 73

Consumer

i —

i 68

i —

i 32

Total

( i 14)

i 1,174

( i 11)

i 2,763

For the three and nine months ended September 30, 2022 and 2021, i i i i 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 or sale.

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. i The amortized cost of past due loans as of September 30, 2022 and December 31, 2021 were as follows:

September 30, 2022

30-89 Days

90 Days or
Greater

Total Past
Due

Current

Loans Receivable

(In thousands)

Commercial business:

Commercial and industrial

i 1,774

i 4,130

i 5,904

i 729,124

i 735,028

SBA PPP

i 167

i —

i 167

i 3,426

i 3,593

Owner-occupied CRE

i 30

i 189

i 219

i 959,267

i 959,486

Non-owner occupied CRE

i 296

i —

i 296

i 1,546,818

i 1,547,114

Total commercial business

i 2,267

i 4,319

i 6,586

i 3,238,635

i 3,245,221

Residential real estate

i —

i 296,019

Real estate construction and land development:

Residential

i —

i 92,297

Commercial and multifamily

i —

i 160,723

Total real estate construction and land development

i —

i 253,020

September 30, 2022

30-89 Days

90 Days or
Greater

Total Past
Due

Current

Loans Receivable

(In thousands)

Consumer

i 736

i 20

i 756

i 206,279

i 207,035

Total

i 3,003

i 4,339

i 7,342

i 3,993,953

i 4,001,295

December 31, 2021

30-89 Days

90 Days or
Greater

Total Past
Due

Current

Loans Receivable

(In thousands)

Commercial business:

Commercial and industrial

i 1,858

i 6,821

i 8,679

i 612,888

i 621,567

SBA PPP

i 223

i 293

i 516

i 145,324

i 145,840

Owner-occupied CRE

i 2,397

i 112

i 2,509

i 928,641

i 931,150

Non-owner occupied CRE

i —

i 1,493,099

Total commercial business

i 4,478

i 7,226

i 11,704

i 3,179,952

i 3,191,656

Residential real estate

i 420

i 10

i 430

i 164,152

i 164,582

Real estate construction and land development:

Residential

i 792

i —

i 792

i 84,755

i 85,547

Commercial and multifamily

i 3,474

i 571

i 4,045

i 137,291

i 141,336

Total real estate construction and land development

i 4,266

i 571

i 4,837

i 222,046

i 226,883

Consumer

i 1,026

i —

i 1,026

i 231,515

i 232,541

Total

i 10,190

i 7,807

i 17,997

i 3,797,665

i 3,815,662

Loans 90 days or more past due and still accruing interest were $ i 20,000 and $ i 293,000 as of September 30, 2022 and December 31, 2021, respectively.

(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 September 30, 2022 and December 31, 2021 was as follows, with balances representing the amortized cost of the loan classified by the primary collateral category of each loan if multiple collateral sources secure the loan:

September 30, 2022

CRE

Farmland

Residential Real Estate

Total

(In thousands)

Commercial business:

Commercial and industrial

i 1,239

i 2,082

i 1,271

i 4,592

Owner-occupied CRE

i 189

i —

i 189

Total

i 1,428

i 2,082

i 1,271

i 4,781

December 31, 2021

CRE

Farmland

Residential Real Estate

Other

Total

(In thousands)

Commercial business:

Commercial and industrial

i 1,499

i 4,362

i 1,036

i 245

i 7,142

Owner-occupied CRE

i 3,035

i —

i 3,035

Non-owner occupied CRE

i 1,273

i —

i 1,273

Total commercial business

i 5,807

i 4,362

i 1,036

i 245

i 11,450

Real estate construction and land development:

December 31, 2021

CRE

Farmland

Residential Real Estate

Other

Total

(In thousands)

Commercial and multifamily

i 571

i —

i 571

Total

i 6,378

i 4,362

i 1,036

i 245

i 12,021

There have been no significant changes to the collateral securing loans individually evaluated for credit losses and for which repayment was expected to be provided substantially through the operation or sale of the collateral during the nine months ended September 30, 2022, except changes due to additions or removals of loans from this classification.

(g) Troubled Debt Restructured Loans

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

Three Months Ended September 30,

2022

2021

Number of
Contracts

Amortized Cost (1) (2)

Number of
Contracts

Amortized Cost (1) (2)

(Dollars in thousands)

Commercial business:

Commercial and industrial

i 4

i 2,150

i 5

i 1,861

Owner-occupied CRE

i —

i 2

i 7,124

Non-owner occupied CRE

i —

Total commercial business

i 4

i 2,150

i 7

i 8,985

Real estate construction and land development:

Commercial and multifamily

i 1

i 5,687

i 1

i 450

Consumer

i 2

i 238

i 5

i 94

Total

i 7

i 8,075

i 13

i 9,529

Nine Months Ended September 30,

2022

2021

Number of
Contracts

Amortized Cost (1) (2)

Number of
Contracts

Amortized Cost (1) (2)

(Dollars in thousands)

Commercial business:

Commercial and industrial

i 8

i 3,119

i 32

i 10,380

Owner-occupied CRE

i —

i 6

i 16,710

Non-owner occupied CRE

i —

i 3

i 5,673

Total commercial business

i 8

i 3,119

i 41

i 32,763

Residential real estate

i —

i 1

i 180

Real estate construction and land development:

Commercial and multifamily

i 1

i 5,687

i 1

i 450

Consumer

i 9

i 307

i 22

i 487

Total

i 18

i 9,113

i 65

i 33,880

(1) Number of contracts and amortized cost represent loans which have balances as of period end, net of subsequent payments after modifications. Certain TDR loans may have been paid-down or charged-off during the nine months ended September 30, 2022 and 2021.

(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 $ i 30,000 and $ i 3.4 million at September 30, 2022 and September 30, 2021, respectively, related to these TDR loans which were restructured during the nine months ended September 30, 2022 and September 30, 2021, respectively.

The unfunded commitment to borrowers related to TDR loans was $ i 5.9 million and $ i 5.7 million at September 30, 2022 and December 31, 2021, respectively.

The following table presents loans that were modified in a TDR and subsequently defaulted within twelve months from the modification date during the periods indicated:

Three Months Ended September 30,

2022

2021

Number of

Contracts (1)

Amortized Cost (1)

Number of

Contracts (1)

Amortized Cost (1)

(Dollars in thousands)

Commercial business:

Commercial and industrial

i —

i 1

i 336

Nine Months Ended September 30,

2022

2021

Number of

Contracts (1)

Amortized Cost (1)

Number of

Contracts (1)

Amortized Cost (1)

(Dollars in thousands)

Commercial business:

Commercial and industrial

i —

i 3

i 976

Owner-occupied CRE

i 1

i 189

i —

(1) Number of contracts and amortized cost represent TDR loans which have balances as of period end, net of subsequent payments after modifications. Certain TDR loans may have been paid-down or charged-off during the nine months ended September 30, 2022 and 2021.

The Bank had $ i 4,000 ACL on loans at September 30, 2022 and $ i 13,000 at September 30, 2021 related to these TDR loans which defaulted during the nine months ended September 30, 2022 and 2021.

(h) Accrued interest receivable on loans receivable

Accrued interest receivable on loans receivable totaled $ i 10.5 million and $ i 10.1 million at September 30, 2022 and December 31, 2021, respectively. It is excluded from the calculation of the ACL on loans as interest accrued, but not received, is reversed timely.

(i) Foreclosure proceedings in process

At September 30, 2022, there were i no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process.

(4) i Allowance for Credit Losses on Loans

The baseline loss rates used to calculate the ACL on loans at September 30, 2022 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 nine months ended September 30, 2022. 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 September 30, 2022 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 nine months ended September 30, 2022.

The reasonable and supportable period and subsequent reversion period used in the CECL model was five quarters and two quarters, respectively, at December 31, 2021. There were no changes to these assumptions during the nine months ended September 30, 2022. Management believes forecasts beyond this seven 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 increases.

During the nine months ended September 30, 2022, the ACL on loans decreased $ i 272,000, or i 0.6%, due primarily to a reversal of provision for credit losses on loans of $ i 1.3 million driven by a $ i 3.4 million reduction in the ACL on loans individually evaluated for losses and their related ACL offset partially by an increase related to the growth in loans receivable. The ACL on loans at September 30, 2022 and December 31, 2021 did not include a reserve for SBA PPP loans as these loans are fully guaranteed by the SBA.

During the nine months ended September 30, 2021, the ACL on loans decreased $21.9 million or 31.2%, due primarily to a reversal of provision for credit losses on loans of $21.8 million. The reversal of provision for credit losses was primarily driven by improvements in the economic forecast at September 30, 2021 as compared to the forecast at December 31, 2020.

A summary of the changes in the ACL on loans during the nine months ended September 30, 2022 and 2021 is as follows:

Nine Months Ended
September 30,

2022

2021

(In thousands)

Beginning balance

i 42,361

i 70,185

Charge-offs

( i 742)

( i 1,267)

Recoveries of loans previously charged-off

i 1,722

i 1,207

Reversal of provision for credit losses on loans

( i 1,252)

( i 21,808)

Ending balance

i 42,089

i 48,317

The following tables detail the activity in the ACL on loans by segment and class for the periods indicated:

Three Months Ended September 30, 2022

Beginning Balance

Charge-offs

Recoveries

Provision for (Reversal of) Credit Losses

Ending Balance

(In thousands)

Commercial business:

Commercial and industrial

i 14,033

i —

i 455

i 180

i 14,668

Owner-occupied CRE

i 8,162

i —

( i 443)

i 7,719

Non-owner occupied CRE

i 9,512

i —

i 41

i 9,553

Total commercial business

i 31,707

i —

i 455

( i 222)

i 31,940

Residential real estate

i 2,137

i —

i 408

i 2,545

Real estate construction and land development:

Residential

i 1,081

i —

i 5

i 208

i 1,294

Commercial and multifamily

i 2,203

i —

i 102

i 1,505

i 3,810

Total real estate construction and land development

i 3,284

i —

i 107

i 1,713

i 5,104

Consumer

i 2,568

( i 138)

i 50

i 20

i 2,500

Total

i 39,696

( i 138)

i 612

i 1,919

i 42,089

Nine Months Ended September 30, 2022

Beginning Balance

Charge-offs

Recoveries

Provision for (Reversal of) Credit Losses

Ending Balance

(In thousands)

Commercial business:

Commercial and industrial

i 17,777

( i 280)

i 876

( i 3,705)

i 14,668

Owner-occupied CRE

i 6,411

( i 36)

i —

i 1,344

i 7,719

Non-owner occupied CRE

i 8,861

i —

i 692

i 9,553

Total commercial business

i 33,049

( i 316)

i 876

( i 1,669)

i 31,940

Residential real estate

i 1,409

( i 30)

i 3

i 1,163

i 2,545

Real estate construction and land development:

Residential

i 1,304

i —

i 19

( i 29)

i 1,294

Commercial and multifamily

i 3,972

i —

i 155

( i 317)

i 3,810

Total real estate construction and land development

i 5,276

i —

i 174

( i 346)

i 5,104

Consumer

i 2,627

( i 396)

i 669

( i 400)

i 2,500

Total

i 42,361

( i 742)

i 1,722

( i 1,252)

i 42,089

Three Months Ended September 30, 2021

Beginning Balance

Charge-offs

Recoveries

Provision for (Reversal of) Credit Losses

Ending Balance

(In thousands)

Commercial business:

Commercial and industrial

i 17,485

( i 743)

i 373

i 1,531

i 18,646

Owner-occupied CRE

i 8,562

i —

i 12

( i 1,644)

i 6,930

Non-owner occupied CRE

i 10,630

i —

( i 1,133)

i 9,497

Total commercial business

i 36,677

( i 743)

i 385

( i 1,246)

i 35,073

Residential real estate

i 1,153

i —

( i 67)

i 1,086

Real estate construction and land development:

Residential

i 1,636

i —

i 8

i 136

i 1,780

Commercial and multifamily

i 8,835

i —

( i 1,530)

i 7,305

Total real estate construction and land development

i 10,471

i —

i 8

( i 1,394)

i 9,085

Consumer

i 3,261

( i 204)

i 161

( i 145)

i 3,073

Total

i 51,562

( i 947)

i 554

( i 2,852)

i 48,317

Nine Months Ended September 30, 2021

Beginning Balance

Charge-offs

Recoveries

Provision for (Reversal of) Credit Losses

Ending Balance

(In thousands)

Commercial business:

Commercial and industrial

i 30,010

( i 757)

i 710

( i 11,317)

i 18,646

Owner-occupied CRE

i 9,486

i —

i 25

( i 2,581)

i 6,930

Non-owner occupied CRE

i 10,112

i —

( i 615)

i 9,497

Total commercial business

i 49,608

( i 757)

i 735

( i 14,513)

i 35,073

Residential real estate

i 1,591

i —

( i 505)

i 1,086

Real estate construction and land development:

Residential

i 1,951

i —

i 28

( i 199)

i 1,780

Commercial and multifamily

i 11,141

( i 1)

i —

( i 3,835)

i 7,305

Total real estate construction and land development

i 13,092

( i 1)

i 28

( i 4,034)

i 9,085

Consumer

i 5,894

( i 509)

i 444

( i 2,756)

i 3,073

Total

i 70,185

( i 1,267)

i 1,207

( i 21,808)

i 48,317

(5) i Goodwill and Other Intangible Assets

There were no additions to goodwill during the three and nine months ended September 30, 2022 and 2021. Additionally, 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 the carrying amount of goodwill exceeds its implied fair value. The Company performed an annual impairment assessment as of December 31, 2021 and concluded that there was i no impairment.

(b) Other Intangible Assets


			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 SEPTEMBER 30, 2022 AND DECEMBER 31, 2021		5
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021		6
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021		7
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021		8
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021		10
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)		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	23

	NOTE 5.	GOODWILL AND OTHER INTANGIBLE ASSETS	25
	NOTE 6.	DERIVATIVE FINANCIAL INSTRUMENTS	25
	NOTE 7.	STOCKHOLDERS’ EQUITY	26
	NOTE 8.	FAIR VALUE MEASUREMENTS	27
	NOTE 9.	CASH RESTRICTION	32
	NOTE 10.	COMMITMENTS AND CONTINGENCIES	32

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		32
	OVERVIEW		32
	RESULTS OF OPERATIONS		33
		AVERAGE BALANCES, YIELDS AND RATES PAID	33
		NET INTEREST INCOME AND MARGIN OVERVIEW	34
		PROVISION FOR CREDIT LOSSES OVERVIEW	37
		NONINTEREST INCOME OVERVIEW	38
		NONINTEREST EXPENSE OVERVIEW	39
		INCOME TAX EXPENSE OVERVIEW	40
	FINANCIAL CONDITION OVERVIEW		40
		INVESTMENT ACTIVITIES OVERVIEW	41
		LOAN PORTFOLIO OVERVIEW	42
		ALLOWANCE FOR CREDIT LOSSES ON LOANS OVERVIEW	43
		DEPOSITS OVERVIEW	44
		STOCKHOLDERS' EQUITY OVERVIEW	44
	REGULATORY REQUIREMENTS OVERVIEW		44
	LIQUIDITY AND CAPITAL RESOURCES		45
	CRITICAL ACCOUNTING POLICIES		45
	RECONCILIATIONS OF NON-GAAP MEASURES		45
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		46
ITEM 4.	CONTROLS AND PROCEDURES		47


PART II.	OTHER INFORMATION	47
ITEM 1.	LEGAL PROCEEDINGS	47
ITEM 1A.	RISK FACTORS	47
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	47
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	47
ITEM 4.	MINE SAFETY DISCLOSURES	47
ITEM 5.	OTHER INFORMATION	47
ITEM 6.	EXHIBITS	48
	SIGNATURES	48


	September 30, 2022		December 31, 2021
	(In thousands)
Commercial business:
Commercial and industrial	$	i 528,690	$	i 570,156
Owner-occupied CRE	i 4,260		i 2,252
Non-owner occupied CRE	i 12,334		i 7,487
Total commercial business	i 545,284		i 579,895

Real estate construction and land development:
Residential	i 52,098		i 51,838
Commercial and multifamily	i 237,204		i 209,217
Total real estate construction and land development	i 289,302		i 261,055
Consumer	i 314,216		i 285,010
Total outstanding commitments	$	i 1,148,802	$	i 1,125,960


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands)
Balance, beginning of period	$	i 997	$	i 2,451	$	i 2,607	$	i 4,681
Provision for (reversal of) credit losses on unfunded commitments	i 26		( i 297)		( i 1,584)		( i 2,527)
Balance, end of period	$	i 1,023	$	i 2,154	$	i 1,023	$	i 2,154


	Three Months Ended September 30,
	2022						2021						Change
	Average Balance(1)		Interest Earned/ Paid		Average Yield/ Rate		Average Balance(1)		Interest Earned/ Paid		Average Yield/ Rate		Average Balance(1)		Interest Earned/ Paid		Average Yield/ Rate
	(Dollars in thousands)
Loans receivable, net (2)(3)	$	3,859,839	$	43,847	4.51	%	$	4,005,585	$	46,863	4.64	%	$	(145,746)	$	(3,016)	(0.13)	%
Taxable securities	1,868,900		12,362		2.62		893,374		4,711		2.09		975,526		7,651		0.53
Nontaxable securities (3)	133,022		892		2.66		157,907		931		2.34		(24,885)		(39)		0.32
Interest earning deposits	730,600		4,009		2.18		1,417,661		537		0.15		(687,061)		3,472		2.03
Total interest earning assets	6,592,361		61,110		3.68	%	6,474,527		53,042		3.25	%	117,834		8,068		0.43	%
Noninterest earning assets	775,375						740,433						34,942
Total assets	$	7,367,736					$	7,214,960					$	152,776
Interest Bearing Liabilities:
Certificates of Deposit	$	297,786	$	290	0.39	%	$	365,278	$	407	0.44	%	$	(67,492)	$	(117)	(0.05)	%
Savings accounts	654,697		99		0.06		609,818		90		0.06		44,879		9		—
Interest bearing demand and money market accounts	3,065,007		1,089		0.14		2,881,567		947		0.13		183,440		142		0.01
Total interest bearing deposits	4,017,490		1,478		0.15		3,856,663		1,444		0.15		160,827		34		—
Junior subordinated debentures	21,356		312		5.80		21,060		184		3.47		296		128		2.33
Securities sold under agreement to repurchase	42,959		34		0.31		52,197		36		0.27		(9,238)		(2)		0.04

Total interest bearing liabilities	4,081,805		1,824		0.18	%	3,929,920		1,664		0.17	%	151,885		160		0.01	%
Noninterest bearing demand deposits	2,356,688						2,313,145						43,543
Other noninterest bearing liabilities	118,191						116,187						2,004
Stockholders’ equity	811,052						855,708						(44,656)
Total liabilities and stock-holders’ equity	$	7,367,736					$	7,214,960					$	152,776
Net interest income and spread			$	59,286	3.50	%			$	51,378	3.08	%			$	7,908	0.42	%
Net interest margin					3.57	%					3.15	%					0.42	%

Heritage Financial Corp./WA – ‘10-Q’ for 9/30/22

On: Tuesday, 11/8/22, at 5:39pm ET · As of: 11/9/22 · For: 9/30/22 · Accession #: 1046025-22-165 · File #: 0-29480

Previous ‘10-Q’: ‘10-Q’ on 8/9/22 for 6/30/22 · Next: ‘10-Q’ on 5/4/23 for 3/31/23 · Latest: ‘10-Q’ on 11/9/23 for 9/30/23 · 3 References:

Quarterly Report — Form 10-Q

Filing Table of Contents

‘10-Q’ — Quarterly Report

Document Table of Contents

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

2 Subsequent Filings that Reference this Filing

1 Previous Filing that this Filing References


	Increase (Decrease) Due to Changes In:
	Volume		Yield/Rate		Total		% Change
	(Dollars in thousands)
Interest Earning Assets:
Loans receivable, net	$	(1,678)	$	(1,338)	$	(3,016)	(6.4)	%
Taxable securities	6,206		1,445		7,651		162.4
Nontaxable securities	(158)		119		(39)		(4.2)
Interest earning deposits	(382)		3,854		3,472		646.6
Total interest income	$	3,988	$	4,080	$	8,068	15.2	%


	Three Months Ended
	September 30, 2022		September 30, 2021

Loan yield (GAAP)	4.51	%	4.64	%
Exclude impact from SBA PPP loans	(0.02)		(0.38)
Exclude impact from incremental accretion on acquired loans	(0.05)		(0.07)
Loan yield, excluding SBA PPP loans and incremental accretion on acquired loans (non-GAAP) (1)	4.44	%	4.19	%


	September 30, 2022				December 31, 2021
	Balance		% of Total		Balance		% of Total		Change		% Change
	(Dollars in thousands)
Investment securities available for sale, at fair value:
U.S. government and agency securities	$	63,749	3.0	%	$	21,373	1.7	%	$	42,376	198.3	%
Municipal securities	185,713		8.7		221,212		17.3	%	(35,499)		(16.0)
Residential CMO and MBS	438,370		20.6		306,884		24.0	%	131,486		42.8
Commercial CMO and MBS	639,441		30.0		315,861		24.7	%	323,580		102.4
Corporate obligations	5,834		0.3		2,014		0.2	%	3,820		189.7
Other asset-backed securities	23,035		1.1		26,991		2.1	%	(3,956)		(14.7)
Total	$	1,356,142	63.7	%	$	894,335	70.0	%	$	461,807	51.6	%

Investment securities held to maturity, at amortized cost:
U.S. government and agency securities	$	150,948	7.1	%	$	141,011	11.0	%	$	9,937	7.0	%

Residential CMO and MBS	296,432		13.9		24,529		1.9		271,903		1,108.5
Commercial CMO and MBS	325,939		15.3		217,853		17.1		108,086		49.6


Total	$	773,319	36.3	%	$	383,393	30.0	%	$	389,926	101.7	%

Total investment securities	$	2,129,461	100.0	%	$	1,277,728	100.0	%	$	851,733	66.7	%




	(In thousands)
Balance, beginning of period	$	23,754
Additions	720
Net principal payments, sales and transfers to accruing status	(13,784)
Payoffs	(4,285)
Charge-offs	(171)

Balance, end of period	$	6,234


	At or For the Nine Months Ended September 30,
	2022			2021			Change			% Change
	(Dollars in thousands)
ACL on loans at the end of period	$	42,089		$	48,317		$	(6,228)		(12.9)	%

Credit quality ratios:
ACL on loans to loans receivable	1.05		%	1.22		%	(0.06)		%	(5.4)
ACL on loans to loans receivable, excluding SBA PPP loans (1)	1.05			1.31			(0.10)			(8.7)
ACL on loans to nonaccrual loans	675.15			186.60			496.82			278.60

Net (recoveries) charge-offs	$	(980)		$	60		$	(1,040)		0.02
Average loans receivable, net during the period (2)	3,815,387			4,297,875			(482,488)			(11.2)
Net recoveries on loans to average loans receivable, net(3)	(0.03)		%	—		%	(0.03)		%	—	%


	September 30, 2022				December 31, 2021
	ACL on loans		% of Total (1)		ACL on loans		% of Total (1)		Change		% Change
	(Dollars in thousands)
Commercial business	$	31,940	81.1	%	$	33,049	83.7	%	$	(1,109)	(3.4)	%
Residential real estate	2,545		7.4		1,409		4.3		1,136		80.6
Real estate construction and land development	5,104		6.3		5,276		5.9		(172)		(3.3)
Consumer	2,500		5.2		2,627		6.1		(127)		(4.8)
Total ACL on loans	$	42,089	100.0	%	$	42,361	100.0	%	$	(272)	(0.6)	%


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)
July 1, 2022—July 31, 2022	—	$	—	9,986,863	638,214
August 1, 2022— August 31, 2022	—	—		9,986,863	638,214
September 1, 2022—September 30, 2022	100	26.94		9,986,863	638,214
Total	100	$	26.94


						HERITAGE FINANCIAL CORPORATION
Date:
November 8, 2022						/S/ *JEFFREY J. DEUEL*
						Jeffrey J. Deuel
						President and Chief Executive Officer
Date:
November 8, 2022						/S/ *DONALD J. HINSON*
						Donald J. Hinson
						Executive Vice President and Chief Financial Officer

This ‘10-Q’ Filing	Date	Other Filings

	3/31/23
	12/31/22
	12/15/22
	11/16/22
Filed as of:	11/9/22
Filed on:	11/8/22	4
	11/2/22	4
	10/31/22	4
	10/19/22
For Period end:	9/30/22
	9/1/22
	8/31/22
	8/17/22
	8/3/22
	8/1/22
	7/31/22
	7/20/22
	7/1/22
	6/30/22	10-Q
	5/18/22
	5/4/22	10-Q, 4, 8-K
	4/20/22
	3/31/22	10-Q
	2/23/22
	2/9/22
	1/26/22	SC 13G/A
	1/1/22	3
	12/31/21	10-K, 11-K
	11/17/21
	11/3/21
	10/20/21
	9/30/21	10-Q
	8/18/21
	8/4/21
	7/21/21
	6/30/21	10-Q
	5/19/21
	5/5/21	10-Q, 4, 8-K
	4/21/21
	2/24/21
	2/10/21	SC 13G/A
	1/27/21
	1/25/21
	12/31/20	10-K, 11-K
	3/12/20	4, 8-K
	1/1/20
	12/31/12	10-K, 11-K, 5
		List all Filings

Heritage Financial Corp./WA – ‘10-Q’ for 9/30/22

On: Tuesday, 11/8/22, at 5:39pm ET · As of: 11/9/22 · For: 9/30/22 · Accession #: 1046025-22-165 · File #: 0-29480

Quarterly Report — Form 10-QFiling Table of Contents

‘10-Q’ — Quarterly ReportDocument Table of Contents

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

2 Subsequent Filings that Reference this Filing

1 Previous Filing that this Filing References

Quarterly Report — Form 10-Q

Filing Table of Contents

‘10-Q’ — Quarterly Report

Document Table of Contents