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We are primarily engaged in the business of planning, directing, and coordinating the business activities of our wholly owned subsidiary and single reportable segment, Heritage Bank.
−Removed: Heritage Bank is headquartered in Olympia, Washington and conducts business from its 49 branch offices located primarily along the I-5 corridor in western Washington and the greater Portland, Oregon area.
−Removed: We additionally have offices located in central Washington, primarily in Yakima County.
+Added: Heritage Bank is headquartered in Olympia, Washington and conducts business from its 50 branch offices located throughout Washington State, the greater Portland, Oregon area and Eugene, Oregon as of December 31, 2022.
+Added: On January 10, 2023, the Company opened its 51st branch in Boise, Idaho which is the first branch in Idaho.
The deposits of the Bank are insured by the FDIC.
−Removed: During the last two years, the Company consolidated 13 branches to create a more efficient branch footprint, reducing the branch count to 49 at December 31, 2021 from 62 at December 31, 2019.
−Removed: The Bank integrated these locations into other branches within its network.
−Removed: These actions were the result of the Bank’s increased focus on balancing physical locations and digital banking channels, driven by increased customer usage of online and mobile banking and a commitment to improve digital banking technology.
Our business consists primarily of commercial lending and deposit relationships with small and medium-sized businesses and their owners in our market areas and attracting deposits from the general public.
We also make real estate construction and land development loans, consumer loans and residential real estate loans for sale or investment purposes on residential properties located primarily in our market.
−Removed: General Development of Business
−Removed: During the last two years, the Bank participated in the SBA's PPP in accordance with the CARES Act and CA Act.
−Removed: The CARES Act initially amended the SBA’s loan program, in which the Bank participates, to create a guaranteed, unsecured loan program, the PPP, to fund payroll and operational costs of eligible businesses, organizations and self-employed persons during the COVID-19 Pandemic.
−Removed: Through the conclusion of the program on May 31, 2021, the Bank had funded 7,184 SBA PPP loans totaling $1.28 billion with an average loan size of $178,000.
−Removed: As of December 31, 2021, total funded SBA PPP loans decreased to $145.8 million, net of unamortized net deferred fees of $4.9 million, due primarily to principal and interest forgiveness payments from the SBA as the Bank began accepting and processing the forgiveness applications during the three months ended December 31, 2020.
−Removed: During the years ended December 31, 2021 and 2020, SBA PPP loans provided an additional $32.1 million and $19.5 million, respectively, of interest and fee income on loans.
−Removed: A combination of new deposit relationships obtained in conjunction with the SBA PPP lending process and existing customers maintaining higher cash balances due to the COVID-19 Pandemic also caused a material impact to our deposit balances, which increased $1.80 billion, or 39.2%, to $6.38 billion at December 31, 2021 from $4.58 billion at December 31, 2019 and cash balances, which increased $1.49 billion, or 654.0%, to $1.72 billion at December 31, 2021 from $228.6 million at December 31, 2019, which was before the start of the COVID-19 Pandemic.
Business Strategy
−Removed: Our business strategy is to be a commercial community bank, seeking deposits from our communities and making loans to customers with local ties to our markets.
−Removed: We believe we have an innovative team providing financial services and focusing on the success of our customers.
We are committed to being the leading commercial community bank in the Pacific Northwest by continuously improving customer satisfaction, employee empowerment, community investment and shareholder value.
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We believe that consolidation across the community bank landscape will continue to take place and further believe that, with our capital and liquidity positions, our approach to credit management, and our extensive acquisition experience, we are well-positioned to take advantage of acquisitions or other business opportunities in our market areas.
−Removed: In markets where we wish to enter or expand our business, we will also consider opening de novo branches.
+Added: In markets where we wish to enter or expand our business, we will also consider opening de novo branches typically in conjunction with hiring commercial lending and deposit teams.
In the past, we have successfully integrated acquired institutions and opened de novo branches.
3 unchanged sentences
We have a well-developed credit approval structure that has enabled us to maintain a standard of asset quality that we believe has moderate risk while at the same time allowing us to achieve our lending objectives.
−Removed: We will continue to focus on loan types and markets that we know well and where
−Removed: we have a historical record of success.
+Added: We will continue to focus on loan types and markets that we know well and where we have a historical record of success.
We focus on loan relationships that are well-diversified in both size and industry types.
3 unchanged sentences
In addition to our focus on underwriting, we believe the strength of our balance sheet provides us with the flexibility to manage through a variety of scenarios including additional growth-related activities.
−Removed: Our liquidity position was also strong, with $1.72 billion in cash and cash equivalents as of December 31, 2021.
−Removed: As of December 31, 2021, the regulatory capital ratios of the Bank were well in excess of the levels required for “well-capitalized” status, and our consolidated common equity tier 1 capital to risk-weighted assets, leverage capital, Tier 1 risk-based capital, and total risk-based capital ratios were 13.5%, 8.7%, 13.9% and 14.8%, respectively.
+Added: As of December 31, 2022, our liquidity position was $103.6 million in cash and cash equivalents and $2.10 billion in total investment securities.
+Added: See also "Item 7.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources" of this Form 10-K.
+Added: As of December 31, 2022, the regulatory capital ratios of the Bank were well in excess of the levels required for “well-capitalized” status, and our consolidated common equity tier 1 capital ratio, leverage ratio, Tier 1 capital ratio, and total capital ratio were 12.8%, 9.7%, 13.2% and 14.0%, respectively.
Focused deposit growth.
Our strategic focus is to continuously grow deposits with emphasis on total relationship banking with our business and retail customers.
−Removed: We continue to seek to increase our market share in the communities we serve by providing exceptional customer service, focusing on relationship development with local businesses and strategic branch expansion.
+Added: We continue to seek to increase our market share in the communities we serve by providing exceptional customer service, focusing on relationship development with local businesses and strategic branch
Our primary focus is to maintain a high level of non-maturity deposits to internally fund our loan growth with a low reliance on maturity (certificate) deposits.
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We have a strong corporate culture, which is supported by our commitment to internal development and promotion from within as well as the retention of management and officers in key roles.
−Removed: There have been no material changes to our business strategy during the years ended December 31, 2021 and 2020, except for our participation in the SBA's PPP.
+Added: There have been no material changes to our business strategy during the years ended December 31, 2022 and 2021, except for our participation in the SBA's PPP program which expired on May 31,2021.
The Bank was established in 1927 as a federally-chartered mutual savings bank.
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(in millions)
−Removed: Purchase June 1998 North Pacific Bancorporation North Pacific Bank $ 85
−Removed: Purchase March 1999 Washington Independent Bancshares, Inc.
+Added: Acquisition June 1998 North Pacific Bancorporation North Pacific Bank $ 85
+Added: Acquisition March 1999 Washington Independent Bancshares, Inc.
Central Valley Bank 61
−Removed: Purchase June 2006 Western Washington Bancorporation Washington State Bank, N.A.
−Removed: FDIC Assisted August 2010 n/a Cowlitz Bank 345
−Removed: FDIC Assisted November 2010 n/a Pierce Commercial Bank 211
−Removed: Purchase January 2013 n/a Northwest Commercial Bank 65
−Removed: Purchase July 2013 Valley Community Bancshares, Inc.
+Added: Acquisition June 2006 Western Washington Bancorporation Washington State Bank, N.A.
+Added: FDIC Assisted Purchase August 2010 n/a Cowlitz Bank 345
+Added: FDIC Assisted Purchase November 2010 n/a Pierce Commercial Bank 211
+Added: Acquisition January 2013 n/a Northwest Commercial Bank 65
+Added: Acquisition July 2013 Valley Community Bancshares, Inc.
Valley Bank 237
Merger May 2014 Washington Banking Company Whidbey Island Bank 1,657
−Removed: Purchase January 2018 Puget Sound Bancorp, Inc.
+Added: Acquisition January 2018 Puget Sound Bancorp, Inc.
Puget Sound Bank 571
−Removed: Purchase July 2018 Premier Commercial Bancorp Premier Community Bank 387
+Added: Acquisition July 2018 Premier Commercial Bancorp Premier Community Bank 387
Description of Business
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Our lending activities are conducted through the Bank.
−Removed: While our focus is on commercial business lending, we also originate consumer loans, real estate construction and land development loans and residential real estate loans.
+Added: While our focus is on commercial business lending, we also originate consumer loans, real estate construction and land development loans, and residential real estate loans both held for sale and investment.
Our loans are originated under policies that are reviewed and approved annually by our Board of Directors.
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Financial Statements And Supplementary Data.
+Added: We participated in the PPP which is administered by the SBA.
+Added: The CARES Act initially amended the SBA’s loan program to create a guaranteed, unsecured loan program, the PPP, to fund payroll and operational costs of eligible businesses, organizations and self-employed persons during the COVID-19 Pandemic.
+Added: Through the conclusion of the program on May 31, 2021, the Bank had funded 7,184 SBA PPP loans totaling $1.28 billion with an average loan size of $178,000.
+Added: As of December 31, 2022, total funded SBA PPP loans decreased to $1.5 million, net of unamortized net deferred fees of $103,000, due primarily to principal and interest forgiveness payments from the SBA as the Bank began accepting and processing the forgiveness applications during the three months ended December 31, 2020.
Residential Real Estate Loans, Originations and Sales
3 unchanged sentences
Terms typically range from 15 to 30 years.
−Removed: As part of our asset/liability management strategy, we also sell originated residential real estate loans in the secondary market with no recourse and servicing released.
+Added: As part of our asset/liability management strategy, we may also sell originated residential real estate loans in the secondary market with no recourse and servicing released.
Real Estate Construction and Land Development
At December 31, 2022, we had $294.1 million, or 7.3% of our loans receivable, in real estate construction and land development loans, including residential construction loans and commercial and multifamily construction loans.
−Removed: We originate residential construction loans for the construction of single-family custom homes (where the home owner is the borrower).
+Added: We originate residential construction loans for the construction of single-family custom homes (where the homeowner is the borrower).
We also provide financing to builders for the construction of pre-sold homes and speculative residential property.
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In addition, the indirect loans purchased were made to only prime borrowers.
−Removed: At December 31, 2021, we had $117.3 million, or 3.1% of our loans receivable, in indirect auto loans remaining, which is a decrease of 58.7% from $284.0 million as of December 31, 2019, which approximates the balance of indirect auto loans before the runoff of this portfolio started.
−Removed: The majority of our remaining consumer loans are for relatively small amounts disbursed among many individual borrowers.
+Added: At December 31, 2022, we had $62.9 million, or 1.6% of our loans receivable, in indirect auto loans remaining which is a decrease of $54.4 million or 46.4% from $117.3 million as of December 31, 2021.
Supervision and Regulation
−Removed: We are subject to extensive legislation, regulation, and supervision under federal law and the law of Washington State, which are both primarily intended to protect depositors and the FDIC, and not shareholders.
+Added: We are subject to extensive regulation, and supervision under federal law and the law of Washington State, which are both primarily intended to protect depositors and the FDIC, and not shareholders.
Additionally, the Consumer Financial Protection Bureau is responsible for the implementation of the federal financial consumer protection and fair lending laws and regulations and has authority to impose new requirements.
Any change in applicable laws, regulations, or regulatory policies may have a material effect on our business, operations, and prospects.
−Removed: We cannot predict the nature or the extent of the effects on our business and earnings that any fiscal or monetary policies or new Federal or State legislation may have in the future.
+Added: We cannot predict the nature or the extent of the effects on our business and earnings that any fiscal or monetary policies or new Federal or State laws may have in the future.
The following is a summary discussion of certain laws and regulations applicable to the Company and the Bank which is qualified in its entirety by reference to the actual laws and regulations.
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In general, enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices.
−Removed: The Company is also required to file certain reports with, and otherwise comply with, the rules and regulations of the SEC.
The Federal Reserve may also order termination of non-banking activities by non-banking subsidiaries of bank holding companies, or divestiture of ownership and control of a non-banking subsidiary by a bank holding company.
Some violations may also result in criminal penalties.
−Removed: Federal Reserve policy provides that a bank holding company is required to serve as a source of financial and managerial strength to its subsidiary banks and may not conduct its operations in an unsafe or unsound manner.
+Added: Federal Reserve policy provides that a bank holding company is required to serve as a source of financial and managerial strength to its subsidiary banks.
A bank holding company’s failure to meet its obligation to serve as a source of strength by providing financial assistance to a subsidiary bank in financial distress is generally considered by the Federal Reserve to be an unsafe and unsound banking practice or a violation of the Federal Reserve’s regulations or both.
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Prior Federal Reserve approval is required for any bank holding company to acquire direct or indirect ownership or control of any voting securities of any bank or bank holding company if, after such acquisition, the acquiring bank holding company would, directly or indirectly, own or control more than 5% of any class of voting shares of the bank or bank holding company.
−Removed: In addition to the approval of the Federal Reserve, prior approval may for such acquisitions also be necessary from other agencies including the DFI and agencies that regulate the target.
+Added: In addition to the approval of the Federal Reserve, prior
+Added: approval may for such acquisitions also be necessary from other agencies including the DFI and agencies that regulate the target.
+Added: In July 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy.
+Added: Among other initiatives, the Executive Order encouraged federal banking agencies to review their current merger oversight practices and adopt a plan for revitalization of such practices.
+Added: There are many steps that must be taken by the agencies before any formal changes to the framework for evaluating bank mergers can be finalized and the prospects for such action are uncertain at this time.
Under the prompt corrective action provisions of the Federal Deposit Insurance Act, a bank holding company with an undercapitalized subsidiary bank must guarantee, within limitations, the capital restoration plan that is required to be implemented for its undercapitalized subsidiary bank.
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Federal Reserve policy also provides that a bank holding company may pay cash dividends only to the extent that the company’s net income for the past year is sufficient to cover both the cash dividend and a rate of earnings retention that is consistent with the company’s capital needs, asset quality and overall financial condition.
−Removed: Bank regulations also require bank holding companies and banks to maintain minimum capital ratios and capital conservation buffer.
+Added: Bank regulations also require bank holding companies and banks to maintain minimum capital ratios and a capital conservation buffer.
For additional information, see “Capital Adequacy” below.
2 unchanged sentences
With some exceptions, we and our subsidiaries are prohibited from tying the provision of various products or services, such as extensions of credit, to other products or services offered by us, or our affiliates.
+Added: The stock of the Company is registered with the SEC under the "Exchange Act.
+Added: As such, the Company is subject to the information, proxy solicitation, insider trading restrictions and other requirements of the SEC under the Exchange Act.
Heritage Bank
8 unchanged sentences
Such restrictions are generally tied to the Bank’s capital levels after giving effect to such distributions.
+Added: Our long-term ability to pay dividends to our stockholders is based primarily upon the ability of the Bank to make capital distributions to the Company.
+Added: So long as the Bank remains “well-capitalized” after each capital distribution, and operates in a safe and sound manner, it is management's belief that the banking regulators will continue to allow the Bank to distribute its earnings to the Company, although no assurance can be given in this regard.
Capital Adequacy
16 unchanged sentences
Total capital is the sum of Tier 1 and Tier 2 capital.
−Removed: In addition to the minimum common equity Tier 1, Tier 1, leverage ratio and total capital ratios, the Company and the Bank must maintain a capital conservation buffer consisting of additional common equity Tier 1 capital greater than 2.5% above
−Removed: the required minimum risk-based capital levels in order to avoid limitations on paying dividends, repurchasing shares, and paying discretionary bonuses.
+Added: In addition to the minimum common equity Tier 1, Tier 1, leverage ratio and total capital ratios, the Company and the Bank must maintain a capital conservation buffer consisting of additional common equity Tier 1 capital greater than 2.5% above the required minimum risk-based capital levels in order to avoid limitations on paying dividends, repurchasing shares, and paying
+Added: discretionary bonuses.
To be considered "well capitalized," a bank holding company must have, on a consolidated basis, a Tier 1 risk-based capital ratio of 6.0% or greater and a total risk-based capital ratio of 10.0% or greater and must not be subject to an individual order, directive or agreement under which the Federal Reserve requires it to maintain a specific capital level.
17 unchanged sentences
Financial Statements And Supplementary Data.
−Removed: Classification of Loans
−Removed: Federal regulations require the Bank to periodically evaluate the risks inherent in its loan portfolio.
−Removed: In addition, the DFI and the FDIC have the authority to identify adversely classified loans and, if appropriate, require them to be reclassified.
−Removed: There are three types of classified loans:
−Removed: Substandard, Doubtful, and Loss.
−Removed: Substandard loans have one or more defined weaknesses and are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
−Removed: Doubtful loans have the weaknesses of Substandard loans, with additional characteristics that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values questionable.
−Removed: There is a high probability of some loss in loans classified as Doubtful.
−Removed: A loan classified as Loss is considered uncollectible and of such little value that continuance as a loan of the institution is not warranted.
−Removed: If a loan or a portion of the loan is classified as Loss, the institution must charge-off this amount.
+Added: Commercial Real Estate Transactions
+Added: The federal banking agencies have issued guidance on sound risk management practices for concentrations in commercial real estate lending.
+Added: The particular focus is on exposure to commercial real estate loans that are dependent on the cash flow from the real estate held as collateral and that are likely to be sensitive to conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment or as an abundance of caution).
+Added: The purpose of the guidance is not to limit a bank’s commercial real estate lending but to guide banks in developing risk management practices and maintaining capital levels commensurate with the level and nature of real estate concentrations.
+Added: A bank that has experienced rapid growth in commercial real estate lending, has notable exposure to a specific type of commercial real estate loan, or is approaching or exceeding the following supervisory criteria may be identified for further supervisory analysis with respect to real estate concentration risk:
+Added: total loans for construction, land development, and other land represent 100% or more of the bank’s total capital;
+Added: or total commercial real estate loans (as defined in the guidance) greater than 300% of the Bank’s total capital and an increase in the bank’s commercial real estate portfolio of 50% or more during the prior 36 months.
Deposit Insurance and Other FDIC Programs
11 unchanged sentences
No institution may pay a dividend if it is in default on its deposit insurance assessment.
−Removed: The FDIC announced that the Deposit Insurance Fund ratio surpassed 1.35% as of September 30, 2018 which triggered two changes under the regulations:
−Removed: surcharges on large banks (total consolidated assets of $10 billion or more) ended and small banks (total consolidated assets of less than $10 billion, which includes the Bank) were awarded assessment credits for the portion of their assessments that contributed to the growth in the Reserve Ratio from 1.15% to 1.35% to be applied when
−Removed: the reserve ratio is at least 1.35%.
−Removed: The Bank was awarded $1.2 million in small bank assessment credits of which $518,000 and $726,000 was applied against quarterly FDIC assessments during the years ended December 31, 2020 and 2019, respectively.
+Added: In October 2022, the FDIC finalized a rule that will increase the initial base deposit insurance assessment rates by 2 basis points, beginning with the first quarterly assessment period of 2023 (January 1, 2023 through March 31, 2023).
+Added: The FDIC, as required under the Federal Deposit Insurance Act, established a plan in September 2020 to restore the Deposit Insurance
+Added: Fund reserve ratio to meet or exceed the statutory minimum of 1.35 percent within eight years.
+Added: This plan did not include an increase in the deposit insurance assessment rate.
+Added: Based on the FDIC’s recent projections, however, the FDIC determined that the Deposit Insurance Fund reserve ratio is at risk of not reaching the statutory minimum by the statutory deadline of September 30, 2028 without increasing the deposit insurance assessment rates.
+Added: The increased assessment would improve the likelihood that the Deposit Insurance Fund reserve ratio would reach the required minimum by the statutory deadline, consistent with the FDIC’s Amended Restoration Plan.
+Added: The FDIC also concurrently maintained the Designated Reserve Ratio (“DDR”) for the Deposit Insurance Fund at 2 percent for 2023.
+Added: The new assessment rate schedules will remain in effect unless and until the reserve ratio meets or exceeds 2 percent in order to support growth in the Deposit Insurance Fund in progressing toward the FDIC’s long-term goal of a 2 percent DRR.
+Added: Progressively lower assessment rate schedules will take effect when the reserve ratio reaches 2 percent, and again when it reaches 2.5 percent.
+Added: The revised assessment rate schedule will remain in effect unless and until the reserve ratio meets or exceeds 2 percent, absent further action by the FDIC.
+Added: Bank Secrecy Act / Anti-Money Laundering Laws
+Added: The Bank is subject to the Bank Secrecy Act and other anti-money laundering laws and regulations, including the USA PATRIOT Act of 2001.
+Added: These laws and regulations require the Bank to implement policies, procedures, and controls to detect, prevent, and report money laundering and terrorist financing and to verify the identity of their customers.
+Added: Violations of these requirements can result in substantial civil and criminal sanctions.
+Added: In addition, provisions of the USA PATRIOT Act require the federal financial institution regulatory agencies to consider the effectiveness of a financial institution's anti-money laundering activities when reviewing mergers and acquisitions.
+Added: Privacy Standards and Cybersecurity
+Added: The Bank is subject to federal regulations implementing the privacy protection provisions of the Gramm-Leach-Bliley Financial Services Modernization Act of 1999.
+Added: These regulations require the Bank to disclose its privacy policy, including informing consumers of their information sharing practices and informing consumers of their rights to opt out of certain practices.
+Added: In addition, on November 18, 2021, the federal banking agencies announced the adoption of a final rule providing for new notification requirements for banking organizations and their service providers for significant cybersecurity incidents.
+Added: Specifically, the new rule requires a banking organization to notify its primary federal regulator as soon as possible, and no later than 36 hours after, the banking organization determines that a “computer-security incident” rising to the level of a “notification incident” has occurred.
+Added: Notification is required for incidents that have materially affected or are reasonably likely to materially affect the viability of a banking organization’s operations, its ability to deliver banking products and services, or the stability of the financial sector.
+Added: Service providers are required under the rule to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect the banking organization’s customers for four or more hours.
Other Regulatory Developments
14 unchanged sentences
Concurrent with enactment of the CARES Act, federal banking agencies issued an interim final rule that delays the estimated impact on regulatory capital resulting from the adoption of CECL.
−Removed: The interim final rule provides banking organizations that implement CECL before the end of 2020 the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of capital benefit provided during the initial two-year delay.
−Removed: The changes in the final rule apply only to those banking organizations that elect the CECL transition relief provided under the rule.
+Added: The interim final rule provided banking organizations that implemented CECL before the end of 2020 the option to delay for two years the estimated impact of CECL on regulatory
+Added: capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of capital benefit provided during the initial two-year delay.
+Added: The changes in the final rule apply only to those banking organizations that elected the CECL transition relief provided under the rule.
The Company and the Bank elected this option.
8 unchanged sentences
Governance Documents.
−Removed: Any waivers of the code of ethics will be publicly disclosed to shareholders.
+Added: Any significant changes or waivers of the Code of Ethics will be publicly disclosed to shareholders.
We compete for loans and deposits with other commercial banks, credit unions, mortgage bankers, and other providers of financial services, including finance companies, online-only banks, mutual funds, insurance companies, and more recently with financial technology companies that rely on technology to provide financial services.
4 unchanged sentences
Human Capital
−Removed: As of December 31, 2021, the Bank employed 727 full-time and 40 part-time employees across Washington and
−Removed: None of these employees are represented by a collective bargaining agreement.
+Added: As of December 31, 2022, the Bank employed 793 full-time and 36 part-time employees across Washington, Oregon, and Idaho.
+Added: No employees are represented by a collective bargaining agreement.
During 2022, we hired 238 regular full-time and part-time employees.
−Removed: Voluntary workforce turnover (rolling 12-month attrition) was 20.76% and our average tenure was 7.6 years.
+Added: Voluntary workforce turnover (rolling 12-month attrition) was 19.4%, compared to 20.8% in 2021.
+Added: Our average tenure was 7.1 years.
Our workforce was 71.3% female and 28.7% male, and women held 69.8% of the bank’s management roles (including department supervisors and managers, as well as executive leadership).
14 unchanged sentences
During 2021, the Puget Sound Business Journal recognized Heritage Bank as one of the Top 100 Best Workplaces in the Puget Sound.
+Added: In 2022, the Company dedicated an afternoon to volunteering at organizations and nonprofits throughout our communities and closed all customer facing locations early.
+Added: Over 500 employees participated and volunteered over 1,500 hours of service.
In addition to vacation and sick leave, all employees receive at least eight hours of paid time each year specifically to use for volunteer activities of their choice in the communities where they live and work.
−Removed: The COVID-19 Pandemic has presented a unique challenge with regard to maintaining employee safety while continuing successful operations.
−Removed: Currently, a portion of our employees are working remotely, however, substantially all employees are expected to return to their go-forward working environments during the three months ended March 31, 2022.
+Added: The Company maintained its commitment to supporting its community and customers during the COVID-19 Pandemic and remains focused on keeping its employees safe and the Bank running effectively to serve its customers.
+Added: As of December 31,
+Added: 2022, all banking branches are open with normal hours and substantially all employees have returned to their routine working environments.
The Company continues to monitor the situation and will continue to implement measures commensurate with guidance issued by the Centers for Disease Control and state/local health authorities.
16 unchanged sentences
Develop structures and strategies to equip leaders with the ability to manage diversity, be accountable, measure results, refine approaches on the basis of such data and foster a culture of inclusion.
+Added: The following chart depicts the percentage of self-identified females and minorities in our workforce at December 31, 2022, by job classification as defined by the Equal Employment Opportunity Commission (“EEOC”):
+Added: Job Classification Female % Minority % (1)
+Added: Distribution by EEOC Job Classification
+Added: Administrative Support Workers 83.9 % 33.0 % 47.2 %
+Added: Executive/Senior Level Officials and Managers 34.6 3.8 3.1
+Added: First/Mid-Level Officials and Managers 74.7 22.0 22.4
+Added: Professionals 58.3 14.2 15.3
+Added: Sales Workers 42.7 13.5 11.6
+Added: Service Workers — — 0.4
+Added: (1) Includes employees self-identified as Hispanic or Latino, Black or African American, Asian, Native Hawaiian or Other Pacific Islander, American Indian or Alaska Native, or Two or More Races.
Compensation and Benefits
4 unchanged sentences
Name Age as of
+Added: December 31, 2022
Position Has Served
the Company or Bank Since
−Removed: Deuel 63 Chief Executive Officer of Heritage Financial Corporation and Heritage Bank 2010
+Added: Deuel 64 President and Chief Executive Officer of Heritage Financial Corporation and Chief Executive Officer of Heritage Bank 2010
+Added: Bryan McDonald 51 Executive Vice President of Heritage Financial Corporation and President and Chief Operating Officer of Heritage Bank 2014
Hinson 61 Executive Vice President and Chief Financial Officer of Heritage Financial Corporation and Heritage Bank 2005
Tony Chalfant 61 Executive Vice President and Chief Credit Officer of Heritage Financial Corporation and Heritage Bank 2018
−Removed: Bryan McDonald 50 Executive Vice President of Heritage Financial Corporation and President and Chief Operating Officer of Heritage Bank 2014
−Removed: Cindy Huntley 58 Executive Vice President and Chief Banking Officer of Heritage Bank 1988
+Added: Cindy Hirman (formerly Huntley) 59 Executive Vice President and Chief Banking Officer of Heritage Bank 1988
The business experience of each executive officer is set forth below.
−Removed: Deuel is the Chief Executive Officer of Heritage Bank and Heritage Financial Corporation.
−Removed: Deuel was promoted to President and Chief Executive Officer of Heritage Bank and President of Heritage Financial Corporation effective July 2018 and then promoted to Chief Executive Officer of Heritage Financial Corporation effective July 2019.
+Added: Deuel is the President and Chief Executive Officer of Heritage Financial Corporation and Chief Executive Officer of Heritage Bank.
+Added: Deuel was promoted to President and Chief Executive Officer of Heritage Bank and President of Heritage Financial Corporation effective July 2018 and then promoted to President and Chief Executive Officer of Heritage Financial Corporation effective July 2019.
Deuel was promoted to President and Chief Operating Officer of Heritage Bank and Executive Vice President of Heritage Financial Corporation in September 2012.
9 unchanged sentences
He earned his Bachelor’s degree at Gettysburg College.
+Added: Bryan McDonald is the President and Chief Operating Officer of Heritage Bank.
+Added: McDonald was promoted to Executive Vice President and Chief Operating Officer of Heritage Bank effective July 1, 2018 and then promoted to President and Chief Operating Officer of Heritage Bank effective July 1, 2021.
+Added: McDonald joined Heritage Bank as an Executive Vice President and Chief Lending Officer as a result of the merger between Heritage Financial and Washington Banking Company effective May 1, 2014.
+Added: Previously, with Whidbey Island Bank he held the position of President and Chief Executive Officer of Whidbey Island Bank from January 2012 to May 2014.
+Added: He joined Whidbey Island Bank in 2006 as Commercial Banking Manager and was promoted to Chief Operating Officer in 2010.
+Added: McDonald has extensive managerial experience in various sales, credit, operations, commercial banking and residential real estate areas.
+Added: Before joining the team at Whidbey Island Bank, he was Snohomish and King County Business Group Manager where he was responsible for developing all aspects of Peoples Bank's commercial banking operation in King and Snohomish counties.
Hinson was promoted to Executive Vice President and Chief Financial Officer in September 2012.
14 unchanged sentences
Chalfant obtained his Bachelor's degree in Finance and Economics from Washington State University and is a graduate of the Pacific Coast Banking School.
−Removed: Bryan McDonald is the President and Chief Operating Officer of Heritage Bank.
−Removed: McDonald was promoted to Executive Vice President and Chief Operating Officer of Heritage Bank effective July 1, 2018 and then promoted to President and Chief Operating Officer of Heritage Bank effective July 1, 2021.
−Removed: McDonald was promoted to Executive Vice President and Chief Lending Officer as a result of the merger between Heritage Financial and Washington Banking Company effective May 1, 2014.
−Removed: Previously, with Whidbey Island Bank he held the position of President and Chief Executive Officer of Whidbey Island Bank from January 2012 to May 2014.
−Removed: He joined Whidbey Island Bank in 2006 as Commercial Banking Manager and was promoted to Chief Operating Officer in 2010.
−Removed: McDonald has extensive managerial experience in various sales, credit, operations, commercial banking and residential real estate areas.
−Removed: Before joining the team at Whidbey Island Bank, he was Snohomish and King County Business Group Manager where he was responsible for developing all aspects of Peoples Bank's commercial banking operation in King and Snohomish County.
−Removed: Cindy Huntley was appointed Executive Vice President and Chief Banking Officer in September of 2019.
+Added: Cindy Hirman (formerly Cindy Huntley) was appointed Executive Vice President and Chief Banking Officer in September of 2019.
+Added: On September 26, 2022, Heritage entered into a transitional retirement agreement with Ms.
+Added: Hirman, effective January 1, 2023.
+Added: The agreement with Ms.
+Added: Hirman provides for an employment period through April 3, 2023, which is Ms.
+Added: Hirman’s planned retirement date.
+Added: Hirman will serve as Executive Vice President, a part-time position in which she will assist with the transition of her Chief Banking Officer duties.
Cindy has been with Heritage Bank since 1988 and previously served as a Director of Retail Banking since 2006 and a Senior Vice President since 2004.
3 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.