Employee Benefit Plans

12 Months Ended

Dec. 31, 2020

(a) 401(k) Plan

The Company provides its eligible employees with a 401(k) plan ("Plan"). The Company funds certain Plan costs as incurred.

The Plan includes the Company’s salary savings 401(k) plan for its employees. All employees hired may participate in the Plan the first of the month following employment or concurrent to their hire date if starting the first of the month. Participants may contribute a portion of their salary, which is matched by the Company at 50%, not to be greater than 3% of eligible compensation, up to Internal Revenue Service limits. All participants are 100% vested in all accounts at all times. Employer matching contributions for the years ended December 31, 2020, 2019 and 2018 were $1.7 million, $1.6 million and $1.4 million, respectively.

The Plan may make profit sharing and discretionary contributions which are completely discretionary. Participants are eligible for-profit sharing contributions upon credit of 1,000 hours of service during the plan year, the attainment of 18 years of age, and employment on the last day of the year. Employees are 100% vested in profit sharing contributions at all times. For the years ended December 31, 2020, 2019 and 2018, the Company made no employer profit sharing contributions.

(b) Employment Agreements

The Company has entered into contracts with certain senior officers that provide benefits under certain conditions following termination without cause or following a change in control of the Company.

The Company has a Deferred Compensation Plan, which provides its directors and select executive officers with the opportunity to defer current compensation. Under the Deferred Compensation Plan, participants are permitted to elect to defer compensation and the Company has the discretion to make additional contributions on behalf of any participant based on a number of factors.

The following table presents a summary of the changes in the Deferred Compensation Plan during the periods indicated:


	Year Ended December 31,
	2020		2019		2018
	(In thousands)
Balance outstanding at the beginning of the year	$	4,244	$	3,654	$	2,844
Employer contributions	207		443		713
Interest credited	128		147		97
Benefits Paid	(478)		—		—
Balance outstanding at the end of the year	$	4,101	$	4,244	$	3,654

(d) Split-Dollar Life Insurance Benefit Plan

In conjunction with the Washington Banking Merger, the Company assumed the split-dollar life insurance benefit plan previously maintained by Washington Banking. Life insurance policies are maintained for current or former officers of the Bank or former Washington Banking officers that are subject to split-dollar life insurance agreements, which continue after the participant's employment and retirement. All participants are fully vested in their split-dollar life insurance benefits. The accrued benefit liability for the split-dollar life insurance agreements represents the present value of the future death benefits payable to the participants' beneficiaries.

The split-dollar life insurance projected benefit obligation is included in Accrued expenses and other liabilities on the Consolidated Statements of Financial Condition. As of December 31, 2020 and December 31, 2019, the carrying value of the obligation was $165,000 and $200,000, respectively.

(e) Salary Continuation Plan

In conjunction with the Premier Merger in 2018, the Company assumed an unfunded deferred compensation plan for select former Premier Commercial executive officers, some of which are current Heritage officers. Under this salary continuation plan, the Company will pay each participant, or their beneficiary, specified benefits over specified periods beginning with the individual's termination of service due to retirement subject to early termination provisions. A liability is accrued for this obligation and is included in Accrued expenses and other liabilities on the Consolidated Statements of Financial Condition. The following table presents a summary of the changes in the salary continuation plan during the periods indicated:


	Year Ended December 31,
	2020		2019		2018
	(In thousands)
Obligation, at the beginning of the year	$	4,334	$	4,600	$	—
Balance acquired in Premier Merger	—		—		4,718
Benefits paid	(460)		(554)		(529)
Expenses incurred	288		288		411
Obligation, at the end of the year	$	4,162	$	4,334	$	4,600