XML 46 R31.htm IDEA: XBRL DOCUMENT v3.20.4
Regulatory Capital Requirements
 12 Months Ended
Dec. 31, 2020
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]  
Regulatory Capital Requirements Regulatory Capital RequirementsThe Company is a bank holding company under the supervision of the Federal Reserve Bank. Bank holding companies are subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as
amended, and the regulations of the Federal Reserve. Heritage Bank is a federally insured institution and thereby is subject to the capital requirements established by the FDIC. The Federal Reserve capital requirements generally parallel the FDIC requirements. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Consolidated Financial Statements and operations. Management believes as of December 31, 2020, the Company and the Bank meet all capital adequacy requirements to which they are subject.
As of December 31, 2020 and December 31, 2019, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's categories.
 Minimum
Requirements		Well-
Capitalized
Requirements		Actual
 $%$%$%
 (Dollars in thousands)
As of December 31, 2020:
The Company consolidated
Common equity Tier 1 capital to risk-weighted assets$203,314 4.5 %N/AN/A$555,644 12.3 %
Tier 1 leverage capital to average assets256,216 4.0 N/AN/A576,531 9.0 
Tier 1 capital to risk-weighted assets271,086 6.0 N/AN/A576,531 12.8 
Total capital to risk-weighted assets361,448 8.0 N/AN/A633,061 14.0 
Heritage Bank
Common equity Tier 1 capital to risk-weighted assets203,112 4.5 $293,383 6.5 %563,630 12.5 
Tier 1 leverage capital to average assets256,051 4.0 320,064 5.0 563,630 8.8 
Tier 1 capital to risk-weighted assets270,815 6.0 361,087 8.0 563,630 12.5 
Total capital to risk-weighted assets361,087 8.0 451,359 10.0 620,124 13.7 
As of December 31, 2019:
The Company consolidated
Common equity Tier 1 capital to risk-weighted assets$211,110 4.5 %N/AN/A$541,154 11.5 %
Tier 1 leverage capital to average assets212,578 4.0 N/AN/A561,749 10.6 
Tier 1 capital to risk-weighted assets281,479 6.0 N/AN/A561,749 12.0 
Total capital to risk-weighted assets375,306 8.0 N/AN/A598,226 12.8 
Heritage Bank
Common equity Tier 1 capital to risk-weighted assets211,017 4.5 $304,803 6.5 %538,560 11.5 
Tier 1 leverage capital to average assets211,187 4.0 263,984 5.0 538,560 10.2 
Tier 1 capital to risk-weighted assets281,356 6.0 375,142 8.0 538,560 11.5 
Total capital to risk-weighted assets375,142 8.0 468,927 10.0 575,037 12.3 
As of December 31, 2020, the capital measures reflect the revised CECL capital transition provisions adopted by the Federal Reserve and the FDIC, that allows us the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period.
Under applicable capital requirements both the Company and the Bank are required to have a common equity Tier 1 capital ratio of 4.5%, a Tier 1 leverage ratio of 4.0%, a Tier 1 risk-based ratio of 6.0% and a total risk-based ratio of 8.0%. Both the Company and the Bank are also required to maintain a capital conservation buffer consisting of common equity Tier 1 capital above 2.5% of minimum risk based capital ratios to avoid restrictions on certain activities including payment of dividends, stock repurchases and discretionary bonuses to executive officers. At December 31, 2020, the capital conservation buffer was 6.0% and 5.7% for the Company and the Bank, respectively.