Form 8-K - Current report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities and Exchange Act of 1934

Date of Report (Dated of earliest event reported): December 13, 2024

HERITAGE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter) 

 

Commission File Number 000-29480

Washington

91-1857900

(State or other jurisdiction of incorporation or organization)

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

201 Fifth Avenue SW,

Olympia

WA

98501

(Address of principal executive offices)

(Zip Code)

[phone]

(Registrant’s telephone number, including area code) 

Not applicable

(Former name or former address, if changed since last report) 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class			Trading symbol			Name of each exchange on which registered
Common stock, no par value			HFWA			The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1934 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company ☐

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

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(b)    Director Retirement

On December 13, 2024, Deborah J. Gavin, a member of the Board of Directors (the “Board”) of Heritage Financial Corporation (“Heritage”) and the Board of Directors of Heritage’s wholly-owned banking subsidiary, Heritage Bank (the “Bank”), informed Heritage in writing that she would not stand for re-election as a member of the Board at Heritage’s 2025 Annual Meeting of Shareholders (the “Annual Meeting”). Ms. Gavin’s decision to not stand for re-election to the Board was not a result of any disagreement with Heritage pertaining to Heritage’s operations, policies, or practices. Accordingly, her term as a director will expire at the Annual Meeting. Ms. Gavin also informed Heritage of her decision not to stand for re-election to the Bank’s board of directors, effective as of the Annual Meeting.

(d)    Appointment of New Director

On December 18, 2024, the Board, upon the recommendation of the Governance and Nominating Committee of the Board, approved the appointment of Karen Saunders, age 60, to the Board, effective January 1, 2025. In addition, Ms. Saunders was appointed to the Board of Directors of the Bank, effective January 1, 2025. Ms. Saunders will serve on the Audit and Finance and Risk and Technology Committees of the Board. The Board has determined that Ms. Saunders is an independent director under the applicable listing standards of the Nasdaq Stock Market.

For further information concerning Ms. Saunders’ background, reference is made to the press release dated December 19, 2024, which is attached hereto as Exhibit 99.1 and incorporated herein by reference.

There are no family relationships between Ms. Saunders and any director or other executive officer of Heritage or its subsidiaries and Ms. Saunders was not appointed as a director pursuant to any arrangement or understanding with any person. Ms. Saunders has not engaged in any transactions with Heritage or its subsidiaries that would be reportable as related party transactions under the rules of the Securities and Exchange Commission (the “SEC”).

Ms. Saunders will participate in Heritage’s standard non-employee director compensation arrangements, as described under “Director Compensation” in Heritage’s definitive proxy statement filed with the SEC on March 22, 2024, which description is incorporated herein by reference, as such arrangements may be amended from time to time.

(e)    Participation Agreement for Mr. Ray

On December 18, 2024, Heritage entered into a participation agreement with Matthew T. Ray (the “Participation Agreement”) under the Heritage Financial Corporation Deferred Compensation Plan, as amended from time to time (the “Plan”). The Participation Agreement has an effective date of January 1, 2025 (the “Award Date”) and provides that Heritage may make contributions under the Plan to Mr. Ray’s company contribution account for the 2025 plan year. Any contribution to Mr. Ray’s company contribution account is contingent upon achievement of the performance metrics set forth in the Participation Agreement. On the first anniversary of the Award Date, Mr. Ray’s company contribution account will be 10% vested; an additional 10% will become vested on each of anniversary of the Award Date thereafter, so that as of the tenth anniversary of the Award Date Mr. Ray’s company contribution account will be fully vested. Distribution of the vested portion of Mr. Ray’s account is scheduled to commence upon the fifth day of the month following the later to occur of his attainment of age 65 or his separation from service other than due to disability or death and will be completed in 24 monthly installments. Mr. Ray’s account would be paid earlier in a lump sum upon a separation from service following a change in control or in the event of Mr. Ray’s death or disability.

The foregoing description of the Participation Agreement is qualified in its entirety by reference to the Participation Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference, and the full terms of the Plan, which was filed as Exhibit 10.4 to Heritage’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 7, 2012.

Item 9.01 Financial Statements and Exhibits

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(d) Exhibits

Exhibit 10.1						Ray Deferred Compensation Plan Participation Agreement
Exhibit 99.1						Press Release of Heritage Financial Corporation dated December 19, 2024

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SIGNATURES

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

						HERITAGE FINANCIAL CORPORATION
Date:
December 19, 2024						/S/  Jeffrey J. Deuel
						Jeffrey J. Deuel
						Chief Executive Officer

1 Exhibit 10.1 2738094.v2 HERITAGE FINANCIAL CORPORATION DEFERRED COMPENSATION PLAN RAY PARTICIPATION AGREEMENT This Participation Agreement (“Participation Agreement”) is entered into as of December 18, 2024, effective as of January 1, 2025 (the “Award Date”), by and between HERITAGE FINANCIAL CORPORATION (the “Company”) and MATTHEW T. RAY an employee of the Company (the “Participant”). Except for terms defined herein, any capitalized term in this Participation Agreement has the meaning ascribed to that term under the Heritage Financial Corporation Deferred Compensation Plan, as amended (the “Plan”). WHEREAS, the Company has adopted the Plan, effective July 1, 2012, as amended and restated August 29, 2012 and further amended and restated as of December 18, 2024, and the Committee has determined that the Participant is eligible to receive Company Contributions under the Plan subject to the terms and conditions set forth in the Plan and this Participation Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual promises and covenants of the parties hereto set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby expressly covenant and agree as follows: Section 1. Company Contributions. (a) For Plan Year 2025, the Company shall make Company Contributions, to be reflected in the Participant’s Company Contribution Account, as determined in accordance with Exhibit A hereto. The performance metrics and targets in connection with such Company Contributions shall be established each year in the sole discretion of the Committee, following consultation with the Chief Executive Officer of the Company. In the event Company performance relative to the established performance metrics and targets is impacted by a decision or activity that is outside of the Company’s current annual financial plan, but supports the Company's long-term strategic plan, the Committee shall give consideration to overall corporate results and achievements. The Committee may exercise discretion regarding the performance metrics used to assess overall corporate performance relative to both the Company’s current annual financial plan and long-term strategic plan when determining Company Contributions. Decisions and activities that may occur that are outside of the Company’s current annual financial plan may include acquisitions, acquisition-related accounting issues, changes in FDIC premiums, special assessments, gains or losses on bank-owned properties and other events that were not foreseeable at the time the Company’s current annual financial plan was prepared. (b) Any Company Contributions made pursuant to this Participation Agreement shall be reflected in the Participant’s Company Contribution Account effective as of the January 1 immediately following the Plan Year to which the Company Contribution relates.

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2 Exhibit 10.1 2738094.v2 (c) In order to be eligible to receive a Company Contribution for a Plan Year, the Participant must (i) have a performance rating of at least “satisfactory” for the Plan Year to which the Company Contribution relates (as determined by the Committee) and (ii) not have died or incurred a Separation from Service prior to the end of the Plan Year to which the Company Contribution relates; provided, however, that the Participant shall be eligible to receive a pro rata Company Contribution for any Plan Year during which the Participant dies or incurs a Separation from Service due to the Participant’s Disability, termination by the Company without Cause, termination by the Participant for Good Reason, or termination by either the Company or the Participant following the Participant reaching age 65, with such pro rata Company Contribution based upon the number of days in such Plan Year prior to the Participant’s death or Separation from Service and actual Company performance for the entire Plan Year. Section 2. Company Contribution Account. The Participant’s Company Contribution Account shall, in accordance with the Plan, be credited with the Interest Rate as of each Valuation Date until all amounts in such Company Contribution Account have been fully distributed or forfeited. Section 3. Vesting and Forfeiture of Company Contribution Account (a) Subject to Section 3(b), Section 3(c) and Section 3(d) below, the portion of the Participant’s Company Contribution Account attributable to this Participation Agreement shall vest in accordance with the following schedule, with no pro rata vesting, provided that the Participant has not incurred a Separation from Service prior to the respective vesting date: Percentage of Company Contribution Vesting Date Initial 10% First Anniversary of Award Date Additional 10% Second Anniversary of Award Date Additional 10% Third Anniversary of Award Date Additional 10% Fourth Anniversary of Award Date Additional 10% Fifth Anniversary of Award Date Additional 10% Sixth Anniversary of Award Date Additional 10% Seventh Anniversary of Award Date Additional 10% Eighth Anniversary of Award Date Additional 10% Ninth Anniversary of Award Date Final 10% Tenth Anniversary of Award Date (b) The Participant’s entire Company Contribution Account shall fully vest upon (i) a Change in Control that occurs on or before the Participant’s Separation from Service, (ii) the Participant’s Disability, if the Participant is an employee or service provider of the Company at the time of such Disability; and (iii) the Participant’s death, if the Participant is an

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3 Exhibit 10.1 2738094.v2 employee or service provider of the Company at the time of such death. (c) In the event the Participant’s Separation from Service, other than as provided in Section 3(b) above and other than for Cause, occurs prior to the vesting of the Participant’s Company Contribution Account, the Participant shall forfeit all rights, title and interest in and to any unvested amounts in the Participant’s Company Contribution Account as of the Participant’s Separation from Service. (d) In the event of the Participant’s Separation from Service for Cause, the Participant shall forfeit all rights, title and interest in and to any vested and unvested amounts in the Participant’s Company Contribution Account as of the Participant’s Separation from Service. Section 4. Distribution of Company Contribution Account (a) Distribution Events. (i) Subject to Section 15(l) of the Plan, distribution of the vested portion of the Participant’s Company Contribution Account shall commence on the fifth day of the month following the later to occur of the Participant’s attainment of age 65 or the Participant’s Separation from Service other than due to the Participant’s Disability or death. (ii) Notwithstanding Section 4(a)(i) above, in the event of the Participant’s Disability or death, distribution of the vested portion of the Participant’s Company Contribution Account shall commence on the fifth day of the month following such Disability or death. (b) Form of Distribution. (i) Subject to Section 15(l) of the Plan, in the event of distribution of the Participant’s Company Contribution Account due to the Participant’s attainment of age 65 or the Participant’s Separation from Service other than due to the Participant’s Disability or death, such distribution shall be paid in 24 equal monthly installments; provided, however, that if such Separation from Service occurs within 24 months following a Change in Control, such distribution shall be in a lump sum. (ii) In the event of distribution of the Participant’s Company Contribution Account due to the Participant’s Disability or death, such distribution shall be in a lump sum. (c) Change in Distribution. The Participant may elect to change the timing of distribution set forth in this Section 4 to a later date, in accordance with Code Section 409A and such rules and procedures as the Company may prescribe, subject to the following: (i) Such election may not take effect until at least 12 months after the date it is filed with the Company; (ii) Such election must be made not later than 12 months prior to the first scheduled payment date; and

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4 Exhibit 10.1 2738094.v2 (iii) To the extent required under Code Section 409A, the revised payment date must be not sooner than the five-year anniversary of the previously-scheduled payment date. Section 5. Miscellaneous (a) Restrictive Covenants. The Participant shall be bound by the restrictive covenants and other terms and conditions set forth in Exhibit B hereto. (b) Tax Withholding. The Company may withhold any taxes that are required to be withheld from the benefits provided under this Participation Agreement and the Plan. The Participant acknowledges that the Company’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authorities and to satisfy all applicable reporting requirements. (c) Plan Governs. Notwithstanding any provision of this Participation Agreement to the contrary, this Participation Agreement is subject to the terms of the Plan, a copy of which may be obtained by the Participant from the Company. This Participation Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan. Notwithstanding anything in this Participation Agreement to the contrary, in the event of any discrepancy between the corporate records of the Company and this Participation Agreement, the corporate records of the Company shall control. (signature page follows)

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5 Exhibit 10.1 2738094.v2 IN WITNESS WHEREOF, each of the parties hereto has caused this Participation Agreement to be executed as of the Award Date. HERITAGE FINANCIAL CORPORATION By: /s/ Jeffrey J. Deuel Its: Chief Executive Officer PARTICIPANT ___/s/ Matthew T. Ray______________________ MATTHEW T. RAY

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6 Exhibit 10.1 2738094.v2 Matthew Ray EVP Chief Lending Officer Exhibit A – DCP Agreement Company Contribution – 2025 Plan Year Pursuant to Section 1 of the Participation Agreement, a Company Contribution shall be made for the 2025 Plan Year contingent upon achievement of the applicable “Performance Metrics” set forth in the table immediately below. The Performance Metrics for the Plan Year 2025 shall be as established by the Compensation Committee at its February 2025 meeting. Upon which, the company will update this exhibit. Such Performance Metrics shall become part of this Participation Agreement without action or consent of the Participant required. 2025 Plan Year Performance Criteria and Company Contribution Percentages Performance Metric* Weighting Minimum* Target* Maximum* Actual Performance Result Company Contribution (%) ‡ Company Contribution ($) TBD 50% TBD TBD TBD TBD 50% TBD TBD TBD Total 2025 Plan Year Company Contribution *The above Performance Metrics and Minimums, Targets and Maximums shall be established each year in the sole discretion of the Committee, following consultation with the Chief Executive Officer of the Company. ‡As % of Annual Base Salary as of December 31, 2025. Company Contribution Opportunities (as % of Annual Base Salary) EPS (50%) Net Charge-offs/Avg Loans (NCO) (50%) Total Company Contribution (as % of Annual Base Salary†) Minimum 5% 5% 10% Target 10% 10% 20% Maximum or above 17.5% 17.5% 35% †As in effect on December 31 of the applicable Plan Year.

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7 Exhibit 10.1 2738094.v2 Exhibit B Restrictive Covenants (a) Restrictive Covenants. The Participant hereby acknowledges and agrees that the non-competition, non-solicitation and other restrictive covenants (the “Restrictive Covenants”) set forth in Section 6 of that certain Employment Agreement made and entered into by and between the Participant and the Company, entered into November 4, 2019 (the “Employment Agreement”), are hereby incorporated into this Participation Agreement by reference as if fully and independently restated herein. (b) Remedies for Breach of Restrictive Covenants. The Participant has reviewed the provisions of this Exhibit B with legal counsel, or has been given adequate opportunity to seek such counsel, and the Participant acknowledges and expressly agrees that the covenants contained in this Exhibit B are reasonable with respect to their duration, geographical area and scope. The Participant further acknowledges that the restrictions contained in this Exhibit B are reasonable and necessary for the protection of the legitimate business interests and confidential information of the Company, that they create no undue hardships, that any violation of these restrictions would cause substantial injury to the Company and such interests, and that such restrictions were a material inducement to the Company to enter into this Participation Agreement. In the event of any violation or threatened violation of the restrictions contained in this Exhibit B, in addition to and not in limitation of, any other rights, remedies or damages available to the Company under this Participation Agreement or otherwise at law or in equity, i. The Company shall be entitled to preliminary and permanent injunctive relief to prevent or restrain any such violation by the Participant and any and all persons directly or indirectly acting for or with the Participant, as the case may be; and ii. The Participant shall forfeit all rights, title and interest in and to any vested and unvested amounts in the Participant’s Company Contribution Account. (c) Condition Precedent. Compliance with the Restrictive Covenants shall be a condition precedent to distribution of any amounts from the Participant’s Company Contribution Account. (d) Similar Restrictive Covenants. In the event of the existence of any other agreement between the Participant and the Company or an affiliate that (i) is in effect during the restricted periods under the Restrictive Covenants, and (ii) contains restrictive covenants that conflict with any of the provisions of this Exhibit B, then the more restrictive of such provisions from the agreements shall control, provided that such more restrictive provisions are in compliance with applicable law, for the period during which the agreements would otherwise be in effect.

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Exhibit 99.1

Heritage Financial Corporation Appoints Karen R. Saunders

to its Board of Directors

OLYMPIA, Wash., December 19, 2024/PRNewswire/ – Heritage Financial Corporation (“Heritage”) (Nasdaq: HFWA) is pleased to announce the appointment of Karen R. Saunders to its Board of Directors. Ms. Saunders was also appointed to the Board of Directors of Heritage’s wholly-owned subsidiary, Heritage Bank. The appointment is effective January 1, 2025.

“We are pleased to welcome Karen to our board of directors,” said Brian L. Vance, Board Chair. “Karen brings the depth of audit, finance, and financial services experience we were searching for along with extensive executive leadership experience. Karen’s background as a former KPMG audit partner within the financial services practice will add valuable expertise to our board.”

Ms. Saunders spent her entire career at KPMG, joining in 1986, promoted to partner in 1999 in the Seattle office, and served as a SEC Reviewing Partner for the firm’s financial services practice. During her tenure with KPMG, she also led the Pacific Northwest Region as the lead partner in community banking, served as the lead banking partner over the firm’s banking practice in the Los Angeles office from 2015 until her retirement in 2024, and regularly participated in local industry events.

Ms. Saunders earned a Bachelor of Arts from the University of Washington’s Foster School of Business and is a licensed Certified Public Accountant in Washington and California. Ms. Saunders resides in Grapeview, Washington and currently serves as an Ambassador Board Member for Big Brothers and Big Sisters of Puget Sound (“BBBS”). She formerly served as the chair of BBBS, chair and board member of the Washington State Accountancy Board, the KPMG Partnership Audit Committee and Board Nomination Committee, and advisory director of the U.S.A Bobsled and Skeleton. Ms. Saunders was also named the 2015 Woman of the Year by the Leukemia and Lymphoma Society, Washington Chapter.

About Heritage Financial

Heritage Financial Corporation is an Olympia, Washington-based bank holding company for its subsidiary Heritage Bank, a full-service commercial bank. Heritage Bank has a branch network of 50 banking offices in Washington, Oregon, and Idaho. Heritage Bank does business under the Whidbey Island Bank name on Whidbey Island, Washington. Heritage Financial Corporation’s stock is traded on the NASDAQ Global Select Market under the symbol “HFWA”. More information about Heritage Financial Corporation can be found on its website at www.hf-wa.com and more information about Heritage Bank can be found on its website at www.heritagebanknw.com.

Contact

Jeffrey J. Deuel, Chief Executive Officer, [phone]

Cover Page Cover Page	Dec. 13, 2024
Document Information [Line Items]
Document Period End Date	Dec. 13, 2024
Document Type	8-K
Entity Registrant Name	HERITAGE FINANCIAL CORP
Entity File Number	000-29480
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	91-1857900
Entity Address, Address Line One	201 Fifth Avenue SW,
Entity Address, City or Town	Olympia
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98501
City Area Code	(360)
Local Phone Number	943-1500
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, no par value
Trading Symbol	HFWA
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001046025
Amendment Flag	false

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