Heritage Financial Corporation (NASDAQ:HFWA) Q3 2023 Earnings Conference Call October 19, 2023 1:00 PM ET

Company Participants

Jeffrey Deuel - CEO

Donald Hinson - CFO

Bryan McDonald - President and COO

Anthony Chalfant - Chief Credit Officer

Conference Call Participants

Matthew Clark - Piper Sandler

Jeff Rulis - D.A. Davidson

David Feaster - Raymond James

Andrew Terrell - Stephens

Kelly Motta - KBW

Timothy Coffey - Janney

Operator

Thank you all for joining. I would like to welcome you all to the Heritage Financial Corporation Q3 2023 Earnings Conference Call. My name is Brika, and I'll be your moderator for today's call. All lines are on mute for the presentation portion of the call, with an opportunity for questions-and-answers at the end. [Operator Instructions]

I would now like to pass the conference over to your host, Jeff Deuel, CEO of Heritage Financial to begin. So Jeff, please go ahead.

Jeffrey Deuel

Thank you, Brika. Welcome, and good morning to everyone who called in. And for those who may listen later, this is Jeff Deuel, CEO of Heritage Financial. Attending with me are Bryan McDonald, President and Chief Operating Officer; Don Hinson, Chief Financial Officer; and Tony Chalfant, Chief Credit Officer.

Our third quarter earnings release went out this morning premarket, and hopefully, you have had the opportunity to review it prior to the call. We have also posted an updated third quarter investor presentation on the Investor Relations portion of our corporate website, which includes more detail on our deposits, loan portfolio, liquidity and credit quality. We will reference the presentation during the call. Please refer to the forward-looking statements in the press release.

We're pleased to report another solid quarter with earnings per share exceeding consensus. This quarter's performance was enhanced by loan recoveries. These recoveries are further evidence of our strong risk management practices and how they continue to benefit us. We continue to see pressure on deposit pricing in Q3, which is impacting our net interest margin.

Deposit balances stabilized in Q3, although the mix of deposits continue to partially shift into higher rate products. As expected, due mostly to the rate environment, loan growth slowed in Q3 compared to the first two quarters of the year, although year-to-date, we are still reporting low single-digit loan growth. Overall, we continue to focus on growing a strong balance sheet with ample liquidity and capital that, will serve us well in the present and in the future.