Heritage Financial Corporation (NASDAQ:HFWA) Q1 2023 Earnings Conference Call April 20, 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

Jeff Rulis - D.A. Davidson

Andrew Terrell - Stephens

Adam Butler - Piper Sandler

David Feaster - Raymond James

Operator

Hello everyone. Thank you for attending today's Heritage Financial Corporation Q1 2023 Earnings Call. My name is Sierra, and I will be your moderator today. [Operator Instructions]

I would now like to pass the conference over to our host Jeff Deuel, CEO of Heritage Financial Corporation. Please proceed.

Jeffrey Deuel

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

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

We're very pleased to report another solid quarter. In spite of the unfortunate industry turmoil we all faced in March, we were happy to see the destabilizing factors around us calm down quickly with the majority of deposit movement in tied to normal deposit flows. As you know, deposit pricing started to get more competitive late in the third quarter of '22 and that theme continued through Q4 '22 and into Q1 '23.

We continue to focus on exception pricing for relationships with good success. The majority of deposit movement in Q1 was tied to normal flows, including capital purchases with a lesser portion tied to alternative investments and general FDIC insurance-related concerns, which, in most cases, resulted in retention of deposits, but at a higher cost.

We expect deposits to stabilize as the year progresses aided by our $150 million deposit pipeline. We reported solid organic loan growth of 7.7% annualized, and we're pleased with the positive trend we have seen in the number of new commitments and new loan closings from our existing production teams and the newer members of that team.