The following is a summary of the Heritage Financial Corporation (HFWA) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Heritage Financial reported strong Q3 2024 financial performance with notable loan and deposit growth, and net interest income increase.

• Loan balances increased by $147 million during the quarter, with yields on the loan portfolio rising to 5.60%.

• Deposits grew by $193 million, with noninterest-bearing deposits constituting about $83 million.

• Net interest income rose by $1.8 million, a 3.6% increase from the previous quarter, with net interest margin increasing to 3.33% from 3.29%.

• Despite economic shifts, they managed a lower cost of interest-bearing deposits at 2.02% in Q3.

• Heritage plans to potentially reprice $420 million of maturing CDs at lower rates following a decline in market rates.

Business Progress:

• Heritage Financial remains focused on expanding and optimizing their commercial lending operations, highlighted by strong loan productions and strategic balance sheet management.

• Continued emphasis on C&I relationships and prudent expense management has resulted in sustained operational productivity.

Opportunities:

• The opportunities for Heritage Financial lie in leveraging strong loan growth and the favorable conditions for repricing maturing CDs.

• They are positioned to capitalize on market dynamics with a strategic focus on growing core deposits and managing loan portfolio effectively.

Risks:

• The gradual shift in deposit mix and instability in market rates pose a risk, potentially impacting the cost of deposits and interest revenues.

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