Heritage Financial Q4 2022 Earnings Call Transcript

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January 26, 2023

There are 9 speakers on the call.

Operator

Thank you for standing by, and welcome to the Heritage Financial Corporation Q4 2022 Earnings Conference Call. My name is Matt and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I'd now like to hand the conference over to Jeff Duell, CEO of Heritage. Jeff?

Speaker 1

Thank you, Sam. Welcome and good morning to everyone who called in and those who may call in later. This is Jeff Jewell, CEO of Heritage Financial. Attending with me are Don Hinson, our Chief Financial Officer and Brian McDonald, Our President and Chief Operating Officer Tony Shelfand, Chief Credit Officer, will not be joining the call today due to a personal commitment. Our Q4 and full year 2022 earnings release went out this morning pre market, and hopefully, you have had an opportunity to review it prior to the call.

Speaker 1

We have also posted an updated 4th quarter investor presentation on the Investor Relations portion of our corporate website. We will reference this presentation during the call. Please refer to the forward looking statements in the press release. We're very pleased to report another solid quarter year. We had good organic loan growth.

Speaker 1

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 as well as the newer members of our team in Southwest Washington And Oregon. Net interest margin continues to improve with rates moving higher together with careful management of our deposit relationships. We continue to manage expenses. As mentioned in previous quarters, we are experiencing the impacts of inflation driven expense increases, together with the additional expense related to the new teams who joined us in May. You will recall we guided to non interest expense in the $40,000,000 range, which is where we came in for the quarter.

Speaker 1

Notably, our long standing focus on credit quality and actively managing our loan portfolio continues to play out well for us. Staying focused on our conservative risk profile has enabled us to continue to report improving credit trends, and it provides us with a solid foundation as we face into a more difficult economic environment in 2023. We'll now move on to Don, who will take a few minutes to cover our financial results and

Speaker 2

Thank you, Jeff. As Jeff mentioned, overall financial performance was very positive in Q4, and I'll be reviewing some of the main drivers of our performance. As I walk through our financial results, unless otherwise noted, All the prior period comparisons will be with the Q3 of 2022. Starting with net interest income, there was an increase of $3,800,000 or 6.4% in net interest income due mostly to a higher net interest margin. The net interest margin increased 41 basis points to 3.98 percent for Q4.

Speaker 2

This was due mostly to improve yields on earning assets, while maintaining a relatively low cost of deposits. We continued the trend of solid loan growth in Q4 and finished the year with loan growth of $380,000,000 or 10.3 percent ex PPP loan repayments. In addition, yields in the loan portfolio were 4.86% In Q4, which was 35 basis points higher than Q3. Brian MacDonald will have an update on loan production and yields in a few minutes. The impact of higher yields on loans and other earning assets was partially offset by a decrease in total earning assets during the quarter due primarily to a decrease in deposits of $313,000,000 or 5% in Q4.

Speaker 2

Most of this decrease was due Great sense of customers seeking higher yielding investments, in addition to a significant portion of customers using excess cash for other purposes, such as asset purchases and owner distributions. Of those seeking higher rates, most are going to brokerage firms to invest And higher rate bonds and T Bills. As an example, the wealth management division at Heritage Bank added $125,000,000 in funds under management from Heritage Bank We continue to strategically increase our deposit rates and develop attractive deposit products as well as working individually with our customers to maintain relationships. As a result of the current rate environment, we expect to continue to experience an increase In the cost of deposits as well as decline in some deposit balances, as we have in the past, we may supplement core deposits with broker deposits. However, as of the end of 2022, we did not have any broker deposits on our balance sheet.

Speaker 2

All of our regulatory capital ratios remain strongly above Well capitalized thresholds. Our TCE ratio is at 8.2%, up from 7.6% at the end of Q3. Although the AOCI impact has decreased, it is still significantly affecting the TCE ratio. As of the end of Q4, AOCI had 130 basis point negative impact on the TCE ratio. In addition, With a loan deposit ratio of 68%, we have plenty of liquidity to continue to grow our loan portfolio.

Speaker 2

You can refer to Page 31 of the investor presentation for more specifics on capital and liquidity. Non interest expense increased $1,200,000 $40,400,000 in Q4. This was due mostly to increases in compensation expense resulting from continued inflationary pressures as well as higher FTE levels as we have been able to reduce the amount of our open positions over the last couple of quarters. Moving on to credit quality, I am very pleased to report that we ended the year with very strong credit quality metrics across our portfolio. During the quarter, we saw continued loan losses and had further reductions in our non performing assets and criticized loans.

Speaker 2

As of December 31, Non accrual loans totaled $5,900,000 and we do not currently hold any OREO. This represents 0.15 percent of total loans and 0.08% of total assets. We moved one C and I relationship to non accrual in the 4th quarter in the amount of $605,000 This was more than offset by $933,000 in loans that were either paid in full, made payments that were applied to principal or returned to accrual status. While non accrual loans declined by a modest $328,000 during the Q4, we have seen a significant reduction of $17,800,000 or 75% since December 31, 2021. Our delinquent loans, which we define as those over 30 days Past due and still accruing remains low at $5,400,000 or 0.13 percent of total loans.

Speaker 2

While this is slightly higher than the previous quarter, Most of the difference was connected to 3 mortgage loans that were part of a loan pool purchase in December, where there was a delay The payments from the original servicer, those payments were received in early January. Page 23 of the investor presentation highlights the positive trends in our level of non performing assets. Criticized loans, those risk rated special mention and substandard declined 10% or $15,600,000 in the 4th quarter and are now down 26% from year end 2021. It is worth noting that over the past 12 months, loans risk rated substandard have declined by $47,000,000 or 42%. As of December 31, criticized loans totaled $135,000,000 or 3.3 percent of total loans.

Speaker 2

At year end 2020, criticized loans were $291,000,000 and our current level represents a decrease of 54% from what we consider to be the high point of this credit cycle. While still high at 25% of criticized loans, our hotel portfolio continues to improve. In the Q4, we saw a reduction of approximately $12,000,000 in criticized loans in this category, primarily from the payoff of one loan. We continue to closely watch our portfolio of office loans. Through year end 2022, we saw very little deterioration In credit quality, criticized office loans totaled approximately $23,000,000 or 4% of our total portfolio of office loans.

Speaker 2

For more detail on our criticized loans, please refer to Page 24 of the investor presentation. During the Q4, we experienced very low charge offs $151,000 all from our consumer portfolio. These consumer losses were low when compared to historical norms and were primarily tied to auto loans, Small unsecured lines of credit and credit cards. The losses were more than offset by recoveries of 359,000 leading to a net recovery of $208,000 for the quarter. A significant portion of the recoveries in the quarter came from the completion of Successful long term workout strategy for a commercial real estate land development loan.

Speaker 2

For the full year, we had net recoveries of approximately 1 $2,000,000 This compares favorably to the net charge offs of $526,000 that we experienced in 2021, also a very strong year when compared to historical performance. As we have stated in previous calls, our average annual net charge offs for the 3 year period 2018 through 2020 was approximately $2,900,000 In 2022, our disciplined credit Approach delivered excellent credit quality across portfolios, while still realizing solid loan growth. While we recognize that 2023 I will now turn the call over to Brian, who will have an update on loan production.

Speaker 3

Thanks, Don. I'm going to provide detail on our 4th quarter loan production results, Starting with our commercial lending group. For the quarter, our commercial teams closed $329,000,000 in new loan commitments, up from $277,000,000 last quarter and the same as the $329,000,000 closed in the Q4 of 2021. Please refer to Page 19 in the 4th quarter investor presentation for additional detail on new originated loans over the past 5 quarters. The commercial loan pipeline ended the 4th quarter at $536,000,000 down from $604,000,000 last quarter and up from $462,000,000 at the end of the Q4 of 2021.

Speaker 3

The pipeline decline was due to the strong Volume of loan closings during the Q4 and the moderating demand for loan opportunities we have been reporting the last two quarters. New commercial teams hired during 2022 have been adding to our loan pipeline and producing strong results As reflected on Slide 10 of the investor presentation, loan balances in Eugene and the Portland MSAs increased 33% during 2022 and grew at a 54% annualized rate from June 30 through the end of 2022. The reported pipeline does not include any loan opportunities from our new team in Boise as this branch did not open until early January. I hope you've had a chance to read our January 10 press release where we announced our new Boise, Idaho branch. Loan growth was $50,000,000 for the quarter or 5% annualized, which is below the growth rate we experienced earlier in the year.

Speaker 3

Although new loan production during the quarter was higher than any other quarter and we purchased a small residential mortgage pool, This was offset by a higher mix of unfunded construction loans and a decrease in the utilization rate, which led to a $20,000,000 decline in net this quarter versus a $55,000,000 increase last quarter. Please refer to Slides 20 21 of the investor deck for further detail on the change in loans during the quarter. Consumer loan production, the majority of which are home equity lines of Credit was $21,000,000 during the quarter, which is down from $29,000,000 last quarter $23,000,000 of production in the Q4 of 2021. The mortgage department closed $18,000,000 of new loans in the Q4 of 2022 compared to $26,000,000 closed in the Q3 of 2022 and $45,000,000 in the Q4 of 2021. With mortgage rates remaining at higher levels, we anticipate volumes will Our average 4th quarter interest rate for new commercial loans was 5.72%, which is 85 basis We are seeing a portion of the rate increases translate into higher quoted rates on new loans.

Speaker 3

I'll now turn the call back to Jeff.

Speaker 1

Thank you, Brian. As I mentioned earlier, we're pleased with our performance in the Q4 and for the full year 'twenty two. We're seeing solid organic production across the bank with deals coming from existing customers and new high quality prospects. Additionally, we are seeing multiple new business opportunities coming from the new teams in the southern part of our footprint, and we expect the new Boise team to start contributing to the revenue line soon. Based on our current pipeline, we expect Q1 loan production to be in the mid single digit range based on We'll continue to focus on expense control with little or no increases in staffing in 'twenty three other than opportunistic hiring to We have also maintained a focus on our technology strategy, which is designed to support more efficient operations, enabling us to do more with the same people and provide a more consistent customer experience.

Speaker 1

This also positions us well to pivot as Bank technology continues to evolve and we continue to grow. Please see Slides 67 of the investor deck for more detail on our tech strategy. We're prepared to pursue acquisitions in our 3 state region when we see the right opportunities for us. In the meantime, we continue to focus on opportunities to Add new teams like we have done in Oregon and Idaho as well as add individual producers throughout the footprint. Please see Slide 13 in the investor deck for a historical look back of our M and A and team lift out activities.

Speaker 1

As Don mentioned earlier, our capital levels and our liquidity position provide us with a strong foundation to add to address unforeseen challenges and to take advantage of opportunities in the current environment. We're grateful to all of our employees for the constructive, Collaborative team environment we work in and for everyone's hard work and focus as we've contributed to the that has contributed to the success of the bank in 2022. That is the conclusion of our prepared statements, Sam. So we're ready to open up the call for any questions that people may have.

Operator

Absolutely, Jeff. We will now begin the Q and A session. Our first question today comes from the line of Matthew Clark with Piper Sandler. Matthew, your line is now open.

Speaker 4

Hey, good morning guys.

Speaker 1

Good morning.

Speaker 4

Maybe just around the margin, trying to get some Better visibility going into the Q1 here. The spot rate at the end of the year on interest bearing deposits or total deposits at a 1% and the average Margin in the month of December, if you have it.

Speaker 2

I'll take that, Matthew. Our spot rate For interest bearing deposits in December was 32 basis points. So it's up a little bit from the overall average of 29 for 25 for the Quarter, so and then also the margin from December was 406.

Speaker 4

Okay. Okay. And that's on a reported basis? I think it's fairly similar to the core anyway.

Speaker 2

Which one are you talking about, the NIM?

Speaker 4

The margin, the December margin you

Speaker 2

just quoted, I assume that's Morely.

Speaker 4

Same as, yes, that's what I thought. That's right. Yes. Yes, yes, yes. Okay.

Speaker 4

Got it. And then maybe just On deposits, they were down in the quarter. I know some of it moved to the wealth management platform you guys have. But it sounds like there's an expectation that deposits continue to decline here maybe in the next quarter or 2. I would have thought some of those new bankers you brought over 6, 7, 8 months ago would have been able to mitigate some of those industry pressures, but I don't know if rates are making it difficult for them to bring over prior relationships or not, both on the loan and deposit side.

Speaker 4

Any color there?

Speaker 3

Jeff, do you want me to take that one?

Speaker 1

Well, sure, Brian, go ahead. I can add if I I think

Speaker 2

it's something I want to add to.

Speaker 3

Okay. Matthew, this is Brian. I was just going to, if you look at Slide 10 in the deck, That's where the bulk of the new team members fall into. And so you can see on the deposit side, we had a little bit of decline in that market. It went from $748,000,000 deposits to $7.24 so a little bit of decline, but lower deposits than what we've seen elsewhere in the bank.

Speaker 3

So With overall deposits declining, just not seeing as much impact. And then of course on the loan side, I commented on that. We've had Nice increases in loan balances. So those have come a little quicker than some of the deposit balances, but we're seeing good activity Across the footprint, obviously, those teams are out calling And we're just doing what we can as an institution to support them. But we are seeing good momentum on both The deposit and loan side.

Speaker 4

Okay. And then just maybe for Don on the non interest expense Run rate pretty much in line with the guidance you gave maybe on the higher end, but What are your kind of updated thoughts on the run rate coming into the New Year and how it might transition or progress through the year?

Speaker 2

Yes, I think it's going to increase. We've got a couple of factors here. Again, we added Boise right at the Right. It's basically year end without a lot of costs in Q4 and we will have costs as we develop that office. In addition, the FDIC premiums are going up this year and that's going to be about $1,000,000 for the year.

Speaker 2

And so it's about if you average that out about $2.50 per quarter. I think it's going to be in the $41,000,000 to $42,000,000 range per quarter as a result, Macy. In addition to overall, Some inflationary pressures that we're feeling, but overall I think that's where we're going to end up.

Speaker 4

Okay. Thank you.

Operator

Thank you, Mr. Clark. The next question is from the line of Eric Spector with Raymond James. Eric, your line is now open.

Speaker 5

Hey, everybody. This is Eric on line for Dave Theaster. Congrats on a solid quarter and appreciate you taking the question. Just wondering how you think about liquidity here and potential outflows. Cash is down to around 1% of assets.

Speaker 5

If we continue to

Speaker 3

see outflows, how would you Look, would

Speaker 5

you look towards borrowing or potentially sell securities? How would you kind of handle Defending your deposit base, any color on there would be great.

Speaker 1

Yes. Sure, Eric. I'll answer

Speaker 2

that. Yes. So I think we're going to we might use a variety. We might be using, although we probably won't be adding to our investment portfolio, it does draw some cash flows There, I think we will utilize possibly some borrowings. I think we're just going to be a mix of we may sell some securities also, maybe just a variety of things to meet it.

Speaker 2

Obviously, there's benefits to in the short run of selling Securities, but I think it hurts you in a ways long run. One of our strategies this last year was actually become Less asset sensitive as we reach the peak of the rates. So when rates come back down that we will be protecting some margin. So you're going to give that up if you start Selling securities. So we'll use a variety of methods to manage our liquidity, which we have a lot of with again with a loan deposit ratio of 68%.

Speaker 2

We have plenty of room to manage this.

Speaker 5

Okay. Sounds good. Makes sense. And then you purchased some resi mortgages again this quarter. Just curious how you think about that going forward?

Speaker 2

We'll probably be doing some of that, but probably not to the extent we did it in 2022. But we will use it to do some supplement loan growth in addition to again, it's kind of a Higher duration paper, so I think we're locking in some rates that way.

Speaker 5

Okay, thanks. And then just wanted to Lastly, just touch on capital. Stocks pulled back a little bit. How do you think about capital now going forward?

Speaker 2

Well, currently we're maintaining our capital for purposes of growth. As you see, we've added a lot of teams and therefore we're expecting a lot of production in certain areas. And so right now, our first Already is growth. There's a chance we might be we might have some buybacks, but it's not going to be certainly a focus.

Speaker 5

Okay, sounds good. Thank you. That's it for me and congrats again on the solid quarter.

Speaker 1

Thanks, Eric.

Operator

Thank you, Eric. The next question is from Jeff Rulis with D. A. Davidson. Jeff?

Speaker 6

Thanks. Good morning.

Speaker 1

Good morning.

Speaker 6

I wanted to circle back to the margin. I got your comments that kind of certainly entering 2023 with some momentum. I think the industry Certainly participated on the upside with earning asset yields repricing. Now we're girding for giving it back on the funding crunch in My guess is you feel a little more fortunate on the deposit side. I guess it's a long way of asking, should we expect It is still outpaced that deposit pressure and scratch out further margin increase.

Speaker 6

I mean, I'm looking more into the balance of 2023

Speaker 2

Jeff, I expect There to be some margin expansion through this year, but it will be contingent on again, how much Run off of deposits we might experience because the more runoff we have the other Actions we might need to take as far as borrowings, which are obviously cost a lot higher. And our loan growth, it would be another one. I'm expecting our loan growth to continue, which will help that. So I think those factors will be important. The third is just the overall rate environment.

Speaker 2

What happens there? Are they going to do 50 basis points and stop For a long time or will they start coming back down? So there's obviously a lot of factors. But in general, I do expect our margin to expand some This year, although at a much lower pace.

Speaker 6

Okay. And so that sounds fairly sustained. If we looked at sort of last cycle and how You performed versus peers on a margin. It seemed like that was it had more of an extended run, given the deposit franchise Strengths is that would all inputs aside that seems like a fair assumption this time around? Yes.

Speaker 6

Okay. Got you. And then on the loan growth, I may have missed it. I think you kind of pointed to mid single digit in Q1. Did you round that out for The balance of the year in terms of full year growth?

Speaker 1

We did say mid single digit, Jeff, In the text, it's just it's hard to see too far out there. Historically, we've said Mid to high single digits, I think in a nice a more positive environment, we might see it Pick up some. I think we're also waiting to see what we're going to get out in the New Year from some of these teams. But you know that we always take a pretty conservative approach on our loan growth. So that's why you're getting that mid single digit.

Speaker 6

Got it. And Jeff, Don kind of answered the capital question and I'll circle back. And I think you had said, we'll continue to look at M and A and look at team ads. Any more inbounds In terms of sellers in the region or has it been pretty quiet?

Speaker 1

It's still pretty quiet. It has been for quite a while, as you well know. We just continue to have our conversations, stay close In the event that somebody decides to do something, but for probably the first half of next year, I don't see much happening.

Speaker 6

Okay. Well, thank you. I'll step back.

Speaker 1

Thank you.

Operator

Thank you, Jeff. The next question comes from the line of Andrew Terrell with Stephens. Andrew?

Speaker 7

Hey, good morning.

Speaker 1

Good

Speaker 7

morning. Apologies if I missed this in earlier comments, but did you provide the new production yields for the quarter, There's no new production loan yields?

Speaker 1

Brian, you have that?

Speaker 3

Yes. Andrew, for new commercial loans, it was, 5.72, which is up from 4.87 last quarter. And then for all new loans, it was 5.51, which is up from 4.89 last quarter.

Speaker 7

Okay. Got it. Thank you. And then do you have a breakdown for how much of your Fixed rate loans or adjustable rate loans reprice over the coming year and then also just the amount of cash flow from the securities book. I'm just trying to get a sense for kind of overall earning asset repricing dynamics looking throughout 2023.

Speaker 7

Yes.

Speaker 2

Andrew, if you go to Page 29 actually of the investor Presentation talks about the repricing. So we break it up into floating rate, which is under 3 months and then adjustable rate and then So you see that, about 16.6% of overall assets, repriced, but about 22% of loans Reprice, in less than 3 months. So and half of that is about Prime and the other half is LIBOR. So, don't that help you there?

Speaker 7

Yes. I guess just for the I'm trying to get a sense for the adjustable piece, the 17% and the fixed rate to 65%, Just how much of that could have a potential rate reset higher throughout 2023, just thinking about kind of longer term if the Fed were to pause, just thinking about maybe kind of longer Earnings asset reprising benefits.

Speaker 2

I see. Okay. Just I would say just on Kind of looking back previously, I haven't looked it up for this quarter, but I would say probably without that adjustable rate, probably another 20%, 30% of that is probably going to reprice

Speaker 7

Sure. Okay. That's helpful. And then is there a way to quantify the I know you mentioned some rate sensitive depositors leaving the bank that led to the deposit declines this quarter. Are you able to quantify how much the deposit decline It was kind of due to rate sensitivity from your customers.

Speaker 7

And have you identified kind of what you view as maybe surge deposit balances Or rate sensitive deposit balances remaining that could be at risk of migration moving forward?

Speaker 1

Don, you want to take that one?

Speaker 2

Sure. So as far as the surge deposits, that's a hard one. We've had a lot of change since You might say the beginning of COVID, we were at again I think $4,500,000,000 or $4,600,000,000 in deposits then. We peaked at 6.5 in early 2022. We're down to 5.9.

Speaker 2

But we've also At the same time, we added, I think, maybe 1,000 customers through PPP. We've added teams of people, numerous producers. So where that should Finally, ShakeOut, it's kind of hard to say if you talk about surge deposits. I think we're continuing to See some outflows similar to what we saw in Q4, at least in the 1st part of the quarter. I expect that to slow down as we get further into the year.

Speaker 2

So it's really hard to give you a number on where that's at. Yes.

Speaker 4

And I'm

Speaker 2

sorry, what was your first part of that question?

Speaker 7

Just the are you able to quantify the amount of deposits, I guess of the $300,000,000 deposit of deposits?

Speaker 2

The rate of liquidity, Yes.

Speaker 7

Yes, that's right.

Speaker 2

I don't have again a number, but from getting the intelligence From our bankers out there, I would say 80%, 90% are probably due to

Speaker 7

Understood.

Speaker 2

Andrew Some of its asset purchases, some of its Owner distributions, so there was some of that going on, but I would say most of it's due to rates.

Speaker 1

Yes. And Andrew, when Don is quoting how the deposits changed Through the last couple of years, what also complicates it is, you'll recall that we gathered up A lot of new customers as a result of our work around PPP, so they're embedded in there too, and that includes They're surge deposits, but also they're operating deposits as well. So it's pretty complicated.

Speaker 7

Yes. No, understood. I

Operator

Thank you, Andrew. The next question is from the line of Kelly Motta with KBW. Kelly?

Speaker 8

Hi, Kelly with KBW. Thank you. Thanks for the question. Most of mine has been asked and answered at this But I was hoping to get a little color on your office portfolio, your exposure a little bit Larger than some of the other things I follow. I know you guys are really conservative on the lending front, but Can you just provide any color on kind of the location of that, whether it's downtown versus suburban and any sort of credit metrics

Speaker 1

Yes, Kelly. Just to give you a little bit of perspective, We consider the core locations to be the zip codes in the primary downtown markets of Seattle, Tacoma and Portland. And if you focus on those areas, we don't have a lot of exposure there. I think it Boils down to a total of 27 loans with total outstandings of just under $48,000,000 which boils down to 8.3% of the Office CRE portfolio. And those would not be the high rise buildings that are experiencing the highest levels of vacancy.

Speaker 1

They're probably medical facilities or whatever that might be in those markets. But if you look at our Criticized office loans, for example, they total about $23,000,000 And there's I think it boils down to about 15 loans, and 3 of them are considered in those core markets. So our Exposure is pretty limited. And while we are seeing vacancy for downtown offices To be going up, it's we're not necessarily seeing A significant impact in the broader market. You might be reading about all of the tech companies with these Sort of breathtaking numbers of people that they're laying off, which something we haven't seen in a long time And that industry hasn't seen probably ever.

Speaker 1

But I think for us, those layoffs are still kind of to be determined for the And we think that the impact will be roughly proportionate to the overall size of the company's Footprint and geography, so while it will have some impact as we go along, it may not be as significant as the numbers would imply. We also are seeing some of the tech companies reducing their footprints for hybrid work in addition to the headcount reductions. We've been seeing that for several quarters now, so that's not necessarily new. And I don't get the impression this is A bubble bursting. I think it's more a correction for the tech companies.

Speaker 1

But overall, our as you can see from our credit quality metrics, Things are pretty benign right now.

Speaker 8

I appreciate all the color. I guess, More broadly speaking, are there any other areas that you think from our seat we should be watching more closely?

Speaker 1

Not for us in this region. I mean, we just got some information from our Chief Appraiser. He gives us an update every month. And There's a little softening in industrial and multifamily, not Significant enough to necessarily cause concern. Retail is actually pretty good right now.

Speaker 1

And hospitality, we know the market the hotel portion of the market It is still in recovery mode, but as we've said in some of our comments, even our hotel portfolio is improving. One of the, I guess, the metrics that I watch for is what's going on with single family. And you know we had A pretty significant rise in values of homes in this the general region, People moving around and buying new homes in different markets. But the information we have would suggest that While things have slowed down a little bit, single family housing maybe pricing dropped back from what it was at the end of the year to what it was maybe at the beginning of the year. But There's still not a huge amount of houses available, which obviously keeps the price up.

Speaker 1

So For now, we're feeling pretty comfortable with where things are and what's in our portfolio.

Speaker 8

Thanks so much. I'll step back.

Speaker 1

Thanks, Kelly.

Operator

Thank you, Kelly. We have no further questions waiting at this time. Seeing none, it's my pleasure to hand the call back over to Jeff for any additional remarks. Jeff?

Speaker 1

Thanks, Sam. If there's no more questions, we'll wrap up this earnings call. We thank you for your time, your support and your interest in our ongoing performance, and we look forward to talking with many of you in the coming weeks. So goodbye, and have a good day.

Operator

That concludes the Heritage Financial Corporation Q4 2022 earnings conference call. There will be a replay available shortly hereafter. You may access the replay by dialing in to the toll free number of 66 8139403 and entering access code 855 414. Thank you all for your participation. You may now disconnect your lines.

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Heritage Financial Q4 2022
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