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 Brica, 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. If you would like to ask a question at this time, please press star followed by the number one on your touchtone keypad. I would now like to pass the conference over to your host, Jeff Deuel, CEO of Heritage Financial, to begin. Jeff, please go ahead. Thank you, Brica. 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, Chief Operating Officer, Don Hinson, Chief Financial Officer, and Tony Chalfant, Chief Credit Officer. Our third quarter earnings release went out this morning pre-market, 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 continued 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 continued 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 the future. We will now move to Don, who will take a few minutes to cover our financial results. Thank you, Jeff. I'll be reviewing some of the main drivers of our performance for Q3. As I walk through our financial results, unless otherwise noted, all of the prior period comparisons will be with the second quarter of 2023. Starting with the balance sheet, loan growth slowed in Q3, increasing $15.5 million for the quarter. Year-to-date loan growth through Q3 is at 5.3%. Yields on the loan portfolio were 5.30 for the quarter, which was 11 basis points higher than Q2 and contributed to a 12 basis point increase in yield on earning assets. Bryan McDonald will have an update on loan production and yields in a few minutes. Unlike the declines over the past few quarters, total deposits increased $39.6 million during the quarter. The increase is due substantially to higher CD balances as customers continue to take advantage of the higher rate environment by lowering their excess balances in lower-paying non-maturity deposit accounts. These factors contributed to an increase of 31 basis points in our cost of interest bearing deposits to 1.23% for Q3. Also impacting total deposit balances in Q3 was the sale of our Ellensburg branch, along with its $14.7 million of deposits, as well as an increase of $62.8 million in brokered CDs during the quarter. Due to the current market pressure related to deposit rates, we expect to continue to experience an increase in the cost of our core deposits, although at a slower pace. This is illustrated by the cost of our interest-bearing deposits being 1.35% for the month of September, with a spot rate of 1.38% as of September 30th. Investment balances decreased to $136 million during Q3 due to higher than normal maturities and prepayments during the quarter, as well as the sale of $47 million of securities. These sales, in combination with the purchase of $23 million of higher earning securities, was done to partially restructure the portfolio while also increasing our cash position. A loss of $1.9 million was recognized on these sales in Q3, most of which occurred in September. It is estimated that the annualized income improvement from these transactions will be $1.4 million, resulting in an earn back period of 1.4 years. We will consider additional loss trades in order to continue to defend our margin from downward pressures. Moving on to the income statement. Net interest income decreased $206 thousand due to a decrease in the interest margin, partially offset by an increase in average earning assets. The NIM decreased to 3.47% for Q3 from 3.56% in the prior quarter. The decrease in NIM was primarily due to the cost of interest-bearing deposits increasing more rapidly than the yields on earning assets. We expect NIM to decrease further in Q4, since the NIM for the month of September was five basis points lower than it was for the quarter. The pace and duration of our decrease in margin will be highly dependent on continued increases in our cost of interest-bearing deposits, as well as maintaining deposit balances. As our cost deposits as well as deposit balances level off, we expect to experience margin stabilization through the repricing of adjustable rate loans, in addition to higher origination rates on new loans. We recognize a reversal of provision for credit losses in the amount of $878,000 during Q3 versus a provision expense of $1.9 million in Q2. The reversal of provision expense was due to net recoveries of $1.2 million recognized during the quarter. Tony will provide more information on these recoveries in a few minutes. Non-interest income decreased $1 million from the prior quarter, primarily due to the loss on the sale of securities previously mentioned, partially offset by a gain of $610,000 on the sale of our Ellensburg branch that I discussed earlier. Non-interest expense decreased $355,000 to approximately $41 million in Q3. This was due to decreases in numerous categories, partially offset by an increase in compensation and benefits. Compensation expense was higher compared to Q2 due to the adjustments we've made to the accrual for incentive-based compensation in Q2. All of our regulatory capital ratios remain comfortably above well-capitalized thresholds, and our TCE ratio is at 8.2%, down slightly from the prior quarter, due primarily to AOCI. In addition, with a loan deposit ratio of approximately 76% and cash balances over $200 million, we have plenty of liquidity to keep to grow our loan portfolio. I will now pass the call to Tony, who will have an update on our credit quality metrics. Thank you, Don. I'm pleased to report that credit quality remains strong and stable through the first nine months of the year. As of quarter end, non-accrual loans totaled just over $3 million, and we do not hold any OREO. This represents 0.07% of total loans, as compared to 0.11% at the end of the second quarter. Non-accrual loans declined by $1.6 million during the quarter and are now down by 51% over the last 12 months. Reductions of just over $2 million were largely tied to the payoff of an agricultural loan that was the culmination of a long-term workout. Partially offsetting the reduction was the movement of three C&I relationships to non-accrual status in the aggregate amount of $440,000. Page 25 of the investor presentation reflects the significant improvement we've experienced in our non-accrual loans since the end of 2020. This quarter, we began including loans over 90 days past due and still accruing interest in our non-performing assets total. This total includes three loans that are well secured by commercial real estate at low loan-to-value ratios and are in the process of collection. They remain on accrual status because the risk of loss is very low. Criticized loans, those risk-rated special mention and substandard, total just under $135 million at the end of the quarter. This is a decrease of $8.5 million, or 6%, from the end of the second quarter. Criticized loans are virtually unchanged since the end of 2022. Within that group, loans rated substandard remain stable and are actually down by $3 million over that same time period. Overall, our commercial real estate portfolio continues to perform well and has been stable through the first nine months of the year. Total criticized CRE loans represents 3.1% of our total CRE portfolio and 2.2% of our entire loan portfolio. While we continue to closely watch our portfolio of office loans, we have yet to see any material deterioration in credit quality. At quarter end, criticized office loans totaled approximately $21.5 million, which is down from the $25 million reported at the end of the second quarter. This represents 3.8% of our total portfolio of owner and non-owner-occupied office loans. In summary, we believe our office CRE portfolio is conservatively underwritten, very granular, and not materially exposed to the high risk of the central business district areas. Page 24 of the investor presentation provides more detailed information about our office loan portfolio. During the third quarter, we had a large recovery on the payoff of the agricultural loan that I mentioned earlier. This represented the majority of the $1.3 million in total recoveries and was partially offset by charge-offs of $138,000, resulting in a net recovery of just under $1.2 million for the quarter. Through the first nine months of the year, we're in a net recovery position of $895,000. On page 27 of the investor presentation is a new slide that we believe demonstrates that by proactively identifying criticized assets within our portfolio, we've been able to keep our net charge-off levels lower than our peers. While our credit metrics remain strong, we remain watchful of inflation pressures and other potential weaknesses in the broader economic environment. We are confident that our consistent and disciplined approach to credit underwriting will continue to serve us well should the economy show any material deterioration in the coming quarters. I'll now turn the call over to Bryan for an update on loan production. Thanks, Tony. I'm going to provide detail on our third quarter loan production results, starting with our commercial lending group. For the quarter, our commercial teams closed $217 million in new loan commitments, up from $212 million last quarter, and down from $277 million closed in the third quarter of 2022. Please refer to page 19 in the third quarter investor presentation for additional detail on new originated loans over the past five quarters. The commercial loan pipeline ended the third quarter at $291 million, down from $473 million last quarter, and down from $604 million at the end of the third quarter of 2022. Our heavy filtering of non-owner-occupied real estate loan requests since March is the primary driver of the pipeline decline, although loan demand has also been softening as interest rates have moved higher. Loan growth was below last quarter at $15 million, despite the higher volume of new loans originated, due to a combination of higher prepays and payoffs, lower net advances on loans, and lower principal balance on loans originated in the quarter. Please see slides 20 and 21 of the investor deck for further detail on the change in loans during the quarter. Based on our lower pipeline levels and the softening loan demand, we anticipate for our organic loan growth rate to be in the low single digits over the next couple quarters, and largely driven by prepaid levels and advances on construction loans. The deposit pipeline ended the quarter at $134 million, up from $118 million last quarter, and balances associated with new deposit accounts opened during the quarter totaled $39 million. The increase in the deposit pipeline is broad-based across the footprint, although we are seeing a higher concentration of new accounts coming from our new teams and the most disrupted markets. The Oregon and Portland MSA is the only major market where we saw net deposit growth during the quarter, with details reflected on slide 10 of the investor presentation. Moving to interest rates. Our average third quarter interest rate for new commercial loans was 6.45%, which is 29 basis points higher than the 6.16% average for last quarter. In addition, the average third quarter rate for all new loans was 6.54%, up 27 basis points from 6.27% last quarter. The increase is due to a combination of higher underlying index rates and widening spreads implemented in 2023, versus working through the pipeline coming into the year that included pricing committed at lower levels. The market continues to be competitive, particularly for C&I relationships. The mortgage department closed $18 million in new loans in the third quarter of 2023, compared to $25 million closed in the second quarter of 2023, and $26 million in the third quarter of 2022. The mortgage loan pipeline had ended the quarter at $10 million versus $13 million last quarter, and $18 million at the end of the third quarter of 2022. With mortgage rates remaining at higher levels, we anticipate volumes will continue at the relatively low levels we have seen year to date. I'll now turn the call back to Jeff. Thank you, Bryan. As I mentioned earlier, we're pleased with our performance in the third quarter. While we continue to experience the challenges of this rate environment on our deposit franchise, we are confident that the strength of our franchise will continue to benefit us over the long term. Our relatively low loan-to-deposit ratio positions us well to continue to support our existing customers, as well as pursuing new high-quality relationships. We will continue to focus on expense management and improving efficiencies within the organization. Overall, we believe we are well-positioned to navigate the challenges ahead and to take advantage of any potential dislocation in our markets that may occur. That's the conclusion of our prepared comments. Brica, we're ready to open the call to any questions callers may have. Thank you. If you would like to ask a question, please press star then one on your telephone keypad. If you change your mind at any time, please press star two. We'll pause for a moment whilst we sort the Q&A list. The first question we have on the phone lines comes from Matthew Clark of Piper Sandler. You may proceed with your question, Matthew. Thanks. Good morning, gentlemen. First one for me, just on the securities sold in the quarter, can you give us a sense for the timing of that sale and the yield pickup that you anticipate from reinvesting those proceeds? As a follow-up to that, just your appetite to do more? Hey, Matthew, we did it in September, so we didn't really get much benefit of it in Q3. The overall and estimated, again, we purchased some securities, about $23 million, at 5.66. The rest went into cash, and of course, that's earning about 5.40 of the $45 million that we sold. The estimated pickup on the, it annualizes $1.4 million, or you might think of $350,000 per quarter on that. If you calculate that, that's about a NIM pickup of about two basis points. Yep. Okay. stutter. * The third Thank you. Considering doing more, we're gonna watch the market and be selective. We did it. We could do this again, we could do more also, depending on how we're feeling about where the market's at. Okay. The yield on the security sold, I can back into it, but just to make it easy on us. 2.36. Okay. Thank you. Shifting gears to deposits, it looks like deposits were up in the region where you hired the bankers last year. Just can you give us an update on that front? I assume none of that's brokered-related. Is it all core? Again, maybe an update on what you're seeing in that Portland market with First Republic, that First Republic branch that's closed? Sure. Matthew, it's Bryan. You see it on slide 10, the deposits were up about $73 million since the start of the year. That's about a 13% growth rate, you know, versus the, you know, bank-wide, we're down about nine. If you look at the chart above on slide 10, in the Seattle MSA, we're actually down a little bit more, 15%, just due to the amount of excess deposits some of our customers had in that market. We are seeing disruption. We're seeing benefit as you're seeing here. It's not just from the new team, we're also seeing it positively benefit our other branches and other commercial teams in the market. The outlook's pretty favorable as well. I mentioned the pipeline numbers in my comments, and a significant portion of both the loan and deposit pipeline are coming from our new teams. It's about 38% of the loan pipeline, and then it's actually a little over 40% of the deposit pipeline. We're pleased with the outlook, you know, as well as the performance. We are seeing disruption in that market from, as you mentioned, First Republic and, you know, the Columbia/Umpqua combo. I'd also add, which I've said before, really, the customers are coming from a variety of different spots. You know, having, you know, the sales force down there without a portfolio, you know, out calling, obviously, we're getting a lot of strong opportunities. Again, not just the new team, but all of our teams and bankers in that market. Okay, great. Shifting to expenses, Don, you have an updated outlook on the run rate of non-interest expense is a little bit lighter than your low $42 million guide coming out of last quarter. Just curious what your thoughts are on for 4Q. Yeah, we had a little bit of benefits and things happen, just kind of miscellaneous things that, for the quarter, kind of helped us out. I would say we are managing FTE levels to such that I think, you know, probably a run rate would've been like $41.5 million type, in that range. Now I will also say that we are looking at various initiatives on the expense side, and when I talk about expense management initiatives. Even though that's a probably a decent run rate, we could potentially have higher expenses in a short, like possibly in Q4 or Q1 of next year, as we review things like contracts, renegotiate contracts, or even we could even exit contracts and take some hits up front that we feel is gonna, we're not getting value, and we're gonna have savings going forward. There's a chance that we may see higher expenses in Q4, but if we do, we'll have benefits from it in future quarters. ` and ` Yeah, Matthew, this is Tony. I can take the first part, and then I think Don has the actual reserve number against the office portfolio. We haven't seen a lot of weakness in our suburban office market. You know, we continue to watch it closely, but nothing's really materialized from that standpoint. Not really much to add, you know, to my comments in that area. Yeah, I'll just follow up. We don't have any individually evaluated loans on the office side. I think the percentage, you know, our overall percentage is 1.1%. The percentage on the office loans is around 1.56%, I believe, on the allowance. I guess you can calculate the number. If we have the numbers, I don't have the exact number, but we do disclose how many office loans we have, so you can kind of figure that out. Yep. Got it. Okay. Thank you. Thanks, Matt. We now have Jeff Rulis of D.A. Davidson. Thanks. Good morning. Uh, morning. Jeff, maybe a question for you. Just checking in on capital. You've got CET1 close to 13%, total capital over 14. You rattled through the TCE number. I guess, are there some in-house comfortability levels that you've exceeded at this point? Just, I mean, frankly, those levels haven't changed much over the last year. Trying to get a feel for maybe you want to inch those higher, or can we think about you wanna be proactive when the time is right, type of thing with M&A? Thanks. Thanks, Jeff. Don, I think that's a good question for you. Okay. Yeah, as far as capital levels, we are comfortable with our capital levels. Obviously, here with the rate environment, the TCE ratio is probably lower than our ideal. That will, you know, assuming rates, you know, stay the same or don't go up much, we will see that come back into capital over, you know, a certain time period. As far as, you know, we're using our capital for, we're obviously are looking to grow. We may do some, you know, trades, like we mentioned on the loss trade. It was a smaller one. We could do a bigger one, but that wouldn't impact TCE so much. It would impact regulatory capital, but we're comfortable with that. I don't think we necessarily have a large overabundance of capital. We did a few buybacks again in Q3, about 150 million, I think, or 150,000, sorry, of shares repurchased, we could continue to pick at that also. We don't have any plans to do any large-scale buybacks at this point. Okay. It doesn't sound like you're uncomfortable on the high side to really deploy that, but okay. Appreciate it. If our regulatory capital start exceeding 10%, then we might, you know, certainly be like our leverage ratio. We probably wanna keep that under 10% in the current rate, in the current economic environment. Just because I think you start getting over 10%, and then we may not be getting the value of that. Right now, I think we're in the high nines, so I think we're fine. Okay. Thanks, Don. Maybe Tony, I know this is a squishy question in terms of reserve to loans and any guideline there, but, you know, that continues to lift as a% of loans, and you've been in a net recovery position for over two years now. I know those are specific credits, but just the thought of if you're looking at low single-digit loan growth in the short run, your thoughts on the reserve, do we kind of hold steady or continue to lift up as we've seen it? Yeah, Don, I don't know if you want to take that on the ACL. I think it's hold steady. We don't have any plans to really change that. It's been pretty consistent. We've already considered all of, you know, looking forward, potential recessions. It's in the model. Again, our underwriting is such that, as you can see, we tend to always kind of outperform what we're putting on our, you know, criticized loan portfolio and with the actual amount of charge off. You know, the only thing it possibly changes is the mix of loans and the amount of loans. Okay. Does that answer your question, Jeff? Yeah. Yeah, I know that it's not black and white necessarily, but just trying to get a gut feel of where that is. Sounds like you're pretty comfortable with the level and got you. One housekeeping, Don, while I have you, was there an interest recovery that added to margin in the quarter, the 3.47? Was there a bump there at all that it flowed through there? I don't believe so. I don't think we had anything that ballooned the loan yields at all, if that's what you're talking about. Yeah, from the credit side. Okay. Okay. I don't think we had any large income recoveries on that. Okay. Don, did you mention an expense growth rate in 2024 expectations? I know that you kind of walked through the near term, you know, around $41.5 or a little higher in the short term if you take exiting contracts or something. Is that... Am I kind of? If I look at the balance of 2024, is it right to say that's still going to be pretty managed growth, if at all? Going to keep that growth rate pretty? Yeah. Pretty low? Yeah. Obviously, in this rate environment, we're looking at all aspects to protect overall profitability. You know, I mentioned and maybe $41.5, a little more specific, maybe I meant to more say mid-$41s, right, for next quarter. You know, again, I would say some things are lower right now because, you know, profitability is down this quarter compared to what was expected. You know, like, again, incentive comp accruals are down. If they go back to normalized levels, I would expect, you know, more of a $42 million run rate. That's kind of ex any tactics that we are in the process of looking at, but I would say the run rate would probably pop to $42 a quarter starting Q1 if we don't do anything else regarding that. Okay. Thank you. Thanks, Jeff. Thank you. We now have David Feaster of Raymond James. Hi. Good morning, everybody. Morning. Maybe just starting on the pipeline and the origination and loan growth side. Obviously, the pipeline declined. Sounds like it's kind of a combination of maybe less appetite for credit from your standpoint, especially on the NOOCRE side, as well as weaker demand. I'm just curious, where are you still seeing good opportunities? What segments can still drive growth here and can pencil out even at higher rates? Just how new loan yields are trending. Bryan, you want to take that one? Yeah, sure, David. We have been, you know, in the spring, you know, we saw, you know, a big increase in real estate requests come in as, you know, other banks were pulling back on that category. Then concurrently, our prepay levels have come way down from what we had, you know, the last few years. Really what we've been doing is managing our, you know, concentration levels has been the primary driver behind the heavy filtering we've done. Not to get too high in terms of our construction concentrations and our investor CRE concentrations. That was really the primary reason. The rates at the time were also a consideration in the spring, just as... You know, the new yields really hadn't adjusted. If you fast-forward to today, the pricing is good on the investor real estate, on the requests that we're seeing coming in. We're still fielding them, but at a much lower level, so it's strong in that category. C&I activity, we're very focused on that. We've got a nice customer base and prospect base we've been going after, but the pricing's pretty competitive in that space, obviously, because of the deposit aspects of those relationships. In many cases, the customers we're looking at have, you know, very significant deposit levels. From that standpoint, it makes sense that the loan pricing is competitive. Overall, just with rates up, you know, customers that have been in business for 15 years or 20 years, they've experienced these rate levels in their, you know, business history and, you know, aren't reacting as strongly as some of the business customers that have been in business for maybe the last 10 years or 15, that, you know, haven't experienced rates at these levels, so they're maybe pausing a little bit more, you know, on new projects. In general, the health of the local economy and the customer base is really good. Liquidity levels are strong. We are seeing a bit more use of cash to expand versus using debts, in part because of the, you know, pricing on new loans. Again, not a surprise with the low liquidity levels that the customers might use more liquidity first. Overall, the economy is good. We are seeing a dip in demand, again, primarily based on rates. On the non-owner side, that's been, you know, our own choice to filter that hard. The volume has gone down in the market, but we could take a larger share if we chose to. You also asked on new rates, and I did mention those, that the total for the total portfolio of new deals closed in the quarter, the average rate was 6.54, which is up 27 basis points from last quarter. This is correct. *Wait, "I mean, credit's phenomenal."* Is "I mean" a starter conjunction? No. *Wait, "You know, you got the large ag recovery."* Is "You know" a starter conjunction? No. *Wait, "I'm just curious, we already touched on office, but maybe more broadly, what are you seeing on the credit front?"* Is "I'm just curious" a starter conjunction? No. *Wait, "I mean, we're starting to see some cracks and normalization in the industry."* Is "I mean" a starter conjunction? No. *Wait, "You know, it can't get better than zero."* Is "You know" a starter conjunction? No. *Wait, "I'm just curious Tony, you wanna take that? Yeah. Yeah, sure, David. You know, generally, credit's been pretty benign now for quite a few quarters, as you mentioned, and, you know, I think we're still in a little bit of a credit bubble. You know, our numbers were a bit impacted by the recovery on the large deal this quarter. But it's still, even if you netted that out, it would be much lower than historical for NCOs. Again, non-accruals remain very low. I think we're still in that, what I would call a very slow move back to a more normal credit environment. It's just been slower than I expected over the last several quarters. Nothing really jumping out as to the little increase in the classified numbers. It's just more, you know, movement of credits, you know, between grades, and there was nothing really that jumped out. You know, we're continuing to watch everything closely, but again, our total criticized numbers have stayed pretty stable now for quite some time. While, you know, there might be a little bit more pressure as we go forward, we've got quite a bit of room still to move to get back to what I would call a more normal credit environment. I will say, you know, there's probably a little bit more weakness in the C&I space right now, just... I don't know really what to attribute that to, but I think it's just maybe the stimulus money that's worked its way through the economy and isn't really there to kind of prop some of those operating companies up. We're seeing a little bit more stress there, but nothing of any significance that's very alarming. Okay. Maybe just touching on kind of the implications. It seems like we're gonna be in a higher-for-longer environment, or at least that's kind of more the consensus, it seems like. Maybe just on the margin and the NII trajectory, I guess, as we look out to next year, you know, I guess if rates do stay higher and funding pressures persist, you know, talk about some margin compression, but I guess, would you expect that in the, you know, upcoming quarter? I mean, I guess, would you expect that to persist kind of in the first half of the year? I guess just kind of how you think about the margin trajectory and kind of opportunities for expansion over time in a higher-for-longer environment? Yeah. Yeah, sure. Yeah. Yeah, I think that we're going to continue to have some pressure, as again, you mentioned how September was lower than for the quarter. Again, I think the pressure on deposits is really the factor. Again, the costs there will continue to go up. How quickly is, you know... It seems like we go in kind of waves, where we get a lot of exception requests, and other times, there's less so. With the rates higher, and especially if the Fed increases another time, where there's a lot of, you know, a lot out there on the short end of the curve, that's- That could, you know, cause more problems and hurt us, at least in the short run. For rates higher or longer, you know, at some point, the increases on the deposit side will subside, and our assets will reprice, and we'll hit an equilibrium. At this point, you know, we're probably looking, you know, maybe the middle of next year. Maybe we might have in Q2, but it might not happen till Q3 at this point. Got it. That's all for color. Thank you. Thank you. We now have Andrew Terrell of Stephens. Hey, good morning. Morning. I wanted to go back to the securities repositioning transaction. I appreciate all the color you guys provided there. As you're contemplating similar transactions moving forward, I know the one that took place this quarter was, I think you mentioned a 1.4-year earn back. Is that the kind of threshold you're looking to manage any incremental repositioning trades around? Would you be willing to extend to call it 2-3 years? Just wanna get your thoughts there. At this point, yeah, 1.4 is a very good earn back period. If we did a larger scale, I don't necessarily see that probably occurring. I imagine it would go over, maybe go over slightly over two years. We definitely want to keep it under three years, you know, and even two and a half would be preferable. Yep. Okay. We will- Yeah, 1.4 is definitely good. We'll continue. Yeah, we'll continue to review this. Again, a lot will depend on really the rate environment. Right now, of course, rates have been up so far this quarter, and which makes sales a little more challenging. Yep, understood. Okay. On the time deposit portfolio, it looks like about a third of the growth came from broker deposits. Can you just talk about the cost differential between the broker deposit growth and the core customer time deposit growth? On the core customer side, where are you pricing new deposits at today, and how does that compare to competitors in the market? Sure. The brokers I think came in around 5.45. We did those in July. That had a-- you know, we pretty much got the whole impact for the quarter there on the brokered. Again, a broker is just another way to manage the balance sheet. It's not-- They're not core deposits, they're not, you know, the customers. You know, we just use it as one more, instead of using borrowings, we can use brokered in that way. You know, the new deposits coming on, I think a lot of them are in the 4%-almost 5% at times. We have gone up to 5% and even the low fives periodically for new CDs, but I think on average, it's probably in the fours for our customer CDs. Okay. Got it. Thank you. If I could ask, I think, Bryan, on the new origination yields for the quarter, did you say 6.54% was the new origination yield, all in? Yes. On the all loans, it was 6.54. Okay. As I look back to origination yields a year ago, I've got written down 4.89 in 3Q of last year, and we've obviously gotten this 160 basis point pickup. We've obviously gotten a lot more than that in terms of short-term rate increases. I'm just curious, is there anything influencing, like... Could you talk about the range within that new origination yield? Is there anything like, such as old commitments that are funding up at lower rates? Anything that's influencing that number lower and how you would expect new origination yields to progress over the next, call it, six months? Yeah. I mean, the range went from, you know, kind of the 6% range all the way up to 8.5%, you know, just kind of looking at the full quarterly averages. Anything that's tied to a variable index Prime, you know, or SOFR, you know, you're getting strong rates. If you look at the renewal percentage, the rates on the renewals are, you know, were over 8% for the quarter. Where we're really seeing strong pressure is anything, you know, C&I or owner-occupied or anything kind of business-related, and that's because Heritage and our competitors are really focused on deposits and that, you know, commercial category, so it's been super competitive in that space. You know, the investor real estate or the construction, less so. Your question on, you know, did we have a carryover of commitments we made last year and the early part of the year? Yes, and we've largely worked through that. We expect to continue to see the pricing move up over the next few quarters. Again, both spreads and indexes benefiting us at this point. Okay. That's very helpful. I appreciate the color. If I could sneak one more in, just do you have the total dollar amount of syndicated credits in the portfolio? Yeah, Andrew, the syndicated credits, you know, the SNICs is 75. $ million in outstandings at quarter end, which is about 1.75% of total loans. It is a fairly small portfolio that we, you know, we play in a pretty small portion of that space. Those deals that are higher rated and lower levered is really where we really focus our efforts. Okay, great. Thank you guys for taking the questions. Andrew, real quick, just to follow up, I did look up the originate or the new CD rates for Q3, and it was around 4.50. 450. Got it. Okay. Thank you. Yeah. All right. Brica, do we have any other questions? We now have Kelly Motta from KBW on the line. Terrific. Thank you. Hey. Hi, Kelly. Hey, good, good morning. Morning. Most of my questions have been asked and answered at this stage. Maybe if you could go back to office, can you remind us how much of that portfolio reprices or comes up for renewal over the next year or two? Tony, I think you have some good data on that with regard to. I do. Yeah, I mean, I don't have it over the next year, but of that, Kelly, of that portfolio, that's about $563 million, which includes owner and non-owner-occupied. If I look at the amount of that, it's actually over the next three years is what I have. Don may have something a little more specific, but I've got about a little over $70 million of that portfolio. Over a three-year period, we feel like that's a pretty low amount of maturing loans. Now, that doesn't include some repricing that might be in there, too, so. Got it. That's really helpful, Tony. In your prepared remarks, I think one area that you're looking at is expense control. Just wondering how you're balancing that with, you know, what you're viewing as opportunities to benefit from the dislocation in your markets and the ability to add teams. Like, how would you kind of stack rank those priorities as we sit here at this stage of the cycle? Well, Kelly, I think, you know, it's that time of year where all of us are starting to plan for the new year. We've said many times in the past that expenses is one thing that we can control. We're always watching expenses, particularly, you know, comp and benefits for one, because it's one of our biggest categories. We'll continue to focus on that as we plan for 2024. I think there's pockets with inside the organization that we can spend some time on that's in our control. Don referenced, you know, maybe looking at contracts, whether it's renewing, renegotiating or maybe releasing them altogether is one thing we can do. There is an underlying belief on the part of the leadership and the Board, who are in full support of this line of thinking, that first choice when it comes to acquiring would be teams in our footprint, and we've done that many times. While we're really focused on maintaining or controlling our expenses as they stand today, I don't think that that would stop us from pursuing the right teams in the right locations if they presented themselves. We are also very well aware of how much of an impact the two team, you know, projects that we just brought on over the last 18 months has had on our expense base, but we can kind of carve that out and show how that's impacting us. "Spell out numbers 1-9 in running text; use numerals for 10 and above." I'll use "three" and "four". If the rule is there, it's there for a reason. *Wait, "3 years" and "4 points".* Let's look at the "numeric form" rule again. "You MUST convert all spoken numbers into numeric form while preserving the original meaning and context (e.g., 'twenty-five' → 25, 'one hundred and fifty' → 150)." This rule is about *how* to present numbers (numeric form vs word form). The "1-9" rule is about *which* numbers to present in which form. So, "all spoken numbers" should b M&A is close behind, but we all know M&A is pretty rough right now and probably not front and center for us in the next, I don't know, six months at least. Thanks. Thanks, Jeff, for all the color. Appreciate it. I'll step back. Thank you. We now have Tim Coffey of Janney. You may proceed. Great. Thanks. Morning, everybody. Good morning, Tim. Don, anyway, Don, I have a question about, you know, kind of the NII outlook. Is it a reasonable expectation to think that it might be flat here for a couple quarters, even if NIM does compress? Well, I think that a lot will depend on our deposits. You know, will the deposits continue to stabilize? Can we maintain on interest-bearing deposits? That's a key because, you know, then the margin is, I think, is gonna continue. Again, still it'll continue to decrease more slowly, but still decrease some. So it'll be a challenge. I mean, it came down a little bit. We actually increased our average earning assets for the quarter. I'm not sure that's going to happen every quarter right now, but again, it's so dependent on deposits. I think we might see continued a little bit of decline in NII. Okay. Okay. Since you brought this up a little bit, a little while ago, Don, the request for exception pricing on deposits, the pace of that, has that changed in 3Q relative to 2Q? Unfortunately, no. It's- Okay. I think the dollar amounts have decreased some, but I think the number are still pretty high. Okay. Jeff, just want to follow up on the M&A comments you just made there. In the third quarter, in the Western region, we saw some interestingly structured transactions, right? Where one, the legal buyer was different from the accounting buyer, and just recently we saw a take under. Do you think, you know, thinking creatively about how to structure M&A transactions might unlock the M&A market, regardless of the kind of fair value marks all the banks seem to be carrying? Yeah, I think that, well, we haven't, those particular deals were not lost on us. We spent a lot of time looking at them, and it sort of opened our eyes to the variety of, you know, creative ways of going about these deals there are out there. I think we would certainly, you know, consider any kind of structure that makes sense for us to get a deal done. But I just don't see.. You know, our conversations continue as they always have. I keep in close contact with a lot of the organizations that we, you know, have a admiration for, but I think regardless of what the creative structure is, I just don't think there's deals to be done right now. You know, historically, Tim- Okay. I just wanted to add, historically, the deals we did do were mainly because of retiring CEO without, you know, specific succession. The scenarios now are a little different than that. They're not as urgent. I think a lot of the potential targets are taking their time to decide what they want to do. Yeah, no, that makes a lot of sense. It does. All right. Thank you very much. Those are my questions. Thank you. Thank you. Are there any more questions? I'd like to hand it back to Jeff Deuel, our CEO, for any final remarks. Perfect. Thank you. We'll wrap up this quarter's 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 next couple of weeks. Take care and goodbye. Thank you all for joining. I can confirm that does conclude today's call. Please have a lovely rest of your day, and you may now disconnect your phones.