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spk07: Hello and welcome to the First Financial Bank Corp Second Quarter 2022 Earnings Conference Call and Webcast. My name is Brika and I'll be coordinating the call today. During the presentation, you will have the opportunity to ask a question by pressing star followed by one on your telephone keyboard. I now have the pleasure of calling to our host, Scott. Thanks, Brika.
spk05: Good morning, everyone. Thank you for joining us on today's conference call to discuss First Financial Bancorp's second quarter and year-to-date 2022 financial results. Participating on today's call will be Arch Brown, President and Chief Executive Officer, Jamie Anderson, Chief Financial Officer, and Bill Herrod, Chief Credit Officer. Both the press release we issued yesterday and the accompanying slide presentation are available on our website at www.bankitfirst.com under the Investor Relations section. We'll make reference to the slides contained in the accompanying presentation during today's call. Additionally, please refer to the forward-looking statement disclosure contained in the second quarter 2022 earnings release, as well as our SEC filings, for a full discussion of the company's risk factors. The information we will provide today is accurate as of June 30, 2022, and we will not be updating any forward-looking statements to reflect facts or circumstances after this call. I'll now turn it over to Archie Brown. Thank you, Scott. Good morning, everyone, and thank you for joining us for today's call. Yesterday afternoon, we announced our financial results for this quarter. Before I turn the call over to Jamie to discuss those results in greater detail, I'm going to say a few words regarding the quarter. I'm extremely pleased with our performance in the recent period, which was highlighted by a rapidly expanding margin, strong loan growth, and exceptional fee income. For the quarter, we achieved adjusted earnings per share of $0.56, a 1.31% return on average assets, and a 21.26% return on average tangible common equity. Earnings improved from the first quarter as our asset sensitive balance sheet was positively impacted by recent rate increases. In addition, credit quality was stable with lower net charge-offs and non-accrual loan balances. This led to a small provision recapture for the quarter. We are encouraged by our fee income performance for the quarter, which reflects the strength of our diverse fee businesses. Total fee income surpassed our expectations due to record foreign exchange income, higher income from limited partnership investments, and our growing leasing business. While second quarter mortgage banking income increased 35% from the linked quarter, we continue to experience headwinds due to rapid rise in interest rates. In addition, recent overdraft program changes led to a modest reduction in deposit account service charges during the second quarter, and we expect some further decline in the third quarter as these changes are fully integrated. We're very pleased with loan growth in the second quarter. Loans excluding PPP increased by $191 million, or 8.3% on an annualized basis. Loan growth was broad-based with increases in CNI, retail mortgage, and consumer banking. This more than offset a decline in the ICRE portfolio, which was driven by elevated prepayments. In addition, we were also pleased with summit growth in the quarter, which included a total of $50 million in leases and loans. Loan origination activity remains strong as we head into the third quarter. With that, I'll turn the call to Jamie to discuss the second quarter results in more detail. After Jamie's discussion, I will wrap up with some additional forward-looking commentary. Jamie. Thank you, Archie.
spk06: Good morning, everyone. Slides four, five, and six provide a summary of our second quarter financial results. The second quarter was highlighted by an expanding net interest margin, strong loan growth, increased fee income, and stable credit quality. As a result of the Fed rate hikes, our net interest margin increased 30 basis points during the quarter. Given our asset sensitive balance sheet, we believe this trend will accelerate into the third quarter as the Fed increases rates further. We were pleased with 8% annualized loan growth during the period, excluding PPP balances. The growth was widespread across the portfolio, with the biggest increases in C&I and residential mortgage. Fee income increased 21% during the quarter, surpassing our expectations. In particular, Bannockburg had a record quarter, while leasing business income increased 19%. Mortgage banking income increased compared to the first quarter. However, we do not expect this trajectory to continue as originations will be negatively impacted from higher interest rates. Additionally, service charge income was relatively flat compared to the first quarter as we made several changes to our overdraft program that are expected to reduce fees in the coming periods. Non-interest expenses were slightly higher than our expectations. due primarily to incentive compensation tied to elevated fee income. We were pleased on the credit front as net charge-offs declined to eight basis points and non-performing assets declined to 31 basis points of total assets. These two factors drove $800,000 of provision recapture during the period. From a capital standpoint, our regulatory ratios remain in excess of both internal and regulatory targets. Similar to the first quarter, accumulated other comprehensive income declined significantly, negatively impacting both tangible book value and our tangible common equity ratio. Slide seven reconciles our GAAP earnings to adjusted earnings, highlighting items that we believe are important to understanding our quarterly performance. Adjusted net income was $53 million or 56 cents per share for the quarter. These adjusted earnings account for $1.1 million of losses on investment securities and $900,000 of summit-related and other costs not expected to recur, such as severance and branch consolidation expenses. As depicted on slide 8, these adjusted earnings equate to a return on average assets of 1.31%, a return on average tangible common equity of 21%, and an efficiency ratio of 61%. Turning to slides 9 and 10, net interest margin increased 30 basis points from the linked quarter to 3.47%. This increase was primarily driven by an increase in asset yields during the period, resulting from rising interest rates. The increase in asset yields was partially offset by a slight increase in funding costs and a decline in PPP forgiveness fees. As a result of rising rates, Asset yields surged during the period, with loan yields increasing 34 basis points. In addition, investment yields increased due to higher reinvestment rates and slower prepayments on mortgage-backed securities. Our cost of deposits was relatively flat when compared to the first quarter, but we expect these costs to increase in future periods in reaction to competitive pressures from an increasing rate environment. Slide 11 details the asset sensitivity of our balance sheet. We remain well positioned for expected rate increases as approximately two-thirds of our loan portfolio will reprice fairly quickly. Slide 12 details the beta utilized in our net interest income modeling. And while we didn't realize a drastic increase in costs from the initial rate hikes, as additional rate increases occur, We expect our deposit beta to be approximately 30% over the full cycle. Slide 13 illustrates our current loan mix and balance changes compared to the linked quarter. As I mentioned before, loan balances increased 8% on an annualized basis, excluding PPP. With the exception of ICRE, every portfolio grew compared to the linked quarter. The largest areas of growth were in the C&I, retail mortgage, and Oak Street portfolios. However, we were also pleased with the trajectory of the consumer, franchise, and summit books. Slide 15 shows our deposit mix, as well as a progression of average deposits from the first quarter. In total, average deposit balances declined $246 million during the quarter, driven by a $136 million decline in brokered CDs, and a $104 million decline in money market accounts. These were isolated to a handful of larger accounts. We were pleased with the growth in lower-cost transaction deposits during the quarter, which included a $36 million increase in non-interest-bearing accounts and a $31 million increase in savings accounts. Slide 16 highlights our non-interest income for the quarter. As I mentioned previously, second quarter fee income surpassed our expectations, primarily due to record foreign exchange income, higher mortgage banking income, and an increase in other non-interest income. In addition, wealth management remained elevated and derivative fees increased 69% from the prior period. While mortgage banking exceeded first quarter levels, increasing rates and record production in prior years has softened mortgage demand significantly, and we continue to expect industry-wide pressure on this business for the remainder of 2022. Deposit service charge income was steady in the second quarter. However, as I mentioned before, we expect reductions in this income going forward as program changes are fully realized. Non-interest expense for the quarter is outlined on slide 17. The second quarter was relatively quiet on the non-interest expense front. On an operating basis and excluding summit, expenses increased $1 million compared to the linked quarter, due primarily to additional incentive compensation resulting from higher fee income at Bannock Burns. Turning now to slide 18, our ACL model resulted in a total allowance which includes both funded and unfunded reserves of $135 million and $800,000 in total provision recapture during the period. This resulted in an ACL that was 1.25% of total loans at June 30th. The provision recapture was driven by stable credit quality and lower net charge-offs during the period. Net charge-offs as a percentage of loans decreased to eight basis points on an annualized basis, while non-performing assets declined to 31 basis points of total assets. Classified assets increased slightly during the quarter due to the downgrade of two credits in the hotel and healthcare industry. However, these borrowers have good liquidity and are exhibiting improving trends. Our view on the ACL and provision expense remains unchanged. We acted aggressively when building reserves in response to the pandemic and have been steadily releasing reserves as credit has stabilized. We expect increasing provision expense in the back half of 2022. Finally, as shown on slides 20 and 21, regulatory capital ratios remain in excess of regulatory minimums and internal targets. During the second quarter, tangible book value and the TCE ratio continued to decline. These declines were caused by a $101 million decline in accumulated comprehensive income as a result of unrealized losses on the investment portfolio from rising interest rates. Absent this decline, the TCE ratio would have been 7.1% at June 30th compared to 6.4% as reported. We returned over 40% of our earnings to our shareholders during the period and believe our dividend yield is attractive to potential shareholders. We do not anticipate any near-term changes to the common dividend. However, we will continue to evaluate various capital actions as the year progresses. I'll now turn it back over to Archie for some comments on our outlook going forward. Archie?
spk05: Thank you, Jamie. Before we end our prepared remarks, I want to comment on our forward-looking guidance, which can be found on slide 22. Loan demand remains strong, and we expect balances to grow mid to high single digits over the third quarter, while deposit balances are expected to decline modestly over the near term. Our asset balance sheet continues to position us very well to benefit from further increases in interest rates. A significant portion of our loan portfolio is indexed to short-term rates, and although there are many variables that can impact magnitude and timing, we expect the margin to continue to expand to a range of 3.85% to 4% in the third quarter. As we get later in the cycle, we're expecting to see some pressure on deposit rates, which will moderate the margin expansion. Regarding credit, much uncertainty remains regarding inflation and the impact of rate hikes to the economy and our customers. Over the remainder of this year, we expect continued improvement in our credit quality trends, which were already strong, and an increase in provision expense. We expect the income to be between $46 and $48 million in the third quarter, which continues to strengthen our fee-producing businesses. Rate headwinds will continue to put pressure on overall mortgage banking income, and we expect a further decline in overdraft income of approximately $1.2 million due to the updates to our program. Specific expenses, we expect to be between $102 and $104 million. This could fluctuate with fee income performance. As our operating lease portfolio grows, we will also see corresponding depreciation expense growth. Regarding Summit, our outlook is unchanged, and we expect the acquisition to have a minimal impact on overall 2022 earnings, with a modestly positive impact in the third quarter. We continue to expect Summit to provide $400 million in annual originations, which should provide a strong lift to overall loan growth. Lastly, our capital ratios remain strong, and we expect to maintain our dividend at current levels. Before I finish, I want to thank our associates for their excellent performance so far this year. And as we head into the back half of 2022, we are optimistic that our balance sheet is positioned to further benefit from additional rate increases and loan activity remains strong. We remain diligent in our credit monitoring and are prepared to manage a downturn in the economy should it occur later in the interest rate cycle. With that, we'll now open up the call for questions.
spk07: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you change your mind at any time, please press star two to remove the question.
spk01: We have the first question from the phone line from Chris from KBW.
spk07: Your line is open.
spk10: Hey, good morning. Jamie, maybe start with a margin interest income question. The margin upgrade was, I would say, significantly above expectations. I'm interested just kind of how you get there. Obviously, I think you've got the ability to shrink the bond portfolio. So I'm interested kind of in a comment about the size of the balance sheet and the funding of the growth. And then also, Just more broadly, you know, you're not interested in coming up, you know, $10, $11 million this quarter. If we think about it that way, like, it would presumably – the sequential increase should accelerate in the back half of the year, but I just wanted to confirm that with you.
spk06: Yeah, yeah. So, yeah, that's 100% true. I mean, we are, you know, at this point not seeing a – any real significant increase in deposit costs that's going to that'll change obviously and that'll start to ramp up here in the third and fourth quarter in the back half of the year but um we are we are expecting the margin at this point the increase from the second quarter to the third quarter to um be greater than what we saw from the first quarter of the second quarter um and from a from a funding perspective i mean i think it's really a couple things i mean we have um we have obviously we have capacity on the borrowing side on the wholesale side from a short-term borrowing capacity and then our plan is to kind of slowly bleed down the um the investment securities portfolio to also fund um to fund some of that um either to fund either some of that growth on the loan side or fund some of the um uh deposit runoff so we are we are forecasting you know some runoff here in the in the third quarter um and on the deposit side you know we're i think we're putting in two or three percent down in total deposits um And so that would be, again, funded from both short-term borrowings and bleeding down the securities portfolio. But we're not going to – I think that will just be kind of slowing down and or stopping the reinvestment of cash flow off of the investment securities portfolio.
spk10: That's helpful. How much is thrown off the bond book every quarter?
spk06: Yeah, at a minimum, I mean, it depends on some of the calls and whatnot, but at a minimum, it's about $50 million a month, so between $600,000 and $700,000, $600,000, $700,000 a year. Okay, great. And then if I could, could you provide the spot rates at June 30th for deposits that
spk10: loans, and also if you had like a June margin.
spk06: So help me out when you're saying the spot rate when you're like... Right.
spk10: So where were loan yields for the month of June? Where were deposit costs for the month of June versus the average for the whole quarter? Yeah, I got you. Okay. Yeah. So just so...
spk06: So let me maybe start at the end because I need to find those actual yields. But on the margin, our net interest margin for Jay was 364 compared to the full quarter of 347. And then – Luke, can you get me those two numbers quickly? And then – But when you think about even that, even for the month of June, Chris, I mean, that was, you know, increasing as the month went on with the rate hike in the middle of the month. And, you know, if you look at, you know, even maybe more significant The margin, if you want to call it, like heading into the third quarter or as of June 30 or July 1st, would have been closer somewhere to like around 375. Okay, that's awesome. And then quickly on the loan yields, our loan yields for the month of June were 434 and deposit costs were 11 basis points.
spk10: And that deposit beta, the 30%, is that an interest-bearing deposit or is that a total?
spk06: That's full, yeah. And when we say 30%, obviously that is for the entire cycle. We have seen, call it 2% to 5% beta so far, but that obviously now starts to ramp up. But for the full cycle, we're forecasting a 30% beta.
spk10: And that's on interest-bearing, Jamie, or totaled, sorry? That's on total. Got it. Okay. Wonderful. Thank you. You're welcome. Chris.
spk07: Thank you, Chris. We now have a question from Scott Syphons of Piper Sandler. Please go ahead when you're ready, Scott.
spk02: Morning, guys. Thanks for taking the question. Hey, Scott. Jamie, I think Hey, I think I must have sort of misinterpreted in the guide how quickly the margin was going to get up to that level as well. So that is really just sort of a profound increase since it'll be in the third quarter, I guess. Number one, I think we've been thinking about maybe eight basis points benefit per rate hike previously. It looks like it's really coming in. you know, even significantly better than that cycle to date. So Jamie, were there any, like, what were the surprises to you as you watched the margin continue to drift higher? And then, you know, I guess by the time we get done with the third quarter, at least based on the forward curve, you know, we'll be mostly done with rate hikes, but not fully done. So will you guys still be asset sensitive? I'm guessing the answer is yes, you know, at the end of the third quarter, but what's sort of the the marginal benefit vis-a-vis what you've got now?
spk06: Yeah, so maybe I'll start at the end again. I mean, yes, we will still be asset sensitive, you know, at the end of the rate hikes. And, you know, we are just – when it comes to the margin, we are showing, you know, based on the – I guess the Fed Fund futures and the projected rate hikes that are kind of built into the market right now, we are showing that our margin will peak somewhere in the fourth quarter and round in the beginning of the first quarter. And then I guess to your question about the, you know, what maybe surprised us, I mean, I guess, I mean, the other thing, when we were kind of talking the last time about the margin and rate hikes and, you know, we were talking about, you know, let's say eight basis points of benefit to the margin per 25 basis point rate hike. You know, that was, it also kind of assumed a little more, I guess, methodical type of rate hike where you're getting 25 basis points at a time. And, you know, when we get these large increases of 75 basis – 50, 75 basis points, I mean, you really get, you know, really no movement at all on the funding side, on the deposit side, and you're getting, you know, two-thirds of the loan book repricing, you know, immediately. And then we do have about – 15% to 20% of the securities portfolio and floaters that blew through their floors as well that are starting to reprice. So I think it's really kind of the culmination of that. It's the magnitude and the frequency of those rate hikes that, you know, the last time we talked, it just surprised everybody. And then so as we get further along, you know, that starts to mitigate in those 25 basis point hikes. You know, we're getting, you know, five, six, you know, basis points of benefit. But they just came so fast and furious that it kind of, you know, the loan book kind of overwhelms things.
spk02: Yeah. Okay. Great. All right. That's good, Colin. I appreciate it. um separately it was something you can maybe walk through sort of the puts and takes in um fees as well you know there's sort of a lot of moving parts between you know forex is uh you know clearly good and presuming that's getting more toward like a steady state now but would be curious to hear your thoughts so maybe some of those that have been a little more volatile or i guess newer within the scheme of the business line yeah i mean the the um
spk06: I mean, foreign exchange business at Bannock Firm, they did have a, you know, a very good quarter at $13.5 million. You know, we still, you know, we think that that business is, and so that's the record quarter, first of all. So, I mean, we're not expecting that, you know, every single quarter, you know, they can have some, uh choppiness to their business but you know we think they're in that 11 to 12 million dollar um a quarter uh type of range um you know obviously we're seeing uh even though it did increase from the first quarter we're seeing pressure on the on the mortgage side so um you know we're expecting that We're expecting that to come down in the back half of the year, the third and fourth quarter. You know, we mentioned the changes we've made within service charges and our overdraft program. You know, we're going to see – we'll see some pressure there, you know, about a million dollars or so decline on the overdraft side, which flows to that service charge. close to that service charge line. And then on the summit side, as they build the balance sheet and are putting on retaining their leases as opposed to their old model of selling them, they have a combination of finance leases and operating leases. So the operating leases, that income flows through Well, that income and the income on the leases that they continue to sell flows through fee income, and that's increasing, call it 15% to 20% per quarter now as they're building those leases. they're building those balances up and that's that also flows through the expense side as well um that the depreciation expense related to those operating leases flows through the expense side so that's why you're seeing um a little bit of increase i think it's about it's a little around a million dollars a quarter increase on the expense side as well so that that will uh that's kind of the offset to that you know we have the the fee income related to it increasing call it a million and a half to two million a quarter, but then you have the depreciation expense on the other side.
spk02: All right. That's perfect. So thank you for all that color there. I appreciate it. Yep. All right.
spk05: Thanks, Scott.
spk07: We now have a question from Daniel Tameo of Raymond James. Please go ahead and open your line, Daniel.
spk09: Hey, good morning, guys. Thanks for asking my question. Maybe we start on the deposits. You talked about transaction deposits coming down here in the third quarter. You've still got a lot of leeway on the loan deposit ratio, though. Just kind of interested in your thoughts, bigger picture, about how – where you see that loan deposit ratio going over the next year or so and the plan to allow deposits to run off if they're not kind of core or maybe they're more rate sensitive.
spk05: Thanks. Daniel, this is Archie. I don't know how there's a little bit of a variable here on these deposits and how they may move around. We didn't see, when it comes to I think we had about three larger business-oriented money market accounts. So that was sort of a temporary part money that exited during the quarter. So we probably see a little more pressure on the rate-sensitive side. Certainly we'll start to see some rate movement. Loan-to-deposit ratio, we're high 70s now. That's going to move into the 80s. Don't know exactly how fast we'll get there, but we'll move into the 80s. based on our current thinking next quarter, we've got room to go, though I think certainly for us to get into the 90% range or low 90s, we'd still be comfortable at that level. So we're going to watch pricing, make sure we're keeping all our core accounts, and as Jamie said, we've got some flexibility on how we make up deposits or funding if we need to on some of the maybe the more hot money kind of deposit accounts.
spk09: Got it. Okay. Thank you. And then switching gears here to capital, you talked about being comfortable with capital here. And on the regulatory side, certainly you've got a cushion there. But with the TCA ratio now in the mid-six range, does that impact your ability or willingness to invest in the business or in loan growth? Or, you know, is that just kind of put aside, um, given the reason for, for getting down there.
spk05: Yeah, Daniel, this is Archie again. We, uh, we don't think it changes anything in terms of how we're currently operating the business. You know, we, we stopped buybacks at the end of the year more at the time because we had just acquired Summit and we wanted to let some time settle. And then with the, of course, the major rate movements and impact on AOCI, uh, you know, we, we've kept it by that. Um, off the table for now. We will continue to do that. But as far as funding the business and growing the business, our loan growth is solid, but it's not at a level that we think creates any sort of problems in terms of how we operate the business in the near term.
spk09: Okay. And not feeling any regulatory pressure with the TCE ratio in those levels? I'm assuming I know the answer to that.
spk05: Yeah, none at all.
spk09: All right, terrific. That's all I had. I appreciate it.
spk05: Thank you.
spk07: Thank you. We now have a question from John Armstrong of First Financial Bank. Please go ahead, John.
spk03: Well, with a quarter like that, I wish I was at First Financial Bank. RBC Capital Markets is who I represent. Anyway... Jamie, the loan fees and accretion, is that included in that 385 to 4 thinking for the Q3 margin?
spk06: Yeah, that would be the all-in margin, John, yeah.
spk03: Okay. Can you talk about, I don't know how to ask it, but like the residual benefit of the most recent 75 basis point hike? How long does that take to get fully reflected in your margin? I know it's kind of open-ended, but, you know, just kind of curious how long it takes for all those benefits to flow through.
spk06: Yeah. Yeah, it is – I mean, to say it's immediate is, you know, fairly close. It takes, you know, maybe a month or so to flow through on some, depending on when – on some of the resets. Like we said, we have about 60-65% of the loan book that reprices off of the short end called LIBOR or SOFR at this point on some of those. And like I said, it just depends on the recess, but it's not months. It's weeks. It might be two to four weeks, so it's not very long at all. So that's why when we're talking about that acceleration in the margins, And at the third quarter, when we're looking at it, the third quarter, we're expecting that to be more significant than that increase from the first to the second quarter.
spk03: Yeah, okay, okay. Yeah, I'm just trying to get a feel for if we get 75 next week. We're going to get two months of it, and then there's going to be some benefit that rolls into 4Q. Yep. Plus maybe some hikes after that. So that's, I think, that's why you're saying probably a peak in 4Q or 1Q, right? Correct. That's correct. Yep. Okay. Maybe for Bill or Archie, just curious on the provision magnitude, what you're thinking there. and maybe an overall assessment of what your clients are saying, because obviously financial media and maybe the public has kind of a dour mood about the economy, and when we look at the bank numbers, it's obviously very clean, and you're telling a pretty good story. So help us think through the provision and then kind of what you're hearing from clients.
spk05: John, this is Archie. I'll start and I'll continue the form that Jamie's been providing. conducting answers this morning. I'll start from the back. Look, credit is really strong right now. We're not seeing any what I would call cracks in what's happening with regard to credit. Spending time with clients over the last few months I think most of them would say things are very good. We've had the residual problems of wage pressure, labor shortages, supply chain issues. I think those continue to hamper some of our clients. But their business is strong, and I think as they look out over the near term, that's what they see. But in the back of their mind, they're reading the news just like you are and we are, and so they're worried about something coming down the pike, and I think they're starting to to act a little bit on some of those concerns. But right now, when you ask them how their business is, their business is really strong.
spk06: Yeah, John, so on the provision expense, I mean, when you look at where our coverage is now, our loan loss reserve to loans is at 125. If you look at where we started, uh day one cecil was 129 so we are just slightly below that you know not not significantly below that but you know at this point we think that you know generally we are at the bottom of that um of that coverage ratio for us and so you know if you think about that then going forward kind of the drivers of what uh uh you know so like we think we've hit the inflection point in terms of you know the provision recapture um is is over and we start to see that swing the other way and if you think about then you know that where we are at that point and the drivers of what provision expense would be you know we're looking at either a um you know changes i guess in the in the forecast we use the moody's forecast and then But the other thing that's going to drive that as well is what we're seeing in loan growth. So that'll fluctuate with that a little bit, but it's really those two things that will kind of dictate what the provision expense will be here going forward.
spk03: Okay. Okay. And Bill, anything, I don't know, Spidey sense? that you're concerned about or worried about, or do you see things as very solid as well?
spk04: Yeah, I do at this point see things as very, very solid in our customer base and our loan portfolio. You know, not a lot of Brent crowns showing their head at this point. You know, collections, you know, and some consumer stuff is a little bit tougher, but nothing systemic that's putting their head out here. Okay. All right. Thanks, guys. Appreciate it. Thanks, John.
spk07: Thank you, John. As a reminder, if you would like to ask any further questions today, please press star followed by one on your telephone keypads now.
spk01: We have the next question from Terry McAvoy of Stevens.
spk07: Please go ahead when you're ready.
spk08: Thanks. Good morning, everyone. Jamie, we've talked a lot about the margin expansion as rates go up over the next couple quarters. I'm just wondering, how do you plan on managing kind of the rate sensitivity looking out into next year, assuming the Fed's done raising rates? And ultimately, how do you protect the margin? And why I ask that question at the bottom of slide 12, you know, you show the loan betas and the deposit betas, and there was some margin kind of compression during that period.
spk06: Yeah, yeah, good question. You know, it's something that we are, that we're looking at now because if you, you know, if you go back to, if you go back to, you know, pre-March or right when the pandemic was hitting March of 20, you know, our margin went down, you know, fairly significantly when we saw the rate cut. So we are, we're looking at that and evaluating, you know, options that we have um you know kind of across the board in terms of um trying to you know look at what you know at the back side of this and trying to mitigate that asset sensitivity and buying some you know potentially buying some protection on the downside um you know extending um out some on the investment portfolio to mitigate some of that risk and what we are reinvesting. Um, and so, you know, everything is kind of, I think on the, on the table there, but, but yeah, we are, we're kind of looking at all those options to try to, um, to try to manage that going forward and potentially at this point reduce, um, some of that asset sensitivity for when, when things start to go the other way. So, um, it's, it's nothing really, um, I would say that we've executed yet or that's set in stone, but evaluating that, and I'm sure you'll see something coming through here in the next quarter or two.
spk08: Great. That was the only question left on my list. Thanks, guys.
spk06: All right. Thank you.
spk07: Thank you. We have no further questions, so I'd like to hand it back to Archie Brown for some closing remarks.
spk05: Thank you, Frank. I want to thank everybody for joining today, and you're interested in our company, and we wish you a nice day and a great weekend, and we look forward to talking to you next quarter. Bye now.
spk01: Thank you all for joining. That does conclude today's call. You may now disconnect your line.
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