Q3 2020 QCR Holdings Inc Earnings Call
Greetings and welcome to the <unk>.
You see our holdings Inc. earnings conference call for the third quarter of 2020 yesterday after market close the company distributed its third quarter earnings press release.
If there's anyone on the call. He was not received a copy you may access it on the company's website www dot QC, our H dot com.
In addition, the company has included a supplemental slide presentation with COVID-19 related disclosures you can refer to during the call. You can also access the slides on the website.
With us today from management are Larry <unk>, CEO, and Talkable, President COO and CFO management will provide a brief summary of the financial results and then we will open up the call to questions from analysts.
Before we begin I would like to remind everyone that some of the information management will be providing today falls under the guidelines of forward looking statements as device as defined by the Securities and Exchange Commission.
As part of these guidelines any statements made during this call concerning the company's hopes beliefs expectations and predictions of the future are forward looking statements and actual results could differ materially from those projected.
Additional information on these factors is included in the company's FCC filings, which are available on the company's website.
Additionally, management may refer to non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures.
The press release available on the website contains the financial and other quantitative information to be discussed today as was the reconciliation of the GAAP to non-GAAP measures.
As a reminder, this conference is being recorded and will be available for replay through November 11th 2020, starting this afternoon approximately one hour. After the completion of this call will also be accessible on the company's website at.
At this time I will now turn the call over to Mr., Larry Hamling accused CR holdings.
Thank you operator.
Welcome, ladies and gentleman and thank you for taking time to join us today.
I will start the call with a brief discussion regarding our third quarter performance Todd.
Todd will follow with additional details on our financial results.
As a pandemic continues to impact our country on the economy, we hope that everyone is staying healthy and safe.
Our top priority remains to help their employees and clients.
I am proud of our entire team for continuing to do what it takes to support each other or clients in our communities in times of need.
We are very pleased to report a record quarter of net income.
Pre provision pre tax adjusted net income.
Non interest income.
Driven by continued strong loan growth record fee income.
And an expanded net interest margin.
Our net income and diluted EPS increased 26% from the second quarter well.
While our tangible book value grew 4% on a linked quarter basis, and 14% year over year.
We achieved these record results despite recording a another quarter of elevated provision for loan losses.
And continuing to build our reserves due to the ongoing economic uncertainty created by the pandemic.
We delivered solid loan growth for the quarter.
Up 11.5% on an annualized basis, driven primarily by strong production counter specialty finance group.
This group is having another banner year generating record production volumes based on our strong client demand for our niche lending products for.
Particularly in the area of municipal and tax credit finance.
We also generated healthy production from our core commercial lending business during the quarter.
Overall, we feel good about the quality of our commercial lending portfolio.
Generally our clients are performing well as economic conditions are better in our local markets than in the rest of the country.
As a point of reference our current unemployment rates in our primary markets. So I wouldn't Missouri are significantly lower than both the national average as well as the Midwest Regional average.
In addition, many of our clients have strong liquidity positions, which is a good indicator of their financial health.
Excluding our P.P.P. loan production loss.
Loan and lease growth for the first nine months of 2027, 0.2% on an annualized basis.
Given our current pipeline, we now believe that we will be able to achieve organic loan growth of between six and 8% for the full year higher than our previous guidance.
As we discussed on our last two earnings calls, we proactively implemented our long relief program offering three month loan payment deferrals to weren't impacted clients.
Turning to preserve cash and liquidity.
Total amount of loan and lease deferrals granted during the first round was $575 million.
Representing approximately 13.5% of our total loans and leases.
Beginning in July many of our clients started to roll off the program and we continued to experience a significant reduction in loan deferrals throughout the quarter.
We are pleased to report that by quarter and approximately 90% of our clients who requested payment to relieve early in the pandemic.
Resumed making payments output.
Outperforming our guidance provided in July.
The total loan and lease balances participating in round. Two is now just 1.95 per cent of loans.
Which we believe speaks to the high quality of our loan portfolio and the resiliency of our local markets.
Additionally, this low level of loan balances remaining on deferrals is among the very best in our peer group.
Our core deposit growth was strong again this quarter.
We posted annualized growth of 36.4% and this was driven mainly by our correspondent bank clients, who grew liquidity during the quarter.
Our outside deposit growth contributed to some excess liquidity on our balance sheet, but.
What we were able to shed a higher cost non core funds and reprice deposits there's.
Just help lower our overall funding cost during the quarter, which enhanced our net interest margin Tom.
Todd will provide more detail on NIM in his remarks.
Our asset quality remains strong and our banks continue to be well capitalized.
Well, we are not currently experiencing meaningful degradation of specific credits in our portfolio.
We chose once again to be prudent and booked a provision for loan losses of $20 million. This quarter in order to continue to build reserves against future potential credit issues related to coal, but 19.
Well it continues to be difficult to predict the ultimate impact that the pandemic will have on our client or banks are well positioned to help them navigate this environment.
We continue to believe that our client focus combined with local decision, making is the best way to serve our markets as the economy adapts and recovers.
I would like to thank the entire QC, our holdings team for their hard work and dedication to excellent customer service and delivering record earnings performance during the quarter.
We appreciate their flexibility and cooperation and are very proud of all that has been accomplished during this time.
In summary, we continue to believe that we will emerge from this pandemic as a stronger company and will be positioned to pursue our long term goal of profitable growth and value creation.
Both organically and through strategic acquisitions.
With that I will turn the call over to Todd to provide further information about our third quarter results.
Thank you Larry as I review, our third quarter financial results I will focus on those items, where some additional discussion is warranted.
Larry already discussed our loan growth. So I'll start with deposits, we generated very strong deposit growth again this quarter.
Total deposits increased by 322 million or 7.4% on a linked quarter basis.
With increases, particularly strong in interest bearing demand deposits, which were up 449 million.
Our time deposits and brokered deposits declined by 125 million as we continue to let higher cost Cds run off the balance sheet.
Our strong core deposit gathering activities, which have significantly reduced our reliance on wholesale funding also helped to enhance our net interest margin.
The majority of our deposit growth was sourced primarily from our correspondent banking relationships and our commercial clients we.
We believe these core deposit relationships are an indication of our true franchise value.
This is a significant benefit as we don't have to rely on wholesale funding to support our stronger than pure loan growth, which will allow us to continue to drive long term shareholder value.
Now turning to earnings.
With the strong growth in our average loans during the quarter funded with core deposits and combined with the increase in our net interest margin. Our net interest income grew 3.6 million or 8.9% on a linked quarter basis.
The yield on our average earning assets increased by 13 basis points from the second quarter and our deposit cost decreased significantly as we gathered a higher mix of lower cost core deposits and reduced our higher cost wholesale funding.
This resulted in a reduction in our total cost of interest bearing funds at 14 basis points.
These strong results led to a 22 basis point improvement in reported NIM and a 23 basis point improvement in adjusted NIM.
Also positively impacting them this quarter was a larger than normal amount of interest recoveries on previously charged off loans that were repaid during the quarter, providing 11 basis points of the NIM improvement.
Therefore, after accounting for the positive impact of these recoveries are true core margin improved by 12 basis points this quarter.
While we continue to be well positioned to navigate a prolonged low interest rate environment. There will be some puts and takes impacting them in the fourth quarter.
First we do not expect the same level of onetime interest recoveries that created a 11 basis points of margin accretion in Q3 to re occur in Q4.
Additionally, we will experience some dilution from the full quarter impact of our opportunistic subordinated debt issuance in mid September.
Finally, we expect some loan yield compression due to the mix and pricing of our new loans coming onto the balance sheet.
Positive factors impacting the fourth quarter will be ongoing progress in reducing excess liquidity and a further decline in the cost of funds as we continue to improve mix and reprice our deposits slower.
Therefore on a net basis, we expect fourth quarter adjusted NIM to modestly decline in the range of three to five basis points.
Now turning to our noninterest income, which was 38 million up significantly from the second quarter.
We produced record swap fee income, which came in at 26.7 million for the quarter up 34% from the second quarter.
As Larry mentioned, we are seeing robust swap production created by the strong relationships our specialty finance group have developed.
Demand for our lending products remains strong, particularly in the tax credit space, where we are making high quality long term variable rate loans and are enabling our clients to lock in attractive fixed long term rates through the use of swaps.
We are also experiencing better pricing execution on or swap transactions due to the low interest rate environment and the flat yield curve.
The pipeline of swap loans that are banks and our specialty finance group remains healthy and we believe that the source of fee income is sustainable for the foreseeable future.
While we don't anticipate achieving the same record level of swap fees that we did in the third quarter. We have averaged nearly 18 million that swap fees per quarter. This year and expect slight fees will approximate that level in the fourth quarter.
We will provide slot see guidance for 2021 on our year end conference call.
Now turning to our expenses.
Noninterest expense for the third quarter totaled 40.8 million compared to 33.1 million for the second quarter and higher than our guidance of 31 to 33 million.
There were a number of significant items that impacted expenses.
First we incurred increased salary and benefits expense of 4.7 million with increased commission and incentive compensation expense in the quarter driven by the strong financial results and higher than anticipated swap fee income.
Second we recorded a 1.9 million loss on debt extinguishment as we paid off high cost wholesale funds to benefit future earnings.
Third we incurred disposition costs and a final loss on sale of 497000 as a result of closing the Bates companies disposition.
And finally, we had 393000 higher FDIC insurance and fees due to our higher cash balances.
Adjusting for these items, our non interest expense came in at 33 million at the upper end of the guidance range. We provided on last quarter's earnings call.
Looking ahead to the fourth quarter, we anticipate that our level of non interest expense will be similar to third quarter levels and the 38 to 40 million range.
This range is higher than our long term run rate expectations, primarily due to higher year end incentive compensation driven by our outlook for strong full year pre provision pre tax earnings and swap fee income.
Our overall asset quality continues to be solid while we did experience a modest linked quarter increase in nonperforming assets in the quarter. It was primarily due to a few isolated relationships that experience degradation not directly related to cove in 19.
The ratio of Npls to total assets increased to 32 basis points at September 30, compared to 24 basis points at June 30, and returned to Q1 levels.
While our local economies are doing better than much of the rest of the nation, we're still providing heavily for potential losses in the future and therefore, we again recorded 20 million a provision for loan losses this quarter.
I would note that the majority of this significant provision was the result of increasing qualitative factors due to the pandemic.
The level of our reserves, excluding the impact of the $358 million in P.P.P. loans was 2.05 per cent to total loans and leases up 44 basis points from the end of June this.
This allowance now represents over four times, our nonperforming assets.
With respect to capital we continue to maintain strong capital levels and have abundant liquidity to meet our clients' needs.
Our opportunistic subordinated debt issuance at the end of the third quarter further strengthened our total risk based capital ratio to nearly 15% at quarter end.
Our tangible common equity to tangible assets ratio at quarter end is roughly 9%. If you exclude the dilutive impact of the TPP loans.
Our overall earnings power remains significant as we generated a pre provision pretax ROI way of 2.9% in the third quarter.
As a result, we are well positioned to continue to fund reserves grow capital and tangible book value per share and provide solid earnings per share.
Additionally, with the aforementioned subordinated debt offering we were able to further build our capital base to support the organic growth of our subsidiary banks and be well positioned for future M&A opportunities.
Our effective tax rate for the quarter came in at 18.8% the rate was higher on a linked quarter basis due to a higher ratio of taxable earnings to tax exempt revenue.
But that added color on our third quarter financial results, let's open up the call for your questions. Operator, we're ready for our first question.
Thank you we will now begin the question and answer session.
Ask a question you May press Star then one touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
If youd like to withdraw your question. Please press star.
At this time, we will pause momentarily to assemble our roster.
The first question will be from Nathan race with Piper Sandler.
Hi, guys good morning.
Good morning Nate.
Let me start on credit.
The reserve build was pretty substantial sounds like it was just driven by qualitative factors not.
Function of any no downgrades or so forth internally.
Just kind of curious how would you kind of think about the reserve.
Looking ahead, and overall credit cost into the fourth quarter I imagine they'll be just to support organic growth, which sounds like the pipeline is pretty strong.
Just based.
Based on the guidance for 68% loan growth.
For 2020.
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Yeah, Todd I'll start and then let you finish if there's additional comments you'd like to make.
Yes, you know we've all long said that we wanted to get our reserved to over 2%.
So we're kind of that level now.
Given what we know today, we feel like we're in a approximately the right territory.
So I think we.
We would still expect.
Elevated reserving to some level in the fourth quarter.
Maybe not at the same level as the last two quarters, but we.
We certainly still one to may.
Maintain the reserve at these kind of relative levels until there's a lot more clarity on the credit metrics going forward.
Yeah, Nathan I'd, just add that to give us any color around the roughly $50 million in provision. We've made thus far this year around half of that 26 million is unallocated COVID-19 qualitative factor and the.
Rental 10 million would be increasing our qualitative factors on national and local economies. So roughly 36 million of the 48 million that we've provided thus far this year is really related to those qualitative factors as you might guess little of the provisioning. Thus far this year has been.
Pacific credit metrics, so to your point.
It's really been about build for the future and just Echo Larry's comments, we've thought about this that we wanted to get around that 200 basis point level, we really wanted to get this provisioning behind us sooner rather than later, that's really part of our credit culture here Q CR, we tend to get our arms around things quickly.
Okay.
And one other comment I'd make and my guess is somebody might have the question art.
Our incurred loss model in our seasonal model are pretty much right on top of each other at this point it at close to 80 million. So.
For all those reasons, we thought it was prudent to provide 20 million this quarter.
Got it that's very helpful. And then just maybe changing gears on capital.
The sub debt raise and the core obviously you guys are operating with very robust capital.
She was at this point.
I would imagine M&A is probably.
Back one of these days just given that most folks are focused these days. So just curious how you guys are thinking about possibly for additional share repurchases in fourq and into early 21 at this point.
Yeah, right right now Nate we're not.
Considering buybacks, we think it's a bit early given the significant uncertainty that remains on the severity and duration [noise] excuse me of the pandemic. So we think it's a bit early to pivot that direction, we do.
Feel very good about the ability to go out and raise that 50 million, we view it as more opportunistic for organic growth for potential M&A for potential stock buybacks depending on.
The results here for the pandemic and credit and what really happened in the equity markets. So gives us more options, we feel very good about the pricing and the ability to do it on a.
Private placement basis, with one large investor and you.
Sure you're right I don't really have anything on the table.
With respect to M&A, but we will remain.
Vigilant on looking for opportunities and potential partners and I think we've said several times our focus would be on a build out in Springfield and des Moines over additional new markets.
Nate you're right there's limited.
Activity in the M&A space right now, but our belief would be that when the pandemic impax become more clear.
It will be a lot like when we came out of the great recession.
You know a decade ago, where there was some pent up demand for buying and selling banks and I think that's certainly very possible again as we get toward later 2021. So you know we've been in an effort to position ourselves to be ready for those opportunities when they present themselves.
Got it.
She'll call and congrats on a great quarter. Thanks, guys. Thank you.
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The next question is from Damon Delmonte of KBW.
Hey, good morning guidance has gone today.
Good morning Damon.
Great. So first question on margin Todd you kind of gave the the puts and takes that the margin in the outlook you know things like three to five basis points of compression in the in the fourth quarter.
So if you guys had about $800000 of.
Purchase adjustments.
When you take that off the reported 351 that gets you had about 344, Oh that 344, how much of that was impacted from P. P. P.
Oh really just a couple of basis points of compression.
From the U.
Good on PPP holds.
Okay.
So no nothing meaningful okay. That's helpful and ended with regards the PPP. What's your you know your outlook on the kind of the timing or the pace of forgiveness, you expect to see much here in the fourth quarter or do you expect it to be more heavily weighted towards 2021 now.
Yeah, Great question Damon, we we believe right now that a little of that will happen in terms of forgiveness in the fourth quarter. It just appears that.
SP a guidance has been slow to come as I think you are well aware. The FDA has I think 90 days to respond to the data once it submitted we put together a very nice portal for all our clients to submit the documents and we're working with them to help them do that.
Our expectation now is it's likely first quarter.
Okay, and David we might see some meaningful numbers of smaller loans, but the dollars are more likely certainly in the first quarter of 2021.
Got it okay that makes sense and then I guess lastly, with bone you know the the outlook for loan growth.
You, obviously raised your guidance for the full year, but you know as you kind of look into 2021, how do you think you guys are shaping up for.
For next year.
Yeah, Dave and we've we've grown loans at a consistent pace.
Over many years and.
I think that we would expect as we.
Look forward.
Still being able to continue to grow loans is you know we've got the specialty finance niche that as you know really being benefited right now because the pandemic environment.
And so we expect that to continue at a strong pace.
Clearly through 2021.
And we've had good activity with our core commercial banking group to.
A lot of it aided by the relationships that we built on during the.
The P.P.P. long process and so we've got some great new core relationships that should allow us to continue to go to our loan totals.
Okay. All right that's great. That's all I had congrats on a nice quarter. Thanks. Thanks.
Thanks Damon.
Thanks, David.
The next question is from Jeff Rulis of D.A.D.A. Davidson.
Thanks, Good morning, Good morning, Jeff morning, Jeff.
Wanted to look at the.
Your thoughts on it.
Expense strategy versus investments in maybe as we roll into 21.
Maybe knock out the variable comp from from Swat, but I I got your comments Cogs.
Q4 expectations, but just thinking a little longer term about <unk>.
The investments versus expense and what's got the heavier hand in 21, as we still kind of climb out of the dependent like any thoughts on.
In house, what you're what you're.
Talking to your folks about on on costs.
Sure Larry I might start with that what you want to fill in Yep go ahead.
We're spending a fair amount of money on I T right now and primarily some really significantly talented folks that we're adding to our roster here and we think that over time that will reduce our spend rate on I T.
Probably likely further ended 22 and 23, a little longer term, but in addition, we think it will improve our user experience both internally and our client user experience a externally.
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The pandemic has really accelerated the need for the best technology, we feel like we've always had the best bankers in each of our markets. We have the best people.
We are very focused on having the best technology alongside that so some of our increased spend here in 20, and maybe into 21 will be on some talented folks helping us navigate this.
And ultimately our spend will go down and we will have better technology as a result.
One thing I would point out Jeff the variable comp for us is pretty significant it's about 36% of our comp a year to date through the third quarter. So we like it that way, we think that's good for shareholders and and our staff would we do better compensation goes.
Up and when we have some challenges.
Varies down.
But longer term I think the investments will continue to be in technology, and we expect some good pay off a little longer term.
Yes, Jeff the other thing I'd add is a.
One of the benefits of having a growth story like we have is that.
We can just slow the growth on expenses and which we'd certainly intend to do in 2021.
And with the growth we have really get to the same place without having to do a some of the drastic expense cuts that others are dealing with it if they don't have girls. So because we we've shown that we can grow over a long period of time, we think that's the way we'll be able to get there in 2021.
Thank you and Todd just a follow up on that.
On the variable side I'm still trying to.
Well down the kind of the swap puts and takes if youre say swaps were up 7 million linked quarter, but I could you mentioned higher comp was something a 4.7 or something and maybe that's not all swaps. Its total profitability is that a good sort of exchange.
Change ratio, if you think about the swap versus variable comp if we had to pull out that piece or is that not the right way to look at it.
Yes. It is.
Convoluted. So a good question I understand I understand why you need a little more detail there. The 4.7 here in Q3 would be a combination of both the incentives around the swap production and also candidly ramping up our incentive comp around the company.
We're certainly performing much better I'm here.
Full year basis pre pre.
At the end of the third quarter than we expected to be at the end of March I think we're all.
Fairly concerned about a bottom line profitability.
Well, we're still not out of the woods were certainly performing much better. So as a result, we've ramped up our incentives and.
Incentive comp around the company and so that's a chunk of that for seven.
I wouldn't say, it's roughly half and half would be related to swaps and then incentives around the rest of the company for improved profitability.
Thanks, that's helpful.
Maybe one last one on the just trying to get a sense for the the loan growth and more particularly color on whether any of that.
Within the footprint was there some areas geographically that that you're doing better or was it fairly.
Broad based.
Yeah, I'd say it was fairly consistent.
If you look at the kind of markets were in.
You know as evidenced by significantly lower unemployment rates, we talked about the economies are nice are sized markets.
I think you're kind of uniquely positioned to perform better than in the major metropolitan areas.
And so I think we feel good about the broad based nature.
Of our marketplace and the opportunity to you know in those midsized markets that are performing much better than that.
And then the big markets.
Appreciate it guys. Thanks.
The next question is from Brian Martin of Janney Montgomery.
Hey, good morning, guys morning, Brian right.
Hey, just a couple of quick questions Todd that to that the PPP for just a minute. The the remaining unearned loan fees to collect today can you give us an idea of what we should still included in the forecast Perspectively and what's it down to today.
Sure Brian its around 7 million left remaining out of the 11 three that was being accreted is being accreted straight line over the 24 month duration of those loans, that's really how the loan system is calculating that so ended up being much more straight line that.
Then deferred but theres roughly $7 million of that left and probably.
Couple of million of that would be accreted in Q4, and then the balance would likely come in bigger chunks as forgiveness happens and in Q1.
Got you Okay. Thanks, Todd and just the you guys talked about it and the strong credit quality, where there any changes of note in the criticized and classified.
This quarter I guess, it doesn't sound like it would be and just want to kind of confirm that based on your comments about the provisions strength of credit.
Yeah, Brian a what I would say is it was it will be what you expect and that there will be some elevation in classified mostly because of those sectors that we've identified.
Hotel Entertainment.
Restaurant the areas that have been.
Disproportionately impact that we will have a little degradation as we watch those credits more closely but certainly.
Not meaningful change in the N P A's as we discussed in the comments.
Okay. So some some migration anvil, both they both the special mention and the.
And the classified primarily due to the the hotel book.
Correct, but nothing to get on it.
It's performing exactly as we would have thought it would given the market conditions.
Yeah, Brian Okay.
As Larry said I'm looking at the table here for the Q will be out sometime soon and really it's just a pivot between special mention and substandard or the total number has moved.
Very slightly like 5 million for total criticized.
Criticized so its really just that.
Grade related to primarily hotel space Gotcha.
Gotcha, Okay. Thanks, Todd and maybe just one more for you Larry just the.
Just the strong growth that you've seen in the specialty finance portfolio year to date can you just give some numbers around it just some context around you know how much growth you've seen in that portfolio and just maybe just articulating what's leading to the you know this portfolio thriving so much today and.
Trying to understand you know both on the swap side and the and the loan generation side, you know how to think about that business has its becoming greater.
Greater piece of the franchise right.
Right.
First of all I'd say, there's a couple.
Things that have put a wind at our back in that space certainly.
In in broad terms.
The.
Demand for our products in that space in the <unk> and the tax credit space have really both been.
Strong the marketplace is wanting more.
Low income tax credit housing.
And in the historic tax credits based strong demand for those kind of products.
Secondly, the interest rate environment has been particularly conducive to doing swap transactions for clients.
Low interest rates with a flat yield curve.
Really help the pricing power a in the swap environment.
And then the pandemic well impacting our many of our customers and I'm not positive way and in this case, it's probably.
A smaller company like us in the tax credit space and in the municipal space has been able to pivot and be responsive in the damp pandemic has really slowed down some of our competitors from being as responsive as they might have been historically.
So just like other parts of our business, if we're responsive and attentive we're.
We're able to grow the business more quickly than than other people in this space.
So.
In total.
The total tax credit business for US now is a little over 10% of our total assets, we'd like the quality the assets. We believe that it's superior to any other of the lending niches that we're in and so it's been a really positive.
Focus for our company.
Got it okay. Thanks, Larry and maybe just one last one if I can sneak it in just on the deposits Todd I mean, you've talked about that you know the significant growth you've seen in the last couple of quarters and just the improvement in the mix and I guess, given lower wholesales that today and kind of you know this strong growth. This quarter I guess do you feel like the deposits are pretty sustained.
Well at this point do you expect some of those took to leave the bank or just.
Thinking about that and maintaining that mix, where the the wholesale side has gotten so much better here the last couple of quarters.
Yeah, Great Great question, Brian It and it has its dramatically improved the mix of our funding.
Our reliance on wholesale is down below 5% and that that may well be a floor for us I don't know that it can get much better, but we will continue to.
See these deposits around I believe for the foreseeable future with it being heavily weighted towards correspondent banks are certainly all.
All banks have a fair amount of liquidity right now and when you're in the correspondent business you tend to be an aggregator of that liquidity. So our challenge is really to continue to put it to work.
It really helped our margin in the third quarter. If you look at the NIM table in the press release you can see.
The average balance of really cash in fed funds that we had was down a couple of hundred million a quarter over quarter. So we were much more.
More aggressive in putting it to work.
That really helped us with margin. It's it's one of the remaining opportunities we have for Q4, we talked in the.
Early comments about some of the headwinds we've got but we will continue to work hard to put the Luca <unk> liquidity to work, we do have a little bit of room left on deposit pricing and we'll try to squeeze that out here in the fourth quarter. So.
I expect that liquidity to be here for some time certainly into 21 deep deep into 21, yeah.
Got it okay. Thanks for taking the questions guys nice quarter.
Thanks, Brian Thanks Bye.
Once again, if you have a question. Please press Star then one at this time.
Thing no further questions I'd like to turn the conference back over to Larry Hamling for any closing remarks.
Thanks, operator, and thanks to all of you for joining our call today.
We hope everyone remains healthy and safe have a great day, and we look forward to speaking with you all again soon thanks so much.
Thank you.
He today's presentation has now concluded we want to thank you all for attending today's presentation. You may now disconnect your lines have a great day.
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