The First Bancshares - Q2 2024
July 25, 2024
Executive Summary
- Q2 2024 delivered stable profitability and margin expansion: diluted EPS was $0.62 (operating EPS $0.63), net income was $19.7M, and NIM (FTE) expanded 6 bps to 3.32% while core NIM (FTE) rose 9 bps to 3.19%.
- Loan growth was strong (+$111M; ~8.6% annualized) on robust originations ($448.7M at 7.92% blended yield); deposit costs plateaued (1.78%), supporting the margin backdrop.
- Credit quality remained solid: NPAs at 0.26% of assets, NCOs at 0.04% of total loans, and ACL at 1.05% of loans; minor upticks in NPAs/nonaccrual were described as manageable.
- Strategic catalyst: On July 29, FBMS announced an all-stock merger into Renasant (exchange ratio 1.00 Renasant share per FBMS share), positioning for regional scale; shareholder votes and regulatory approvals remain pending.
What Went Well and What Went Wrong
What Went Well
- Margin tailwinds: “We were able to see margin expansion, and our margin expanded 6 basis points, and our core margin was up, actually 9 basis points”.
- Deposit costs stabilized: CFO noted the “cost of deposits remained the same at 1.78%,” with monthly cadence improving into June (1.74%).
- Production strength and footprint breadth: Q2 new loan production of $448.7M at 7.92% yield; Mississippi contributed 35% of production and Georgia had its strongest quarter since the merger.
What Went Wrong
- Sequential earnings dip driven by higher provision: Net earnings of $19.7M ($0.62 diluted) were down $0.9M q/q due to a $1.7M provision associated with loan growth (vs. 0 in Q1).
- Deposit contraction and expected public funds runoff: Deposits decreased $84.2M q/q (~1.3%), including $38.3M public funds, with further runoff expected through year-end.
- Loan yields down slightly from late-fee dynamics and competitive pricing: Loan yield decline was partly due to lower late fees and some competitive pressure; new originations still near ~7.90%.
Transcript
Operator (participant)
Good day, and thank you for standing by. Welcome to the review of the second quarter 2024 financial results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Hoppy Cole, CEO. Please go ahead.
Ray Cole (CEO)
Well, thank you, and good morning, everyone, and welcome to our second quarter conference call. As is our custom, we'll, we'll start with several prepared remarks this morning and open it up to questions at the end. We've got several team members with us this morning, Dee Dee Lowery, our CFO; JJ Fletcher, our Chief Lending Officer; and George Noonan, our Chief Credit Officer. So for the second quarter, we were very pleased with the performance of the company in terms of growth, profitability, and credit quality. Loans grew by $111 million, so they were up about 8.6% on an annualized basis. Our markets continue to provide us ample growth opportunities. We are able to see margin expansion, and our margin expanded six basis points, and our core margin was up actually nine basis points.
Credit quality remained strong, with only four basis points of net charge-offs and three basis points migration in NPAs. And although net income was down a little bit, it was down primarily due to the $1.7 million provision that we took associated with the loan growth. Actually, pre-tax, pre-provision income was up $800,000, or 2.9%. So again, we were very pleased with the performance of the company, it sort of all, all around. Dee Dee, would you like to talk about our financial performance in a little more detail?
Donna T. Lowery (CFO)
Sure, Hoppy. Thanks. And as Hoppy already did what he said, we're very pleased with the quarter and, very happy with all around solid results. But, we did report, net earnings of $19.7 million, which was $0.62 on a diluted share. That was down $900,000 from, first quarter, but we did record a $1.7 million provision expense this quarter and, and zero for last quarter. So, that is basically accounting for the difference there. Pre-tax, pre-provision, operating earnings totaled $27.4 million compared to $26.6 million, so we did have a 2.9% increase for the quarter when you look at pre-tax, pre-provision. As Hoppy mentioned, our core margin did increase 9 basis points to 3.19%.
The cost of deposits remained the same at 1.78%, which made me like, "Woo-hoo!" Anyways, we feel like we're there, finally, on our deposits.
Ray Cole (CEO)
Happy to call that.
Donna T. Lowery (CFO)
Yes. Our yield on our earning assets increased one basis point, and then, of course, on our interest-bearing liabilities, we had a decrease of three basis points. So, our non-interest-bearing portfolio actually increased both in dollars and percent this quarter back to 28%. Our interest-bearing deposit costs increased one basis point to 2.46%, and our cumulative beta stayed the same at 43% for this quarter. Our deposits did decrease this quarter $84.2 million, which was about 1.3%, but $38.3 million of that was related to public funds. And as you know, following us, we will continue to see a decrease in deposits throughout the rest of the year because of our public fund portfolio, so that was expected.
On our liquidity position, still remain very strong. Our ratios are well above our limits. Our loan deposit ratio is 79%. We have I mean, $2 billion available at the Home Loan Bank for borrowing, and we have about 38% of our securities portfolio unpledged. So we're real pleased with all of those numbers. And actually, over the next four quarters, we have about $266 million in cash flows coming off the securities book into cash over the next four quarters. And then our ratios for the quarter, looking at our operating ratios, we've had an ROA of 1.01, and our return on average tangible common equity of 12.76%, and efficiency ratio of 60.65%. And then our capital ratios, TCE increased to 8.3%.
Our leverage ratio was 10%, and our total risk-based was 15.3%, which all were in line with last quarter. So, overall, we're very pleased.
Ray Cole (CEO)
Thank you, ma'am. Great report. JJ, would you like to talk about, give us a little color on the loan portfolio, loan originations for the quarter?
J.J. Fletcher (Chief Lending Officer)
Yes, sir. Thank you, Hoppy. As Hoppy said, we had a great quarter, second quarter, in terms of loan growth. Net increase of about $111 million. Originations were very robust at about $450 million, up from about $253 million in the first quarter. Construction lending and lines continued at a solid pace, with approximately 40% of those loans being originated, reserved for future funding. After a large increase in the first quarter, you all remember in the pipeline, we did see a modest decrease, which is expected based on originations in the first quarter.
I would note that, we do track the amount to be funded at origination, and at the end of the second quarter, that number was actually higher than the first quarter, so bodes well entering the back half of the year, we think. Average yield did contract slightly from 8.12% to 7.92% for the quarter, but overall, we're at 7.99% or basically 8% year to date. Regionally, the Mississippi team had an incredible quarter. They actually had 35% of the entire bank's production. And Georgia, for the first time since our merger, had their strongest showing, and they accounted for about a quarter of all new originations. So we're glad to see that. Lastly, operationally, we've migrated the rest of the legacy branches into the centralized consumer platform.
And then George may speak to this too, but we're continuing to refine our small business platform, expanding that, and plan to have the 1071 implementation done by the end of the year, ahead of schedule. So, overall, great quarter. Appreciate all the lending staff, lenders, and all support folks to make that happen, and I couldn't be more pleased with the quarter.
Ray Cole (CEO)
Okay, thanks, JJ. Great report. George, you want to tell us on credit quality?
George Noonan (Chief Credit Officer)
Thank you, Hoppy. We did continue to see good performance across most all of our credit metrics. The leading indicator, 30-day past dues, were manageable. We did see a slight uptick over quarter one, but I think still very acceptable at 40 basis points at the quarter end. Year-to-date average continues to be good at 35.5 basis points. Most of the metrics, as I said, we did see some moderate movement. A few upticks here and there. Non-accruals were up 5 basis points. All total, NPAs ticked up about 3 basis points to 26 basis points. That's a very manageable level for us, we believe. Net charge-offs at 4 basis points, as Dee Dee, Dee Dee's already alluded to, and then $1.7 million provision kept our ACL at 105, as it was in last quarter.
CRE concentrations ticked up a little bit, 9 basis points, but still at 215% of RBC. We think that's a comfortable margin below the 300% interagency guidance level. And we saw C&D actually come down a bit, so we're at 69% of RBC, and that's well below the 100% level. Classified loans as a percentage of capital plus ACL, they did move up about 47 basis points, but still manageable at 7.52%. When you combine those with criticized, we actually came down by 4 basis points. And I would note that we continue to see borrower capacity in our substandard loans to pay off loans.
We actually had almost $5.8 million in substandard loans pay off in the second quarter, so that has continued a trend that we've been seeing quarter after quarter. Overall, loan portfolio continues to reflect the strategic balance that we see, owner-occupied CRE at 24%, non-owner occupied at 22%, 1-4 family, 19%, and then 13% and 12%, respectively, for C&I and C&D. We continue to try to balance all of our subsets. C&D exposure is very evenly apportioned among four major categories, as you see in the deck. Land development represents only 3.68% total loans, multifamily construction at 2.4%, and then other construction and residential construction under 4% as well. Kind of the same trend for CRE.
Our professional office is at 9.1% of total loans, but that's pretty well evenly split between owner-occupied and non-owner occupied, and then retail center at 6.29, hotel at 5.53, and warehouse industrial at 4.33% of total loans. So we monitor these categories very closely. Non-owner occupied office is at 3.75% of total loans. And we've seen our average non-office loan balance remain pretty constant over the last year. 713,000 is the average size in our non-owner occupied office category. And we see about approximately 18.32% of office loans maturing in the next 18 months, so we think that's a very manageable horizon for that. Our largest single loan continues to hover at about $28.5 million.
Top 20 loans represent only about 6.35% of our total portfolio, and top 75 borrower relationships comprise about a quarter of the loan portfolio. In the CRE category, we have continued to see very, really minimal lease renewal and turnover issues. We've seen good tenant stability, and a very few credit issues in our office loan portfolio, thank goodness. But we have witnessed, as all banks have, insurance cost escalations are putting some pressures on OpEx expense for some borrowers, but we're monitoring that very closely across the markets as well as multiple CRE segments. So in summary, we're witnessing some nominal basis point increases across some of the categories due to tighter rate environment and OpEx pressures. But we've really been very fortunate to see very few troublesome issues with delinquencies, charge-offs, or unacceptable risk migration.
We really expect to see similar outcomes for the balance of the year into 2025. So Thank you, Hoppy.
Ray Cole (CEO)
Thank you, George. Great report. That concludes our prepared comments. We would open it up to questions now.
Operator (participant)
Certainly. As a reminder, to ask a question, please press star one one on your touch tone telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will be coming from Matt Olney of Stephens. Your line is open.
Matthew Olney (Managing Director and Senior Equity Analyst)
Hey, thanks. Good morning, everybody.
Ray Cole (CEO)
Morning, Matt.
Matthew Olney (Managing Director and Senior Equity Analyst)
... I'll start on the loan growth front. Really strong loan growth trends, a good report overall. I take a step back and just look at the loan growth the first half of the year, I think we're at about a 3% annualized pace. Just curious if this is a reasonable pace we should expect for the back half of the year? It sounds like the report from earlier, it sounds like the pipeline still look really strong even after the two key results. So just curious on expectations for loan growth the back half of the year?
Ray Cole (CEO)
Yeah, I think so, Matt. I think that the expectations for level loan growth and what we saw this last quarter would be about that mid-single digit range.
J.J. Fletcher (Chief Lending Officer)
I think if you take the two quarters together, obviously, we had a lot of stuff that kind of got pushed early into the second quarter, kind of level it out at that 4% type range, I think is fair.
Matthew Olney (Managing Director and Senior Equity Analyst)
Okay, that's helpful. And then on the deposit cost side, really encouraging to see some of that pressure ease up quite a bit, in Q2. Would love to hear any more color, whether it's by month or kind of what you saw, any kind of an inflection, just any color at all on deposit cost pressure easing, and then same thing, kind of expectations for the back half of the year.
Donna T. Lowery (CFO)
I mean, we are still seeing some pressure in our markets with some specials. We're still, as Hoppy said a while ago, when I was celebrating a little, and, you know, it's still out there, hand-to-hand battle market, you know, going through and matching some things. But, you know, we had—when you look at it kind of monthly, you know, when we had looked at the first quarter and kind of talked about where it was looking like we were kind of there, through April and May, and so when you look at that, it's April was 177, May was 182, and June was down to 174. So it looks like, I think we'll be tracking around where we are. Now, we do have a couple of things in play, as I mentioned about the public funds.
We will continue to have runoff the rest of the year for that. And then also, we do have some brokered CDs that I had mentioned, and those, a group of those are maturing tomorrow, and we were replacing those and adding a little bit to it. The same cost that that was, but just some additional dollars. So I feel like overall, with those couple of things that I really feel like that just, not just the deposit cost, but kind of the margin should kind of stay right where we are. I would say give or take a couple of basis points, just kind of projecting forward, projecting those decrease in public funds, the reduction in Home Loan Bank borrowings, and then the brokered CD.
So I feel like kind of projecting those forward, we should kind of stay where we are. Mm-hmm.
Matthew Olney (Managing Director and Senior Equity Analyst)
Okay, that's helpful, Dee Dee. So it sounds like margin, relatively stable from what we saw in Q2. You mentioned some of the balance sheet movements in the third quarter, and also, public funds could be a little bit lower. Any color on just the overall, average earning assets in the third quarter? Are we gonna see earning asset levels, move down a little bit, I guess, given some of the puts and takes that you mentioned?
Donna T. Lowery (CFO)
I think some of those, you know, really what I was talking about on the liability side, really kind of wash a little bit on, on that side. So, you know, we could see some increase in earning assets if, you know, what the loan book does for the third quarter, with what the expectations are for there, because we would probably more than likely end up funding it from, cash flows out of the securities book. So that could fund some of that, so you could see a slight increase or just flat.
Matthew Olney (Managing Director and Senior Equity Analyst)
Okay, that's helpful. Thanks for taking my questions.
Donna T. Lowery (CFO)
Sure. Thanks, Matt.
Operator (participant)
One moment for our next question, which will be coming from Brett Rabatin of Hovde Group. Brett, your line is open.
Brett Rabatin (Managing Director and Head of Equity Research)
Hey, good morning, everybody.
Donna T. Lowery (CFO)
Morning.
Ray Cole (CEO)
Good morning, Brett.
Brett Rabatin (Managing Director and Head of Equity Research)
Wanted to ask first on the... I think if I heard it correctly, $450 million of loan originations, is that a function, as you see it, of customers, you know, looking to draw on lines or do projects, or are you guys maybe moving some market share from competitors?
J.J. Fletcher (Chief Lending Officer)
So those are new originations, really, I think moving from competitors. And again, we've got that legacy, really strong book of business. A lot of that is still internally generated by our clients, you know, doing new projects or making acquisitions. It's kind of a, you know. And we also have the new lending teams. I know we talked about that for two quarters, but don't lose sight of that we're still getting new credits coming over from those groups, too. So it's really a combination of all those factors, I think.
Ray Cole (CEO)
But a lot of the new originations are new projects that are being-
J.J. Fletcher (Chief Lending Officer)
They're new.
Ray Cole (CEO)
Yeah.
J.J. Fletcher (Chief Lending Officer)
We've had some refinances out of the non-recourse market-
Ray Cole (CEO)
Right
J.J. Fletcher (Chief Lending Officer)
-from those for good, long-standing customers.
Ray Cole (CEO)
That's right.
J.J. Fletcher (Chief Lending Officer)
So it's been a combination.
Brett Rabatin (Managing Director and Head of Equity Research)
Okay, that's helpful. And then, you know, any, any thoughts on, you know, obviously with stocks higher, I think people are gonna talk about M&A more. You know, Hoppy, any, any thoughts on M&A and, and just, you know, how you see that playing out for you guys, you know, the back half of the year, if you think you might be looking to acquire or what's, what you're seeing out there?
Ray Cole (CEO)
Well, so valuation certainly helped that as everybody. So we always, you know, keep our optionality open.
... We're always having conversations. There's a number of interesting, you know, banks out there that would fit in our profile, but we always talk. We're always developing relationships.
Brett Rabatin (Managing Director and Head of Equity Research)
Okay. And then just, just lastly, back on the margin, wanted to make sure I understood. So Dee Dee, the margin is expected to be flattish in the back half of the year, and, and that's a function of the brokered CDs that you're gonna need to use to replace public funds, you know, offsetting some additional improvement in earning asset yields? Just wanna make sure I understood the, the narrative on that.
Donna T. Lowery (CFO)
Right. I was, you know, basically kind of looking at those three things as far as on the balance sheet side, what the impact of additional funding on the brokered CDs, with, and paying down the home loan bank advances, and then some of the public funds running out. Just trying to see kind of what that looked like, and really not giving any credit to the earning asset side as far as increase in, you know, loans, those kind of things. But really kind of looking at what that cost was gonna do to us is kind of what I was more, you know, JJ, go and get that loan book rolling, and then-
J.J. Fletcher (Chief Lending Officer)
Conservative forecast.
Donna T. Lowery (CFO)
I have to look at the conservative side. What am I adding to where we currently are, and what is that impact? So that's kind of what I was looking at. So I mean, we obviously always hope that we'll do a little better and always try to model more conservative on the cost side, so.
Brett Rabatin (Managing Director and Head of Equity Research)
Okay. That's helpful. It's good to see the cost of funds flatten out. That's nice. Thanks for all the color.
J.J. Fletcher (Chief Lending Officer)
Thanks.
Donna T. Lowery (CFO)
Thanks, Brett.
Operator (participant)
One moment for our next question. Our next question will be coming from Catherine Mealor of KBW. Your line is open, Catherine.
Catherine Mealor (Managing Director)
Thanks. Good morning.
Donna T. Lowery (CFO)
Good morning.
Ray Cole (CEO)
Good morning, Catherine.
Catherine Mealor (Managing Director)
With follow-up on the margin, I noticed that yield on loans just was down a little bit this quarter. Any outlook on just the pace of loan yield increases in the back half of the year?
Donna T. Lowery (CFO)
I will
Catherine Mealor (Managing Director)
And also maybe what drove the decline this quarter?
Donna T. Lowery (CFO)
Some of that decline, Catherine, and I'll let JJ add about the loan yield piece, but some of that was driven by some late fees, decrease in some fees. So I don't expect - I really don't expect that to continue. That was a little bit of a, kind of a one-time deal during the quarter. So, but JJ can address the actual loan yield piece. Mine was more on the fees.
J.J. Fletcher (Chief Lending Officer)
Yes, and Captain Hoppy and I were talking about that this morning. If you looked at our notes from first quarter, we kind of guided to that. We were seeing pressure in most of the markets going into the sevens. We've been in the eights pretty consistently for several quarters. So I think really it's competition. Maybe the potential rate cuts are driving some banks to start pricing in early, but to get good competitive deals, and of course, you know, there's a lot of banks that are sort of on the sidelines right now, but the ones that do have liquidity, I think they're pricing the strong deals. And we only really try to stay in the A-plus credit markets. As you all know, we don't cut on credit. So I just think we're seeing pressure there.
Hoppy, I think that's what we're seeing at committee every week, seems like.
Ray Cole (CEO)
No, there, there's no question about it. But now your new originations came on just right under 8, about 7.9.
J.J. Fletcher (Chief Lending Officer)
Yeah, yeah, still close to 8.
Ray Cole (CEO)
Still close to 8% on new originations. So for the quarter, the real quarter-to-quarter comparison had more to do with the late fee accrual than it did actual loan yield.
Catherine Mealor (Managing Director)
Okay, that makes sense. And then, would you say there's still enough fixed rate repricing opportunity? And then, I mean, if your new loans are still coming on 7.90, even if that comes down a little bit, I mean, the portfolio is at, you know, 5.86. So is it still fair to assume that the overall portfolio still continues to move higher over the next couple of quarters?
J.J. Fletcher (Chief Lending Officer)
Yeah, we've got roughly $250 million rest of the year in fixed rate, and those are gonna be in the lower sixes, so we'll get some bump there on the existing book as well.
Catherine Mealor (Managing Director)
Okay, great. And then, just back to the deposit growth commentary that you made, Dee Dee. I, I know that public funds fluctuates. It feels like we're hearing from other banks there's kind of more of an effort to push higher cost public funds out of the bank, but, and this is a bigger business for y'all. Is there any way to size the amount of decline you expect this year out of public funds?
Donna T. Lowery (CFO)
I mean-
Catherine Mealor (Managing Director)
And then as we model next year, do you think the peak will be as high, or is there less reliance on that deposit type?
Donna T. Lowery (CFO)
It seems the overall, when you kind of look back, the peak continues to increase every year. Really, COVID was a big increase, and then post that, on public funds. But I've, I think we usually run a $200 million-$300 million increase, and so... I mean, decrease over the course of the year. So I can't remember exactly off the top of my head what first quarter was, but with this $38 million, I mean, I think we still have-- I mean, we still could have $100+ million the rest of the year decrease.
Ray Cole (CEO)
Right. But it's been a good source of funding for us, and it's still... I think last report was just under, like, $272, wasn't it?
Donna T. Lowery (CFO)
Right. Our overall cost of public funds was 270, 270 and some change. So we're not necessarily trying to run it all.
Ray Cole (CEO)
But we're not out there aggressively bidding new-
Donna T. Lowery (CFO)
No.
J.J. Fletcher (Chief Lending Officer)
-money either.
Donna T. Lowery (CFO)
Right.
Ray Cole (CEO)
What you see is more of a seasonality and not a replacement of new, new money.
Donna T. Lowery (CFO)
Yeah.
Catherine Mealor (Managing Director)
Great. Okay, that, that makes sense. Okay, great. And then maybe one more on just the outlook for fees.... I'm sorry, not, not fees, just the outlook for expenses.
Donna T. Lowery (CFO)
I think, Catherine, looking at where we are, I think we're still pretty much in line. I've kind of given $176 million for the year, and so, I think we were at 43.4 last quarter and 43.7. And, you know, as we go through the year, that'll tick up a little bit, but I still think we're in line to be around that $176-$177 million for the year.
Catherine Mealor (Managing Director)
Okay, perfect. Yeah. That's usually very steady for y'all. All right, great! Thank you. Great quarter.
Donna T. Lowery (CFO)
Thanks, Catherine.
Operator (participant)
Wait for our next question. Our next question will be coming from Christopher Marinac of Janney Montgomery Scott, LLC. Your line's open.
Christopher Marinac (Director of Research)
Hey, thanks. Good morning. Just wanted to drill down on expenses a little further. What's your thought on this expense rate as a guide going into the next couple quarters and just maybe any kind of inflationary expense we should expect next year?
Donna T. Lowery (CFO)
I think, you know, just kind of was talking a little bit about that. I think, you know, we were kind of showing 176, 177 for the year. So I think we'll be in the, in the 44, and some change, on operating expenses the next two quarters. Because, you know, and then typically the fourth quarter, all these year-end things to true up. So I think, we'll be 44 and some change, third quarter and then fourth quarter as well. And then I think, you know, we usually budget an increase of 3%-4%, so I think that's, what, what we're looking at for next year.
Christopher Marinac (Director of Research)
Great, that's helpful. Hoppy, just wanted to follow back up on the deposit cost conversation from earlier. Do you or did you see any deposit campaigns by other, you know, midsize or bigger banks that happened maybe in June, that would have happened below the surface and didn't necessarily impact you, but were out there just for the team to, kind of, you know, have to work with?
Ray Cole (CEO)
Not as much pressure out there, Chris, as there has been. We didn't see as many of those campaigns. It was more kind of a one-off matching than an actual campaign.
Christopher Marinac (Director of Research)
Okay. I guess the same would be true for credit unions, where they impact you in various markets?
Ray Cole (CEO)
Yeah, we just haven't seen, haven't seen much out of the credit unions.
Christopher Marinac (Director of Research)
Great. Thank you very much for all the background this morning.
Ray Cole (CEO)
Thanks.
Donna T. Lowery (CFO)
Thanks, Chris.
Operator (participant)
One moment for our next question. Our next question will come from Matt Olney of Stephens. Your line is open.
Matthew Olney (Managing Director and Senior Equity Analyst)
Hey.
Donna T. Lowery (CFO)
Matt!
Ray Cole (CEO)
I didn't realize you got to go around twice.
Matthew Olney (Managing Director and Senior Equity Analyst)
Lucky, lucky me, I guess. I wanted to follow up with George. I think George mentioned something interesting about borrower capacity to pay down substandard loans in some cases. Any more color on kind of those examples? Are these just guarantors adding additional equity to the project, or any more color on that topic would be interesting.
George Noonan (Chief Credit Officer)
You know, it's sort of a variety, Matt, but I would say in several specific instances, actually, the assets were sold. And so there was an outside buyer that had negotiated a deal, and it was sufficient enough. The loans were seasoned enough that the principal balances had been reduced. So I would say probably of this past quarter, that was the predominant exit, if you will, or just asset sales, even though we had already marked down the risk rate a little bit. So that was the main driver this past quarter.
Matthew Olney (Managing Director and Senior Equity Analyst)
Okay. All right. Thanks for that, George. And then maybe just if I could sneak in one more, I'd be curious about the bank's appetite for any kind of securities restructuring. I think you guys completed something maybe late last year or first part of this year. Rates have moved down a little bit lower over the last few weeks. Just, just curious about the bank's appetite to sell some securities and reinvest that. Thanks.
Donna T. Lowery (CFO)
Yeah, we did actually get the sale accomplished at the last week of December and then purchased those bonds in January of this year. So, we are talking about it and looking at it and running the numbers. So I think if we can do something that kind of looks like that, as far as the loss and the earn back, we would consider doing it again. So probably something about the same size. We're not, you know, nothing big and just... We're looking at running the numbers. If it makes sense, we'll obviously pull the trigger on it.
Matthew Olney (Managing Director and Senior Equity Analyst)
Okay. All right. Thanks. Great quarter.
Donna T. Lowery (CFO)
Thanks, Matt.
Operator (participant)
I'm sure no further questions. I would now like to turn the call back to Hoppy for closing remarks.
Ray Cole (CEO)
Well, thanks, thanks, everyone. We appreciate your attendance this morning. Again, a good quarter. Very pleased with what, the performance during the quarter, and we'll circle back up next quarter. Thank you.
Donna T. Lowery (CFO)
Thanks.
Operator (participant)
This concludes today's conference call. Thank you for participating. You may now disconnect.