Question-and-Answer Session
Operator
(Operator Instructions) There are no further questions at this time.
Tommy May
Operator?
Operator
Yes.
Tommy May
You may try that again.
Operator
Your first question comes from the line of David Scharf.
David Scharf - Ftn Midwest Securities Corp.
Thank you.
Tommy May
Hello, David.
Bob Fehlman
Hey, David.
David Scharf - Ftn Midwest Securities Corp.
Hey, how are you?
Tommy May
Good.
David Scharf - Ftn Midwest Securities Corp.
Good, Hey, I was wondering if you could kind of go over some of the dynamics that affected the net interest margin this quarter and may be kind of give me some color on potential where you see going? I know, it’s very difficult environment to manage through it, but I would assume that funded cost are coming in pretty reasonably and that there should be some upside. Is that a fair assessment?
Tommy May
Let me just start, I will get to the go forward in just a second. When you look at our quarter-over-quarter when we were down eight basis points, we of course have been talking about that all year with the rapid decrease in the interest rates, but then on the link quarter basis we were down 20 basis points and I think the big issue that we need to remind ourselves starts with seasonality.
Trying to compare margin or anything else on the fourth quarter and the first quarter will create some challenges there for the seasonality. In fact a big portion of that 20 basis points would be associated with that. I think the second thing is and you can see that in the balance sheet that we have been very aggressive in attempting to grow our liquidity, and as a result of that we introduced what we call a high yield investment account, which we created at about $50 million to $55 million in new money on a temporary basis until some of that money goes into the seasonality pool, it is being invested in overnight assets which would be putting some pressure on the earning assets.
So, I think it's a combination of 2 or 3 things, David. None of it was unexpected. I think going forward, as you said it's with the headwinds that we are seeing right now it's pretty hard to know where this margin is going to go. I would say from our perspective that until we fulfill that the Fed has stopped dropping interest rates then we would anticipate a little bit more compression over the next 90 days.
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