U.S. Markets close in 4 hrs 2 mins

Edited Transcript of RNST earnings conference call or presentation 19-Jul-17 2:00pm GMT

Thomson Reuters StreetEvents

Q2 2017 Renasant Corp Earnings Call

TUPELO Aug 12, 2017 (Thomson StreetEvents) -- Edited Transcript of Renasant Corp earnings conference call or presentation Wednesday, July 19, 2017 at 2:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* C. Mitchell Waycaster

Renasant Corporation - President & COO

* Edward Robinson McGraw

Renasant Corporation - Chairman & CEO

* James W. Gray

Renasant Corporation - EVP

* John Sidney Oxford

Renasant Corporation - Director of Corp Communication and First VP

* Kevin D. Chapman

Renasant Corporation - CFO & Executive VP

================================================================================

Conference Call Participants

================================================================================

* Andrew Wesley Stapp

Hilliard Lyons, Research Division - Analyst for Banking

* John Lawrence Rodis

FIG Partners, LLC, Research Division - SVP and Research Analyst

* Matthew Covington Olney

Stephens Inc., Research Division - MD

* Michael Edward Rose

Raymond James & Associates, Inc., Research Division - MD, Equity Research

* Peter Finley Ruiz

Sandler O'Neill + Partners, L.P., Research Division - VP, Equity Research

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning, and welcome to the Renasant Corporation 2017 Second Quarter Earnings Conference Call and Webcast. (Operator Instructions) Please also note that today's event is being recorded.

I would now like to turn the conference over to Mr. John Oxford with Renasant Corporation. Please go ahead.

--------------------------------------------------------------------------------

John Sidney Oxford, Renasant Corporation - Director of Corp Communication and First VP [2]

--------------------------------------------------------------------------------

Thank you. Good morning, and thank you for joining us for Renasant Corporation's 2017 Second Quarter Earnings Webcast and Conference Call. Participating in this call are the members of Renasant's executive management team.

Before we begin, let me remind you that some of our comments during this call may be forward-looking statements, which involve risks and uncertainty. A number of factors could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements.

These factors include, but are not limited to, interest rate fluctuation, regulatory changes, portfolio performance and other factors discussed in our recent filings with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

And now I will turn the call over to E. Robinson McGraw, Chairman and CEO of Renasant Corporation. Robin?

--------------------------------------------------------------------------------

Edward Robinson McGraw, Renasant Corporation - Chairman & CEO [3]

--------------------------------------------------------------------------------

Thank you, John. Good morning. Thank you again for joining us today. Looking at our results for the second quarter of '17, net income was $25.3 million, an increase of 10.41% as compared to the same quarter in '16. Our basic and diluted EPS were $0.57 per share as compared to $0.54 for the second quarter of '16.

During the second quarter of '17, we incurred expenses and charges in connection with certain transactions that are considered to be infrequent or nonrecurring in nature. These expenses were primarily associated with merger and conversion expenses, which impacted our EPS by $0.04. Excluding these nonrecurring items, our '17 second quarter return on average tangible assets and return on tangible equity -- average tangible equity were 1.38% and 14.84%, respectively.

On July 1, '17, we completed our previously announced acquisition of Metropolitan BancGroup, in an all-stock merger. As of July 1, Metropolitan operated 8 offices in Nashville and Memphis, Tennessee, and the Jackson, Mississippi MSA and had approximately $1.2 billion in assets, which included approximately $990 million in total loans and approximately $940 million in total deposits. The acquired operations and expenses of Metropolitan are not included in our second quarter '17 reported results.

Focusing on our balance sheet, total assets at June 30, '17, were approximately $8.9 billion as compared to approximately $8.7 billion in December 31, '16. Total loans were approximately $6.4 billion at June 30, '17 as compared to $6.2 billion for December 31, '16, and $6.24 billion at March 31, '17, which represents an annualized growth rate of approximately 9% on a linked-quarter basis. We continued to experience a strong pipeline as we enter the third quarter.

Total deposits were $7.2 billion at June 30, '17, as compared to $7.1 billion at December 31, '16. Our noninterest-bearing deposits averaged approximately $1.6 billion or 22.5% of average deposits for the second quarter of '17 as compared to $1.5 billion or 21.98% of average deposits for the same period in '16. Our cost of funds for the second quarter of '17 was 30 basis points as compared to 26 basis points for the same period in '16.

Looking at our capital ratios. Our tangible common equity ratio was 9.31%. Our Tier 1 leverage capital ratio was 10.68%. Our common equity Tier 1 risk-based capital ratio was 11.65%, and our Tier 1 risk-based capital ratio was 12.86% and our total risk-based capital ratio was 15% for the second quarter of '17. Our regulatory capital ratios are all in excess of regulatory minimum required to be classified as well capitalized.

Net interest income was 96 -- excuse me, were $79.6 million for the second quarter of '17 as compared to $77.2 million for the second quarter of '16. Net interest margin was 4.27% for the second quarter of '17 as compared to 4.01% for the first quarter of '17 and 4.29% for the second quarter of '16. Our net interest margin adjusted for purchase accounting adjustments on loans and income collected on problem loans was 3.84% for the second quarter of '17 compared to 3.69% for the first quarter of '17.

For the second quarter of '17, noninterest income was $34.3 million as compared to $35.6 million for the same quarter in '16. The quarter was highlighted by increases in service charges on deposit accounts, fees and commissions on loans and deposits and wealth management revenue.

Mortgage loan originations were down when compared to the second quarter of '16 due to a reduction in the refinancing of mortgage loans. Noninterest expense was $74.8 million for the second quarter of '17 as compared to $77.3 million for the same quarter in '16. Excluding nonrecurring charges, the merger and conversion expenses, noninterest expense decreased when compared to the second quarter of '16. The decrease is primarily attributable to a decrease in salary and employee benefits, data processing costs, which realized the contract renegotiations and expenses on OREO. Our efficiency ratio for the second quarter of '17 was 60.75%, which reflects our continued focus on expense management.

Shifting to our asset quality at June 30, '17. Our credit quality metrics continue to remain at or near historic lows, with improving trends in all credit quality metrics, including NPAs, loans 30 to 89 days past due and our internal watch list both at linked-quarter basis and when compared to 12/31/16. For more information on financials, I'll refer you to our press release for specific numbers and ratios.

In closing, we're pleased with our second quarter '17 results, which are highlighted by record quarterly earnings, along with expanding net interest margins, strong fee income, improving credit metrics and a continued focus on overall expenses. Our performance, along with the recent completion of our merger with Metropolitan, has provided us with great momentum at the midpoint of '17, which we believe positions us well for a strong finish to '17 and another great year for our company.

Now I'll turn the call back over to you for Q&A.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Our first question comes from Brad Milsaps of Sandler O'Neill.

--------------------------------------------------------------------------------

Peter Finley Ruiz, Sandler O'Neill + Partners, L.P., Research Division - VP, Equity Research [2]

--------------------------------------------------------------------------------

This is actually Peter Ruiz for Brad. So maybe just if we could first touch on expenses and maybe just the cost saves related to Metro, where you guys are on that and kind of your thought process on what expenses look like going forward.

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [3]

--------------------------------------------------------------------------------

This is Kevin. I'll handle expenses. Overall, we're pleased with our trajectory on expenses. We've seen 2 to 3 quarters now of flat or slightly increasing expenses. As we look into Q3, from just a Renasant stand-alone side, we expect a similar type trend line for it to be relatively flat. We are expecting expenses to be up a little bit in Q3, but that's going to be driven primarily off some variable costs coming out of mortgage, and the expenses will be higher in correlation with the mortgage income being higher in Q3. As we look at Metropolitan and their -- combining their expenses with ours in the call today is well on track with the projections that we gave, the estimates we gave on the call saves in 37.5% range, we're on track with that. Those will all be fully realized next year, so the cost saves will be completely in our run rate in Q1. We anticipate that in the back half of this year, that we'll realize about 75% of those cost saves, and we are on track with each of those projections.

--------------------------------------------------------------------------------

Peter Finley Ruiz, Sandler O'Neill + Partners, L.P., Research Division - VP, Equity Research [4]

--------------------------------------------------------------------------------

Yes, that's great. So maybe just touching on the margin. You think the core NIM here is kind of at a stabilizing point, maybe some further upsize here depending on what happens with traditional rate hikes later this year. And maybe if you could speak about what new and renewed loan yields look like. I know that they got a nice bump last quarter. Any similar bump this quarter or less so?

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [5]

--------------------------------------------------------------------------------

Yes. So in margin, let's talk about the new and renewed first, and then we'll talk about where we go from here just on margin. So now we saw similar type -- similar to what we saw in Q1 where we had a 20 basis point increase in our new and renewed in Q1 compared to Q4. We saw a very similar trend line. New and renewed loan yields in Q2 compared to Q1 were up another 15 to 16 basis points. So we saw another quarter of increasing loan yields on the new and renewed front. As we discussed last quarter, we hit an inflection point on our new and renewed or on loan yields that are new and renewed loan pricing was coming in at or, in some cases, better than our rollout rates, what was paying off and what was rolling out. And so that, in and of itself, has had a positive impact on margin. As we look out into Q3 in margins, we'd expect some positive benefit from the rate increase that incurred in late June, that the last 25 basis point rate increase was not fully reflected in all of our results for Q2, so we would expect a positive benefit with that and due to rate increase, would anticipate a positive benefit. One thing I will mention is just with Metropolitan, adding Metropolitan to our margin will pull margin back a little bit. Their margin is in the low 3s, the 3.15%, 3.20% range and so when we just add their margins to our margin, our core margin, it will pull that -- it will pull our core margin back. We're projecting right now about maybe 10 to 12 basis points. But again, we expect positive offset to that as we realize the full effect of the last 25 basis points. And then, any future rate increase would also be positive to margin.

--------------------------------------------------------------------------------

Peter Finley Ruiz, Sandler O'Neill + Partners, L.P., Research Division - VP, Equity Research [6]

--------------------------------------------------------------------------------

Okay. And maybe lastly, if you just -- that's great on the asset side. Are you seeing any sort of deposit pricing pressure at all? And anything on that would be great.

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [7]

--------------------------------------------------------------------------------

Yes. So we -- to answer the question shortly, yes, we are seeing stiffer competition and higher rate offerings in the market on funding, on deposit costs. What we are -- I think we're doing a good job of being competitive, maintaining relationships as well as our team being focused on offsetting those higher rates to be competitive with mix change. You could see in our balance sheet, our mix right now, we have 22%, almost 23% in noninterest-bearing DDA, that's up by a full percentage point from Q1. So again, our -- we recognize that rates -- there may be more competition on funding now. But we can still offset that cost through mix change and keep the total cost to funding maybe moving -- or lagging at a lower level than what stated rates or what overnight rates are moving. I will say that as we get into Q3, typically, Q3 is when we see some deposit outflows out of our public funds. We will be relying a little bit more on FHLB borrowings in Q3. Those FHLB borrowings will come at a higher cost than what our historical deposit costs have been. But we don't anticipate that having a dramatic impact on margin, although it may weigh on margin a couple of basis points compared to Q2. We don't anticipate that weighing significantly and would anticipate it being short term in nature as we get into Q4 and Q1 as we build public fund money back up.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

Our next question comes from Michael Rose of Raymond James.

--------------------------------------------------------------------------------

Michael Edward Rose, Raymond James & Associates, Inc., Research Division - MD, Equity Research [9]

--------------------------------------------------------------------------------

Just wanted to kind of clarify on the noninterest expenses. Just as a starting point for next quarter, if I assume you guys are flattish and I -- taking some cost saves from Metropolitan's first quarter numbers, I don't have their second quarter numbers, it looks like good run rate to start off might be around $78 million. Is that a good kind of starting point?

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [10]

--------------------------------------------------------------------------------

Yes. I'll -- in the high 78s, maybe high 78s to mid-79s will be a good starting point.

--------------------------------------------------------------------------------

Michael Edward Rose, Raymond James & Associates, Inc., Research Division - MD, Equity Research [11]

--------------------------------------------------------------------------------

High 78s. Okay, great. And then just want to get an update, maybe from Mitch, on the pipeline, where it stands. And obviously, we're coming to a seasonally stronger quarter for you guys, so just any thoughts there would be great.

--------------------------------------------------------------------------------

C. Mitchell Waycaster, Renasant Corporation - President & COO [12]

--------------------------------------------------------------------------------

Sure, Michael. The current pipeline is $186 million. And we are beginning the third quarter, as you can see, with a strong pipeline. Metropolitan added $26 million. So if you adjust that, the legacy pipeline would be at $160 million. That's up from Q2 at $157 million. If we break that down by state, 26% would be in Tennessee; 21% in Alabama, Florida; 37% in Georgia; 16% in Mississippi; and as I mentioned at the beginning, $26 million added or about 14% to Metropolitan. The other thing I would note, our specialty lines, they're adding about $41 million or about 22% to that $186 million pipeline. So $186 million should result in about $65 million in growth and nonacquired outstandings within the next 30 days. So we are beginning the quarter with a strong pipeline. We see that, again, which also reflects the strong production that we had in the second quarter. We're seeing that across all markets and business lines. And we do expect continued strong loan growth as we go into the third quarter.

--------------------------------------------------------------------------------

Michael Edward Rose, Raymond James & Associates, Inc., Research Division - MD, Equity Research [13]

--------------------------------------------------------------------------------

Okay, that's helpful. And then maybe just one last one for me. A lot of talk -- credit trends have been very good for you guys, but a lot of talk on retail. Can you just kind of size up your exposure for us and if you have any concerns at this point or going forward?

--------------------------------------------------------------------------------

C. Mitchell Waycaster, Renasant Corporation - President & COO [14]

--------------------------------------------------------------------------------

Yes, Michael. As we've talked before, retail, if you looked at the term portion, it's about 8% of the total. At the end of the quarter, we had 0 past dues. We're not a big box lender. If you look at our larger credits, it would be single national credit type tenants. We don't have any reason for concern. Naturally, we continue to monitor that space, just understanding what -- some of the closure of the big box, how that's going to affect some rental rates and some of our markets. But we're not seeing any indications that would cause us concern at this point.

--------------------------------------------------------------------------------

Operator [15]

--------------------------------------------------------------------------------

Our next question comes from Matt Olney of Stephens.

--------------------------------------------------------------------------------

Matthew Covington Olney, Stephens Inc., Research Division - MD [16]

--------------------------------------------------------------------------------

I want to go back to loan growth and I want to dig in on the impact of Metropolitan Bank. And I'm curious, what kind of growth Metropolitan has seen in the first half of the year. Any details you can give us on that? And then going forward, how is metropolitan going to kind of augment the loan growth outlook for Renasant combined?

--------------------------------------------------------------------------------

C. Mitchell Waycaster, Renasant Corporation - President & COO [17]

--------------------------------------------------------------------------------

Sure. Matt, let me start. I'll go back to the pipeline. I mentioned they were adding about $26 million to the $186 million. And if you break that down by market, that would make up -- their pipeline would be about 46%, that pipeline in Memphis, about 38% in Nashville, about 16% in Jackson, so definitely additive to all 3 of our markets. Their production would be as a percentage a little higher than ours so far this year. As we continue to guide net loan growth in the high single, low double digits, Metropolitan will, again, support our growth within that same range, probably more in the higher end of that range. So their focus on C&I, particularly the private client areas, will definitely be additive in all 3 of those markets and to the company. They bring very good talent, very focused on the client and we look forward to combining these 2 teams, definitely will be a positive in -- to loan growth and like I said, keep us within the range that we've been guiding to this year.

--------------------------------------------------------------------------------

Matthew Covington Olney, Stephens Inc., Research Division - MD [18]

--------------------------------------------------------------------------------

Okay, that's helpful, Mitch. And then, on the efficiency ratio, looks like you guys made some nice progress towards your sub-50% goal. Can you talk more about this trend into the back half of the year with Renasant's stand-alone and obviously, the impact of Metropolitan Bank? What's your expectation for efficiency ratio?

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [19]

--------------------------------------------------------------------------------

I'll start off some commentary. I'll -- if Robin and Mitch want to add anything, I'll let them add as well. But as we look at our efficiency trend, we're seeing frankly nice improvement and steady improvement, really, as the noninterest expense has leveled all and due to an increase in margin, a growing balance sheet, nice production coming out of mortgage, all of that revenue lift on that flat expense base is really what's causing the improvement in the efficiency. As we look at Renasant on a stand-alone basis, we expect a similar trend line in Q3 and Q4. Just as margins hold, as balance sheet growth occurs and again, in building off a previous comment, but we expect that Renasant expenses to be relatively flat compared to Q2 -- in Q3 compared to Q2. So we would expect efficiency trend lines to continue to improve. That's going to be masked as we look at -- or as we combine with Metropolitan in Q3, Q4, combining their operations. They are a little bit more inefficient than we are and not receiving all -- or not realizing all the expense saves until Q1, won't really see a clean, combined efficiency ratio on a fully realized -- fully cost savings realized until Q1, but would anticipate in Q1 that you would see improvement in Q1 compared to where we are at Q2 with the underlying Renasant efficiency ratio improving in Q3 and Q4 as we approach that clean look in Q1.

--------------------------------------------------------------------------------

Matthew Covington Olney, Stephens Inc., Research Division - MD [20]

--------------------------------------------------------------------------------

Just to clarify, Kevin, are you saying that by the first quarter of '18, we have full cost saves? With Metropolitan Bank, you expect to have efficiency ratio below where it's at today or just below where it would be in the back half of the year?

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [21]

--------------------------------------------------------------------------------

Below where it's at today.

--------------------------------------------------------------------------------

Matthew Covington Olney, Stephens Inc., Research Division - MD [22]

--------------------------------------------------------------------------------

Got it, okay. And then just lastly, for me, as far as capital, can you just remind us where you expect the capital ratios to be in the third quarter with Metropolitan totaled in?

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [23]

--------------------------------------------------------------------------------

Sure. So just taking a couple of ratios, our TCE and our leverage ratio, when we add in Metropolitan, we'd anticipate about, call it, 60 to 65 basis points of compression. So right now, the leverage ratio is north of 10.60%. We would expect our leverage ratio to be the high 9s, maybe low 10s on a combined basis. The risk-based capital ratios will experience a little bit more compression. We'd anticipate the compression in those to be in excess of 100 basis points. So total risk-based capital would be in the low 14%, maybe high 13% and CET1, similar type trend line with a total risk-based capital, about 100 to 125 basis points of compression.

--------------------------------------------------------------------------------

Operator [24]

--------------------------------------------------------------------------------

Our next question comes from Andy Stapp of Hilliard Lyons.

--------------------------------------------------------------------------------

Andrew Wesley Stapp, Hilliard Lyons, Research Division - Analyst for Banking [25]

--------------------------------------------------------------------------------

Was the linked-quarter increase in core loan yields solely reflective of the Fed rate hikes or were there other drivers?

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [26]

--------------------------------------------------------------------------------

Andy, I would say it is -- it was definitely helped by the Fed rate hike. We saw our variable rate loans, repriced almost immediately. If you just -- just to remind everybody, our variable rate loans have very few that are subject to floors. And variable rate loans approximate around 30% of our loan portfolio. It was all repriced immediately. So that has helped. It's been interesting as far as other factors. I think our team has done a tremendous job of being cognizant of pricing and maximizing returns on our capital. And I think that's reflective in our margin as well and in our loan yields. As I mentioned earlier, we've seen our new and renewed loan pricing increase for about 3 or 4 consecutive quarters and that, to me, is as much attributable to our team being cognizant of yields and margins and profitability as well. And breaking down some of the new and renewed, we saw our renewed -- new and renewed rates on fixed rates expand more than we've seen in several quarters. Our variable rate loans on new and renewed as well as just stated, they've been increasing in high correlation as the short end of the curve has moved. That has not been the case on fixed rate loans up until this quarter. We saw a larger movement in fixed rate loans in this quarter than we've seen in previous quarters. So I would chalk it off, some to that, but I'll also give credit to the team members and their diligence on pricing and returns.

--------------------------------------------------------------------------------

Andrew Wesley Stapp, Hilliard Lyons, Research Division - Analyst for Banking [27]

--------------------------------------------------------------------------------

Okay, that's helpful. And would you provide some color on the linked-quarter decline in securities yields?

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [28]

--------------------------------------------------------------------------------

Yes. So a couple of things there is, we did have some calls of some municipal securities. And we did not -- some calls that occurred and they were at a higher-yielding rate. We did not reinvest in munis either, reinvest in a different type security or held on to that cash. That would be one. And also, in Q1, we had some -- Q1 compared to Q2, we have some changes in prepayments, prepayment fees that affected amortization. It's a little bit more beneficial in Q1 compared to Q2.

--------------------------------------------------------------------------------

Andrew Wesley Stapp, Hilliard Lyons, Research Division - Analyst for Banking [29]

--------------------------------------------------------------------------------

Okay. And what's a good rate for the effective tax rate going forward?

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [30]

--------------------------------------------------------------------------------

A good rate would be 0. I'm not sure we're going to get that though. We -- our effective tax rate was a little north of 32% in Q2. And we -- with the addition of Metropolitan, the additional income they bring, we'd expect that to be more in the 33% range on the back half of the year.

--------------------------------------------------------------------------------

Andrew Wesley Stapp, Hilliard Lyons, Research Division - Analyst for Banking [31]

--------------------------------------------------------------------------------

Okay. And last question, just wondering, you might have a breakout of the various components of mortgage banking, such as gain on sale, servicing, et cetera.

--------------------------------------------------------------------------------

James W. Gray, Renasant Corporation - EVP [32]

--------------------------------------------------------------------------------

Andy, this is Jim. The majority of our -- the vast majority of our mortgage banking income is gain on sale and origination fee, representing roughly 99%. Servicing is only about 1%, primarily because we are pretty aggressive on amortization of our servicing asset. And we try to be very conservative, make sure that we maintain a conservative book value on our servicing.

--------------------------------------------------------------------------------

Operator [33]

--------------------------------------------------------------------------------

(Operator Instructions) Our next question comes from John Rodis of FIG Partners.

--------------------------------------------------------------------------------

John Lawrence Rodis, FIG Partners, LLC, Research Division - SVP and Research Analyst [34]

--------------------------------------------------------------------------------

Maybe -- Jim, maybe a follow-up question for you on mortgage. Was this a fairly, I guess, clean quarter for mortgage? And it sounds like you guys alluded to maybe a better third quarter for mortgage. So I don't know if you could just elaborate on that.

--------------------------------------------------------------------------------

James W. Gray, Renasant Corporation - EVP [35]

--------------------------------------------------------------------------------

Sure. Yes, it was a clean quarter. I think what we're seeing now is kind of the fruits of our labor in the first quarter of -- as we had mentioned, really focusing on recruiting, both on the retail side and the wholesale side. We had recruited -- let's see, brought on 11 new hires on the retail side, 2 on the wholesale side during the quarter for a net of -- up 6 because we did have 5 that left. So -- and we really focus on recruits that have purchase volume, that weren't really just riding away with refis. And as a result of that, our purchase volume for the second quarter was 77% versus 68% for the first quarter. I think as we move into the third quarter, we are continuing to recruit. We have, right now, about 13 in both retail and wholesale, another 13 projected hires that -- throughout our markets really spread all across our markets with a purchase volume focus. And so we would anticipate -- our closings for second quarter were $526 million. We're projecting closings in the third quarter in the $500 million to $600 million range and mortgage banking revenue in the, where was it, $12.4 million for the second quarter, in the $13 million to $15 million range.

--------------------------------------------------------------------------------

John Lawrence Rodis, FIG Partners, LLC, Research Division - SVP and Research Analyst [36]

--------------------------------------------------------------------------------

$13 million to $15 million in revenues in the third quarter?

--------------------------------------------------------------------------------

James W. Gray, Renasant Corporation - EVP [37]

--------------------------------------------------------------------------------

That's what we project, yes.

--------------------------------------------------------------------------------

John Lawrence Rodis, FIG Partners, LLC, Research Division - SVP and Research Analyst [38]

--------------------------------------------------------------------------------

And you guys -- I guess, this quarter, mortgage revenues were 10.5% to 11% of total revenues. I think you guys have talked about keeping it around 10%. Is that sort of -- still the plan going forward?

--------------------------------------------------------------------------------

James W. Gray, Renasant Corporation - EVP [39]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

John Lawrence Rodis, FIG Partners, LLC, Research Division - SVP and Research Analyst [40]

--------------------------------------------------------------------------------

Okay, okay. Kevin, maybe just a follow-up question for you on the margin. Obviously, a lot of moving parts. And you guys benefited this quarter from, I guess, a little bit higher level of interest recovery, what, $2.7 million. And just given your comments on some of the, I guess, the impact from Metro, if you look at the all-in margin for the second half of the year, sort of does around a 4% level seem to make sense if you assume interest recoveries kind of trend back down and obviously, yield accretion and so forth?

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [41]

--------------------------------------------------------------------------------

Yes. I would -- the purchase accounting is noisy and lumpy, would anticipate our reported margin to be in that 4% to 4.10% range. We're still finalizing the Metropolitan fair values. So those numbers will -- the reported numbers will bring -- will be positively impacted by purchase accounting adjustments made to Metropolitan's loan portfolio and interest rate sensitive liabilities as well, but would anticipate our reported margin to be in the 4% to 4.10% margin range, just with normal levels of purchase accounting and normal levels of interest income recovered from previously charged-off loan. You mentioned the large -- or the item -- the recovery in interest income. I will mention on that, provide a little bit of color. That actually goes back to a loan that was charged off in relation to the Crescent FDIC acquisition. So this was a long-term effort that we've been working to obtain monies from the borrower. We were successful in that in the second quarter. And that actually allowed us to be, like to date, recover any negative impact that we incurred as far as terminating our loss-share agreement with FDIC. We anticipated an earn back of about 12 months when we elected to terminate the loss-share agreement. It actually took us about 5 to 6 months to recoup any onetime hits to earnings to terminate that agreement. So we're now in the black as far as terminating our loss share and would still continue to expect future recoveries off of the FDIC acquisitions or in some cases, previous whole bank acquisition.

--------------------------------------------------------------------------------

John Lawrence Rodis, FIG Partners, LLC, Research Division - SVP and Research Analyst [42]

--------------------------------------------------------------------------------

Okay. But obviously, lumpy going forward, I guess, obviously.

--------------------------------------------------------------------------------

Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [43]

--------------------------------------------------------------------------------

It needs to be lumpy going forward.

--------------------------------------------------------------------------------

John Lawrence Rodis, FIG Partners, LLC, Research Division - SVP and Research Analyst [44]

--------------------------------------------------------------------------------

Okay. Robin, maybe just one final question for you. Just your thoughts on the M&A environment going forward now that Metro is closed.

--------------------------------------------------------------------------------

Edward Robinson McGraw, Renasant Corporation - Chairman & CEO [45]

--------------------------------------------------------------------------------

John, we feel like that there's a lot of opportunity out there. And we've been acquisitive for the last several years and will continue with the same thought process we've had in the past. We likely would be opportunistic, look for opportunities that fit the parameters that we have previously quoted. And hopefully, we'll be able to find some partners that are willing to work with us to receive that optimum pricing that we feel like we need in order to move forward with the M&A activities.

--------------------------------------------------------------------------------

Operator [46]

--------------------------------------------------------------------------------

This concludes our question-and-answer session. I would like to turn the conference back over to Robin McGraw for any closing remarks.

--------------------------------------------------------------------------------

Edward Robinson McGraw, Renasant Corporation - Chairman & CEO [47]

--------------------------------------------------------------------------------

Thank you, Andrea. We appreciate everybody's time today, and everyone's interest in Renasant Corporation. And we certainly look forward to speaking with you again in the near future. Thanks, everyone.

--------------------------------------------------------------------------------

Operator [48]

--------------------------------------------------------------------------------

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.