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Edited Transcript of RNST earnings conference call or presentation 18-Oct-17 2:00pm GMT

Thomson Reuters StreetEvents

Q3 2017 Renasant Corp Earnings Call

TUPELO Oct 19, 2017 (Thomson StreetEvents) -- Edited Transcript of Renasant Corp earnings conference call or presentation Wednesday, October 18, 2017 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* 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

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Conference Call Participants

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* Andrew Wesley Stapp

Hilliard Lyons, Research Division - Analyst for Banking

* Catherine Fitzhugh Summerson Mealor

Keefe, Bruyette, & Woods, Inc., Research Division - MD and SVP

* John Lawrence Rodis

FIG Partners, LLC, Research Division - Senior VP & Research Analyst

* Matthew Michael Sealy

Stephens Inc., Research Division - Research Associate

* Michael Edward Rose

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

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Presentation

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Operator [1]

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Good morning, and welcome to the Renasant Corporation 2017 Third Quarter Earnings Conference Call and Webcast. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to John Oxford. Please go ahead.

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

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Thank you, Brandon. Good morning, and thank you for joining us for Renasant Corporation's 2017 Third Quarter Earnings Webcast and Conference Call. Participating in this call today are 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 Securities and Exchange Commission. 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.

In addition, some of the financial measures that we may discuss this morning may be non-GAAP financial measures. A reconciliation of the non-GAAP measures to the most comparable GAAP measure can be found in our earnings release, which has already been posted to renasant.com in the Press Release section under Investor Relations tab.

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

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

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Thank you, John. Good morning, everyone, and thank you again for joining us today.

Looking at our results for the third quarter of '17, net income was $26.4 million, an increase of 13.99% as compared to the same quarter in '16. Our basic and diluted EPS were $0.54 and $0.53 per share, respectively, as compared to $0.55 for the third quarter of '16.

During the third quarter '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 and impacted our diluted EPS by $0.09. Excluding these nonrecurring items, our '17 third quarter return on average tangible assets and return on tangible -- average tangible equity were 1.30% and 14.62%, 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 in the Jackson, Mississippi MSA, and net assets with a fair value of approximately $1.4 billion, which included approximately $970 million in total loans and total deposits with a fair value of approximately $940 million. The acquired operations and expenses of Metropolitan since the date of acquisition are included in our third quarter '17 reported results.

Focusing on our balance sheet, total assets at September 30, '17, were approximately $10.3 billion as compared to approximately $8.7 billion at December 31, '16. Total loans were approximately $7.4 billion at September 30 as compared to $6.2 billion at December 31, '16, and $6.4 billion at June 30, '17. Excluding loans purchased in previous acquisitions, loans grew to $5.3 billion at September 30, '17, as compared to $4.7 billion at December 31, '16, and $5.1 billion at June 30, '17, which represents an annualized growth rate of 18%.

Total deposits were $8.1 billion at September 30, '17, as compared to $7.1 billion at December 31, '16.

Our noninterest-bearing deposits averaged approximately $1.7 billion or 22.40% of average deposits for the first 9 months of '17 as compared to $1.4 billion or 21.79% of deposits for the same period in '16. Our cost of total deposits for the third quarter of '17 was 33 basis points as compared to 27 basis points for the same period in '16.

Looking at our capital ratios at September 30, 2017. Our tangible common equity ratio was 9.03%. Our Tier 1 leverage capital ratio was 10.05%. Our common equity Tier 1 risk-based capital ratio was 11.21%. Our Tier 1 risk-based capital ratio was 12.25% and our total risk-based capital ratio was 14.29%. Our regulatory capital ratios are all in excess of regulatory minimums that are required to be classified as well-capitalized.

Net interest income was $90 million for the third quarter of '17 as compared to $75.7 million for the third quarter of '16. Net interest margin was 4.08% for the third quarter of '17 as compared to 4.15% for the same quarter in '16. Our interest margin adjusted for our purchase accounting adjustments on loans and income collected on problem loans was 3.76% for the third quarter of '17 compared to 3.72% for the same quarter in '16.

Our noninterest income is derived from diverse lines of business, which primarily consist of mortgage, wealth management and insurance revenue sources along with income from loan and deposit products.

For the third quarter of '17, noninterest income was $33.4 million as compared to $38.3 million for the same quarter in '16. Mortgage banking income for the third quarter of '17 was $10.6 million compared to $12.4 million on a linked-quarter basis as light mortgage volumes declined in the third quarter from previous periods. Noninterest expense was $80.7 million for the third quarter of '17 as compared to $76.5 million for the same quarter in '16. Including nonrecurring charges from merger and conversion expenses, noninterest expense remained relatively flat when compared to the third quarter of '16.

The contribution by Metropolitan was offset by a decrease in data processing costs, which were realized through contract renegotiations and expenses on OREO. Our continued focus on expense containment resulted in the achievement of an efficiency ratio below 60%, which has been a key long-term objective for us.

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

In closing, we're pleased with our third quarter '17 results, which are highlighted by record quarterly net income along with strong fee income, solid credit metrics and a continued focus on overall expenses. Our performance, along with the recent conversion of Metropolitan, has provided us with great momentum as we enter the final stretch of '17, which we believe positions us to experience another great year for our company.

Now Brandon, I'll will turn the call back over to you for questions and answers.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Michael Rose with Raymond James.

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Michael Edward Rose, Raymond James & Associates, Inc., Research Division - MD, Equity Research [2]

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I just wanted to start on the loan side. The nonpurchase growth was again pretty strong this quarter. Can you just give us some color? And can you talk about pipelines, both on the core side and then if you could talk about Metropolitan specifically. I would think that with the bigger balance sheet, bigger lending capacities the pipeline might actually start to grow here.

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

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Sure, Michael. I'm going to let Mitch answer that.

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C. Mitchell Waycaster, Renasant Corporation - President & COO [4]

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Michael, current pipeline beginning the first -- fourth quarter is $190 million. That compares to $186 million prior quarter, $147 million prior year. If we break that down by state, 33% would be in Tennessee; 21% in Alabama, Florida; 29% in Georgia; and 17% in Mississippi. As to Metropolitan, in the state of Tennessee, they would be adding over 50% in West Tennessee. Middle Tennessee would be approximately 40% of that total. And in Mississippi and Central Mississippi, about 30% of that total. So very additive to the pipeline as we look to the fourth quarter. And that $190 million should result in about $66 million growth in nonacquired outstandings within 30 days. If we just look at the production for 3Q, production was around $395 million. That resulted in about $235 million or about 18%, as Robin mentioned earlier, growth in nonacquired. Metro production of that total would be around 16%, which was reflective of what they were contributing to the pipeline at the beginning of 3Q. And we do expect continued growth from the Metropolitan group naturally as we go into fourth quarter as they make up about 30% of our current pipeline.

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Michael Edward Rose, Raymond James & Associates, Inc., Research Division - MD, Equity Research [5]

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Okay, Mitch. So just to follow-up on that, it seems like the core pipeline, ex Metropolitan might be down a little bit, but that's obviously on the heels of pretty decent growth in the quarter.

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C. Mitchell Waycaster, Renasant Corporation - President & COO [6]

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Yes, we -- I'm sorry.

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Michael Edward Rose, Raymond James & Associates, Inc., Research Division - MD, Equity Research [7]

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Go ahead, I'm sorry.

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C. Mitchell Waycaster, Renasant Corporation - President & COO [8]

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Yes, we typically see as we go into 4Q, the pipeline pull back. That's fairly typical. But as you can see this year, going into the fourth quarter, we are continuing with a strong pipeline. And to your point, Metropolitan is very additive to that. But if you go back to the production of 3Q and if you look at the pipeline as I went through the percentages, we do continue to see good pipelines around all the geographies, particularly in the commercial business lines. There was strong contribution there in 3Q from that group. And looking forward to 4Q, we see that as well.

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

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Okay. And then maybe just one follow-up. I guess, I was a little surprised with the magnitude of the drop in mortgage income. If you guys could just give us more color to what happened there and maybe what the outlook is as we move into next year, given the MBA's forecast.

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James W. Gray, Renasant Corporation - EVP [10]

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Sure, Michael. This is a Jim. Really, most of the decline in our mortgage income can be attributed to locked volume. In the second quarter, our locked volume was $706 million. That was versus the $571 million in locked volume for the first quarter. So for the second quarter, our pipeline built quite a bit and had an impact on our mark-to-market adjustment. In the third quarter, our locked volume slowed somewhat, particularly into September. Our locked volume for the third quarter was $649 million, still stronger than the first quarter, but down from the second quarter. And that did result in a downward noncash adjustment to the mark-to-market on our pipeline. As far as our closed volume, it was really strong for the third quarter. Our closed volume was $559 million versus $526 million in the second quarter. Our margin was a 2.11% for the third quarter versus a 2.19% for the second quarter, but that can primarily be attributed to our third quarter closings. 44% were wholesale versus 40% in the second quarter. And obviously, our margins on wholesale volume are lower. And so we believe that the decline in the margin was really more attributed, just a change in mix in the closed volume. But we also had a strong month in sold volume. We sold $507 million versus $384 million in the second quarter. So really, you can boil it down to -- that difference was the fact that we had a large positive adjustment to the pipeline in the second quarter and a large negative adjustment to the pipeline in the third quarter.

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

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Any change in the retail versus -- the refi versus purchase mix?

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James W. Gray, Renasant Corporation - EVP [12]

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Yes, good point. Pretty much this year -- for this year, our refi volume has been fairly consistent. It was 32% in the first quarter, down to 23% and 24% in the second and third quarter. That's compared to latter part of '16. We were around 40%. So obviously, the increase in rates has had an impact on the refi volume. And of course, we were out recruiting the originators. We're primarily focused on recruiting those originators, the big -- primarily purchase volume. So that -- we tried to address that by trying to load our staffing more with the purchase volume-type originator. And kind of talking about is that third quarter a good run rate going forward? I certainly hope not. I think the pipeline adjustment did have an impact on that. We shouldn't continue to see that. Our locks for the first half of October have been really strong. We've been pleased with that. They have been up. They did drop off in, like I mentioned, in September, but we have seen a resurgence in locks into October. We do have a pretty good stable of accrueds right now. We've brought a number of new originators on in the last 30 days or so. We probably have another 10 to 15 that are -- should be coming on board. You never know until they actually come, but they made verbal commitments that they will be coming in the next 30 to 60 days. We don't, at this time, anticipate any attrition from our existing team, so we believe we will be able to continue to increase our originators by maybe 10 to 12 over this next quarter as we have been doing over the last few quarters.

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Operator [13]

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Next question comes from Catherine Mealor with KBW.

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Catherine Fitzhugh Summerson Mealor, Keefe, Bruyette, & Woods, Inc., Research Division - MD and SVP [14]

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First question on the margin. Your deposit data seems really still very low this quarter. But I mean, I would assume it's still impacted by Metro. Is there -- can you give any color as to how much of the increase in your deposit cost was related to the Metropolitan deal? And so what the kind of core deposit data might have been?

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Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [15]

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Catherine, this is Kevin. In fact, we (inaudible) our deposit cost, also our cost of fund. Let's talk about the deposit cost first. We -- our deposit cost increased 5 basis points, and there's really 2 primary drivers of that increase. One, Metropolitan. Metropolitan, their cost of funding or their cost of deposits were higher than our legacy cost. Really, you can chalk up 2 to 3 basis points of our cost of deposits increase, specifically to Metropolitan. The other 2 basis points will just come to movement in our own deposit cost. Beginning in late Q2, we started to see some aggressive pricing of deposits, and we have to react to that to protect our core. And so that -- as well as we did see a rate increase at the end of Q2. So we were expecting our cost to come up. They did go up 2 bps. The other 2 to 3 bps can be attributable to Metropolitan. And that holds true if you look at our cost of fund. If you look at our cost of fund, the -- our cost of funds were up 6 basis points. Again, 2 basis points for our legacy cost, 2 basis points for Metropolitan. And then also if you look at our mix of our fundings, we did rely a little bit more on FHLB borrowings during the quarter. They are up about $350 million, and that is at a market rate, which is going to be higher than our deposit cost. And so that contributed to about 2 basis points. So mix, that 6 basis points on cost of funds, you can add in another 2 basis points just for the mix change on the borrowing side.

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Catherine Fitzhugh Summerson Mealor, Keefe, Bruyette, & Woods, Inc., Research Division - MD and SVP [16]

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Okay. And so what's your outlook for the margin moving forward?

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Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [17]

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Yes. So I will say, we're -- I think we're going to continue to have upward pressure on our funding cost. I think that's real now. I do think though that our deposit base will respond better than the average. I still think our deposit betas are responding better than most of our peers. Our deposits are being sticky. And we've been very proactive in focusing on changing mix as we have to combat rate. It's really getting more of our customers' deposits as well as continuing our focus on mix. If you look at our noninterest-bearing DDA, it's now over 23% of our total funding. That's up from Q1 and Q2. That's something we'll continue to focus on. How that translates into margin? If we look at -- I know our -- if we look at our margin excluding the purchase accounting, it did drop about 8 to 9 basis points. For core margin, it's down about 8 to 9 basis points. Really, that's all attributable to Metropolitan. Metropolitan margin was in the 3.20%, 3.25% range. And you add them to us, just simple math, it's going to bring the average down. It brought -- but they -- just adding their margin to ours, it dropped our margin 7 to 8 basis points. So our core margin is flat to down, maybe a basis point. And for Q4, I would expect a similar type result. It's in the flat, maybe some downward pressure, but flat if we don't see a rate movement. If we see a rate movement, there could be an opportunity for some expansion in the margin.

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Operator [18]

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Our next question comes from John Rodis with FIG Partners.

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John Lawrence Rodis, FIG Partners, LLC, Research Division - Senior VP & Research Analyst [19]

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Kevin, just a follow-up. Your comment on the margin, that was -- you said the margin would be flat in the fourth quarter on a core basis, correct?

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Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [20]

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Core basis, correct.

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John Lawrence Rodis, FIG Partners, LLC, Research Division - Senior VP & Research Analyst [21]

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Okay, so excluding purchase. Kevin, maybe just another question for you, just the operating expenses for the quarter came in better. If you strip out the M&A cost, it came in around $74 million. And I think on the second quarter call, you were talking around $78 million to $79 million. So can you talk about the difference there?

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Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [22]

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Yes. So a couple of things. One, I would just continue to compliment our team for their ability and their focus on expense containment and control. We've really -- since going back to Q3, Q4 of last year, we've had flat expenses and some pretty significant revenue growth, and that's what's leading to the downward trend in efficiency. But several things are -- several things have occurred based on events that started last year. One, contract renegotiations. We highlighted the data processing cost. If you look at data processing cost, we're trending downwards for Q2. They bumped up in Q3. That's really just duplicate data processing cost with Metropolitan. That's a cost save that we will realize in Q4 as that comes down. So our data processing costs are relatively flat, even including Metropolitan. Our -- if we look at other operating expenses, if you'll see, they're down the most. And it's a lot of little -- not any 1 specific item, there's a lot of little pickups in that other operating expenses. Legal and professional fees are down $300,000 to $400,000. Mortgage with mortgage production being down, some of our mortgage expenses are down. Total mortgage expenses are down about $1 million. And other operating expenses, that would be about $500,000 to $600,000. Some of our communication and our public relation expense is down $0.5 million. So it's a lot of little that adds up to that decrease. So we think that our expense rate, with our expense initiatives on the Renasant side, our growth initiatives on the revenue side and still the opportunity to receive more cost saves coming out of Metropolitan as we get into Q4 and Q1 of next year, really, like the trend of our expenses over this year, particularly this quarter, and are positive about their outlook as we look at Q4 and Q1.

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John Lawrence Rodis, FIG Partners, LLC, Research Division - Senior VP & Research Analyst [23]

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So this quarter was $74.4 million without the merger charges. So are you saying you can go -- I mean, can you go -- is the trend lower? Is that a good number to work off of, assuming you get some more cost saves out of Metro? Or -- and then I guess, part of that offset is if mortgage is better, is that correct?

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Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [24]

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Yes, so if mortgage picks up, expenses will go up. If mortgage banking income goes up, that will go up. But I would expect with an uptick in mortgage and some of the cost saves that were realized that are expense rate in Q4 will be up slightly from its current levels.

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John Lawrence Rodis, FIG Partners, LLC, Research Division - Senior VP & Research Analyst [25]

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Okay, okay. Just moving -- the tax rate, Kevin, that jumped up to the effective rate was 35%. That was up from, I think, 32%, 33% in second quarter. Is 35% a better number to use going forward? Or how should we think about that?

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

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For the year, we will be in the high 33s, low 34s, picking up the Metropolitan income did move us up on the tax bracket. So a little bit of catch-up there, a little bit higher effective tax rate, but we think that will normalize a little bit in Q4. And it was really to get our effective tax rate in the high 30 -- for the year in a high 33%, low 34% frame.

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John Lawrence Rodis, FIG Partners, LLC, Research Division - Senior VP & Research Analyst [27]

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Okay. And as we look to 2018, assuming nothing out of Washington, is 34% to 35% a better tax rate? Or...

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

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Well, 34% to 35%, I wouldn't say it's a better tax rate. It will be...

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John Lawrence Rodis, FIG Partners, LLC, Research Division - Senior VP & Research Analyst [29]

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(inaudible)

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

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I do think that 34% -- the 34% range is what I would anticipate our effective tax rate to be without any change in statutory tax rates at the federal level.

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Operator [31]

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Our next question comes from Matt Olney with Stephens Inc.

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Matthew Michael Sealy, Stephens Inc., Research Division - Research Associate [32]

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This is Matt Sealy on for Olney. I want to circle back to mortgage. So in the earnings release, I think it mentions a reduction in housing supply in a number of your markets. Can you elaborate on this, provide any other commentary?

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James W. Gray, Renasant Corporation - EVP [33]

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Yes, Matt, this is Jim. And I don't have any numbers to share with you on that. That is anecdotal evidence we've received from our originators in different markets, particularly the Metro markets. We did -- we have talked with some of our competitors in those markets, and they said they have seen the same thing. Just hard to find. We'll have a borrower that's preapproved shopping for a house and are having difficulty finding a house of their choice. And that's basically where that came from, it's the feedback we're getting. And again, particularly in our Metro markets, the Atlanta, Birmingham, Nashville, Memphis, those markets.

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Matthew Michael Sealy, Stephens Inc., Research Division - Research Associate [34]

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Okay, I appreciate that. And with $10.3 billion in assets now, do you think that you guys can manage this below $10 billion on October -- or excuse me, December 31? Would you consider managing down throughout 4Q to stay below that $10 billion threshold? And if so, how much would this save in Durban in 2018?

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Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [35]

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Matt, Kevin again. That's something that we're looking at. It's really something that we considered as we look at the Metropolitan acquisition and the fact that it would put us above $10 billion. And what it come -- what really boils down to is what assets can we convert to cash, what yield would we give up, what spread would we give up and does that offset, is that more -- what will be more beneficial: to give up the yield, to retain Durban for another year? And that's the analysis that we're going through. The impact of Durban for us is going to be in the $8 million to $8.5 million range pretax annually. And so where we currently are being at $10.3 billion, as we look at our -- as we look at assets that we could convert and possibly sell, there will be an income give up to do that. Another thing that we have to factor in is it's not just a matter of converting that asset to cash, we actually have to reduce the liability. We've got to delever the balance sheet. And we have had an internal focus for several years of core deposit origination. And so really, if you look at our borrowings, we have about $300 million to $350 million of FHLB borrowings that we could possibly delever that we could use to pay down us a deleveraging strategy. But I just say that only because we don't have much leverage on the liability side. So something that we're looking at. It's something we would not rule out, but it has to make economic sense for us to do that. And if we look at selling $300 million in earning assets that have a 3% spread, that's $9 million of pretax income that we would give up to save a $8 million of pretax income. So it's just -- it's something we'll look at and continue to build and have it build our balance sheet to have some optionality and flexibility, but it's really going to come down to the economics and what we give up versus what we retain. As it relates to other costs associated with going over $10 billion, I think we discussed this in the past. We've been preparing for that, whether a higher level of regulatory rigor or DFAST. We've already embedded some of those expenses in. We've got processes in place to be prepared. We are in the process of doing a mock stress test, even though we would not be required to submit anything for another 18 months to 2 years. I don't think -- we're not going to try to do anything that would cause a delay in those expenses or those initiatives because we feel they'd be heading our way, whether we're over $10 billion or not. It's really just a matter of preserving that Durbin Amendment interchange income, which really comes down to give up in yield versus retaining the interchange fees.

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Matthew Michael Sealy, Stephens Inc., Research Division - Research Associate [36]

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Right. No, that's fair. And on the other DFAST-related cost, what's already been accrued for? How much is left? Would you guys say you're in the later innings or still kind of middle innings of building out that DFAST team?

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Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [37]

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I'd say we're in the later innings. I mean, we are -- there's still incremental cost that we incur to complete the actual DFAST. There's incremental cost that we will incur as we have higher levels of regulatory scrutiny. But for the most part, the majority of our expenses, we've already incurred a significant amount of our expenses, whether it's on the IT build, whether it's on infrastructure build, whether it's databases, data warehouses that we build. Those expenses are already in our run rate. We may have a small amount with some consultative work that we're doing, some outside help that we're using, but we've already had those groups engaged in excess of a year now.

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Operator [38]

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(Operator Instructions) Our next question comes from Andy Stapp with Hilliard Lyons.

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Andrew Wesley Stapp, Hilliard Lyons, Research Division - Analyst for Banking [39]

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I just have a follow-up question on other noninterest expense. How should we think about Q4's other noninterest expense? Is -- and just wondering if Q3 is good run rate for modeling purposes.

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Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [40]

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Yes, I would say that it's a good baseline. It may increase a little bit just as we have some volatility in mortgage. There are some mortgage origin -- mortgage -- expenses tied to mortgage originations that flow through that line item. So they -- it could be higher than where it currently is, but I think that's a good baseline to work off of.

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Andrew Wesley Stapp, Hilliard Lyons, Research Division - Analyst for Banking [41]

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Okay. And did you have any cost savings related to Metropolitan in Q3?

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Kevin D. Chapman, Renasant Corporation - CFO & Executive VP [42]

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We did. So we've incurred -- we are on target with our total cost-saving initiative. And what we targeted with Metropolitan, I think we targeted 37.5%. With that, we would realize 75% of those in the current year in 2017 and then we'd realize (inaudible) as we get into next year. Right now, just through Q2, I think we're a little bit ahead of those realizations. Our total realizations were slightly ahead. We're more on the 38% side of that 37.5%, but our realization rate is a little bit ahead of schedule. Just through Q3, we're about 70% realized on those, and we're realized -- and that's -- we did not convert Metropolitan until late September. So we had a significant amount of duplicate cost in Q3 that we won't have in Q4 just being post-conversion.

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Operator [43]

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

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Edward Robinson McGraw, Renasant Corporation - Chairman & CEO [44]

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Thank you, Brandon. Thank you, everybody. We appreciate your time and your interest in Renasant Corporation, and look forward to speaking with you again next quarter. Thank you.

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Operator [45]

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