Hancock Whitney Corp (HWC) 2011 Q3 法說會逐字稿

Good afternoon and welcome to Hancock Holding Company's third quarter 2011 earnings conference call. Participating in today's call are -- Carl Chaney, President and CEO; Mike Achary, CFO; Sam Kendricks, Chief Credit Officer; Steve Barker, Chief Accounting Officer; Trisha Carlson, Investor Relations Manager. And as a reminder, this conference call is being recorded. I would now like to turn the conference over to Ms. Trisha Carlson. Ma'am, you may begin.

Thank you. During today's call we may make forward-looking statements. We would like to remind everyone to review the Safe Harbor language that was published with today's press release. Hancock's ability to accurately project results or predict the effects of future plans or strategies is inherently limited. We believe that the expectations reflected in the forward-looking statements are based on reasonable assumptions, but actual results and performance could differ materially from those set forth in the forward-looking statements. Hancock does not intend, and undertakes no obligation to update or revise any forward-looking statements, and you are cautioned not to place undue reliance on such forward-looking statements. I will now turn the call over to Carl Chaney, President and CEO.

Thank you, Trisha. And welcome to Hancock's earnings conference call and we thank you for joining us this afternoon. We certainly appreciate your interest in our Company. As you can see from the release, the third quarter's operating results provide a better picture of the long-term earnings potential of the newly combined Company. Operating income -- net income excluding tax-effected merger costs and securities transactions totaled $45 million or $0.53 per diluted common share for the third quarter. The numbers reflect a full-quarter impact of the Whitney acquisition and the period-end balance sheet reflects the completion of the divestiture of the seven Whitney branches along the Gulf Coast of Mississippi and one branch on the north shore in Louisiana. The divestiture was completed on September 16, and resulted in the sale of approximately $47 million in loans and $180 million in deposits.

Operating ROA was 92 basis points for the third quarter and the projected target for a 1.2% ROA to 1.3% ROA in 2013 is still in our sights. Hancock continues to remain well-capitalized with total equity of $2.4 billion at September 30. The [TCE] ratio improved 8.56%, up 45 basis points from 8.11% at June 30, 2011. We have the ability to utilize our capital strength for the benefit of our shareholders. There are many ways we can do this and the Board will actively consider any options it is presented. However, as of right now, our main focus is on completing the Whitney integration.

We reported $23 million in merger costs in the quarter, bringing the total to $47 million to date. Our expectation for total pre-tax merger costs of approximately $125 million is unchanged and these costs will be included in quarterly results through the remainder of 2011 and early 2012. The integration continues to progress as scheduled; the main systems conversion is still scheduled for the first quarter of 2012, and we have already successfully converted the HR system and the general ledger system. Our projected annual cost saves target at $134 million also remains unchanged. During the third quarter, we realized approximately $15 million in savings compared to pro forma results for the third quarter of 2010, or approximately 45% of our target. While the total cost saves to date are higher than originally expected, the next major milestone towards reaching the target will occur with the main systems conversion in the first quarter of 2012. We still expect to meet our total annualized goal for 2013.

During the third quarter, we hired three new executives for the Company -- [Rudi Thompson] joined us as our new Chief Human Resources Officer; [Cindy Collins] joined as our Chief Compliance Officer; and we have a new Regional President for the Texas market, [Randy Gartz]. While Hancock and Whitney have been very successful in maintaining customer relationships the total loan portfolio declined slightly during the third quarter, less than 1% excluding the divestiture. In this slow growth economic environment, some customers are choosing to reduce debt with excess liquidity and we did see payoffs and paydowns on several larger credits. We also received payoffs on certain problem credits and some credits refinanced into the secondary market as expected.

Despite the overall decline in loans, [senile] loans were up linked-quarter for several markets across our footprint, including Coastal Mississippi, Baton Rouge, South Central Louisiana, Tampa, and Jacksonville. Customer retention remains a priority. You can be assured that this management team and the relationship managers throughout the organization remain focused on providing the competitive products and services that both Hancock and Whitney are known for. At this time, I will turn the call over to our CFO, Mike Achary.

Thank you Carl. Operating income for the third quarter was $45 million, or $0.53 per diluted common share, compared to $27 million, or $0.48 in the second quarter of 2011, and $15 million, or $0.40 in the third quarter of 2010. Operating income for the third quarter did not include $23 million of pre-tax merger-related costs. Merger costs for the second quarter were $22 million. We still expect total merger cost related to the Whitney transaction to be $125 million. Through third quarter 2011, we have recorded approximately $47 million in merger costs.

Return on average assets, excluding merger-related items and security transactions, was 92 basis points for the third quarter, unchanged from the second quarter and improvement of 22 basis points over the prior year period. Pre-tax, pre-provision profit for the third quarter was $74 million compared to $50 million in the second quarter. Total loans at September 30, were $11.1 billion, down $147 million or 1% from June 30. The linked-quarter decline included approximately $47 million from the divestiture as noted earlier, and approximately $26 million in loss share covered charge-offs related to the 2009 acquisition of Peoples First.

Another $60 million of the decline from June 30, was related to the resolution of problem credits with one-half of that amount coming from the Texas market. The remaining debt decline reflected payoffs and paydowns in excess of new originations during the quarter. We continue to experience limited loan demand in certain parts of our operating region. As Carl noted earlier, many commercial customers are holding excess liquidity and are choosing to pay down debt in light of the overall economic environment.

Total deposits at September 30 were $15.3 billion, down $296 million or 2% from June 30. The linked-quarter decline included $180 million from the divested branches, $73 million from anticipated Peoples First CD runoff, and $160 million in seasonal public funds deposit outflows. CDs were down $298 million compared to June 30. During the third quarter, approximately $900 million of CDs matured at a rate of 94 basis points. Approximately 60% of those CDs renewed during the quarter at an average rate of 33 basis points, with much of the difference remaining on the balance sheet [but] switching over to transaction deposits.

We continue to have opportunities to further reduce our funding costs with over $2.1 billion of CDs scheduled to repriced within the next three quarters at an average rate of 145 basis points. Non-interest bearing demand deposits totaled $5.1 billion at September 30, up $198 million compared to June 30. Approximately $61 million of DDAs were sold with the divested branches. So excluding those deposits, DDAs were actually up $259 million on a linked-quarter basis. Our funding remains strong and actually improved during the quarter as non-interest bearing demand deposits comprised 33% of total deposits at September 30, up from 31% at June 30. Net interest income for the third quarter was $180 million compared to $102 million in the second quarter. The increase was mainly related to the full-quarter impact of the Whitney acquisition.

The Company's net interest margin was 4.32% for the third quarter and [widened] 21 basis points compared to the 4.11% for the second quarter. Whitney-related net purchase accounting adjustments of 24 basis points, or $9.9 million, are included in the third quarter. Approximately 8 basis points, or $2.1 million of net purchase accounting adjustments, were included in the second quarter. Purchase accounting adjustments are preliminary and so in the third quarter, we refined the accretion and amortization schedules slightly. It is important to note that while the current quarter's results are a good proxy for future quarters, the total amount of net accretion will decline over time. The loan accretion is based on the effective yield method applied to the projected declining balances for each pool.

The weighted average maturity for the loans at acquisition date was approximately 57 months. Adjusting for the purchase accounting impact, third quarter's core margin of 4.08% was up 5 basis points from the 4.0% last quarter and was due to a better earning asset mix and lower funding costs. As noted last quarter, we did deploy $400 million of excess liquidity into the bond portfolio which helped to improve our core net interest margin this quarter. Additional purchases were made during the third quarter that basically replaced normal amortization and [calls] on the existing bond portfolio. We continue to build liquidity almost as quickly as we can deploy it, and so at September 30, we had approximately $900 million in excess liquidity. Further deployments will benefit the NIM going forward. Non-interest income totaled $65 million for the third quarter compared to $47 million in the second quarter.

The increase was mainly related to the full quarter it impact of the Whitney acquisition. There were no significant changes to recurring sources of income during the third quarter. No gain was recorded on the divested branches as they were recorded at fair market value at acquisition date. The premium received on the branch sale effectively reduced Goodwill acquisition. Our previous guidance as to the impact of Durbin Amendment could have on fee income was confirmed in the release. We're continuing to review opportunities to offset the loss of income but do not anticipate charging our customers per item or monthly debit card service fee. We anticipate increased volume will offset some lost revenue as legacy Hancock customers begin using our popular New Orleans Saint Visa debit cards.

Operating expenses, excluding merger costs for the third quarter, totaled $171 million compared to $99 million in the second quarter. The majority increase was related to the full quarter impact of the Whitney acquisition. The amount of amortizing intangibles on the Company's balance sheet was $206 million at September 30; approximately $195 million is related to the Whitney transaction. Amortization of intangibles totaled $7.1 million for the third quarter of 2011, with $6.5 million of that total related to the Whitney transaction.

We recognized this amount may be slightly higher than the second quarter were normalized and reflects additional work done during the quarter to refine the schedules. The CDI and related intangibles are being amortized using an accelerated method over their estimated useful lives and will decline over time. Again the quarter's operating results do reflect the full quarter's impact of the Whitney transaction but without the full realization of our targeted cost synergies or revenue opportunities. At this point, I will turn the call over to Sam Kendricks, our Chief Credit Officer.

Thanks, Mike. As we mentioned last quarter, when you review Hancock's credit measures, keep in mind the accounting for the Whitney transaction eliminates credit impaired portfolio at the acquisition date because of the fair value adjustments also known as loan mark. When you review the supplemental asset quality information in the financial tables, originated loans include the legacy Hancock portfolio plus any newly originated Hancock Bank or Whitney Bank loans. The acquired loan information include the Whitney portfolio that was marked to acquisition and the loss share covered loans related to Peoples First. The acquired and covered portfolios were runoff over time as loans mature.

The Company's allowance for loan losses was $118 million at September 30, compared to $112 million at June 30. The ratio of the allowance for loan losses to period-end loans was 1.06% at September 30 compared to 1% at June 30. Excluding the acquired and covered portfolios, which did not carry forward a reserve under purchase accounting rules, the allowance for loan losses as a percent of period-end loans was 1.86% at the end of the third quarter compared to 1.99% at June 30. Net charge-offs for the third quarter were $7.8 million, or 28 basis points of average loans on an annualized basis, compared to $8.2 million, or 49 basis points of average loans for the second quarter. Hancock recorded a total provision for loan losses for the third quarter of 2011 of $9.3 million, up slightly from the $9.1 million in the second quarter. Included in the third quarter total provision was approximately $200,000 net related to the December 2009 Peoples First acquisition.

During the third quarter of 2011, the Company recorded $4.5 million increase and allowance for losses related to impairment of certain pools of the Peoples First covered loans. The allowance increase was mostly offset by $4.3 million increase in the Company's FDIC loss share indemnification asset. non-performing assets totaled $231 million at September 30 compared to $258 million at June 30. Non-performing assets, as a percent of total loans and foreclosed assets, was 2.06% at September 30; that compares to 2.27% at June 30. The net decrease from the previous period is mainly in the legacy Hancock portfolio and is related to payoffs and paydowns on non-performing loans along with net sales and reductions of ORE.

Whitney's acquired credit-impaired loan portfolio was recorded at estimated fair value at acquisition and is not included in non-performing assets. Whitney's classified portfolio, excluding the mark and the held-for-sale portfolio, declined approximately $119 million or 15% from June 30. I'm very pleased with the continued improvement of our asset quality and the performance of the loan portfolio. We are continuing to address and deal with problem credits and you can see from the Whitney classified statistic I just mentioned that we are making progress. There continued to be no surprises from the acquired portfolio. The policies are being integrated and our teams are working well together. I will now turn the call back over to Carl.

Thanks Sam. I'm proud of what our bankers have accomplished so far in integrating these two well-known organizations and I certainly look forward to what the future holds for this premier Gulf South Franchise. At this time, we will now open the call for questions.

Thank you. (Operator Instructions) Kevin Fitzsimmons from Sandler O'Neill.

I was wondering, number one, you mentioned a few times about the Texas market specifically about the payoff/ paydowns of the ongoing loans but also resolution of problem credits so just was wondering what is going on specifically in the Texas market that is making that seem like it is more an accelerated pace there? And then secondly, if you could just comment, I know in past presentations, you all have outlined the earnings potential for the Company in the neighborhood of $3 per share to $3.25 per share depending on what you assume for an ROA; and I'm just wondering, was there anything in this quarter that makes you feel less or more confident in that potential? Thanks.

Okay, Kevin, this is Carl. I will start with the end of your question on the earnings estimates. We feel comfortable about where we are. I think the quarter came in just as we had expected. And so that is why we still feel comfortable with the [initial] estimate that we had put out when we announced the transaction. So we feel good about [heading] into that 1.2% ROA arena. On the Texas piece, as I mentioned, we have recently brought on board a new Texas president who is outstanding. He is a local gentleman from Houston with a wealth of experience and is hitting the ground running fast. We have also -- I will let Sam Kendricks speak to the other aspects of the loan portfolio but I know we have had some payoffs that were pleasing for us in the Texas market. But Sam, do you want to --

Certainly.

Provide some additional color?

Sure will. In the Texas markets, there were some volume of CRE that was having some challenges. And as a number of those projects approached stabilization and [lease-up], those projects have migrated on into the secondary market just as they were originally planned. So the early stall on some of those projects is starting to pick up and those projects have moved on just as they were originally contemplated at origination. Secondly, in the energy sector, there is some number of companies that are having some success as they get flushed with cash, are paying down their debt, deleveraging, so to speak. And so some of that activity is happening as well.

So it is more a sign of success that, that market is happening that they are more able to pay down their debt?

That is how I would term it.

Okay. All right, thank you guys.

Jefferson Harralson from Keefe, Bruyette & Woods.

Mike, can I ask you a question on the loan yields? Do you have the loan yields [P&E] for the originated, the acquired, and the covered loan portfolios?

No, I don't have that information handy, Jefferson, but again the total impact [for] the purchase accounting adjustments on net interest income in total was 24 basis points with about 60 basis points of that P&E impact on the loan portfolio. All right. And maybe this is a Sam question because he had mentioned it but the indemnification asset, the accretion, there was a net accretion for that at $4.3 million?

That's right. That's approximate.

Okay. And then lastly, can you mention -- on the acquired portfolio with the actual loan losses were on those loans?

On the acquired portfolio, the Whitney acquired?

That's right.

Any charge-offs related to the Whitney acquired portfolio were, of course, [affected] against the loan evaluation. I'm sorry. Go ahead, Jefferson.

Or maybe, I guess a better question to ask is, can you talk about that net loan valuation and how it changed quarter-to-quarter? And how much of that would have been credit losses against it?

Not disclosing the amount of credit losses related to the portfolio, at least we're not going to do that over time but certainly, the original loan mark, again, that was [affected] at the transaction; booking was $463 million, and then about $16.6 million of that is accretion of the amortizing part of the loan mark.

Okay. Thanks guys.

Emlen Harmon from Jefferies.

Could you give us a sense just on the Whitney portfolio, obviously, those acquired loans just because of the fair value marks are included in the [NPAs] but could you give us a sense just what the classified trends have been there? And just what you have seen in the 1.5 quarters that you had those loans on the books?

Well, as you can see from the release, the volume of non-performing assets continues to decline. We have had a general paydown in the classified portfolio if you exclude the mark and held-for-sale portfolio. That declined approximately $119 million for the quarter. So all-in-all, positive movement on that front.

Okay. Thanks. And then just working through the expenses, you guys obviously moved a decent chunk of oil off the books this quarter. Could you just give us a sense of any foreclosure losses that just ran through the expense line? Also was just curious of the $15 million expense saves were run rated for the full quarter or if there is maybe a little bit of additional ramp there that we would see in the fourth quarter?

No, the run rate that we refer to -- the $15 million, that's going to be a run rate that is fully reflected in the quarter and should be the run rate, really, for the next couple of quarters as our ability to harvest additional cost synergies evens out until we get to our core systems conversion. And, certainly, part of the synergies that are reflected is a reduction in ORE expense.

I would add to that in that the overall volume of ORE was down but keep in mind part of that is the [loss share] book and as we accumulate those assets, we're able to move them off with some coverage and reimbursement from the FDIC under the purchase and assumption agreement.

All right. I think -- right, and we do typically get just -- when we get the filings, that we typically see what the foreclosure -- the losses from ORE rate were down for? I was just hoping to get a sense what that number might be.

It will be additional information that will be provided in the 10-Q.

Okay. Thanks.

Bill Young from Macquarie.

You mentioned that some of the purchase accounting related to Whitney may have been a little bit accelerated this quarter. Could you give us a sense how much of that may potentially come off the books over the next couple of quarters?

Well, as we indicated in the discussion, that amount will decline over time and it is based on accelerated accretion methodology. But there will be significant levels of accretion, really, for the next many, many quarters. So it's certainly not going to drop off the end of the table anytime soon.

Okay. And you had mentioned you had about $900 million excess liquidity. Do you feel comfortable holding onto that for now or are you looking to deploy that into some more securities purchases?

I think over the next couple of quarters depending on the interest rate environment and certainly what happens to loan demand, that you will see certainly some of that excess liquidity, again, be deployed into the bond portfolio.

Okay. And could you just make maybe a general comment in terms of how competitive your markets are in terms of loans and how that may be impacting yields?

Well, from a competitive point of view, we really, really don't see that impacting our yields in any significant way. Again, in our operating regions, the real issue is certainly the amount of liquidity that our customers are holding and overall loan demand.

Okay. Thanks a lot.

Thank you. Jennifer Demba from SunTrust Robinson.

Thank you. Good afternoon. Just a couple of questions on the fee income categories and the expense categories. How much ORE expense was in the expense line versus the previous quarter?

This quarter, we had just over $6 million in ORE and don't have the change in front of me related to last quarter.

Okay. And how about FDIC-related income on the fee income lines?

FDIC-related fee income?

(multiple speakers) expense, Jennifer? FDIC expense, not income?

Yes.

Our FDIC, just a little bit less than $6 million in the third quarter. You're talking insurance cost?

I'm sorry, I'm sorry. The covered loan.

Okay. All right. We didn't understand the first time. I'm sorry.

Sorry about that.

Non-interest income, it would be right around $5 million for the quarter.

You don't have that number for the second quarter, do you?

It is up just a little bit compared to the second quarter but fairly stable.

Okay. Thank you very much.

Thank you. Ebrahim Poonawala from Morgan Keegan.

Good. A question, I guess, Carl, you talked about capital in your opening remarks and I was just wondering if you could can us in terms of if there's a target capital ratio which you would want to manage to or in terms of how would you think about capital over the next few quarters? Would you just let the fee build in absence of loan growth or could you do something else in terms of a share buyback or something of that sort over the coming months or quarters?

Yes, that's a good question and we certainly are exploring all of those options with our Board at -- on a monthly basis. But at this point, with being still relatively early in the acquisition stage, our plan is just to continue to retain earnings into capital and let that continue to grow. The other reason is because we certainly feel fairly confident that we will have opportunities to deploy that capital as other opportunities present themselves. But we certainly -- to the extent we are unable to deploy that capital in an expansion means we certainly would be open to any -- a certain type of buyback. So we are keeping all of our options open as we move through this environment.

Thanks And then I guess one question for Mike, if I can. Just in terms of the securities portfolio, if you can give us what the duration was at the end of the quarter and what have you been buying or what did you look to buy in terms of MBS' 15-year pass-throughs, or what?

Yes, absolutely. The effective duration of the portfolio at the end of the quarter was 2.08 [years]. And as far as the purchases that we are doing when we deploy excess liquidity into the bond portfolio, again, it is mainly first issue mortgage-backed securities from Fannie and Freddie, and basically 15 year pass-throughs. So, pretty plain vanilla.

Got you. As you look at [deploying] specifically, liquidity, will that duration probably [inch] closer to three years, would you -- does that make sense?

Additional deployment certainly will have the incremental impact of increasing that duration.

Okay. Thanks guys.

Kevin Reynolds from Wunderlich Securities.

Couple of questions. One is, you may have mentioned this and I may have missed it. Was there a gain on the branch sale during the quarter that is in the numbers?

Yes, there was a gain but we did not disclose what that amount is and is actually ends up showing up as an offset to goodwill.

That's correct.

That's right, that's right. Okay. The real question I have here I guess, Carl, for you. Now that you are a big bank and I'm sure that some of the smaller banks out there are pointing to you that way and saying look at the big bank now. How has the competitive environment changed and your place in it? Do you -- are you finding things more difficult to do or are there any surprises out there, good or bad now that you have gone -- grown to such a size and you've got the scale and the ability to be a bigger player across the footprint.

Kevin, that is a good question but I will start off by saying we're still just a community bank. We are not -- we don't consider ourselves a big bank but on a more serious note, we really have not seen any added complexity or difficulties in the various markets in which we operate. We certainly have expanded the footprint across the Gulf South but we are in some very good markets. And our bankers know the Hancock and the Whitney story very well and they are out on the streets telling that story and it is a great story to tell.

There aren't many banks, at least in the markets in which we operate, that have the unique story that we have and the strength and stability that we have, the capital that we have, and the ability to compete with the big banks from a product standpoint. So we do have a great story to tell and we're being very successful in that. So, I would say, no, we actually have not run into difficulties or issues but rather just the opposite. It's -- we are having a lot of fun right now.

Okay, thanks and all my other questions have been answered.

Christopher Marinac from FIG Partners.

Thanks, good afternoon. Mike, Carl, can you give us a sense of the what the average loan runoff would be in the next several quarters just as a natural runoff that occurs whether you look at that as the legacy at Hancock or Whitney or combined, however it's best to think about it?

Chris, this is Carl. It would be difficult to step out and guesstimate what type of runoff or paydown there may be. We do continue to see though, particularly in the commercial lines, where we have strong companies that are choosing to use that excess liquidity to pay down. We have also have some outstanding results in being able to move out some problem credits to other institutions and so we are certainly very pleased with that. But at the same time, we are seeing growth in the C&I book and so, I think it would be reasonable to expect that the overall trends that you see in this past quarter probably would continue as far as loan growth going forward with an economic environment as it is.

And also Chris, just as a reminder, about one-third of the loan decline that we experienced this quarter was related to the divested branches. And so we obviously won't have that again in the next quarter.

That's right, okay. Yes, I was thinking more about contractually what you know is going to be coming due in any given three month to six month period, if there is a natural -- now that just you will have no matter what.

Yes, there is certainly a number out there. I don't know that is a number that we're going to disclose right now but certainly that number is going to be impacted by the items that Carl reiterated just now.

That's fine. Just one follow-up, Mike. Mechanically, if you discover over a period in the future that your evaluation marks were actually too conservative, can you just walk us through how long that takes before you make a decision to change that or was that something that will be revalued each and every quarter as we see the statements?

Well, part of it is [revalued] every quarter in the form of the impairment analysis that we make on the impairment loans. So there is a mechanism that's in place that pretty much is well documented around how that would happen. The other part relates to the accretable discount that we're accreting back into earnings and and certainly, the amount of paydowns on the loans where the loans are charged off. How they renew -- when they renew impacts the remaining level of accretion that we would actually book on the income statement going forward. So it is a dynamic situation taking into account the regular ins and outs related to the [accruing] loan portfolio and then certainly, the credit history related to the impaired loans.

Again, the timing of -- (multiple speakers)

of course, it's not an easy to answer.

I understand. But the timing of how things came in this quarter influenced the amount of accretion that we just saw on the portfolio [with the NIM].

It did. At the same time, we are still making adjustments to the purchase accounting adjustments and we will do that, really, through the end of this year then those items are locked down going forward.

Great. Okay. Sounds good guys. Thanks very much.

Andy Stapp from B. Riley & Company.

Do you have early stage delinquencies at quarter end?

I don't have those numbers handy here but what we did see generally those metrics holding out very well compared to prior quarters.

Okay. All right. That is -- all my other questions have been answered.

Thank you. Michael Rose from Raymond James.

Are you guys prepared to give any color on potential revenue synergies and opportunities out there for in that arena?

No. As we have consistently maintained that there certainly are revenue synergies out there but at this time, I don't think it would be appropriate to start talking -- trying to wrapping around numbers but there certainly are some revenue synergies out there that we are working on.

I think it's well documented, the ones that we've discussed in the past and those are still opportunities but not ready to quantify -- (multiple speakers)

We've been very open as to the type of synergies that are out there but we're just not comfortable right now putting -- assigning a number to it.

Okay. And then just a housekeeping question. I know the tax rate's going to be about 21% or 22% next quarter. Will that hold into 2012?

It actually will increase to between 26% and 28% in 2012 and the driver there is some tax credits that we have been enjoying through the last couple of years begin to roll off the books.

So we do expect to see a little bit of the increase in our effective tax rate next year.

Okay, thanks guys.

Dave Bishop from Stifel Nicolaus.

Mike, I was wondering if you can go over, maybe give some color regards to the outlook for the CD book in terms of what is repricing into current markets? Could you just go over that real quick?

Yes, again, we have the $2.2 billion that will be maturing of the next three quarters. And specifically in the fourth quarter, we have $735 million maturing at 141 basis points. And as we've indicated, our history has been that we generally retain a little bit less than two-thirds on the balance sheet. This past quarter, our history was a little bit less than that. But really, with the majority of that difference remaining on the balance sheet [for] just transferring over to transaction accounts. And as far as where those maturities are happening it is really across the enterprise but the vast majority of dollars, of course, being Hancock or legacy Hancock.

And current market rates CD rates you're rolling those into?

Yes, again, this past quarter we reinvested our CDs at about 33 basis points. So that is a fairly good proxy to use certainly for the next quarter or so.

Got you. And then in terms of the commentary, in regards to the -- you said there were some pockets of loan demand. Did I hear you right that you're actually starting to see some commercial growth in terms of the Florida markets as well?

We are both seeing C&I in Jacksonville and Orlando as well as in -- here on coastal Mississippi and Baton Rouge and then South Central Louisiana as well.

Great, thank you.

Justin Maurer from Lord Abbett.

Hi, Mike, just back on the margin. The 4.08%, just given what you're saying about CDs rolling off and reinvesting some of the liquidity, do you feel good with that within a range?

We do. Certainly, there are headwinds out there for the margin and those are well documented and certainly, many banks have discussed those before us. And a lot of those are no different on our part. But really to offset that, we have two important offsets -- one is the ability to reprice our CD book and then also, the ability to take our additional liquidity and deploy that into the bond portfolio or into the loan portfolio when we have loan demand. So overall, the core margin should be maintained for the next couple of quarters.

And then on the Whitney piece, again, like you said, there is a lot of moving parts you need to constantly adjust but you also made the comment that you would expect significant amounts for some period of time. Does that -- just thinking of that relative to the CDI and other things that are on an accelerated basis, how quickly does that decline, all things being equal? Is that fairly stagnant for 12 months to 18 months and then it starts to rolloff or does it immediately start to decline?

It declines roughly about $500,000 or so per quarter and that is the impact on our net interest income.

Right. Okay, thanks much.

Thank you. This concludes our question-and-answer session for today. I would like to turn the call back over to Mr. Carl Chaney for closing remarks.

Okay. Thank you for joining in on this conference call for the third quarter earnings. We certainly appreciate your interest in our Company and look forward to another successful fourth quarter. Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program for today. You may all disconnect and have a wonderful day.