Renasant Corp (RNST) 2008 Q1 法說會逐字稿

Good day ladies and gentlemen and welcome to the Renasant Corporation first-quarter 2008 earnings conference call. My name is Sylvana and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session toward the end of this conference. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's conference, Mr. E. Robinson McGraw, Chairman and CEO of Renasant Corporation. You may proceed, sir.

Good morning everyone to thank you for joining us for Renasant Corporation's first quarter 2008 earnings conference call. With me today are Jim Gray, Chief Information Officer; Stuart Johnson, Chief Financial Officer; Harold Livingston, Chief Credit Officer; and C.H. Springfield, Chief Credit Policy Officer; Mitch Waycaster, Chief Administrative Officer; and Kevin Chapman, Chief Accounting Officer.

Before we begin the me remind you some of our comments during this call may be forward-looking statements which involve risks and uncertainties. A number of factors could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. Those factors include but are not limited to interest rate fluctuations, 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, occurrence of unanticipated events or changes to future operating results over time.

During the first quarter 2008, we believe that our financial results reflect our ability to meet the challenges offered in the current economic environment. Although the Federal Reserve reduced the federal funds target rate 200 basis points during the first quarter 2008 we experienced only a slight compression in our core net interest margin. Additionally our mortgage lending division grew non-interest income on record mortgage loan volume even when mortgage loan originations declined nationally.

In looking into our tri-state markets it's been over seven months since we integrated Capital Bancorp of Nashville, Tennessean into our systems. With the merger and successful conversion now behind us, Nashville looks to be a strong growth market for years to come. While there has been a definite slowdown in Nashville's housing market we believe its diverse economy and its lack of dependency on any one industry has helped to insulate the area against the full impact of today's economic challenges.

In our other key Tennessee market of Memphis, and we continue to experience decent growth as we're now the eighth largest bank in the Memphis region based on deposits. We believe Memphis and Nashville, Tennessee area markets will bring much opportunity to grow our banking and financial services in years to come.

Moving to our Alabama markets, during the first quarter 2008 we secured a new location in downtown Birmingham's Park Place Tower. We're moving our Alabama executive headquarters, our corporate mortgage operations and our (inaudible) branch to this new location. We believe this strategic move will add to our presence in Birmingham, not only in physical location but also as we have secured the signage rights at the top of the building found within the city's skylines.

With this relocation we will be closing our [watch] branch and moving it into the downstairs retail space of the Park Place Tower. We believe this move will create better continuity among our Alabama operations as we anticipate the move to take place during the third quarter of '08.

Another one of our Alabama growth markets, Huntsville, has been recognized by the January 2008 issue of Forbes magazine as being one of America's fastest-growing metro areas. The article states that Huntsville is expected to increase its gross metropolitan product by 15% by 2012. Huntsville and Decatur are still experiencing growth in population brought on by the Federal government's base realignment closure decisions of '05 and we are being aggressive in recruiting this new business as it moves into the region.

In Mississippi we continue to be enthusiastic about our DeSoto County markets. Even as the pace slowed during early '08, DeSoto County growth remains strong according to the census data released in March of '08. DeSoto County remains the fastest-growing county in Mississippi and the 33rd fastest-growing county in the entire United States.

As a note of interest our Oxford, Mississippi market was recently chosen by the Commission on Presidential Debates to hold the first debate of the 2008 general election. This'll bring not only great national attention to the University of Mississippi where the debate will be facilitated but also to the State of Mississippi as a whole.

In our corporate headquarters city of Tupelo, Renasant continues to enjoy strong market share. Construction of Toyota motor manufacturing North America's $1.3 billion automobile manufacturing facility is well under way as operations are expected to commence in early 2010. Joining Toyota in northeast Mississippi, related suppliers Toyota Boshiku, Toyota Autobody, Toyota (inaudible), ViewTech Corporation, PK USA and [arbensango] have all recently announced future plant locations in close proximity to Tupelo that will bring approximately $375 million in capital investment and approximately 1800 confined new jobs to the region.

We believe that the construction and operation of the Toyota plant and other anticipated Tier 1 and Tier 2 service providers enhance the future growth prospects in our mature northern Mississippi markets and may especially help to insulate the Tupelo market from the full effect of possible downturns in the Mississippi or national economy. We have over 36 locations within a 60 mile radius of the Toyota and supplier facilities and we believe this provides us with a great opportunity in our North Mississippi markets.

Reflecting our financial performance for the first quarter of '08, net income was approximately $8.3 million up 19% compared to approximately $7 million for the first quarter of '07. Basic EPS was $0.40 down 11.1% and diluted EPS was $0.39 down 11.4% compared to basic EPS of $0.45 and diluted EPS of $0.44 for the first quarter of '07. The decrease in basic and diluted earnings per share was in part attributable to the shares issued in connection with the capital acquisition which was completed on July 1 of '07 and the related equity offering in the second quarter of '07.

Total assets as of March 31 of '08 were approximately $3.1 billion representing a 2.4% increase from December 31 of '07 and a 34.3% increase since March 31 of '07. Total loans were approximately $2.58 billion at the end of the first quarter of '08, a slight decrease from $2.59 billion at December 31, '07 and an increase of 36.6% from $1.9 billion dollars at March 31, of '07.

Total deposits grew over $2.6 billion at March 31 of '08 a 3.1% increase from December 31 of '07 and a 15.9% increase since March 31 of '07. Net interest margin was 3.52% for the first quarter of '08 as compared to 3.48% for the fourth quarter of '07 and 3.67% for the first quarter of '07. Net interest income for the first quarter of '08 included approximately $531,000 in interest income from loans accounted for in accordance with AICPA (SOP) 03-3 which increased net margin by seven basis points. Additional interest income from Sumner loans increased fourth quarter '07 net interest margin by two basis points and had no impact on the net interest margin first quarter of '07.

Adjusting both the fourth quarter of '07 and the first quarter of '08 for the impact of (SOP) 03-3 we experienced a one basis point decrease in net interest margin on a link quarter basis. We as with most financial institutions experienced an increase in nonperforming loans and net charge-offs in the first quarter of '08. Continuing our proactive approach to credit quality we increased our provision for loan losses during the first quarter of '08 by over $900,000 more than we charged off during the quarter with no additional provision being required for loan growth during quarter. Our senior credit officer continue to closely monitor all credit relationships so that we can promptly identify any loans that may become problematic and mitigate any potential credit issues.

Annualized net charge-offs as a percentage of average loans were 26 basis points for the first quarter of '08 down from 36 basis points for the fourth quarter of '07 and up from four basis points for the first quarter of '07. As we discussed in previous conference calls, we generally target our net charge-offs to be 20 basis points of average loans. In light of our first quarter charge-offs, we currently anticipate net charge-offs as a percentage of average loans for 2008 to be within range of 5 to 10 basis points of this target.

The allowance for loan losses as a percentage of loans was 1.06% on March 31 of '08 as compared to 1.02% at December 31 '07 and 1.06% at March 31 last year. Nonperforming loans as a percentage of total loans were 85 basis points as of March 31 '08 compared to 54 basis points for March 31 '07 and 63 basis points on December 31 of '07.

The Company reported a provision for loan losses of $2.6 million for the first quarter of '08 as compared to approximately $2 million for the fourth quarter of '07 and $750,000 for the first quarter of '07. As general economic conditions continue to linger we have increased our provision for loan losses during the last two quarters in order to provide for any unforeseen occurrences resulting from this less than favorable economy.

Non-interest income increased 9.3% to $13.8 million for the first quarter of '08 from $12.7 million for the same period in '07. The growth in non-interest income occurred primarily in deposit fees and mortgage lending. The Company's mortgage division recorded record income on mortgage loan production of approximately $191 million for the first quarter of '08 as compared to approximately $141 million for the first quarter of '07.

The non-interest income for the first quarter of '08 included a $409,000 gain related to the redemption of shares as of result of the Visa initial public offering. Non-interest expense was $26.8 million as compared to $22.5 million for the first quarter of '07. The increase in non-interest expense during the first quarter of '08 can primarily be attributable to the expenses associated with the addition of Capital's employees and other costs resulting from the integration of Capital's operations.

In conclusion let me reemphasize that we remain ever vigilant in watching our credit relationships and we have implemented strategies to proactively manage the challenges presented by the current economic conditions. Through active and responsive asset and liability management, continued inspection of each construction and land development loan, and by carrying out measures to control non-interest expense, we believe we are positioned to react to today's ever challenging economic environment.

Now Sylvana, I'll turn it back over to you for questions.

(OPERATOR INSTRUCTIONS) Barry McCarver.

My first question was -- I wondered if you could touch a little bit on what gross loan production looked like in the quarter since period end loans were basically flat and at the same time talk a little bit about what the pricing for loans look like in Q1.

First quarter gross production was about 114, $115 million. Obviously we had paydowns on positive standpoint we saw our construction and development loans decrease by about $7 million during the quarter net. From a pricing standpoint let me let Stuart give you an answer to that on both sides of the ledger.

We're seeing on the loan side [proxy] in the neighborhood of probably depending on the credit 575 on a (inaudible) credit maybe around the 575 -- the large credits.

Relative to Q4, has that improved any at all?

No.

And then on the other side of the balance sheet I was wondering if you could talk a little bit about your pretty strong deposit growth in the quarter, what you're seeing on money-market and CD rates in some of your markets. At the same time it looks like you used some of that excess funding to move into some securities.

That's correct, Barry. We're seeing very aggressive pricing in some of our markets. So what we have made a determination to do is basically to maintain our core relationships and hot money especially hot money that goes out for any period of time to utilize wholesale funding, mainly home loan buying money as a replacement for that money. We feel like obviously there's hot money we will recycle and we will take another look at it as it comes back up in the future.

But we're seeing some rather significant rates being paid in some of our markets. We've been pretty aggressive in our pricing as evidenced by a margin being basically flat and obviously a part of that was due to the fact that we had that huge 125 basis point drop. It took us a while to catch up but we basically to a breakeven point at this stage in the game in that pricing scenario on both sides of the -- both sides of the ledger. So we are seeing some very aggressive pricing in our markets especially the Memphis market to some degree the national and Birmingham markets.

Just to make sure I understand the working parts of the margin there then, could you give us maybe the monthly margin or at least give us some sense as to where you feel like you are in bringing those deposit rates down? Obviously I'm thinking about the margin Q2 and going forward.

We basically have -- and I don't have any -- Stuart has the monthly in front of him.

What we're doing on our margin right now, certainly if you go back and look at the quarter we're down totally about 44 basis points on our total liability pricing, 79 basis points on our debt but we do bring our deposits down about 37 basis points. So we continue to work off the deposit side in bringing those rates down with the quarterly margin pretty close to what we were doing on the last month if you exclude 03-3 in there. We're right at about a core of about a 340 -- 345, 346.

Last question. I was looking at non-accrual loans were up a couple million dollars and and then looked like foreclosed assets came up about $4 million. Can you tell us what those were?

Let me give you a little color on that. Actually, following month end, we have seen about a 19 -- or we're in the process of seeing -- have or in the process of seeing about a 19 basis point drop in the nonperforming loans. We have about $2.4 million of loans -- $1.8 million has already been paid off and we have additional loans with a total of the already paid off and those two be brought current, our $2.4 million level or about 19 basis points off of that 85.

Nonperforming assets, we have contracts to sell about $3.4 million of the nonperforming assets at this point in time. So these were just some things that didn't occur before month end that should have that ran those up. In addition to that, of our 90-day past due loans, first I mentioned (inaudible) was non-accruals $2.4 million are turning around and then 90-day past dues, we see another $1.6 million that are in the process of being brought current and we should see another $1 million loan brought current prior to month end based on what we see. So there will be a substantial reduction in that during the month of April.

Great, it sounds very helpful. All right guys. I have got more questions but let me give somebody else a chance here.

Brian Klock, KBW.

Can you give us a little bit more color on the net charge-offs, the $1.7 million in the quarter I guess by loan type and geography?

Brian, a substantial portion of that was the conclusion of the Birmingham loan we have been talking about for a while. That was I think close to half of what that total was. In addition to that we had about another $700,000 in Mississippi plus the Alabama loan I mentioned which was the major portion of what we had.

The loan in Mississippi, was that a construction loan or CNI loan or --?

They were construction type loans I think mainly.

I guess just to follow-up on just to make sure I got all the math correct from Barry's question; so in the second quarter, you mentioned that there was $2.4 million of NPLs that you expect to be cleared out in the second quarter?

Let me go back and tell you what -- non-accrual loans, we have about $2.4 million that have already either cleared up or will this month. We have about $1.6 million of 90-day past dues that either have or will this month with another potential of $1 million that should clear up this month -- that we think will clear up this month the way it looks right now.

I guess if all goes well, the $16.1 million of nonperformers that where there at the end of the first quarter, that should go down by $2.4 million and the past due that was 5.9 go down by $2.6 million?

Total nonperformers, that includes non-accrual and 90-day past dues, that would be about $5 million. (multiple speakers) $4 million with the potential of it being $5 million. That's during this month and that does not account for anything that could come up and I'm not making predictions on that over the course of this month but right now that's what we see at this stage in the game.

But the 2.4, that's not relieving anything out of the (inaudible) that's just --

(inaudible) we're looking at a potential of about $3.4 million coming off of that based on contracts we have assuming that the contracts close which we don't anticipate that they want won't, another $3.4 million. And that's of the [Oreo].

I guess maybe, Stuart, if you could give us a little color within the gain on sale of mortgage loans? I know, Robin, you mentioned it was a strong record production quarter. Can you give us the gain on sale margins and volume of loans sold?

Jim can answer that. Mortgage lending falls under him.

Okay.

Our margins typically run on wholesale volume of about half to 5/8 and then on our retail volume is running probably about 1 to 1.25.

And I guess within the other operating items there, anything nonrecurring other than what you've already broken out with the Visa gain and the other fee income?

On the income side? (multiple speakers) no, nothing else on the income side other than the (SOP) 03-3 and the Visa gain.

One of the things that we do and it is a timing -- we do have our contingency income that we recognize from an insurance agency during the first quarter that we will not typically get in second, third or fourth quarter.

And how much is that is that typically, Stuart?

That's going to run approximately a couple hundred thousand.

Robin, earlier you mentioned the moves in Birmingham to the Park Place Tower. Were there any costs in the first quarter related to that or are those costs going to be a more into the third quarter when you said the move will actually (multiple speakers)

Actually, Brian, those costs -- any expenses we have will be minimal and it will only relate to basically a small portion of the improvements. Most of the improvements were done by the landlord. We have a little debt. We'll have very little impact on the expense side. On the other side of the ledger though we actually will end up with a reduction in rental expense as a result of this move.

We consolidated multiple locations. Our mortgage loan back office was in one location, our mortgage loan production office was in another location. We had two floors in the same building but two separate rental situations for our relationship managers and plus our executive officers. We combined -- and plus the Watts Tower downtown retail space. We combined all of those into this one building actually there were some slight efficiencies which would offset any expenses involved in this move. That includes the signage rights on the building. So there will not be any uptick in expenses as a result of that.

Great, and last question and I'll let somebody else jump on it. On the salary and benefits expenses how much of that is sort of seasonal first quarter FICA (inaudible) sort of things?

Let me go back. As you're looking on a link quarter basis and I think we mentioned this last quarter, our salary expense last quarter declined I think about $240,000. That was adjustments in incentives based on what has been approved prior to year-end and our not entirely hitting targets. And so therefore in the fourth quarter we saw a $240,000 decline in that.

This quarter as obvious from the mortgage quarter that they had you saw incentive expense go up as a result of that because of the outstanding quarter they had. So mortgage originators incentive picked up as a result of that. Also, as we look ona link quarter basis, and we mentioned this last quarter, we had a $300,000 credit on our core processing bill that had an impact on the fourth quarter. And in addition to that this quarter we had some legal expenses and taxes -- we have to pay taxes on other real estate and some of those items that cropped up during the first quarter of this year.

Plus as you know the FDIC -- everybody has pretty much exhausted their credit that they had. So therefore we had to start accruing for a higher amount for FDIC premiums. So those are where we saw some changes from the fourth quarter of last year. But the fourth quarter we had some -- was a low quarter and not a good run rate to look at.

Great, I appreciate that.

[Brian Rohman] Robeco, Weiss, Peck & Greer

Most of my questions have been answered but that doesn't stop me from coming up with new questions. I just want to clarify these numbers. You said -- let's see if I can get that release here. Let's see -- there was $35 million in nonperforming at the end of the quarter and you're saying in the current quarter without bringing -- without assessing new nonperformers coming on, I see four, five -- about 6 million of [cures], is that correct?

On NPA?

Yes.

We're anticipating right now and some of which have already occurred --

What do you mean it's occurred? It's occurred in the second quarter?

Yes, it occurred just right after the end of the month. For example we had a $1.8 million nonaccrual loan pay off a couple of days after after the end of the quarter (inaudible). We have right now seen or are seeing about $7.4 million reduction in that NPA number.

That's just from the [cures]. are there are new assets coming into that classification, NPA?

That have not been then added that this point. That's not to say that there could be some that could occur and I'm not making a prediction one way or the other as far as (multiple speakers)

We have got a lot of the second quarter to go to, I realize that.

Exactly. But what has happened -- this is just things that could have or should have occurred during the first quarter but didn't. On the other real estate these are the $3.4 million I mentioned there. Those are actual properties on which there are contracts that should close generally this month, not anything that will close in later months. These are only items that will close this month or are supposed close this month. The nonaccrual loans that we're talking are in fact loans that were not '09 accrual that have either already come off by way of payoffs -- for example someone has added -- infused some capital into one of the situations we're talking about.

Okay, without being too forward-looking and we were told at the beginning of this call you might make forward-looking statements, so you've got a Safe Harbor here, that $34.78 million of nonperformers of the end of the first quarter, you have got 7.4 going off. Something is going to go on -- as you look into your crystal ball do you think that number at the end of the second quarter is up or down $34 million?

We're not going to get forward-looking on that. I think where we mentioned we would be forward-looking is we gave a little bit of color on what we thought our run rate would be on charge-offs for the year.

What was that number again? I missed it.

What my comment was we had 26 basis points in the first quarter. We look at our normalized charge-off run rate to be around 20 basis points. The last couple of years we have been under that. We anticipate this year looking at maybe five to possibly 10 on the outside at this point in time.

So it's 25 to 30 basis points for the year?

That correct.

That's about (inaudible) you are giving me. Okay, next question staying on the theme of nonperformers, it was up $10 million in the quarter sequentially. It's actually doubled since the end of September. What is actually flowing into the nonperforming categories at this point and where?

Are you talking about types?

Types and geography too.

Okay, more -- to give you a weighting, it would be more heavily towards the construction and development type lending.

C&D is how big again total portfolio?

It's a total of $718 million (multiple speakers) that's all commercial, that's all Incremental -- all construction and development but it is commercial and land -- I mean and residential. It's a combination of the two, not just residential (multiple speakers)

So the markets where you are seeing -- I'm very glad and heartened to hear that we're going to see an improvement, we're going to see $7.5 million go off that are there right now but it still went up $10 million. Again could you say -- or $17 million over the last two quarters. Can you say again which markets and what type of projects and I think you answered the project part.

And the markets would mainly be in the area of the Memphis MSA and the national, MSA. Some of the Nashville were loans that we identified prior to the merger and actually were brought in under (SOP) 03-3.

Last question -- outlook for the net interest margin -- was wondering if you were saying you saw a core run rate of about 340, is that correct?

No, in the mid 340s -- 345, 346.

That is for the year?

That's what we are anticipating right now and we feel like we could be give or take three or four basis points. Either way we are being very aggressive in trying to make up for the lack of loan growth we're being very deliberate and our lending. We are in fact adding a little bit stronger commercial lending group with a credit side devoted strictly to that commercial side. We put a floor on rates on many of our loans, most of our loans, as many as we can. So we are being pretty aggressive in what we're doing on the loan size as far as covering ourselves both from a credit and interest rate standpoint.

Great, thank you very much.

Andy Stapp, B. Riley & Co.

I was wondering if you could just provide some color on the economies you serve and whether you see a light at the end of the tunnel or whether or not it's a train? If you could just to that for me I would appreciate it.

Whether a train is coming from the other end? Let me make -- throw a caveat in too to the last answers that were given (inaudible) is that anything we say is based on future Fed rate cuts and the impact there. Each time that happens there's a catch-up time on the liability side. So I will throw that little caveat in.

Looking at our markets and I will start with our legacy market here, with the activity happening related to the automotive industry we're not seeing a huge slowdown here but we have seen slowness I guess in housing starts to some degree and we're seeing slowness in sales of the existing homes to some degree. But the market itself, the economy itself is pretty good based on what's going on. There's huge amount of construction going on with just around the Tupelo area with the active construction going on right now in Toyota -- Toyota Autobody and Toyota Boshiku, all three of whom have steel up at this point time.

As far as this part of our market, it's doing well. DeSoto County has although we're still seeing population growth occurring in DeSoto County that is where we have seen the most slowness and one of the main reasons is DeSoto County has been impacted in the past as far as growth by people exiting the Tennessee side of Memphis. DeSoto County is obviously the southern part of the Memphis MSA. When subsidiary prime lending hit and some of these national lenders upped their credit standards, standards that slowed down these first-time home buyers being able to acquire some homes and a lot of the DeSoto County market was in fact for first-time home buyers.

So that has had an impact on that DeSoto County side. We have seen some slowness in the Memphis market. It has not impacted us as much because of where we are located in Memphis. We are located on the east side of Memphis -- Germantown, Cordova, Carterville, plus our main office is right inside the 240 loop in Memphis in East Memphis which is the strongest commercial area of that Memphis market right now. So we are not seeing some of the negative impact that's impacting the Memphis economy at this point in time although it obviously impacts everybody in the Memphis area.

Nashville is seeing a slowdown I think to a degree. It was quoted yesterday and I don't hold this quote as true but I heard the quote yesterday that although housing sales have slowed down housing prices may have even upticked a notch. I don't know if that is from the Nashville Chamber of Commerce. However, did I hear that yesterday. We have seen some impact in that Nashville market as a result of the economic slowdown.

Basically the North Alabama -- we have seen less slowdown than anywhere else mainly I think because of the relocations under the base realignment closure situation. In Birmingham we have seen some slowdown but not to as significant possibly as the DeSoto County and the Memphis markets. In each area we see promise at this stage of the game.

Okay, great. Could you also tell me how your 30 to 89 day delinquencies compared to the fourth quarter?

They were up from the fourth quarter. Let met comment -- we had a -- let me give you a little run here. In the fourth quarter we had numbers of loans past due. We had about 1.7%. At the end of this quarter we had 1.66% as far as numbers of loans. So we had a decrease in the number of past due loans. But we saw the actual dollar volume jump up a little bit from 2% to 2.75% and basically that was a couple of loans that we were hopefully in the process of renewing. Those are 30 days (inaudible).

Okay. Your mortgage banking revenues were stronger than I expected. Could you give me some color there? Is it a good run rate -- whatever color you can provide there.

I would like to say it's a good run rate. I don't know that we can sustain that for the full year. There was -- refinance activity accounted for about 60% of this volume. As we -- again going back to what I said as far as what the Fed does and what happens otherwise, you get a big uptick in mortgage rates and that certainly will slow it down but there's a lot of refinance activity right now. We have had a resurgence in conventional government type loans after the sub prime meltdown. These conventional and government loans accounted for about 95% of our volume.

How do you see loan growth in coming quarters? In other words are you going to be cautious and should we expect rather modest loan growth until the economy turns around?

Yes, we would look for modest loan growth in the second quarter to flat. We're looking at a decent pipeline but it's below what it's been. We are -- as we budgeted this year we anticipated whatever loan growth that we had would occur in certain fourth quarters.

We're still seeing positive growth you know like in our national markets. They grew at about over 13% for the first quarter and we saw some growth in the Memphis markets in the first quarter. And interestingly enough Mississippi has shown some positive signs in the month of April. So -- but I'm still going to say that we will see modest to flat for this quarter.

Great, that's all I had.

Kevin Reynolds, Janney Montgomery.

Good morning from East Memphis. A little under the weather today and unfortunately I think all of my questions have been asked and answered about five times. I apologize, I guess -- good quarter and my only question is if maybe you could offer forward-looking comments on the Ole Miss football season now that you've got a new coach.

We're all very positive on that. How's that?

Brian Klock, KBW.

It looks like Andy got my loan question asked and answered. So the second quarter you're looking at modest to flat and earlier you were talking about the full year guidance for '08 might have been sort of upper single digits. Do you think that is something that maybe pulls back a little bit because of the second quarter being a little bit slower growth than the first quarter being a little modest as well? So should we expect full year growth to sort of be in the mid to upper digits -- versus upper single digit guidance that we had previously?

Brian, we're still hoping to see -- and again it all depends on what's happening in the economy. We are very deliberate in our loan approval process right now. And quite frankly you know some of the lack of volume is not due to opportunity but due to pricing and/or conservative credit approval on our part. We're hoping that as the economy goes on others may not be as aggressive on their pricing and therefore some opportunities will arise on that side.

But we will not be compromising our credit posture no matter what happens in the second quarter. But we think we will probably be seeing some loans we're looking at right now maybe not looking at -- maybe the borrowers being a little bit stronger later on in the year as the economy moves on too.

Great, I appreciate it.

And a lot of it too is that we are having some volume but we are encouraging paydowns and we're obviously not seeing construction draws and things of that nature at this stage of the economy.

Sure, I think that's a prudent thing to do especially in this environment.

Joe Stieven, Stieven Capital.

All of my questions have been answered two or three times already. So thank you very much, guys.

Good talking to you anyhow.

Charlie Ernst, Sandler O'Neill.

I just wanted to confirm a number you mentioned. The 30 days past due number you said went from 2% to 275?

That's correct.

And then you said a number before that. You also set a number before that that was around 1.7 -- what was that number?

Let me give you those two again. It's differentiated between number of -- we look at past dues two ways. We look at the number of loans that are past due and the dollars. The number of our past due loans dropped so therefore as a percentage of total loans we went from 1.7% of our loans being past due to 1.66% and this is 30 days or more.

Dollar-wise we went from 2% to 2.75% and that was based on a large relationship that had not been renewed that became 30 days past due because it has not been renewed at the end of the quarter. It slipped over into the fourth quarter.

Was it past due for reasons of delinquent credit or was it something technical or --? I guess I'm having a hard time why you would be quick to renew a loan that is showing signs of stress and it's past due.

It's not necessarily showing signs of stress. It's a partnership and there's some issues that are being worked out among the partners that are delaying the renewal.

(OPERATOR INSTRUCTIONS) At this time we don't have any further questions in the queue. I will pass the call over to management for closing remarks.

Thank you, Sylvana. We appreciate everyone's time today and your interest in Renasant Corporation and we are looking forward to speaking with you again when we report our second quarter results 2008. Thank you everybody.

Thank you ladies and gentlemen. This concludes the presentation for today. You may now disconnect.