Renasant Corp (RNST) 2010 Q2 法說會逐字稿

Good morning and welcome to the Renasant Corporation second-quarter 2010 earnings conference call. All participants will be in listen-only mode. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions. (Operator Instructions). Please note this event is being recorded. I would now like to turn the conference over to Robinson McGraw, Renasant Corporation Chairman and CEO. Please go ahead, sir.

Thank you, Andrea. Good morning, everyone, and thank you for joining us for Renasant Corporation's second-quarter 2010 earnings call. Participating in this call with me today are members of Renasant Corporation'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 risk 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.

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, the occurrence of unanticipated events, or changes to future operating results over time.

During the first half of 2010, the markets within our footprint have continued to show positive trends. Reflecting this, Toyota announced in June that it will resume completion of its manufacturing facility in North Mississippi. Huntsville saw an expansion within its aerospace and engineering industries, and Nashville showed its resilience by quickly rebounding from a catastrophic flood.

Even as the economy has not fully rebounded and many banks continue to struggle, during the second quarter of 2010 we opened two new full-service banking facilities and added strategic new hires and experienced a linked-quarter increase in our net income.

Looking at our financial performance, net income was approximately $3.8 million for the second quarter of 2010 as compared to approximately $3.6 million for the first quarter of 2010 and $4.3 million for the second quarter of 2009. Basic and diluted earnings per share were $0.18 for the second quarter of 2010 as compared to a basic and diluted EPS of $0.17 for the first quarter of 2010 and basic and diluted EPS of $0.20 for the second quarter of 2009.

Total assets at June 30 of 2010 were approximately $3.6 billion, representing a 1.3% decrease from March 31, 2010. At quarter end the Company's Tier 1 leverage capital ratio was 8.78%, its Tier 1 risk-based capital ratio was 11.42% and total risk-based capital ratio was 12.67%. In each case in excess of regulatory well-capitalized thresholds.

As in previous quarters, we have continued to grow all of our capital ratios. We are particularly pleased that our leverage ratio has continually increased quarter-over-quarter during the year. In addition, our tangible common equity ratio has grown to 6.52%, an increase of 58 basis points since the second quarter of 2009.

Total loans were approximately $2.26 billion at the end of the second quarter of 2010 as compared to $2.31 billion as of March 31, 2010. As anticipated, the decrease in loans was attributed to a combination of soft demand for loans in some of our markets and our continued reduction in the Company's construction and land development loan portfolio.

Construction loans decreased approximately $48 million to $64 million on a linked-quarter basis. More than two-thirds of the reduction in these loans is attributable to these loans being converted to permanent financing after completion of the construction phase of the loan.

Total deposits were $2.69 billion as of June 30, 2010, representing a 1% decrease from March 31, 2010. The reduction in total deposits, as compared to the previous quarter, was due to a $51 million reduction in public funds, a $16 million reduction in retail time deposits, and a $40 million increase in retail non-time deposit on a linked-quarter basis.

Net interest margin was 3.15% for the second quarter of 2010 as compared to 2.27% for the previous quarter and 3.04% for the second quarter of 2009. Net interest income was $23.7 million for the second quarter of 2010 compared to $24.4 million for the first quarter of 2010 and $24.2 million for the second quarter of 2009.

The decrease in net interest income and net interest margin on a linked-quarter basis was attributable not only to a reduction in low volume but also to $1.2 million in premium amortization related to accelerated prepayments in our mortgage backed securities portfolio due to the recent Fannie Mae and Freddie Mac repurchase program. Our funding cost was 1.86% for the second quarter of 2010 as compared to 1.95% for the first quarter of 2010 and 2.25% for the second quarter of 2009.

Net interest margin, excluding interest charged off on loans placed on non-accrual, and the impact of the accelerated premium amortization on mortgage backed securities, was up 2 basis points from the first quarter of 2010 on a comparable basis.

We expect our net interest margin to improve approximately 10 basis points on the remainder of the year due in part to approximately $100 million of high-interest certificates of deposit that are maturing during the last half of 2010. Most of this improvement should occur during the fourth quarter. In addition, we anticipate another $130 million of these high-interest certificates of deposits maturing during the first half of 2011.

As mentioned in previous quarters, our policy continues to be aggressive in identifying potential issues within our credit portfolio and quickly address them. In order to provide for these potential issues we have significantly increased our provision for loan losses over the past seven quarters.

During the second quarter of 2010, we recorded a provision of loan losses of $7 million as compared to $6.67 million on a linked-quarter basis and $6.7 million for the same period in 2009. As a result of this larger provision, our allowance for loan losses as a percentage of loans was 1.82% at quarter's end as compared to 1.78% at first quarter end and 1.46% at June 30, 2009.

Annualized net charge-offs as a percentage of average loans were 121 basis points for the second quarter of 2010, up 81 basis points for the first quarter of 2010 and 93 basis points for the second quarter of 2009. Non-performing loans were $64.7 million at June 30, 2010 as compared to $54.6 million at March 31, 2010 and $65.5 million on June 30, 2009.

Loans 30 to 89 past due as a percentage of total loans were 1.57% at quarter end, down from 1.8% at first quarter end resulting in a 15% decline on a linked-quarter basis. Most of the linked-quarter increase in non-performing loans was attributable to the migration of approximately $11 million of troubled debt restructured loans into this category.

Other real estate owned was $66.8 million on June 30, 2010 as compared to $62.5 million on March 31, 2010. The balance of OREO on June 30, 2010 includes a $5.3 million property which was booked and placed under contract to sell during the second quarter. The sale of this property is scheduled to close later this week with no additional loss to the Company.

As in the previous quarter, the Company's OREO increased as the Company took possession of the real properties securing problem loans in order to control the liquidation of these properties. The Company has an additional $1.8 million in OREO currently under contract to sell, which is scheduled to close during the third quarter.

With this in mind, members of our special assets division continued their proactive efforts to market OREO while at the same time maintaining very low loss rates. Non-interest income was $14.3 million for the second quarter of 2010 as compared to $12.5 million for the first quarter of 2010 and $15.4 million for the second quarter of 2009.

Non-interest income for the second quarter of 2010 included a $2 million gain on the sale of securities which included the sale of the remaining $17 million of private label CMOs in our portfolio. Non-interest expense was $26.2 million for the second quarter of 2010 as compared to $25.6 million for the first quarter of 2010 and $27.1 million for the second quarter of 2009.

I would like to point out that non-interest expense for the second quarter of 2009 included $1.75 million for the special FDIC insurance assessment which was levied on all financial institutions last year. Looking beyond our financial numbers, there were many noteworthy items which took place during the second quarter which will positively impact our markets in the future.

In May, we opened our second location in Union County, Mississippi. This full service branch in the city of New Albany is within close proximity to the future Toyota automotive factory and also one of Toyota's major Tier 1 suppliers.

As previously mentioned, Toyota made its much-anticipated announcement that its Blue Springs plant has resumed preparation for operations and will produce 150,000 units annually of the Corolla sedan when at full capacity. The first Corollas are expected roll off the line in the fall of 2011.

Hiring at the management level has already begun and hiring for all manufacturing positions will begin in the near future, according to Toyota news releases. We are very excited about the economic impact of the estimated 4,000 combined jobs through Toyota and its suppliers will have on our legacy market. We have 22 locations within a 30-minute drive or less to the plant.

Also in North Mississippi during the second quarter, MTD, an outdoor power manufacturing -- equipment manufacturer announced the expansion of its operations into an additional 525,000 square foot facility in Tupelo, Lee County Mississippi. The expansion represents a $6.25 million investment and will create over 100 new jobs.

In addition, Cooper Tire completed its $36 million expansion of its manufacturing facility in April, which when it was announced it would create approximately 150 new jobs when at full capacity.

Also worth mentioning was the efforts of our national franchises' management team and employees to minimize the impact of the May floods on our business. The damage to our banks was minimal, only our Hendersonville branch lobby was closed for one day due to the heavy rains and roof leaks, but the drive-through remained open. All other branches remained open for business as usual despite the circumstances.

In addition, our employees delivered food and water to variously affected small businesses, donated and collected household items and assisted in the cleaning up of some of Nashville's hardest hit subdivisions. During April, Huntsville's aerospace engineering companies, Vector Aerospace, Cummings Aerospace, Boecore, CSC, and Redstone Arsenal, all announced major openings or expansions. Huntsville continues to be a strong growth market due to its strong industrial, military engineering, and aerospace industries.

Just this past Monday we officially opened our new location in the Crestline area of Birmingham, Alabama. As mentioned in last quarter's call, this branch will be a cost neutral expansion of our Birmingham franchise as we simultaneously close a low-volume drive through which we acquired in a merger.

Even as the current economy and banking environment remains challenging, we believe our key markets are fundamentally sound and we're optimistic in our positioning for long-term success as we continue to look for opportunities to grow and enhance our franchise. Now, Andrea, I'll turn it back over to you for questions.

(Operator Instructions). Andy Stapp, B. Riley & Co.

Good morning. Was the net interest margin guidance that you provided based on the actual margin or the core margin ex the accelerated premium amortization?

It's based on the core, Andy, because as we look at non-performing -- or charge-offs of interest on non-accrual loans and things of that nature, that's not predictable at this point. We're looking strictly at our core margin.

Okay, and you have the balance of TDRs at quarter end?

We do. Smoky, do you want to talk about that? Harold Livingston, our Chief Credit Officer, will talk about that.

Yes, Andy, the TDRs at quarter end were $29 million. Out of that $29 million, $27 were performing and $2 million were somewhere between 30 and 99 days.

Which was a large reduction from the prior quarter.

Yes, we were down from $45 million and $37 million respectively of those two numbers at the end of March.

As we said, Andy, about $11 million of those TDRs migrated into non-accrual.

Okay, and -- but that -- what about the $2 million of non-performing that you mentioned?

They're actually just 30 days past due.

Got you, got you. And in your last call you indicated that the Company should begin to generate positive growth in the second half of the year. Could you discuss your loan pipeline and your confidence in achieving this goal?

Yes, based on what we see in our pipeline we're up about $30 million over the second quarter in that loan pipeline, so we're anticipating potentially to be in, as we said before, possibly a breakeven mode this quarter and maybe see a little positive side of the coin in the fourth quarter.

One of the things I want to mention, Andy, is we have -- last year and early this year we reconstituted our Alabama force of city presidents and relationship managers. We're still seeing some significant growth in those Alabama markets. We've begun that same process in Mississippi as we have reconstituted our Desoto County Bank. As you know, that was one of the areas in Mississippi that was hit the hardest.

We have moved away from the force of relationship managers and the president of that market. In fact, I think we've totally reconstituted that market, too. The new hires are more of the commercial and C&I small business variety. By the same token, one of our other major markets, and I won't mention it at this stage of the game, the name of it, but it was another market that was hit hardest.

The president in that market was more of a C&D type lender. We have replaced him with one that's more of a small-business commercial orientation. That's not been announced yet so I won't mention that at this stage of the game, but that will be a -- that was another significant hire for us. We've also hired another relationship manager in one of our major markets that has a significant customer base and we anticipate growth there.

So Mississippi is making significant progress. We're looking at some new hires in the Memphis and Nashville markets in the future, in the not too distant future. In fact, we're discussing that with them. So over and above this $30 million increase in the pipeline, we anticipate additional loan increases in the quarter and especially the fourth quarter based on these new hires that we're talking with.

Got you, that's helpful. I'll get back in the queue and let some other folks get on.

Catherine Mealor, KBW.

Robinson, I wondered if you could give us a little bit more color on the $11 million in TDRs that migrated into non-performing.

We feel like that we -- and I'm going to let Harold get into it or Kevin in a few minutes, I'm going to give you a general comment or two -- we feel like that we followed the letter of the law of the TDRs and therefore, as long as they're still performing and we are in fact collecting interest on them, we leave them there. At some point in many instances we decide to move a performing loan which one of the larger of these was.

It's still to some degree performing in that we are getting principal reductions on it. But we've elected not to take any future interest payments until the end of this credit. A couple of the others that migrated that way, we feel like there will definitely be a foreclosure on one. Harold, I'm going to let you get into more color on those from that perspective as to which -- without names, obviously -- the progression.

We have really -- this [quirky] Springfield. We have three relationships that made up the majority of that. Two of those relationships in this area and (technical difficulty) that made up a majority of it, the $11 million.

Two of those relationships will proceed on to foreclosure I believe and the third will continue to be a performing/non-performing credit for a while.

How about the remaining balance of your TDRs? What's the state of those TDRs? Do you foresee that those loans are going to be moving into non-performing status like this $11 million did this quarter?

Not necessarily. Like I said, $27 million of those $29 million are current and perform in accordance with the restructuring terms. $2 million are somewhere over 30 days and, of course, that does happen from time to time. It doesn't necessarily mean they'll move into NPAs.

Obviously if they get up to 90 days we'll move them over to the NPA category. It's hard to predict, but at this point we don't have -- we don't see any trends where the bulk of that $29 million is going to move to NPAs in the near future.

Okay, and what type of loans are these? Are these mostly land development and construction loans?

Primarily yes, and probably more -- a little more on the land development side, because our construction book has dropped considerably it is really pretty small overall right now, about $62 million I think.

And do you have the aggregate amount of new NPLs added this quarter? Was it all in the TDR balances or were there any other NPLs added this quarter?

Say that again, the aggregate amount of what?

Of non-performing loans added in the quarter or was it entirely based on these TDRs?

No.

No, actually we had about $22 million that was added this quarter and then we had a migration out of the balance of it, Catherine. You mentioned in there we have what we call performing/non-performing loans we keep mentioning and several of those that we put on non-accrual were actually performing loans. But we elected to, because of the closeness I guess of the collateral values that we would prefer applying the payments to principal as opposed to interest. And of those that didn't progress from the TDR stage, a very high percentage of those were actually in that particular category.

And do you have OREO sales in the quarter as well?

I'll give you here year to date first. We had sold 72 properties for almost $9 million. The loss on that was like $271,000. We have another 11 properties booked to close this quarter for $7.15 million. The estimated loss on that would be about $249,000. And in the month of June we sold 10 properties for $1.5 million and actually booked a slight gain on those sales. Does that answer your question?

Catherine, let me speak to one of those particular properties, which it kind of goes back to our higher than anticipated charge-offs this quarter and the reason for the uptick in our non-performing assets or other -- OREO. We had a $9-plus million relationship out of Memphis that had property that was outside of that area -- coastal property that we elected to auction. That auction occurred. One of the credits still performed up until right before that quarter as far as on an interest-only basis.

That property was auctioned and we had a $4 million loss on that property during the second quarter, $5.3 million contract to sell. And these were two parcels, actually, but the contracts were to close on or around the 23rd, which is Friday, and they are anticipated to close this Friday. There's no issue with that. So that was why -- those kinds of crossed quarters. But that was where the higher than -- we weren't anticipating that high of a charge-off, but based on what's going on in coastal properties, there was a higher than anticipated charge-off.

Okay, and speaking of charge-offs, I know, Robin, you've mentioned before that you believe total charge-offs for 2010 should be below 2009 levels. Do you still feel comfortable with that guidance?

Well, with the little bit higher than we anticipated there, we're probably going to be bouncing in at about the same levels now, I think probably would be a better portrayal of that, and by the same token the provision should be around the same levels.

Okay. And then my last question and then I'll get out of the -- or let others in the queue is -- I remember last quarter you mentioned that your watch list trends had been flat since last October. Are you still seeing that trend? Are you seeing an increase in your watch list?

No, that trend is still there and we're still like on the non-performing loans we anticipate -- again, this is all predicated on the lack of surprises that we don't see. We anticipate non-performing loans to trend downward this quarter and non-performing assets on the whole being basically at or maybe a little below the same levels. We're not anticipating an increase in non-performing assets and we're anticipating a decrease in non-performing loans.

Okay, great. Thank you.

Joe Stieven, Stieven Capital.

Good morning, Robin. Actually Catherine sort of just got my question. But you had given a number for some sale of OREO that was -- I think was like $5 million that was closing very shortly. I was just confirming that number and actually Catherine just got all my other questions. So I would just have you go back to that again.

It's $5.3 million.

And that's closing -- did that already close?

It closes Friday.

It closes this Friday?

Correct, and there's another $1.8 million that's under contract.

Okay, so that gives -- that's the $7 million of OREO that you see potentially being sold very shortly. So -- okay.

Correct. Yes, that's correct, Joe.

Okay, that's very helpful. And then just to confirm, you said your TDRs dropped from 45 to 29 in the quarter. Part of that was due to the movement into the non-accruals, though, correct?

That's correct. 11 of them moved into the non-accrual bucket.

But you're not filling that bucket back up right now, so that's good.

No, no. In fact, we don't anticipate, again, seeing that to occur.

Okay. Final thing, talk big picture on -- now that Toyota is gearing back up, what's that sort of -- just give us some big picture thoughts of what that means for you down there.

We anticipate, especially at the management level, a large number of families moving into the immediate area surrounding Toyota. That would include Pontotoc, Mississippi and New Albany, Mississippi and Oxford, Mississippi in addition to Tupelo. Obviously we have, as I said, 22 locations within 30 minutes of the plant. In addition to that we have locations in Oxford, two locations in Oxford and other locations in areas where suppliers are going to locate. For example, I think one of the suppliers was scheduled to locate in Batesville, Mississippi. We have locations there.

So we feel like that pretty much all of our markets with the possible exception of DeSoto County will be impacted by Toyota in some way, form, or fashion in Mississippi. So we see a real opportunity there as this operation kicks off. They own a pretty short timeframe. As you can tell, they are actually -- normally they're given about 18 months, but they're not going to have quite 18 months to get things rolling. So they're moving on a pretty fast timeline right now. But even more than just the action-packed, psychologically it has had a huge lift to Northeast Mississippi.

Okay. Thank you, Robin.

Joe Maloney, Sterne, Agee.

Thanks for taking my question. With regard to the agency buy-ins, can you give a little information about sort of what the volume of securities they bought back and sort of what you see the impact of that being going forward?

Jim Gray will answer that for you, Joe.

Sure, Joe. We figured there was roughly about $36 million worth of securities that were included in the repurchase, but we are seeing those slow down. Our prepayment rates have slowed down dramatically in June and we do not anticipate that kind of accelerated prepayment going forward. They will continue with accelerated buyback, but this backlog of all the buyback was completed in the month of June. And even though there will be some buyback going forward, it will just be on a concurrent basis. So we really don't see a substantial impact of that going forward.

Okay, great. And do you know what the average yield was on the securities that they did buy back?

It was probably in the 5% range. Probably in the 4.75%, 5% range.

Okay, great. Thank you very much.

[Dan] Harvey, Stephens Inc.

Good morning, guys. Robin, I had a question. Last time we spoke, you mentioned the increase in 30 to 89 in the first-quarter construction. One of those loans is going to be moving into ORE. Is that the same property we've discussed so far today on the call, that $9 million property?

Yes.

Okay, and then of the two-thirds of the C&D that you said went to permanent financing, did any of that stay on your books?

Yes, yes, and these were all performing under the terms of the loan. There was nothing extraordinary about these. These were just your traditional tight credits, some of which were single-family residential homes of individual buyers and then most of it was commercial either owner-occupied or in some instances income-producing.

Okay, and last question. I would assume you're talking about the increased pipeline and the anticipation for that to keep increasing from the new hires. Is that more market share gain or are you seeing any kind of organic loan growth out of some of those new hires?

A combination. We're seeing actual -- in addition to the new hires we're seeing a lot of organic growth in our markets from our existing relationship managers. The pipeline in Mississippi has really ramped up. This was before we brought in the new hires. Alabama's pipeline has continued to remain robust.

Nashville is starting to show some very optimistic numbers for the future that's not really included in the pipeline at this stage of the game. But a decent pipeline coming out of Nashville again, which we thought very positive, and we're hoping to see -- start seeing some positive loan growth in the Memphis market.

Okay. Thank you for taking my question, guys.

Andy Stapp, B. Riley & Co.

Has there been any change in the mood of customers regarding their business prospects?

Let me say this. There has definitely been a change in our relationship managers on optimism about their customers, so I guess that translated into -- in answer to your question -- that there appears to be some optimism there. Going back, Andy, I think a lot of it's market-related. But there's been a huge psychological boost in the Tupelo area as a result -- or the Northeast Mississippi area as a result of the Toyota announcement.

Huntsville, with all the activity, they're exploding over there with optimism. We've seen a lot of positive things happen in that Birmingham area. Of course connected to Huntsville is Decatur, which is its next-door neighbor and they're also benefiting from the growth in that particular market.

The resilience of Nashville following that flood has been absolutely amazing. That's been one of the best stories not really told is how the city of Nashville responded to that flood with very little federal help. This was kind of a doing on their own type proposition and it's been unbelievable. We're seeing considerable optimism in that area in the housing market and otherwise, so I think there's beginning to be a little bit of a change in all of our markets, quite frankly.

Okay, good. And the provision for loan losses came in roughly in line with net charge-offs. Was the reason that the provision did not mirror the ramp-up in net charge-offs, was it just because a big chunk of the charge-offs were applied against existing reserves?

To a large degree, but we also, going back to the optimism you were talking about, had several credits that were upgraded during the quarter and the reallocation of that portion of the allowance had some impact on it also.

Okay, and could you talk about the progress you're making in getting customers to opt in and except overdraft charges on debit card transactions?

Yes, Jim has been our point person on that. Let me let Jim comment.

We're seeing of the customers that have responded to date, and we've mailed to not all of our customers but ones with debit cards and the ones that this reg would impact. We're seeing an opt-in rate on those of north of 80%. And one number that we kind of track is a daily average of overdraft -- debit card overdrafts for customers that have not opted in, and that number, when we started tracking it a couple months ago, was running over 400 a day and that number now is down to about a little over 200 today.

When you kind of translate that to the impact on fee income, it's below a 2% -- excuse me, below a 10% impact on our total overdraft income. And of course we've still got several weeks ago and we're pushing hard to get more customers contacted in that period of time. So we definitely believe we'll have less than a 10% impact on our overall overdraft income and hopefully be able to bring it down further than that.

And what is your overall overdraft income?

Roughly net of about $19 million.

And how many -- roughly what percentage of your customer base has responded to whether or not to opt in?

Of our total base we really mailed to about 30% of that base because those were the ones that would be the most impacted. And the majority have -- probably 75% of those have responded and of that about 80% have opted in. That's about probably 60 something percent of that 30% have opted in at this point.

Okay, and Jim, this is probably another question for you. To what extent did mortgage loan production slow down after the expiration of the first time home buyer tax credit?

Andy, surprisingly we have not seen a slowdown. We actually saw an increase in our pipeline and I think it's due to this. With the dramatic decrease in rates in the second quarter, we had a future fallout. A lot of loans that had locked or committed, they fell out because of rate. And so, even though we had an increase in volume in our second quarter versus first quarter, it would've been actually higher had we not had all that fallout.

Now the rates are down low we've had a lot more come back and lock-in and our pipeline has picked up quite a bit and we're not seeing much fallout at all right now. I'd say our pull through rate is probably up to 85%, 90% now, where it might've been in the 70% range in the second quarter.

So I think also, as you know, they extended the closing date for the first time home buyer credit through the end of September I believe it is, and the reason because they were just really having a lot of trouble getting loans closed with all the new rest of the guidelines and everything.

So we still have quite a few loans in the pipeline related to first-time home buyers that had contracts by April 30 or May 31, whatever that deadline was. But they just haven't closed yet. So we're optimistic right now that our third-quarter production will improve over the second quarter.

Okay, thank you. That's helpful.

Bill Young, Macquarie.

Good morning, guys. I had a couple of quick questions for you. First, going to your margin guidance, at what level are the $100 million of CDs at currently and what level do you expect to -- what level do you expect to reprice them down to, thanks?

Is this Bill?

Yes.

Sorry, Bill, this is Jim Gray. Those -- the $100 million that's maturing over the course of this year are -- just looking to each month -- probably going to average somewhere around 3.5%. And even our special rates on our 12-, 13-month CDs that we're seeing a lot of these dollars go back into is kind of in the maybe $125 million, $130 million range.

We also are seeing some of those dollars -- we just started in the month of July, just started seeing some of the activity on those maturities. Some of those dollars are going into money market. Some of them are going into some special higher rate checking products that we have. So I'd say blended somewhere in that $125 million, $130 million range.

Right. And could you -- apologies if I missed this earlier. Could you go into a little more color on the securities sales this quarter and what impact on the margin there was?

Yes, the securities we sold this quarter, part of that was about $17 million in private label CMOs. Those were the last private label CMOs in our portfolio, we sold those. The weighted average yield on those securities we sold was around a 4.80. The reinvestment -- we didn't reinvest every penny of that. We're still in the process of reinvesting, but the weighted average yield on the reinvestment was around a 4.08.

Okay. And other expenses had a bit of uptick this quarter. Could you just give a little bit more color on what was driving the increase? Whether it was more one-time charges related to the flood or any other unusual items? And also, would you be able to disclose your credit-related costs in that line item? Thanks.

Bill, this is Stuart. A lot of that increase came from our ORE costs during the quarter over linked-quarter, and we just had some accrual adjustments into marketing and then we had some sales and use tax and other fees that caused that increase. But the bulk of that was ORE costs.

Bill, let me expand on that to some degree. The costs related to the flood were not that significant. We had some damage, but most of the damage we had was covered by insurance and it was moderate in comparison to others.

One other thing I want to point out -- you stirred another thought in my mind there is -- we have absolutely, I can't say we don't have any, but we have no exposure to the Mississippi, Alabama, Florida, Louisiana coastal areas, or very little at all. So therefore the oil spill is not having any impact on us at this stage of the game. So we don't anticipate any issues in that regard.

Great. Thanks a lot, guys.

Dave Bishop, Stifel Nicolaus.

Good morning, Robin. A quick question. In terms of the commercial real estate portfolio there, I don't know if you guys have a sense in terms of how much of that comes up for renewal over the next couple quarters, say the next six months or so and how the credit quality is holding up thus far.

Yes, we do and I've got it broken down by -- I'll go over our non-owner occupied first if you want to talk about that.

Sure.

About 17% of that portfolio will mature or reprice in the next three months on the C&D side, that's about 40% that will mature or reprice in the next three months. We feel like that we have a pretty good handle on which ones will be able to renew and continue to pay. In fact, some of the ones that we think will not we probably have already put on non-accrual.

And then we've got some authors that actually have interest prepaid, so we know they're going to renew. So at this point we don't see a lot of movement from those maturities or renewals like into NPLs or whatnot. You can always be surprised here or there, but we think at this point it's not going to be a major issue.

Great. Thank you, guys.

This concludes today's question-and-answer session. Gentlemen, do you have any closing remarks today?

Before I make closing remarks, let me do one thing. This goes back to a question -- I believe it was Bill's question regarding the flood. We have not seen any real strong indication with our customers of direct impact of the flood and we're still evaluating any kind of credit issues that may come up as an indirect impact for the flood.

I will point out that one of the TDRs that moved into the non-accrual category, the non-performing category, was in some way as a result of the flood. There was -- part of that credit was dependent on royalty payments that were coming from someone who was impacted by the flood and therefore we did in fact move that loan to a non-accrual basis.

The other side of the coin, and when I was saying performing/non-performing loans I didn't include this one, but a payment, the royalty payment stream has started back up to the extent that we received a payment on that particular credit yesterday. But there was about a 60-day period of time that the royalty payments did not come in because of that and we thought it prudent to move that loan to non-accrual.

We had it in the TDR category prior to that because we had worked out a relationship with him on how we were in fact going to get that paid. That's not one, though, that we consider at this stage of the game a performing/non-performing loan. It could come back into that, but at this stage we don't consider it that way. But that royalty stream is in fact pledged to us to collateralize the loan and it will continue coming in.

Right now that's the only indirect credit relation -- credit impact that we know of as a result of the flood. With that in mind, let me just say I appreciate everybody's time and interest in Renasant Corporation and we certainly look forward to speaking with everyone again when we report our third-quarter results. Thank you a whole lot.

Thank you. This concludes today's conference. Thank you for joining. You may now disconnect.