Renasant Corp (RNST) 2011 Q4 法說會逐字稿

Good morning, welcome to the Renasant Corporation 2011 fourth quarter earnings conference call and webcast. 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 Mr. John Oxford of the Renasant Corporation. Mr. Oxford, the floor is yours, sir.

Thank you, Mike. Good morning. Thank you for joining us for Renasant Corporation's 2011 fourth quarter and year-end earnings webcast and conference call. Participating in this call 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 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 fluctuation, regulatory changes, portfolio performance and other factors discussed in our recent filings with the Securities and Exchange Commission. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes to future operating results over time. And now I will turn the call over to E. Robinson McGraw, Chairman and CEO of Renasant Corporation.

Thank you, John. And good morning, everyone. Thank you again for joining us today. During the fourth quarter of '11 we achieved much success as we experienced net loan growth, while continuing to expand our franchise by opening de novo locations in Starkville, Mississippi and Tuscaloosa and Montgomery, Alabama. In addition to our market expansions we continued to experience a decrease in our nonperforming loans and other real estate owns. Our nonperforming loans not subject to loss share decreased 35% during the year, and now represent only 1.56% of total loans at the end of '11.

Reflecting on our financial performance for the fourth quarter of '11, net income was approximately $5.8 million as compared to approximately $4.7 million for the same period in '10. For the year, net income was approximately $25.6 million as compared to $31.7 million for '10. Net income for '10 included a pretax acquisition gain of $42.2 million from our FDIC-assisted acquisition of Crescent Bank of Jasper, Georgia, which was recognized during the third quarter of '10. During '11, we recorded a pretax acquisition gain of $8.8 million, in connection with our FDIC-assisted acquisition of American Bank and Trust, of Roswell, Georgia, which was recognized during the first quarter of the year.

Basic and diluted EPS were $0.23 for the fourth quarter of '11, as compared to $0.19 for the fourth quarter of '10. Both basic and diluted EPS were $1.02 for '11 as compared to basic and diluted EPS of $1.39 and $1.38 respectively for '10. Total deposits were $3.41 million (sic-see press release) at December 31, 2011, as compared to $3.34 billion at September 30, 2011 and $3.47 billion at December 31, 2010. We continue to improve our deposit mix as noninterest-bearing deposits now represent 15.59% of total deposits at December 31, 2011, as compared to 10.63% at December 31, 2010. As a result of this improvement, our cost of funds declined 63 basis points to 111 basis points for the year ending December 31, 2011, from 174 basis points for the year ending December 31, 2010. Our cost of funds for the quarter ending December 31, 2011 was 92 basis points, down from 149 basis points, for the quarter ending December 31, 2010.

Total loans were $2.58 billion at the end of '11. As compared to $2.56 billion at the end of the third quarter of '11, and $2.52 billion at the end of '10. Loans not covered under FDIC loss share agreements were $2.24 billion, at December 31, 2011, as compared to $2.2 billion at September 30, 2011, and $2.19 billion on December 31, 2010. We're pleased to have achieved net loan growth on both an annual and linked quarter basis. During the fourth quarter, noncovered loans increased $37 million, or 6.6% on an annualized basis. Of this increase, $18 million came from our legacy markets, while the remaining $19 million came from our new de novo markets. In terms of the types of loans, the most significant growth occurred in owner and nonowner occupied CRE and C&I loans.

Breaking down loan growth by market, our Alabama markets continued to grow loans and have now grown loans nine of the last 10 quarters. Our Mississippi markets have now grown loans for two consecutive quarters and our Georgia markets experienced new loan growth primarily in the small business sector. Although we experienced a net reduction in our Tennessee markets, we continue to have strong new loan production out of these markets, and are expecting future net loan growth as unscheduled payoffs subside. We believe that we are well positioned to continue this trend of growing loans as we take advantage of our recent new hires, entrances into new markets, and a continued focus on loan opportunities in our existing markets.

While I am discussing our success in our new markets, let me update you on the progress of our RBC trust acquisition. As of year end, we have retained over 95% of the revenue stream represented by the accounts acquired. We are pleased with the team that has joined us as part of the acquisition, and expect further new business opportunities as we continue to integrate this business with our banking operations. Total assets as of December 31, 2011, were approximately $4.2 billion, as compared to approximately $4.1 billion at September 30, 2011 and $4.3 billion for December 31, 2010. Shareholders equity was $488.3 million, on December 31, 2011 as compared to $469.5 million at December 31, 2010.

As of December 31, 2011, our capital ratios were in excess of regulatory minimums required to be classified as well capitalized. Our tangible common equity ratio was 7.38%, Tier I leverage capital ratio was 9.44%, Tier I risk-based capital ratio was 13.33%, and our total risk-based capital ratio was 14.58%. Net interest income was $32.5 million for the fourth quarter of '11, as compared to $29.86 million for the fourth quarter of '10, and $32.87 million on a linked quarter basis. Net interest margin was 3.84% for the fourth quarter of '11 as compared to 3.43% for the fourth quarter of '10, and 3.92% on a linked quarter basis. For 2011, net interest income increased to $129.1 million, from $105.06 million, for '10. For '11, net interest margin increased to 3.77%, from 3.26% for '10.

Although margins decreased on a linked quarter basis, due primarily to higher-than-anticipated levels of cash, from an increase in deposits and payments on mortgage-backed securities, we grew margin by 51 basis points during '11. We expect to see improvement in net interest income with year over year net interest margin remaining stable, as we continue to adjust our asset mix by growing loans and changing our funding mix. For the fourth quarter of '11, noninterest income was $14 million as compared to $14.5 million for the fourth quarter of '10 and $19.6 million for the third quarter of '11. During the third quarter of '11, noninterest income included a gain of approximately $5 million from the sale of securities. Noninterest income for '11 was $68.7 million, as compared to $96 million for '10. Excluding the aforementioned gains from FDIC-assisted acquisitions, noninterest income was $59.9 million for '11, and $53.7 million for '10.

Noninterest expense was $33.3 million for the fourth quarter of '11, as compared to $32.2 million for the fourth quarter of '10, and $38.1 million on a linked quarter basis. Noninterest expense for '11 was $140.7 million, as compared to $123.6 million for '10. The increase in noninterest expense during '11 was primarily due to the cost related to operations associated with our acquisitions and new market expansions and higher levels of expenses related to other real estate owned. At December 31, 2011, total nonperforming loans were $124.1 million, and total other real estate owned was $113.2 million. The loans and other real estate owned acquired and FDIC-assisted transactions are recorded at fair value, which includes an estimated impairment.

Furthermore, the loss share agreements with the FDIC as well as adjustments to the balances of these acquired assets to record them at fair value mitigate the impact of further losses on these assets. Our nonperforming loans and other real estate owned covered under the loss share agreements with the FDIC at December 31, 2011 were $89.2 million and $43.1 million respectively. The following information on nonperforming loans, other real estate owned, and the related asset quality ratios, excludes the assets covered under the loss share agreements with the FDIC. Nonperforming loans were $34.9 million on December 31, 2011, as compared to $49 million on September 30, 2011, and $53.9 million on December 31, 2010. Loans 30 to 89 days past due as a percentage of total loans were 0.71% on December 31, 2011, as compared to 0.75% at September 30, 2011 and 0.99% at December 31, 2010. We recorded a provision for loan losses of $6 million and $22.35 million for the quarter and year ending December 31, 2011 respectively. As compared to $5.5 million, and $30.66 million for the quarter ending December 31, 2010. The provision for loan losses for the third quarter of '11 was $5.5 million.

Annualized net charge-offs as a percentage of average loans was 156 basis points, compared to 80 basis points for the same period in '10, and 70 basis points on a linked quarter basis. Net charge-offs as a percentage of average loans for the year ending December 31, 2011 were 91 basis points, as compared to 100 basis points for '10. The increase in net charge-offs as compared to prior quarters is due to the final resolution of several large credits during the fourth quarter of '11. The allowance for loan losses as a percentage of loans was 1.98% at December 31, 2011. As compared to 2.2% at September 30, 2011 and 2.07% on December 31, 2010.

Although our allowances for loan losses decreased for the quarter and year end as compared to the quarter ending September 31, 2011 and the year ending December 31, 2010, our coverage ratio, or the allowance for loan losses as a percentage of nonperforming loans increased to 127 basis points, as compared to 99 basis points on a linked quarter basis, and 84 basis points for '10. It is worth noting that our coverage ratio on December 31, 2011 was at its highest level in four years. Other real estate owned was approximately $70 million on December 31, 2011, as compared to $72.8 million on September 30, 2011 and $71.8 million on December 31, 2010. The decrease in other real estate owned reflects our efforts to dispose of these underlying properties.

We continue to aggressively market the property held in OREO as we sold approximately $29.1 million of other real estate owned during '11 and $7.2 million during the fourth quarter of '11. In our Georgia markets we sold $19.1 million of OREO during '11, with $6.1 million of this occurring during the fourth quarter of the year. We continue to experience strong outflows of OREO properties. We currently have $5.7 million of OREO under contract which should close in the next 30 to 45 days at a minimal loss. We also have agreements on land and development properties which will result in incremental sales over a slightly longer period of time. These properties total $7.3 million, of which $4.6 million should be fully disposed of by the fourth quarter of '12. We also have agreements in place to close in 2013, which should result in an additional $2.7 million in sales of land and development properties. Based on the contracts in place for these extended 2012 and 2013 sales, we anticipate a slight gain on the sale of these properties.

Moving forward, we believe positive trends such as our improved deposit mix, net loan growth and improving credit metrics and our strong capital position have us prepared for another successful year. In addition, our ability to participate in external opportunities whether through de novo branches or new market acquisitions has us positioned to expand our market share and cultivate new banking relationships in 2012. Now, Mike, I will turn it back over to you for questions.

Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions) At this time we will pause momentarily to assemble our roster. Catherine Mealor, Keefe, Bruyette & Woods.

Good morning, guys.

Good morning.

Robin, can you give a little more color on the large amount of net charge-offs you had this quarter and maybe specifically talk about the properties that you saw some resolution on this quarter? Thanks.

Sure I am going to let Corky Springfield answer part of it and I will answer part of it if needed.

Good morning, Catherine.

Good morning.

We had some large credits that finally came to resolution. Basically most of them, $7 million of them, in December, involving -- $6 million of that involved six large credits in the Memphis market. $5 million of which was basically to two borrowers up there. We got $3 million in back end foreclosure and the other $2 million we resolved through deed in lieu, does that answer your question?

Well, a little bit. And so if there were -- to get about $10 million in net charge-offs this quarter, can you break down that a little bit and how much of it maybe is coming from land or maybe or from Memphis or Nashville and maybe a little more granularity in where the charge-offs came from this quarter, by property type and by geography.

About 60% came from our C&D loans. About another 20% are nonowner occupied CRE, and the rest are spread through C&I, and other real estate and owner occupied properties. The vast majority of that -- Harold, am I right, came from our Memphis and Nashville markets.

Yes, that's correct.

And what level of write-downs were you taking on these properties? And what would the charge-off rate have been on the unpaid principle balance of some of the C&D properties.

Catherine, this is Robin. One development piece of property was the largest write-down. We had previously impaired the property. All of these properties had either previously impaired and that one was a very high -- it was about a 60% charge-off. The others were 50% or less, on the large ones, and these were mostly Memphis properties. Let me point out something, too, about Memphis. Following the end of the fourth quarter of our $35 million of nonperforming loans, only $2.5 million are Memphis now, and of these 30 to 89 day past dues only $1.5 million are Memphis. So we feel like that we have -- well it would be finally, are getting to the end of the credit situation in Memphis, as we've brought to resolution these credits. The reason -- this was not a cleanup, we had been trying to take possession of these properties for a while. And as you struggle through the process, we were finally able to bring all of these to resolution during the second quarter.

Okay. Great. Thank you. And one follow-up. Just on the reserve. Robin, can you just talk a little bit about your thoughts about the reserve going forward? I feel like you've been saying that you didn't expect to have reserve relief until you really felt good about the potential for NPO in-flows and the macroeconomic environment. So would you say that because we saw so much reserve relief this quarter is that an indication that you're feeling a lot better about the potential of credit costs going forward at Renasant?

I don't consider this reserve release, Catherine. We actually had specific allowances for these particular credits. When I think of a reserve release, I think of a lowering of provision. And our provision was actually a $0.5 million more than it was the prior quarter. Our coverage ratio increased rather dramatically, as a result of it.

Going forward, any reserve release that we will see basically will be based on loan growth as opposed to other factors that we feel like that 2011 will be a significantly higher year of charge-offs than we will see going forward. As you look at our nonperforming loans, quite frankly, and I wouldn't say they're performing, but we have -- some are, but 40% to 50% of these loans are having principal reductions made on the credits. Some of the others are tied up in bankruptcies that at some point in time there may be some principal reductions, but to a large extent some of the collateral values are sufficient to take care of the underlying credit. So we do see, again, our TDRs are basically on the same level as they were the prior quarter. And quite frankly, several of those TDRs are within probably six months of coming out of the TDR bucket, because of their performance at this stage of the game.

We see our credit metrics improving significantly. And so as far as reserve release, we don't anticipate it early on. But any that we see will be based on the growth in the loan portfolio. As you noticed, we were able to grow loans on a 6% plus rate, annualized rate in the fourth quarter. The last half of the year, we grew loans about $57 million or so. So we were pretty much on target with the guidance that we gave, that we'd grow net, in that range for the second half of the year. We are anticipating loan growth next year as we're seeing a very, very nice loan pipeline at this stage of the game. So I think that we should be -- if we do see any reduction in our allowance, it will not be as a reserve release, but it will be because of the growth of loans that we have. We have, in our 30-day pipeline -- well, our total pipeline is about $75 million at this stage of the game. Over 50% of which is in that 30-day bucket.

Great, thank you very much for the color, Robin.

You bet. Thank you.

Bill Young, Macquarie.

Good morning, guys.

Good morning, Bill.

Could you maybe talk about, of your existing nonaccrual loans, what proportion of that would you kind of still consider a large credit? Or how would you kind of identify a large credit? Is it kind of in terms of balances, is it $1 million and up? And then, what proportion of that is still kind of in the nonaccrual pipeline?

Of the nonaccrual loans, about $20 million of them are over a $0.5 million. $20 million to $22 million would be over a $0.5 million. Of that, probably -- without looking at it intently, of that $22 million, I would say probably $10 million to $12 million, $15 million at most, are over $1 million. Of those, the large -- we don't really have any over about $2.5 million today. I think that is a key thing, Bill, is that we've seen most of the very large credits have been brought to resolution. Of the several that we have that are in that $2.5 million range, some of them have a possibility of coming out without any loss, and without foreclosure. So we see our nonperforming loans in a much better situation as far as having it under our control at this stage of the game.

Okay, That's helpful. And then it sounds like in just kind of general commentary, in terms of the appetite for OREO and NPA sales seems to be kind of picking up. Is that the case? Or can you just kind of comment and maybe you can comment specifically on kind of the Memphis market in particular, what the demand is, and kind of what the appetite is amongst potential buyers?

Of those longer term sales that we have, we do have, one of those is in the Memphis market. One is in the Nashville market, and one is in the Birmingham market. And we have actually about $1.4 million is in the Georgia market. We are seeing some movement in the development type properties, which we heretofore have not seen any bulk type agreements on. We are pleased with seeing that. We feel like that over the course of the next six months or so, we will start seeing some more activity, too. We have some wonderful properties in OREO that we think will move as we get to spring. We have some pretty attractive properties that we feel like will in fact -- and these are vertical, will move closer to the middle of the year, probably, we will start seeing some activity on there.

Going back to your previous question, the largest nonaccruals we have, we have one $3 million that is in litigation right now, and another $2.1 million one that is a very attractive property quite frankly, and has a potential contract on it. And there is another relationship that is a couple of properties, a total of $2.5 million. So for the most part we're talking much smaller loans in that NPO bucket.

Thanks. That's very helpful. And then just kind of changing the subject to the margin. Can you just talk a little bit about kind of how much excess liquidity build-up you had. Kind of the plans for deployment? And then maybe the margin impact from a MBS prepays this quarter?

You bet. Jim Gray will talk about that, Bill.

Bill, we did have quite a bit of cash inflow in the fourth quarter. Some of it was related to the mortgage backed security prepays, probably in the $30 million range. We had about $70 million of deposit inflows. And then we still had some cash remaining from the security sale in the third quarter. We purchased approximately $140 million plus in securities during the fourth quarter, still leaving us with $150 million, $170 million in cash. And that probably was the most significant impact to interest margin decline for the quarter. Since then, we have deployed another $70 million or so of that cash. We do have our cash now down below $100 million. We will continue -- we are in the process of purchasing some additional securities, and we do have a $50 million borrowing that is coming due during the mid to latter part of the first quarter, right on that is a 3.85% and we will be using some of our excess cash, deploying that, to pay that down. So we think by the end of the first quarter we should have our cash worked down to what we consider more of a run rate level.

Thanks. That's very helpful.

Kevin Reynolds, Wunderlich Securities.

Good morning, Robin.

Good morning, Kevin.

Good quarter.

Thank you.

And a couple of questions for you. One, and maybe you can take these together. Competitive environment, particularly from the larger banks, we've seen a lot of smaller banks that said-- or at least heard from that sound upbeat, they're saying pretty good numbers, they're all talking about moving share. Wondering, has that opportunity to move share gotten better or stayed the same or not changed that much? And am I just misreading the tone? And then the second question is, I think you mentioned that you only have about $3.5 million of remaining problem assets here in the wonderful land of milk and honey in Memphis, and I was trying to figure out what you do when you transfer, or transition from defense to offense in Memphis, what are the opportunities in a market like this that is top heavy with some of those larger banks out there?

I will answer your last one first. That is true, and we are pleased to finally be at that position. We have been transitioning to the offense over the course of the last six to nine months in Memphis. And we actually have seen nice production, but based on, as you said, some larger banks coming in and taking some credits in a manner that we couldn't match, and the charge-offs that we talked about, we've seen a net loss of loans in Memphis. In Nashville, we've seen a net loss of loans for the same reason. We've had conduits, secondary market insurance companies, big banks, come in and make some deals that we just couldn't match, or didn't feel appropriate to match, and saw quite a few payoffs in the Nashville market as a result of it. Although we had excellent production in Nashville, over the course of the year.

We feel like most of the types of loans in Nashville that have been pirated were large credits and we don't have that many of those left anymore. Most of what we have left are -- for us, are middle sized credits. We feel like that we should be able to maybe avert any additional or any significant reductions along that line. And hopefully continue to have the very strong production that we've had in that market. In other markets, we're seeing the ability to actually continue to take market share, which we've done in our Alabama markets and our Mississippi markets, especially, and the de novo markets that we've entered in Mississippi and Columbus and Starkville and in Alabama in Montgomery and Tuscaloosa, we're seeing excellent growth in those markets from a -- both a loan and deposit, on both sides of the balance sheet, Kevin.

Okay. And so you're still talking about a lot of share movement there on both sides, but do you think, are we at the point now, do I hear correctly in your tone that credit is really not our issue anymore? Now, it is the pace of economic growth and that you feel pretty confident that there is a broad-based, maybe modest but broad-based economic recovery out there that you guys can live into, in the coming 12 to 24 months.

I think that it would be a market by market type answer to that. We are seeing the economy pick up in our north Mississippi markets. And the Alabama markets, we're seeing some decent economic recovery. Nashville is still making a little bit of a recovery in that particular market. We are not, and you would know this better than I, we're not experiencing or seeing the market experience as much recovery in Memphis as we've seen in some of our other markets. The Georgia markets are still not robust at this stage of the game. But we are in fact seeing a little bit of improvement in that north Atlanta market right now. So I think it would be a market by market type answer.

Okay. And one last question, and then I will hop. I don't know if you've seen this but over the last two days, the educational consultants have come out up here with reports that say that it is feasible for the subsidiary -- or I'm sorry, the cities and the suburbs to go forward with municipal school districts and kind of thwart the unified school district. Does that change your view at all, does that impact your view of the population flows from Shelby County into DeSoto County and maybe the strength or weakness going forward of residential real estate markets in each of those two places?

I think, Kevin, that the population inflows into DeSoto County will continue just because of the price of housing, the actual insurance prices, tax, real estate tax benefit down there. That was happening back before the recession came into place. And I think you're still seeing it to a large degree. The only difference I think that we have been seeing is rather than these smaller home purchases down there, it has been the rental market has picked up in DeSoto County. I think at some stage of the game, you will begin seeing those home sales beginning to pick back up. And we've seen a little bit of that in DeSoto County already.

Okay, okay. Thanks a lot. Good quarter.

Kevin, hold on, Kevin Chapman wants to make a comment.

Kevin, just following up, you mentioned on what the economy can grow and Robin mentioned market by market. I think one thing that is relevant to point out is that for the last 12 to 18 months, we've been out generating new business. If you look at this year, even for the first half, even though we didn't have growth, or net loan growth, we were basically break even. And where we have an advantage, maybe over some other competitors, is that our pipeline has been building, because we have been out generating new business. Making contacts, generating new business, for an extended period of time, as opposed to maybe just now, or over the past couple of quarters starting that engine back up.

Okay. Got it. Thanks a lot.

Thank you, Kevin.

David Bishop, Stifel Nicolaus & Company.

Good morning, gentlemen.

Hey, Dave.

Robin, your introductory comments, I think you mentioned that one of the segments you saw some growth this quarter was, if I heard you right, nonowner occupied commercial real estate. Is that somewhat of a newly developing trend there where you're feeling more comfortable with that asset class? Or where you're seeing pricing come in? Or bar us bringing more equity to the table there? Maybe just talk about what you're seeing on that front and give a comfort level beyond that asset class.

I am going to let Harold Livingston our Chief Credit Officer answer that, Dave.

Okay.

The answer to that is, that is a type of loan that even throughout the recession, if it met certain standards that we were willing to consider. The loan growth that we have in that area is a reflection of a pretty thorough analysis of the project, and the people involved, and the cash flows that accompany the project and the guarantors. So that part of the real estate market, if it made sense, we were willing to go ahead and pursue. Some of them maybe single tenant, and some of them may be multiple tenant but we look pretty hard at the entire project and the feasibility of it before we go forward.

Okay. Are you seeing any pickup in terms of competition for those types of credits here so far in the credit cycle?

Well, the competition has been there really all along with the exception of some banks that had issues where they just wouldn't look at any kind of CRE. We never got to the extent that we wouldn't consider it if it made good sense.

Okay. And Robin, you had mentioned some of the newer markets you're entering. Tuscaloosa, Birmingham there, in terms of the loan growth, any particular industry segment or SIC codes that are driving that particularly? Or is it just sort of a broad-based movement in so far?

It is broad-based. And most of it is the smaller business. You know, small business type lending.

Okay.

Good core clients that we like to have.

Got you. Great. Thanks for the color, gentlemen.

Thank you, Dave.

Robert Madsen, Stephens.

Hi, guys.

Good morning, Robert.

Hey, I just had a question on the net interest margin. Kind of on what your thoughts were going forward on the securities balance. Maybe what is rolling off and what the average yield is of the securities that are rolling off.

Robert, this is Jim gray. Our portfolio is about $811 million. The average yield on our portfolio is about 3.65%. Right now, we're looking under the current rate environment of about 20% of our portfolio could roll off over 2012. A lot of that roll off would be callable agencies. About 15% of our portfolio is made up of callable and step-up agencies. And obviously, we bought those given the current rate environment anticipating that they would be called, and we would have to roll those, and in addition to that, part of that 20% would just be made up with normal prepayments from mortgage-backed securities.

Okay. That's helpful. Similarly, on the other side of the balance sheet, could you quantify the CD repricing opportunity in terms of volume as well as rate.

Sure. We -- over the next quarter, we have approximately $200 million in CDs. Repricing in approximately 1% range. What we've been seeing over the last month or so, new and renewed CDs going on at about 65 basis points. So still picking up about 35 basis points there on the maturing CD portfolio.

All right. Hey, thanks for the information.

You bet.

Thank you, Robert.

(Operator Instructions)

Michael Rose, Raymond James.

My questions have been answered. Thanks, guys.

Good morning, Michael.

Zachary Wollam, Sterne Agee.

Good morning, guys.

Good morning, Zachary.

I just had a quick question about the OREO. What was the carrying value versus the unpaid principal balance, the original unpaid principal balance?

Are you talking about our total OREO or just specific to the sales that we had during the --

Yes, total.

I will have to get back with you. On the write down, on the average throughout the entire portfolio is probably somewhere between 20% and 30%.

Okay. Let me see. Could you talk just a little bit more about the makeup and the timing and the disposition of the OREO?

The makeup for this quarter on the sales for this quarter, Mark Williams, will answer that.

Zachary, the sales that we had in our legacy OREO in that fourth quarter that made that $7.2 million, residential and lot were about $2.5 million, other one to four family was about $2.2 million, and then we had some commercial property that came in at about $2.2 million. And that's the one we had, as Robin already mentioned, we had some good extended contracts and sales where we were anticipating going forward in '12. That first quarter of '12 number is about $4.3 million, in the legacy, with about $1.4 million in our Georgia markets.

Okay. All right. And one more question about loan growth. Could you talk about the geography of the loan growth you're seeing right now. And maybe give some color on like payoff activity, and maybe your outlook for 2012, in terms of payoffs, and do you think they will slow, stay the same or --

Last quarter, again, we saw, of our loan growth, we saw about $29 million of net loan growth in Alabama. And about $18.5 million of net loan growth in Mississippi. That was offset by about $16 million in Tennessee, most of which was in Nashville, with unscheduled pay downs. But we also saw about $6.5 million of net loan growth in Georgia. And our pipeline continues to be robust in all of these markets, as we look going forward, I think you can look to see that Alabama and Mississippi both have very strong pipelines, as does our Nashville market, going forward, into the first quarter, and later on in the year.

Okay. Thank you very much.

Thank you.

It appears that we have no further questions at this time. We will go ahead and conclude the question-and-answer session. At this time I would like to turn the conference back over to management for any closing remarks. Gentlemen?

Thank you, Mike. We appreciate everyone's time and interest in Renasant Corporation today and look forward to speaking with you again in the near future. Good day.

Good day to you, also, sir. And we thank you for your time. The conference call has now concluded. We thank you all for attending today's presentation. At this time, you may disconnect your lines. Thank you and take care.