Renasant Corporation (RNST) Q4 2012 Earnings Report, Transcript and Summary

Good morning, and welcome to the Renasant Corporation 2012 Fourth Quarter Earnings Conference Call and Webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to John Oxford with the Renasant Corp. Please go ahead.

Thank you, Laura. Good morning, and thank you for joining us for Renasant Corporation's 2012 fourth quarter and year end earnings webcast and conference call. Participating in this call today are members of Renasant's executive management team. Before we begin, let me remind you that some of our comments during this call may be forward-looking statements which involve risks and uncertainty. A number of factors could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. 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, we'll turn the call over to E. Robinson McGraw, Chairman and CEO of Renasant Corporation.

Thank you, John. Good morning, and thank you again for joining us today. Our results for the fourth quarter 2012 represent a strong finish to a successful year for Renasant as we experience a 26% increase in EPS and net income as compared to the same period in 2011. Contributing to this strong performance during the fourth quarter of '12, as compared to the fourth quarter of '11, we increased net interest margin by 13 basis points and grew both net interest income and noninterest income. Also, loans increased for the sixth consecutive quarter. In addition, we experienced a significant improvement in all of our major credit metrics for the fourth quarter of '12 as compared to the same quarter of '11. Reflecting on our financial performance for the fourth quarter of '12, net income was approximately $7.3 million, up 26% as compared to the same period in '11. Basic and diluted EPS were $0.29 for the fourth quarter of '12 as compared to $0.23 for the fourth quarter of '11. For 2012, net income was approximately $26.6 million, up 4% as compared to '11. Net income and EPS for '11 included pretax acquisition gains of $8.8 million in connection with our FDIC-assisted acquisition of American Bank and Trust of Roswell, Georgia and $570,000 from our acquisition of RBC's Birmingham Trust operations. We did not record any acquisition-related gains in 2012. Total deposits were $3.46 billion at December 31, '12, as compared to $3.41 billion at December 31, '11. We continue to improve our deposit mix as non-interest-bearing deposits grew 7% to $568 million at December 31, '12, as compared to December 31, '11. Noninterest bearing deposits now represent 17% of the total average deposits for the fourth quarter of '12, up from 16% of total average deposits at the fourth quarter of '11. As a result of our continued improvement in funding mix, our cost of funds was 64 basis points for the fourth quarter of '12 as compared to 92 basis points for the same quarter of '11. In addition, our cost of funds declined to 72 basis points for the year ending December 31, '12, from 111 basis points for the year ending December 31, '11. Total loans increased 9% to $2.81 billion at the end of '12 as compared to $2.58 billion at the end of '11 as loans not subject to loss-share agreements outpaced growth on the covered loan portfolio. Loans not covered under FDIC loss-share agreements grew 15% to $2.57 billion at December 31, '12 as compared to $2.24 billion at December 31, '11. For the fourth quarter of '12, non-covered loans increased $33.5 million as compared to the third quarter of '12. Breaking down year-over-year loan growth by market, our Alabama markets grew loans by 18.7% and have now grown loans 11 of the last 12 quarters. Our Mississippi markets increased loans by 8.5%, and our Tennessee markets grew loans by 10%, which is their fourth consecutive quarter of loan growth. In Georgia, we essentially replaced 77% of the decline in non-covered loans with new loan production primarily from the small-business sector. 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 continued focus on loan opportunities in our existing markets. Total assets as of December 31, '12 were approximately $4.18 billion as compared to $4.16 billion at September 30, '12 and $4.20 billion as of December 31, '11. Shareholders' equity was $498 million on December 31, '12, as compared to $487 million on December 31, '11. At December 31, '12, our tangible common equity ratio was 7.60%, Tier 1 leverage capital ratio was 9.86%, Tier 1 risk-based capital ratio was 12.85% and total risk-based capital ratio was 14.13%. Our capital ratios were all in excess of regulatory minimums required to be classified as well-capitalized. In addition, during '12 and throughout the recent economic downturn, we maintain our annual dividend of $0.68, which equates to an approximate dividend yield of 3.5%. Net interest income was $34 million for the fourth quarter of '12 as compared to $32.6 million for the fourth quarter of '11. Net interest margin was 3.97% for the fourth quarter of '12 as compared to 3.84% for the fourth quarter of '11. For '12, net interest income increased to $133.3 million, up 3.1% from '11, and net interest margin increased to 3.94% from 3.77% for '11. The current interest rate and competitive banking environment continues to put pressure on any banking and financial services institution's ability to grow net interest income and preserve net interest margin. Despite these pressures, we have grown net interest income and net interest margin on both the quarterly and year-over-year basis. As we continue our efforts to grow loans and restructure our deposit mix, we believe we will be able to increase net interest income while minimizing net interest margin compressions. Our noninterest income is derived from diverse lines of business which primarily consist of mortgage, insurance and wealth management revenue sources, along with income from deposit and loan products. For the fourth quarter of '12, noninterest income increased 40% to $18 million as compared to $12.9 million for the fourth quarter of '11. Noninterest income for '12 was $68.7 million as compared to $64.7 million for '11. Excluding the aforementioned gain from our acquisitions, noninterest income increased $13.4 million or 24% for '12 as compared to '11. Noninterest expense was $38.5 million for the fourth quarter of '12 as compared to $32.4 million for the fourth quarter of '11 and $38.6 million on a linked quarter basis. Noninterest expense for '12 was $150.5 million as compared to $137 million for '11. The increase in noninterest expense during '12 as compared to '11, as well as on a quarter-over-quarter basis, was primarily due to costs associated with our new market expansions, increased health care costs and commissions paid on mortgage loan originations. December 31, '12, nonperforming loans were $83.4 million and total OREO was $90.3 million. Our nonperforming loans and OREO covered under FDIC loss-share agreements at December 31, '12, were $53.2 million and $45.5 million, respectively. The remaining information during this discussion on nonperforming loans, OREO and the related asset quality ratios excludes the assets covered under loss-share agreements with the FDIC. Nonperforming assets were $75 million at December 31, '12, a decrease of 28.7% as compared to December 31, '11. Nonperforming loans, loans 90 days or more past due and nonaccrual loans, were $30.2 million at December 31, '12 as compared to $32 million at September 30, '12 and $34.9 million at December 31, '11. Early stage delinquencies, or loans 30 to 89 days past due, as a percentage of total loans were 31 basis points at December 31, '12 as compared to 71 basis points at December 31, '11. We recorded a provision for loan losses of $4 million and $18.1 million for the quarter and year ending December 31, '12, respectively, as compared to $6 million and $22.3 million for the quarter and year ending December 31, '11, respectively. Annualized net charge-offs as a percentage of average loans were 52 basis points for the fourth quarter of 2012 as compared to 156 basis points for the same period in '11 and 77 basis points on a linked quarter basis. Net charge-offs as a percentage of average loans for the year ending December 31, '12, were 67 basis points as compared to 91 basis points for '11. The allowance for loan losses as a percentage of loans was 172 basis points on December 31, '12, as compared to 174 basis points on September 30, '12, and 198 basis points on December 31, '11. OREO was $44.7 million at December 31, '12, as compared to $48.6 million at December 30 -- excuse me, September 30, '12, and $70.1 million on December 31, '11. We continue to aggressively market the properties held in OREO as we sold approximately $30.4 million during '12 and $4.7 million during the fourth quarter of '12. We continue to experience strong outflows of OREO properties. We currently have approximately $4.9 million of OREO under contract which is expected to close during the first quarter of '13. As we move into 2013, we are excited about our many opportunities to build upon our success from 2012. We're well positioned to continue our positive trends which enhance our earnings potential through our strong team of community bankers and favorable banking markets. Additionally, we will continue to take advantage of external opportunities to expand our market share and cultivate new relationships. Now Laura, I'll turn it back over to you for questions.

[Operator Instructions] And our first question will come from Catherine Mealor of KBW.

Robin, the pullback in end of period loan growth was a little more than we had expected. Can you talk about the pipeline and the pricing dynamics in your markets? Do you think you can get back to the double-digit loan growth we saw earlier this year, or do you think that pricing is just too [indiscernible] to make that achievable?

Fourth quarter -- we talked about third quarter being an anomaly because of the large growth we had. The same is true with the fourth. And it, basically, was based on some payoffs and pay downs and some other situations. I kind of run through a little bit of the math on it, we had about $187 million of actual production during the quarter, new loan production. But what happened in this quarter was normally, we -- the first 3 quarters, we averaged about $86 million of payoffs during the quarter. We had $133 million this quarter, which is $47 million more than average. Normally, during the quarter, we had pay downs of about $90 million but had $120 million this pay down -- I mean, this quarter. We actually had average production of about $63 million, which is pretty much in line with what we thought our -- per 30 days. $63 million a month on average, which is pretty much in line with our 30-day pipeline at the end of the quarter -- or at the beginning of the quarter. We actually had advances, were a little bit larger than normal. But when you go through this whole basis, we ended up in double digits, around 10% growth we would have for the quarter had things been on a normal basis. But what we actually saw happen was, on the large amount of pay downs, is we had quite a few of our customers selling their businesses at the end of the year. From a tax standpoint, it was significant, quite frankly. In addition to that, the good news was -- is we were able to resolve quite a few problem credits over the course of the year -- or the last quarter, especially the month of December. We saw our watch list drop $13 million during the fourth quarter due to payoffs. Some of these were nonperforming loans. One actually was a TDR that went on during the quarter and then was sold. It was about $2.8 million credit. So we saw some real positive news in that front. With that in mind, I think loan production was good during the quarter, but we just had some instances that occurred, both good. And I guess, we hate the pay downs that came from the sale of businesses and losing those good customers in that respect, but then we had the normal amount of payoffs coming in with some of the larger banks, coming in with some long-term fixed rates that we lost some credits that way, in addition to some going into the conduit market. But as far as our pipeline for the future, I'll let Mitch make some comments about that.

Yes, Catherine, our current 30-day pipeline is approximately $50 million. Breaking that down by state, 48% of that would be in Tennessee, 13% in Alabama, 10% in Georgia and 29% in Mississippi. And as Robin mentioned, we don't foresee the pay downs that we saw in the fourth quarter, so this pipeline should result in approximately $12 million in growth in non-covered loans. Another point of note, if you go back to the same period in '12, our pipeline was approximately $38 million, first quarter of '12.

Okay, great. So basically, you don't read in to the slowdown, the pipeline still looks really strong, and pricing is still at a level where you're comfortable growing the portfolio at a fairly reasonable pace?

Right. As we've said, we don't think that we'll have, obviously, the growth that we had in the third and fourth quarters on an annualized basis. But we do think that we'll be around that double-digit number, the low double-digit number that we have projected over the course of the year. First quarter last year was a lot slower than the second and third quarters, so -- and we're probably seeing about the same thing now although the pipeline is greater than it was in the first quarter last year.

All right. This is really helpful. And then maybe just one follow-up on your mortgage revenue. You had another really nice quarter in mortgage earnings. Can you talk a little bit about what percentage of that -- of your originations were refi versus purchase and what your outlook is on this business line?

Catherine, I'm going to let Jim Gray comment on that.

Catherine, our refi is actually pretty acceptable to us. We're running about 65% refi. That's actually down from fourth quarter of '11, which was running closer to 70%, so -- and in talking with peers, we've seen peers up as high as 75%, 80% refi, so we feel very comfortable with the refi percentage at that level. I'm just going to make a comment that kind of looking forward, I think the industry as a whole is projecting refis to decrease about 20% over the course of 2013. Based on our pipeline, we're certainly not seeing any slowdown of refi coming into the first quarter of '13. But over the course of the year, we could see a decline of that and really have factored that in to our forecast for '13. However, we believe that we've been pretty aggressive through '12 in hiring additional originators. Just kind of listing the markets, we've hired additional originators in Birmingham. We're actually opening a new retail origination office in Birmingham. We've hired originators in Starkville and Columbus, Mississippi; Tuscaloosa and Montgomery, Alabama; hired some new ones in Georgia; and the East Tennessee, Maryville, Johnson City, Bristol. We project hiring originators in Memphis. We've hired new originators in Huntsville and Oxford, Mississippi. And then, we're also starting to see our wholesale volume improving in the fourth quarter. We had some bottlenecks in production just because our production was so great. We've resolved those the early -- late summer or early fall. And as a result of that, we saw our wholesale volume picking up. We had signed up a lot of new wholesale clients in Georgia, and they had not started doing business with us because our turn times, frankly, were a little long. But those turn times have gotten acceptable now, and we've -- immediately started seeing that volume occur.

And our next question is from David Bishop of Stifel, Nicolaus.

In your commentary, it seemed like there is a pretty good optimism in terms of just the growth -- or the outlook for growth in overall spread income with modest amounts of NIM pressure there. Should we think about just the overall balance sheet strategy here as continue to use some of that liquidity from the security portfolio to fund that loan pipeline as we move forward into 2013?

Not as much as we did this year. We're going to try to keep our security portfolio at about the levels that we have it today, so you won't see as much of a runoff from the security portfolio as you did last year. We probably will see balance sheet growth this year as a result of that, not as much growth on the balance sheet as you will on the loan side, but you will see some balance sheet growth. Kevin has a comment to make, too.

Yes, Dave, some of the loan growth is going to be funded by other balance sheet categories on the asset side. We are anticipating OREO to continue to come down, and that's both on the covered and non-covered portfolio. That's going to provide cash for loan growth, as well as just NPLs. We are anticipating NPLs continuing to come down. So less funding coming out of the security portfolio, and looking at some of those other categories on the balance sheet, to help fund some of that loan growth. But as Robin mentioned, we're kind of at the point that we will start seeing some incremental growth in the balance sheet. It won't be in line with the pace of loan growth, but it will be incremental growth in the balance sheet.

Got you. And then following up to Catherine's question regarding the loan pipeline, as you talk to your client base out there, have you seen any sort of drag or negative effects from the ongoing, never-ending discussion regarding the fiscal cliff decisions that have been pushed off a couple of months? Have you seen any sort of a fall out there in terms of your loan pipeline or potential fundings where bars are just sitting on our hands and delaying projects that is also serving the dampening loan growth?

I'm going to let Mike Ross, who's our Eastern division -- Eastern region president, which covers Alabama and Georgia, answer that question for you, Dave.

Dave, we have seen a modest amount of that going on, no question about it. However, I must say in the last couple of 3 weeks, we started seeing some tick up in activity such that our current pipelines are closer to where they were toward the end of the third quarter. So we feel like that was a temporary phenomenon, and we're very encouraged by what we're seeing out there going on right now among our banking things.

And the next question is from Michael Rose of Raymond James.

A decent amount of the loan growth over the past couple of quarters has come in 1-4 family mortgages. Have you all made kind of a conscious decision to portfolio more of that production, and what's the -- what's your thought process going forward?

I'm going to let Mitch Waycaster answer that for you, Michael.

Michael, that's primarily driven by 1-4 family residential consumer portfolio credits that would have a typical maturity of 5 years or less. And that's driven by the consumer demand for that type product in lieu of a secondary market type mortgage. So we have seen pick up there just from consumer demand for that type product in lieu of that typical secondary mortgage type solution.

Okay, that's helpful. And then -- I'm sorry if I missed this, I got on a little bit late. But can you kind of walk us through the accretable yield portion of the margin and kind of the trends in the non-covered loan portfolio yield and kind of what you're putting new money or new credits on the books at, and would you expect that, I would assume, to continue to come down as competitive pressures weigh on?

Kevin will answer that, Michael.

Yes, Michael, we're holding new and renewed loan yields in the half 4s, say 4.70-ish, and that's been consistent throughout 2012. And so incrementally, the loan portfolio is pricing down the loan yields, quarter-over-quarter, dropped a couple of basis points, not significantly, but we are seeing some pressure on just the loan yields as the existing book reprices down. We're augmenting that with new loan growth, and that's driving growth in net interest income. And we are still incrementally picking up margin improvement as we reprice deposits. We still have some room in time deposits. And then also just on the mix side, that's been a focus of ours going on 2 years now, and just incrementally improving the cost of funds to augment some of the pressures we're seeing on the yield side. When you look at accretable yield, all in for the third quarter, accretable yield accounted for about 8 basis points, and that's been declining. In the third quarter, it was 10 basis points, and if you go back to the second quarter, it was 12 basis points to margin.

Okay, that's helpful. And one more, if I can. I know you guys said, I think it was last quarter, you mentioned that OREO expenses, you would expect to come down pretty significantly in 2013. Obviously, they bumped up here in the fourth quarter. Is that kind of still your expectation as you continue to kind of churn through your pipeline of OREO?

It is. And we had $2 million of impairments, fourth quarter. Of that $2 million, $1.4 million were based on contracts for sale in the first quarter of this year, so we impaired the OREO that will, in fact, sell first quarter. So there will be actually a slight gain on the $4.9 million that is under contract. In addition to that, through 2 quarters -- through the second quarter, we already have $7.5 million under contract to close in the first 2 quarters, and there are several other pending potentials that are there. And also, we don't want to lose sight, we have this $4.4 million of entire subdivision under contract to incrementally close over an 18-month period that has been tied up in some litigation based on the homeowner association rights in improving -- in approving the actual houses to be built. And those should be resolved -- that issue should be resolved this quarter, so those sales should be starting, and that said, at a no loss situation. So we do continue to feel that our OREO costs should drop off during the 2013 year.

And our next question is from Matt Olney of Stephens.

Robin, most of my questions have already been addressed, but kind of more of a strategic question. It seems like over the last few years, you've been very opportunistic with some new hires, whether it's lenders or guys in the mortgage team or trust team. What's the strategy for 2013 regarding new hires? Are you going to continue to be opportunistic, or is now the time to pause and let some of these new hires become more accretive at the bottom line?

We will be opportunistic as opportunities present themselves. We don't anticipate a lot of de novo openings, but we will be, I guess, hiring new relationship managers as both replacements and/or additions. We just added a 3-person team in our Memphis operation that we've been talking with for 2, 3 months that are more commercial orientation, I guess, C&I commercial real estate-type lenders. And this is basically as we have somewhat -- as we did in Alabama 2 or 3 years ago, Mike Ross started the process of pretty much replacing the entire team. We've pretty much done that in our Memphis operation with the addition of these 3 new hires out there. What you'll be seeing would be on a very small basis as far as that goes, we don’t anticipate any large scale lift outs at this stage of the game.

And what about on the fee income side, Robin, anybody in the pipeline there as far as new hires?

Yes, obviously, Jim was talking about the hires last year in mortgage, and we'll continue looking for some wealth management personnel in some markets outside of Birmingham and Tupelo. I think that will be your big addition as far as that goes. We'll continue hiring people in the annuity sale and in mutual fund sale area across the system, but we don't have any big lift outs there either, it will be on a kind of one-off basis for the most part. Jim has a comment.

Matt, as you know, on the mortgage hires, the mortgage originators, they -- you might have to give them a 90-day guarantee, but if they're not paying for themselves in 90 days, they -- we opt them out or they opt themselves out. So we're not committing on those hires to a long-term fixed overhead.

And Matt, the only other comment I'd make -- I'm going to let Mike Ross comment on a new hire in Georgia, Alabama area.

Matt, we're really excited to have Mike Knuckles join our team from -- he has joined us to head up our asset-based lending line of business, which is obviously exclusively a C&I loan business. And so we're in the process during the -- right now, of being -- doing all the ground work and laying all the ground work to be able to process that business. And we anticipate some fairly significant lift in the second half of this year coming out of that initiative. So we're delighted to have Mike on our team.

And the next question comes from Christopher Marinac of FIG Partners.

Robin, I wanted to ask you a little more about the FDIC-covered portfolio. To what extent with the loss share, even though you may have still a few years left in the loss-share agreements, will that run off be getting faster on that particular portfolio? And I'm mostly curious on the ability to look at some of the few remaining failed deals, if there's still loss share available for you on new bids.

Yes, Chris, this is Kevin, I'll start with the second question. What we're seeing on the FDIC-assisted transactions, there are going to be more bank failures. We're having a difficult time making the existing terms that the FDIC is offering on these franchises to meet our economic thresholds, and so we're a little bit cautious about our opportunity to be successful in future bids. There's some that we're analyzing or preparing, anticipate that we will have the opportunity to analyze. But again, the terms are changing such that it's difficult for us to make economic sense. As it relates to the remaining portfolio, I'll let Mark Williams answer that question.

Chris, we've had -- we're pretty pleased with how we've been able to run out those problem assets, and we stay on track to our budget and really our forecast that we did when we first really got in to the loss share. You're right, there's about a 2, 2.5-year window left on that commercial side. So we have a heightened awareness, if you will, that we're still analyzing those that are on the watch list to make sure they're properly identified, those that we need to have that resolution and get out in that timeframe remaining. We certainly have strategy and will keep employing strategies to get those out of the bay.

And the next question is from Kevin Fitzsimmons of Sandler O'Neill.

Most of my questions have been answered but just quickly on expenses, I heard the discussion before about OREO expenses being a lever for 2013. But just non-credit-related expenses, is there any -- with the environment being what it is, is there any program or any effort to really scrutinize some of the expenses more, or is it simply a matter of waiting for some of these new market entries to season and those revenues to kind of kick in? And then secondly, if you guys could just share what accruing TDRs were this quarter. I believe it was about $30.9 million last quarter end, if you have that number available.

Go ahead and address TDRs.

Yes, Kevin, I'll answer the TDR question first. They dropped about $1.5 million to $29.4 million.

Kevin, on the expense side, one of the biggest levers that we have is obviously the credit cost of the OREO. We also have problem loan expense that is running somewhere between $600,000 and $700,000 a quarter this past year. We expect that to continue to subside as well. When you look at more of the operational cost, we are renegotiating contracts with some of our primary vendors. And upon resolution of that, we'll have some operational expense saves, as well as when you look at our salaries and employee benefits, we had an unusually high year of health insurance costs. And not necessarily due to regulatory changes, but just because of just some -- just internal cost of employees. We just had a higher level of health care costs and would hope and expect that, that number would come down from the high that we saw this past year.

We're self-funded on our health insurance, and so that's based on claims as opposed to any type of premium is the reason for it. So it is not something that would carry over to this year from a premium standpoint, but the only thing there would be anticipation of future claims in that particular regard.

Yes, it's more of a function of actual loss experienced being much higher than we had experienced any other year.

And the other portion of that salary and benefit expense, obviously, that we want to continue to be at the high level is the commission side of it, payments to -- for mortgage loan originations. That's obviously going to be high when originations are going to be high.

But aside from the expenses, you mentioned the de novos, we still have several of the de novos that haven't fully matured, they still are seasoning. And we will see some continued build out in those de novos. We're not at a mature state yet, and there will be incremental revenue that is driven by the expenses that are already embedded in our run rate.

Okay, all right. And just a quick follow-up to that, Robin, earlier before, I heard you mentioned there will probably be no major lift outs this year. Is that -- should we take that to mean there probably wouldn't be any new market entries apart from the markets you're already in, in 2013?

We, today, have no immediate plans for any de novo openings during 2013. Obviously, we've opened up in East Tennessee, in Maryville, Johnson City and Bristol. And we anticipate that continue -- those markets will be ongoing this year. The actual Johnson City opening isn't until March 1 as far as the facility itself. But the other markets have, in fact, opened at this stage of the game. So as far as any additional personnel as a result of that, there won't be.

And then we have a question from Zachary Wollam of Sterne Agee.

Just a couple of questions. On loan mix, could you talk about what you're seeing in terms of region and type and then the change by region this quarter?

Yes, actually, this quarter, from the standpoint of originations, about 75% of our originations were in our old legacy markets and about 19% were in the de novo markets and about 6.5% of the originations [indiscernible]. We saw -- we saw a pretty good bit of originations by market, and [indiscernible] had a new originations for the quarter of about $5.5 million, and historical, about $4 million. East Tennessee had $20 million of loan originations, so [indiscernible]

Okay. And can you talk about where you're seeing payoffs still negating origination activity?

Pardon me, we have a lot of static on the line right now for some reason. Can you ask that again, Zachary?

Yes. Just where are you seeing payoffs still negating originations?

Mainly in all of our legacy markets. This quarter, again, this quarter was an anomaly from the standpoint of the end of year business sales and tax planning activities that occurred. We saw quite a bit of payoffs in the national market. I think they had about $14 million total. Of that, over $6 million of that were in problem credits that we wanted to see paid off and were very pleased to see paid off. But we also saw it across the system. Mississippi had 1 large $11 million payoff, and we don't anticipate that being the case this quarter or the rest of this year. These were all special circumstances, I think, a lot of those. As I was saying before, about -- normally, we run payoffs on average of about $80 million to $90 million a month -- a quarter, but we were exceptionally high in the fourth quarter. And normally, pay downs run about $90 million a quarter, but they were about $30 million over that in the fourth quarter also, so we don't anticipate seeing that. As far as new originations, we saw about 18.5% of our new originations were commercial, nonowner-occupied investment type properties, but these were all -- normally, these run as major national tenants, 1-4 rental property, about 5 -- a little over 5% to 6% there. Non-commercial real estate type properties were about 40%, so we had about 80% of those were real estate-related and probably about 20% were non real estate-related originations.

Okay. And can you talk about how the closing ratio has changed over the past year?

The closing ratio, being the percentage of our pipeline that closes?

Right, right.

The -- actually, it really hasn't changed. The numbers that we report to you guys are actually the ones that are accepted, customer approved by the bank and/or in the process of closing. So our closing rate really is really close to 100% on the pipeline numbers we gave you.

Okay, all right. And just a couple more, if you don't mind. How much residential do you guys want to have about mix and what types are you putting on the balance sheet right now?

I think Mitch, to some degree, answered that before. Mitch, if you go back to the types. We generally are looking at maturities that are 5 years or less on these residentials. Mitch, if you could comment on that.

Yes, Zachary, in the last quarter, that was about 19 million net, and it is 1-4 family residential portfolio credits with the typical maturity would be 5, 5 years or less, and that being driven just by consumer demand for that type credit in lieu of the secondary market. So you're talking about fairly short terms and the first mortgage consumer residential.

Zachary, to kind of expand on that a little further. We were not really aggressively seeking those types of credits. For the most part, the individuals who are looking for residential mortgages are looking for longer-term fixed rates at this time, based on where rates are today, and we're not interested in those types of credits. Where this happens is where we have customers who are not interested in getting into the secondary market for various reasons, I guess more than anything else, the hassle factor, or they aren't planning on staying in their house that long, and therefore, they're looking for the type of credit that we're able to offer. But we don't try to compete with those longer-term fixed rates. We try to cut it off in that 5-year range.

And at this time, we show no further questions. I will conclude the question-and-answer session. I'd like to turn the conference back over to Robin McGraw for any closing remarks.

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

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.